Verizon Communications Inc (VZ.N) lowered its full-year profit and wireless service revenue expectations on Friday as it invests substantially in network upgrades and customers are unable to afford newer, more expensive plans due to growing inflation.
In premarket trade, the company’s shares were down 3%.
According to IBES data from Refinitiv, Verizon now expects a full-year adjusted profit at the lower half of its projection range of $5.40 to $5.55 per share, while analysts expect a profit of $5.45.
The telecoms market in the United States is very competitive, with Verizon, AT&T Inc (T.N), and T-Mobile US Inc (TMUS.O) all competing for customers with new plans and bundles. However, rising inflation and its impact on consumer spending are starting to put a strain on businesses.
“Clearly, the wireless market is still very competitive. We’re seeing inflation rates and the impact on interest expense, so some costs are going to be higher than we anticipated for the year “Matt Ellis, the company’s chief financial officer, said to Reuters.
For the first three months of 2022, the company recorded an adjusted profit of $1.35 on revenue of $33.6 billion, which was in line with Wall Street’s expectations.
“As people’s wallets are being hit by inflation, we observed a little bit of a decline in total foot traffic towards the back-end of the quarter,” Ellis noted.
Wireless service revenue growth for the whole year is expected to be at the lower end of the previously indicated range of 9% to 10%.
In the first quarter, the company reported a loss of 36,000 monthly phone users, compared to Factset’s projection of 49,300.
During the same time period, AT&T reported 691,000 new customers.