Verizon sees no increase in 2019 profit, misses quarter four revenue estimate

By Sheila Dang and Akanksha Rana (Reuters) - Verizon Communications Inc on Tuesday said it does not expect profit growth in 2019 due to a higher tax rate and interest expense, and missed Wall Street estimates for fourth quarter revenue. The largest U.S. wireless carrier by subscribers said 5G, the next-generation wireless network that is expected to bring much faster data speeds, will not have a large impact on Verizon's financials until 2020, foreshadowing a year of flat growth for the major U.S

Reuters January 30, 2019 01:05:26 IST
Verizon sees no increase in 2019 profit, misses quarter four revenue estimate

Verizon sees no increase in 2019 profit misses quarter four revenue estimate

By Sheila Dang and Akanksha Rana

(Reuters) - Verizon Communications Inc on Tuesday said it does not expect profit growth in 2019 due to a higher tax rate and interest expense, and missed Wall Street estimates for fourth quarter revenue.

The largest U.S. wireless carrier by subscribers said 5G, the next-generation wireless network that is expected to bring much faster data speeds, will not have a large impact on Verizon's financials until 2020, foreshadowing a year of flat growth for the major U.S. carriers.

Craig Moffett, an analyst with MoffettNathanson, said in a note on Tuesday that investors have been focussed on what the build-out of 5G will cost Verizon rather than how much it will earn from the technology.

Moffett also said the company's profit guidance this year was "not very inspiring," given the strong U.S. economy.

Verizon Chief Financial Officer Matt Ellis said during the earnings call with analysts that the company expects earnings per share growth to be reduced by between 24 cents and 28 cents, due to the higher effective tax rate and increased interest expense.

Ellis said Verizon's business was still strong enough to offset the "non-operational items" and balance out to the same earnings per share level from 2018.

Shares of Verizon, the largest U.S. wireless carrier by subscribers, were down 2.4 percent to $53.75 in afternoon trading.

Total operating revenue rose 1 percent to $34.28 billion in the fourth quarter, missing the average analyst estimate of $34.44 billion, according to Refinitiv data.

The company forecast an increase in 2019 capital spending to a range of $17 billion to $18 billion, including expansion of the commercial launch of its 5G wireless technology, up from $16.7 billion last year.

Verizon, which has 118 million wireless customers, said it added a net 653,000 postpaid phone subscribers during the fourth quarter, beating the average estimate of 355,600, according to research firm FactSet.

Analysts pay attention to postpaid customers, or those with a recurring bill, because they are more valuable to carriers and remain with the company longer than prepaid customers.

The company lost 46,000 Fios video subscribers during the quarter, more than the 29,000 it lost last year, as viewers leave for cheaper internet TV services rather than pay for pricier cable packages. Analysts looked for 51,000 losses.

Net income attributable to the company fell to $1.94 billion, or 47 cents per share, in the quarter, from $18.78 billion, or $4.56 per share, a year earlier, when it recorded a $16.8 billion one-time benefit from the U.S. tax overhaul.

Revenue for the Verizon Media Group, formerly called Oath and which includes Yahoo and AOL, was $2.1 billion during the quarter, down 5.8 percent from the prior year.

Excluding items, Verizon earned $1.12 per share, above the average estimate of $1.09 per share, according to IBES data from Refinitiv.

(Reporting by Akanksha Rana in Bengaluru and Sheila Dang in New York; Editing by Phil Berlowitz and James Dalgleish)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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