Verizon slips as inflation and rising prices hit subscriber growth

A person walks past a Verizon store in Manhattan, New York, U.S., November 22, 2021. REUTERS/Andrew Kelly/File Photo

July 22 (Reuters) – Verizon Communications Inc (VZ.N) cut its full-year profit forecast on Friday as the U.S. mobile operator added fewer monthly subscribers than expected in the second quarter, a sign that runaway inflation has started to impact his business.

Chief executive Hans Vestberg said customer additions were significantly impacted by the inflationary environment at a time when the operator faces intense competition in the U.S. telecommunications sector.

Shares fell nearly 5% before the bell after closing down nearly 3% in the previous session in which rival AT&T (TN) warned that some of its customers were delaying bill payments. AT&T and T-Mobile US Inc (TMUS.O) fell about 1%.

U.S. businesses are bracing for a slowdown in consumer spending in the second half of the year as inflation, which has been high for four decades, makes customers more price-conscious in the world’s largest economy.

“If we continue in a highly inflationary market for an extended period and are exposed to inflationary cost increases, we will look for ways to try to recover them in our prices,” Chief Financial Officer Matt Ellis said in an interview. at Reuters.

Telecommunications companies, including Verizon and AT&T, have raised prices for their plans to cushion the impact of rising input costs. Verizon’s price hike in June through additional fees was beyond its already costlier plans.

The highly competitive environment will necessitate a higher level of promotional activity in the second half, Ellis said, citing that as another reason for lower earnings expectations.

The cellphone carrier added just 12,000 net-phone subscribers who pay a monthly bill in the quarter ended June 30, compared with 150,800 additions estimated by FactSet. In the first quarter, Verizon had lost about 36,000 subscribers.

The company now expects 2022 adjusted earnings per share to be between $5.10 and $5.25 per share, lower than the previous outlook of $5.40 to $5.55.

Reporting by Chavi Mehta and Eva Mathews in Bengaluru; Editing by Arun Koyyur

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