Verizon shares falter as inflation nears wireless forecast

Verizon Communications on Friday lowered its full-year forecast for wireless service revenue and profit as it spends heavily on upgrading its network, while rising inflation prevents customers from choosing newer or higher-priced plans.

The company’s shares were down about 6% at midday.

Verizon said it now expects full-year adjusted profit at the lower end of its forecast range of $5.40 and $5.55 per share, while analysts estimate a profit of $5.45, according to IBES data from Refinitiv.

The US telecoms landscape is highly competitive, with Verizon, AT&T, and T-Mobile vying fiercely for customers with innovative plans and packages. However, companies are starting to feel the heat from rising inflation and its effect on consumer spending.

“Obviously the competitive environment in wireless remains strong. Some costs will be higher than we initially thought for the year – we’re seeing inflation and an impact on interest expense,” Matt Ellis, CFO, told Reuters.

The company reported an adjusted profit of $1.35 on revenue of $33.6 billion for the first three months of 2022, in line with Wall Street estimates.

“With people’s wallets affected by inflation, at the end of the last quarter, we saw a slight drop in overall traffic,” Ellis added.

It also expects full-year wireless services revenue growth at the lower end of the previously targeted range of 9% to 10%.

The company reported a loss of 36,000 monthly phone subscribers in the first quarter, compared to FactSet’s estimate of a loss of 49,300.

AT&T reported 691,000 additions in the same period.