Verizon Adds Subscribers as Earnings Guidance Falls Short of Forecasts

The company’s consumer unit gained 41,000 postpaid subscribers, while its commercial division added 176,000. Investors and analysts track postpaid phone customers to gauge wireless-companies’ health because it measures trends among reliable monthly bill payers.

Shares rose about 2% to $40.40 on Tuesday after falling in the pre-market session.

The consumer unit had been losing subscribers in recent quarters. Mr. Vestberg said he expects the unit to build on its momentum from the fourth quarter.

“We weren’t happy with where consumer was last year, but you’ve seen us take actions there,” Chief Financial Officer

Matt Ellis

said in an interview.

Verizon remains the largest U.S. cellphone carrier in terms of subscribers, but it has ceded ground over the past two years in a three-way race with rivals

AT&T Inc.

and

T-Mobile US Inc.

Gains in the company’s business-focused unit in recent quarters have offset subscriber losses in the company’s consumer division. 

Mr. Vestberg succeeded

Manon Brouillette

as head of the consumer unit after she served less than a year in the role. That move marked the latest sign of the wireless company’s struggle to appeal to nonbusiness clients.

On a conference call, Mr. Vestberg said the current level of sales and discounts being offered across the industry is unsustainable. Mr. Ellis said the company is competing by offering promotions that rely less on device discounts, such as less costly welcome offers. He said Verizon’s customer base remains healthy, despite widespread inflation and tightening financial conditions.

Mr. Vestberg said customers are still paying their phone and internet bills on time. “We continue to see only limited impact for the macroeconomic environment on our customers,” he said.

For 2023, Verizon forecast adjusted earnings of $4.55 a share to $4.85 a share, below Wall Street expectations of $4.96 a share. Rising interest rates as well as costs tied to phone discounts that the company has been offering are expected to weigh on earnings, Mr. Ellis said.

While the company’s capital spending on the buildout of 5G and related projects rose above what analysts expected last year, executives said they expect that figure to fall in the next couple of years.

Capital spending totaled $23.1 billion last year, and the company forecast $18.25 billion to $19.25 billion for 2023. By 2024, Mr. Vestberg said, spending should be closer to $17 billion.

Overall for the quarter, net income, excluding profit from interests in noncontrolling entities, rose to $6.58 billion, or $1.56 a share, from $4.61 billion, or $1.11 a share, a year earlier. Stripping out one-time items, adjusted earnings came to $1.19 a share, matching Wall Street expectations. 

Revenue climbed 3.5% to $35.25 billion, topping analyst expectations of $35.09 billion. 

Verizon rival AT&T is slated to report fourth-quarter results on Wednesday morning. T-Mobile is expected to report earnings next week.

Write to Will Feuer at [email protected]