Verizon Communications Inc. (NYSE: VZ) reported lower than expected fourth quarter financial results. Shares were up 1 percent during Tuesday’s premarket hours.
For the fourth quarter, Verizon reported an EPS of $0.86, falling short of Thomson Reuters analysts’ estimates of $0.88. Verizon reported revenue of $33.96 billion, increasing 5 percent year over year, and beating Thomson Reuters analysts’ estimates of $33.26 billion.
Verizon added 1.17 million in retail postpaid connections, including 431,000 phones and 647,000 smartphones. Retail postpaid reported churn of 1 percent, and retail postpaid phone churn reported 0.77 percent.
Fios services grew 2.3 percent in revenue year over year. Fios Internet service added 47,000 new users, while Fios video lost 29,000 users.
Verizon’s loss in Fios video users can be due to the growing competition in the streaming media industry with competitors such as Netflix, Hulu, and even Disney rising to the top spots now.
"Verizon finished 2017 with great momentum, led by some of the best customer growth and loyalty results Verizon Wireless has delivered in recent years," said CEO Lowell McAdam.
Verizon’s growth was stunted by competitors such as T-Mobile and AT&T. Verizon’s competitors push out constant promotions to bolster their positions which is appealing to consumers. But still, these three companies are major corporations in the communications industry.
The tax reform caused a positive impact to cash flow from operation of approximately $3.5 billion to $4 billion. Verizon says the additional cash on hand will be used to strengthen its balance sheet. The company will increase funding to Verizon Foundation by $200 million to $300 million over the next two years and announce employees further share in the company. The two initiatives will project an EPS impact of 5 to 6 cents over the next two years.
“In 2018 we look to drive long-term shareholder value by deploying next-generation network services, leveraging global platforms such as Oath [Verizon’s digital content subsidiary], and using our strategic Humanability approach to turn innovative ideas into realities.” added McAdam.
For 2018, Verizon plans to spend $17 billion to $17.8 billion, which will include the commercial launch of its 5G network. The carrier expects overall revenue growth for the year along with a 55 to 65 cent increase in 2018 EPS due to the tax reform.