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Verizon Lowers Annual Forecasts After Weak Customer Growth

Verizon Communications Inc.

VZ -6.69%

struggled to add wireless phone customers in the latest quarter and lowered its profit and revenue goals for the rest of the year.

The telecommunications giant gained 12,000 postpaid phone connections in the second quarter, a sign of relatively weak growth in its core customer base.

AT&T Inc.,

T -2.82%

one of Verizon’s rivals, reported a net gain of 813,000 in this measure over the same span.

Operating revenue was roughly flat from the previous year at $33.79 billion.

Net income attributable to Verizon fell to $5.2 billion, down from $5.8 billion from the same period one year ago. On a per-share basis, its profit slipped to $1.24 from $1.40 a year earlier.

Earnings excluding one-time items came in at $1.31 a share, below the consensus forecast from analysts of $1.32 a share, according to

FactSet.

“Although recent performance did not meet our expectations, we remain confident in our long-term strategy,” said Verizon finance chief

Matt Ellis.

Verizon’s shares dropped nearly 5% in premarket trading Friday. Shares are down about 8% so far this year, compared with a roughly 16% decline in the S&P 500.

Verizon’s earnings are the latest sign of struggles for the company. Executives warned earlier this year that rising interest rates, higher consumer prices and heavier corporate expenses, tied to things such as its 5G network build-out, could pressure its bottom line.

AT&T also reported its results were reflecting some strain in consumers’ budgets. On Thursday it lowered its free cash-flow target for 2022 due to costly smartphone promotions and delays getting customers to pay their bills.

T-Mobile US Inc.,

another competitor, is expected to report earnings next week.

For the full year, Verizon said it expects wireless-service revenue growth of 8.5% to 9.5% from a year earlier, compared with its earlier forecast of an increase between 9% and 10%. Its new forecast for adjusted per-share earnings was between $5.10 and $5.25, down from between $5.40 and $5.55.

As inflation climbs in the U.S., rising food and energy costs have pushed the nation’s most popular price index to its highest level in four decades. WSJ’s Gwynn Guilford explains how the consumer-price index works and what it can tell you about inflation. Illustration: Jacob Reynolds

Write to Alex Harring at [email protected]

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