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(Bloomberg) — Verizon Communications Inc. fell in early trading after cutting its forecast for the second straight quarter, adding to concerns that consumers are pulling back on spending.
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The largest US wireless carrier is having difficulty keeping up with rivals on subscriber growth amid heavy phone discounts and decades-high inflation. Verizon said Friday that it added only 12,000 monthly wireless phone subscribers in the second quarter, well below analysts’ predictions for 167,200 new phone customers.
The news is another setback for wireless carriers after AT&T Inc. alarmed industry watchers Thursday with a warning that some customers are starting to delay paying their bills. Both AT&T and Verizon have been raising prices by $6 a line on older mobile plans.
Shares of Verizon slid as much as 5.4% in early trading. The stock dropped 2.9% Thursday after AT&T’s earnings and is down more than 8% on the year.
Verizon is under pressure to retain its market lead. The company returned to free phone promotions in an effort to counter discounts and giveaways by AT&T and T-Mobile US Inc. The New York-based mobile giant is also racing to catch up with T-Mobile on 5G service and expects to find new revenue by pursuing network contracts with businesses and facilities including shipping ports.
Earnings per share, excluding some items, are now expected to be between $5.10 to $5.25 for the year, down from a range of $5.40 to $5.55, Verizon said Friday in a statement. The company also reduced its forecast for service and other revenue, calling for as much as a 1% decline. The outlook had previously been for flat revenue growth compared with a year ago.
Verizon lost a net 215,000 consumer wireless customers in the second quarter and gained 227,000 business customers. Higher device activiations and increased inventory levels tied to supply-chain initiatives hurt cash flow in the first half of 2022, the company said.
In so-called fixed wireless, a relatively new segment of broadband service where signals are beamed directly to a home WiFi router, Verizon added 256,000 wireless internet subscribers. T-Mobile had taken a lead in the race to serve wireless broadband to homes with more than 1 million internet subscribers as of April. The wireless carriers’ introduction of a $50-a-month, high-speed alternative to landline broadband has been cutting into the cable companies’ most prized business.
(Updates with subscriber breakdown and cash-flow pressures in seventh paragraph.)
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