Verizon Shares Slide After CEO Warns Of Wireless Subscriber Decline

Verizon Shares Slide After CEO Warns Of Wireless Subscriber Decline

Verizon Communications shares slid Wednesday afternoon after Hans Vestberg, Chairman and CEO, told investors at Goldman Sachs’ Communacopia + Technology Conference that wireless subscriptions are expected to decline. 

Vestberg said the drop is the exodus of consumer wireless subscribers. He added that the loss would be partially offset by business subscriber gains, though he expects a decline in wireless subscribers overall. 

Verizon’s second quarter was a warning sign of darkening clouds forming above the wireless carrier. The carrier noted shrinking consumer budgets due to rising inflation resulted in no revenue growth and barely any subscriber growth. 

During the second quarter, Verizon said 215,000 consumer postpaid phone subscriptions were lost. That was offset by the addition of 227,000 postpaid business wireless subscriptions for an overall net gain of 12,000 subscribers. 

However, for the third quarter, it appears postpaid business wireless subscriptions might not be able to offset the losses of consumer ones. 

Vestbergm said the price hikes on wireless bills were the “right decision.” Other carriers, including AT&T, also raised prices for wireless subscribers this summer. 

Remember, AT&T warned that an increasing number of customers couldn’t pay their phone bills this summer. 

Verizon’s move to attract more low-end customers via the acquisition of TracFone Wireless appears to have been a good move during these challenging times for households: 

“We’re getting good traction,” the exec said. 

Verizon shares are down 1% in the late afternoon session. Year-to-date, shares are down 20% and have broken a decade-long support level. 

When questioned about stock buybacks, Vestbergm told the investing crowd: “we continue to invest in our business.”

It’s likely Vestberg will continue to blame shrinking consumer budgets due to rising inflation for Verizon’s third-quarter wireless subscriber decline when it reports earnings next month.

Tyler Durden
Wed, 09/14/2022 – 13:58

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Author: Tyler Durden

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