Verizon Predicts Wireless Growth Despite Pandemic -- Update
By Drew FitzGerald
Verizon Communications Inc.'s fourth-quarter profit slipped due
to higher costs and a tepid pool of new customers, though the
company issued an upbeat preview of earnings in 2021.
The largest U.S. cellphone carrier said it expects
wireless-service revenue growth to hit at least 3% this year while
it continues to invest in upgrades to support fifth-generation
wireless technology, also known as 5G. The company said this year's
capital spending would fall between $17.5 billion and $18.5
billion, roughly in line with last year's budget.
The growth forecast followed a relatively slim gain of 279,000
postpaid phone connections in the last three months of 2020. That
compared with a 790,000 increase over the same period a year ago.
Telephone companies prize so-called postpaid accounts, which charge
customers monthly bills after service is rendered, for their stable
The core customer additions missed some Wall Street forecasts
that had counted on brisk demand for Apple Inc.'s slate of iPhone
12 models. Industry analyst New Street Research had projected a net
gain of 411,000 postpaid phone connections.
Rival carrier T-Mobile US Inc. this month issued preliminary
results that showed an 824,000 postpaid-phone gain over the same
span. AT&T Inc. plans to report its fourth-quarter results
Verizon said its own customers showed a strong appetite for new
smartphones, though the coronavirus pandemic curbed foot traffic in
its shops and limited new sign-ups.
"The Apple 5G phone came out late in the fourth quarter. That's
when this all started at the same time as the pandemic," Verizon
Chief Executive Hans Vestberg said during a call with analysts
Tuesday. "Still, we are very pleased with what we have seen with
our customers migrating to 5G."
Verizon last year pulled its sales projections and braced for a
wave of past-due bills as millions of Americans lost their jobs due
to the pandemic. As the year wore on, revenue losses were limited
by Verizon's more affluent customer base and the must-have nature
of cellphone and home-internet service.
The company's media business, which includes online brands like
Yahoo, also appeared to turn a corner in the fourth quarter. Its
overall sales jumped 11% to $2.3 billion. The company said strong
advertising demand lifted the division's results.
Overall, quarterly net income attributed to Verizon reached $4.6
billion, down from $5.1 billion a year earlier. The most recent
quarter took a $523 million hit from severance payments, the sale
of the HuffPost media business and other one-time expenses. Revenue
slipped 0.2% to $34.7 billion
The company said Tuesday it remains on track to meet the
cost-cutting goals executives set in late 2017. The company at the
time pledged to slash about $10 billion of expenses over four
Verizon's past cost-cutting efforts don't account for the tens
of billions of dollars that could be due in the coming years for
new wireless licenses. The Federal Communications Commission's
recent auction of C-band airwaves collected a record $80.9 billion
The government hasn't yet identified the winners of the auction,
though Wall Street analysts expect Verizon to be a top spender on
the radio frequencies, which are considered apt for faster 5G
Write to Drew FitzGerald at firstname.lastname@example.org
(END) Dow Jones Newswires
January 26, 2021 10:46 ET (15:46 GMT)
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