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On the heels of Yahoo deal, Verizon hits a wall

It's clear why the nation's largest wireless carrier needs to look elsewhere for growth: Its core mobile phone business has slowed way down.

Josh Miller/CNET

How do you follow up to making a $4.8 billion purchase of an internet pioneer?

If you're Verizon, you get right back to business and release your second-quarter results.

The New York telecommunications giant is fresh off its Monday announcement that it plans to acquire Yahoo's core internet business. The deal is part of Verizon's broader strategy to transform itself into something more than just a basic phone company. Yahoo is expected to merge with Verizon's other online asset, AOL, to create a digital ad and media platform designed to rival online giants Google and Facebook.

"By acquiring Yahoo, we will dramatically accelerate the timetable for scaling up to be a major competitor in mobile media," Verizon CEO Lowell McAdam said in a statement Tuesday.

It's clear why Verizon needs to look elsewhere for growth: Its core wireless phone business has hit a wall. On Tuesday, the company reported adding only 86,000 net new wireless customers in the period, with much of its growth driven by tablets. In comparison, Sprint said Monday it added 173,000 postpaid customers, or folks with the high credit scores who pay at the end of the month.

The Yahoo acquisition comes at a unique moment for the wireless industry, with rival AT&T also looking to transform itself into more of a media business through its acquisition of DirecTV. Smaller players T-Mobile and Sprint, meanwhile, are offering more perks and discounts to win your business. The results are better deals for customers willing to hunt for them.

A common trend among the carriers that have reported second-quarter results so far: a decrease in customer turnover. So while Verizon isn't adding as many new customers, it's keeping the ones that it has. It boasted an industry turnover rate of 0.94 percent, a uptick from a year ago due to more tablets dropping its service.

Verizon reported second-quarter earnings of 17 cents a share on revenue of $30.5 billion. A year ago, it reported earnings of $1.04 a share on revenue of $32.2 billion. Excluding one-time items such as pension and benefit costs, as well as a seven-week strike by its landline workers, the company would have earned 94 cents a share.

Analysts, on average, had forecast earnings of 92 cents a share on revenue of $30.94 billion, according to Thomson Reuters.

Verizon says it expects to exit 2017 with growth in service revenue. Earlier this month, the carrier hiked its prices while adding more data and features to its plans.

Verizon fell 0.8 percent to $55.45 in pre-market trading.