By Malathi Nayak and Kshitiz Goliya
(Reuters) - Verizon Communications Inc (N:VZ) on Thursday reported higher-than-expected revenue for the fourth quarter as heavy promotions helped it counter aggressive offers and discounts from rivals and win new users.
Shares of the No. 1 U.S. wireless phone service provider, whose profit edged past analysts' estimates, rose 2.7 percent to $45.63 in morning trading.
Verizon added a net 1.5 million wireless retail postpaid, or monthly, subscriptions in the quarter, below 2 million a year earlier but above the analysts' average estimate of 1.42 million, according to market research firm FactSet StreetAccount.
The company, known for its high-quality network, withstood stiff competition from rivals in the saturated U.S. wireless market. Smaller rival Sprint Corp offered 50 percent off to encourage users to switch to its network, and T-Mobile US Inc launched a free video streaming plan.
For its part, Verizon rolled out holiday season offers such as a data giveaway on some plans, $100 discounts on certain phones and a $300 credit to trade in some models.
Customer defections, or churn, in Verizon's postpaid business fell to 0.96 percent from 1.14 percent a year earlier.
Average revenue per account, however, fell 6.6 percent to $148.30, below the analysts' forecast of $149.61, according to FactSet. Jefferies analyst Mike McCormack said Verizon must curb such declines in this measure this year.
Like its rivals, Verizon has switched from offering customers two-year contracts to monthly installment plans that have lower service fees and can weigh on revenue.
To increase revenue, Verizon is investing in its new "go90" mobile-video service and "Internet of Things," which connects everything from industrial machines to household devices to the Internet.
Chief Financial Officer Fran Shammo said in an interview that the company still expected full-year earnings growth, excluding special items, to be on "a flatter plateau" in 2016 than 2015 as a result of those investments and the shift to the installment model.
Revenue from Internet of Things-related offerings rose about 18 percent to $690 million in 2015.
In the quarter, sales at the company's FiOS high-speed Internet, TV and phone service rose 6.8 percent to $3.53 billion.
Net income attributable to Verizon was $5.39 billion, or $1.32 per share, compared with a year-earlier loss of $2.23 billion, or 54 cents per share.
Excluding special items such as pension adjustments, Verizon earned 89 cents per share, above the analysts' average forecast of 88 cents, according to Thomson Reuters I/B/E/S.
Operating revenue rose 3.2 percent to $34.25 billion. Analysts had expected $34.10 billion.