Verizon Communications Inc.’s profit outlook trailed Wall Street estimates as the consumer wireless business struggles to win new customers.
(Bloomberg) — Verizon Communications Inc.’s profit outlook trailed Wall Street estimates as the consumer wireless business struggles to win new customers.
The largest US wireless carrier has relied on costly phone giveaways to compete with its peers. The company said Tuesday that it expects 2023 earnings per share, excluding some items, to be in the range of $4.55 to $4.85, while analysts were looking for $4.97, on average.
Verizon is the first of the big three US wireless carriers to report full results. The company has been losing market share to AT&T Inc. and T-Mobile US Inc. thanks to their network improvements and free phone offers.
This year’s projected annual profit drop of about 9% highlights the challenges Verizon Chief Executive Officer Hans Vestberg is facing as he relies on margin-squeezing promotions to turn around the slumping consumer business. Verizon has had three consumer chiefs in the past year.
Speaking on a call with analysts Tuesday, Vestberg said his pricing strategy will depend on the market. His current plan doesn’t include price increases.
“We’ll be surgical and segmented in our approach,” Vestberg said. “We’ll continue to look for ways to put plans in the marketplace that reduce the level of subsidy out there.”
The company added 217,000 new wireless phone subscribers in the fourth quarter, topping the 209,600 analyst projection. But the gains were well below T-Mobile’s preliminary addition of 927,000 mobile phone subscribers in the fourth quarter. AT&T, which reports Wednesday, is expected to have added 639,600 phone subscribers.
Shares of Verizon rose 0.1% at 10:23 a.m. New York time. The stock had fallen 25% over the past 12 months through Monday’s close, compared with a 4% decline for AT&T and a 35% gain by T-Mobile.
Verizon didn’t provide a forecast for the mobile business. Analysts expect the industry’s subscriber growth to slow this year as consumers start to pull back on spending.
One bright spot for Verizon is continued growth in broadband. The company added 379,000 wireless home subscribers in the fourth quarter, while analysts had projected 251,200. For the full year analysts expect that business to add more than 1 million customers as Verizon and other wireless carriers ratchet up competition with cable companies.
Profit and sales in the fourth quarter were in-line with estimates compiled by Bloomberg.
(Updates with CEO comments in fifth and sixth paragraphs.)
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