Verizon Communications Inc.’s VZ 1.65% profit and sales slipped in the fourth quarter as higher costs burdened its bottom line, though the company issued a more upbeat view of its prospects in 2021.
The largest U.S. cellphone carrier said it expects wireless-service revenue growth to hit at least 3% this year while it continues to invest in upgrades to support fifth-generation wireless technology, also known as 5G. The company said capital spending would fall between $17.5 billion and $18.5 billion in 2021.
Verizon ended 2020 with a quarterly net gain of 279,000 postpaid phone connections compared with a gain of 790,000 in the same quarter a year earlier. Telephone companies prize so-called postpaid accounts, which charge customers monthly bills after service is rendered, for their stable revenue.
Rival carrier T-Mobile US Inc. this month issued preliminary results that showed an 824,000 postpaid-phone gain over the same span. AT&T Inc. plans to report its fourth-quarter results Wednesday.
Verizon last year pulled its sales projections and braced for a wave of past-due bills as millions of Americans lost their jobs due to the coronavirus pandemic. As the year wore on, revenue losses were limited by Verizon’s more affluent customer base and the must-have nature of cellphone and home-internet service.
The company’s media business, which includes Yahoo, appeared to turn a corner in the fourth quarter. Its overall sales jumped 11% to $2.3 billion.
Overall, Verizon’s quarterly net income reached $4.6 billion, down from $5.1 billion a year earlier. The most recent quarter took a $523 million hit from severance payments, the sale of the HuffPost media business and other one-time expenses. Revenue slipped 0.2% to $34.7 billion.
The company said Tuesday it remains on track to meet the cost-cutting goals executives set in late 2017. The company at the time pledged to slash about $10 billion of expenses over four years.
Verizon’s past cost-cutting efforts don’t account for the tens of billions of dollars that could be due in the coming years for new wireless licenses. The Federal Communications Commission’s recent auction of C-band airwaves collected a record $80.9 billion.
The government hasn’t yet identified the winners of the auction, though Wall Street analysts expect Verizon to be a top spender on the radio frequencies, which are considered apt for faster 5G wireless service.
Write to Drew FitzGerald at [email protected]
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