ii view: Verizon customer additions hit five-year high

Fourth-quarter results to 31 December

• Revenue up 1.6% to $35.7 billion (£28.6 billion)
• Adjusted earnings per share up 1.8% to $1.10 per share
• Quarterly dividend of 67.75 US cents per share, unchanged from Q3
• Unsecured debt of $117.9 billion (£94.3 billion), down from $128.5 billion a year ago

ii round-up:

Telecom giant Verizon Communications Inc (NYSE:VZ) has detailed growth in mobile phone customer numbers at a five-year high as both revenue and earnings rose during the final quarter.

Fourth-quarter mobile phone customer additions for both business and retail customers of 568,000 was up from 449,000 a year ago. That beat Wall Street hopes of 488,000, with the 426,000 in new retail customers the biggest since 2019.   

Shares in the Dow Jones company rose 1.5% in US trading having come into this latest news up 6% in 2024. That’s similar to O2 owner Telefonica SA (XMAD:TEF) but behind a 13% improvement for the Dow Jones itself over last year.

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Verizon serves over 110 million mobile phone customers across the USA. Total fourth-quarter revenues to late December climbed 1.6% year-over-year to $35.7 billion (£28.6 billion), pushing full year 2024 revenue growth of 0.6% to $134.8 billion.

The telecoms giant flagged a more than doubling in postpaid net wireless phone additions for 2024 compared to 2023. Continuing gains in market share at its non-wireless or Broadland business were also made. 

Adjusted fourth-quarter earnings improved to $1.10 per share from $1.08 a year ago, broadly matching analyst estimates.  

Accompanying management forecasts for 2025 pointed to expected growth in wireless service revenues of between 2% and 2.8%, helping adjusted earnings to potentially gain up to 3%. 

A previously announced quarterly dividend payment of 67.75 US cents per share, payable on 2 March to eligible shareholders, is unchanged from the prior third quarter. 

ii view:

Formerly Bell Atlantic, Verizon today employs over 103,000 people. Headquartered in New York, it's focused on expanding its wireless service revenues, growing adjusted profits and generating strong free cash flow. In September, Verizon announced a move to outsource or lease its more than 6,000 mobile phone towers across the USA to infrastructure firm Vertical Bridge.  

For investors, squeezed consumer spending and an arguable lack of recent smartphone innovation from the likes of Apple fed into a 4.5% fall in Verizon’s 2024 equipment related revenues. Industry competition remains intense. Many businesses no longer use desktop work phones which reduces fixed line demand. Generating a return on its major 5G investments continues to occupy management, while costs for businesses generally remain heightened.

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On the upside, initiatives such as bundled and flexible mobile plans have helped gain customers. A focus on reducing costs persists. The pandemic has arguably added to the need for fast data from more locations, while a price-to-net asset value sat below the three-year average may suggest emerging value.  

In all, changes in technology and the arguable effective downgrading of data network providers to utility providers suggests unexciting growth. That said, sizeable cashflows support a forecast dividend yield of close to 7%, which at least offers some diversification for income seekers. 

Positives

• Focus on costs 
• Attractive dividend (not guaranteed)

Negatives:

• High competition
• Unsecured debt of $117.9 billion

The average rating of stock market analysts:

Strong hold