On January 24, Verizon Communications projected annual free cash flow and profits below Wall Street predictions, attributing the lower figures to hefty investments in expanding high-speed internet services to compete in a saturated wireless market.
The company's substantial spending on the C-band spectrum, known for its speed and reach, aims to enhance its 5G capabilities to gain an edge over competitors like AT&T and T-Mobile.
Additionally, the significant investments are crucial in achieving its target of doubling subscribers for its fixed wireless service to up to 9 million by 2028.
Verizon's stock, based in New York, saw a 1% rise in premarket trading.
The company's 2025 outlook reflects robust fourth-quarter subscriber growth, with wireless additions reaching a five-year high, driven by initiatives such as the customizable myPlan, Black Friday promotions, and trade-in options for the AI-powered iPhone 16 series.
Verizon anticipates a 0% to 3% growth in adjusted profit for 2025, with the midpoint falling short of analysts' 2.7% growth estimate. Free cash flow for the year is expected to range between $17.5 billion and $18.5 billion, with the midpoint slightly below the $18.44 billion estimate.
Facing slowing U.S. telecom market growth, Verizon and its competitors are focusing on expanding high-speed internet services to attract subscribers, exemplified by its acquisition of Frontier Communications in a $20 billion deal last year.
In the fourth quarter, Verizon surpassed FactSet projections by adding 568,000 bill-paying wireless subscribers, benefiting from price adjustments in 2024 and the appeal of myPlan, which includes streaming perks from Disney+, Hulu, and Max at an additional cost.
Wireless equipment revenue in the fourth quarter rose around 1% to $7.5 billion due to increased device upgrade volumes, contributing to an overall revenue of $35.7 billion, slightly higher than the estimated $35.32 billion.