By Drew FitzGerald
Verizon Communications Inc.'s profit and sales slipped in the fourth quarter as higher costs burdened its bottom line, though the company issued a more upbeat view of its prospects in 2021.
The largest U.S. cellphone carrier said it expects wireless-service revenue growth to hit at least 3% this year while it continues to invest in upgrades to support fifth-generation wireless technology, also known as 5G. The company said capital spending would fall between $17.5 billion and $18.5 billion in 2021.
Verizon ended 2020 with a net gain of 279,000 postpaid phone connections compared with a gain of 790,000 a year earlier. Telephone companies prize so-called postpaid accounts, which charge customers monthly bills after service is rendered, for their stable revenue.
Rival carrier T-Mobile US Inc. this month issued preliminary results that showed a 824,000 postpaid-phone gain over the same span. AT&T Inc. plans to report its fourth-quarter results Wednesday.
Verizon last year pulled its sales projections and braced for a wave of past-due bills as millions of Americans lost their jobs. As the year wore on, revenue losses were limited by Verizon's more affluent customer base and the must-have nature of cellphone and home-internet service.
The company's media business, which includes Yahoo, appeared to turn a corner in the fourth quarter. Its overall sales jumped 11% to $2.3 billion.
Overall, Verizon's quarterly net income reached $4.6 billion, down from $5.1 billion a year earlier. The most recent quarter took a $523 million hit from severance payments, the sale of the HuffPost media business and other one-time expenses. Revenue slipped 0.2% to $34.7 billion.
The company said Tuesday it remains on track to meet the cost-cutting goals executives set in late 2017. The company at the time pledged to slash about $10 billion of expenses over four years.
Verizon's past cost-cutting efforts don't account for the tens of billions of dollars that could be due in the coming years for new wireless licenses. The Federal Communications Commission's recent auction of C-band airwaves collected a record $80.9 billion.
The government hasn't yet identified the winners of the auction, though Wall Street analysts expect Verizon to be a top spender on the radio frequencies, which are considered apt for faster 5G wireless service.
Write to Drew FitzGerald at firstname.lastname@example.org
(END) Dow Jones Newswires