Verizon Slow to Cash In on iPhone 12

Verizon Communications Inc.’s

VZ -3.16%

fourth-quarter profit slipped due to higher costs and a tepid pool of new customers, though the company issued an upbeat preview of earnings 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 this year’s capital spending would fall between $17.5 billion and $18.5 billion, roughly in line with last year’s budget.

The growth forecast followed a relatively slim gain of 279,000 postpaid phone connections in the last three months of 2020. That compared with a 790,000 increase over the same period a year ago. Telephone companies prize so-called postpaid accounts, which charge customers monthly bills after service is rendered, for their stable revenue.

The core customer additions missed some Wall Street forecasts that had counted on brisk demand for

Apple Inc.’s

slate of iPhone 12 models. Industry analyst New Street Research had projected a net gain of 411,000 postpaid phone connections.

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 shares fell 3% to $56.67 early Tuesday.

Verizon said its own customers showed a strong appetite for new smartphones, though the coronavirus pandemic curbed foot traffic in its shops and limited new sign-ups.

“The Apple 5G phone came out late in the fourth quarter. That’s when this all started at the same time as the pandemic,” Verizon Chief Executive

Hans Vestberg

said during a call with analysts Tuesday. “Still, we are very pleased with what we have seen with our customers migrating to 5G.”

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 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 online brands like Yahoo, also appeared to turn a corner in the fourth quarter. Its overall sales jumped 11% to $2.3 billion. The company said strong advertising demand lifted the division’s results.

Overall, quarterly net income attributed to Verizon 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 in bids.

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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