Published: Tuesday, April 26, 2022 · 5:42 PM | Updated: Tuesday, April 26, 2022 · 5:42 PM
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Verizon Communications Inc. (
VZ, Financial) experienced some disconnects in the first quarter of 2022, resulting in year-over-year declines in Ebitda, net income and subscribers. Moreover, executives lowered their profit and revenue guidance for all of 2022.
The company’s share price dropped by 5.6% on Friday to $51.91 – Verizon’s biggest single fall since March 12, 2020, when it dropped by 6.6%. By the time Tuesday rolled around, shares were trading below the $50 mark.
Consolidated earnings per share was $1.09, compared with $1.27 in the first quarter of 2021. Adjusted EPS, excluding special items, was $1.35 compared with $1.36 in first-quarter 2021. Total revenue was $33.6 billion, up 2.1%. Adjusted Ebitda was down 1% to $12.0 billion. Net income also dropped 12%, to $4.7 billion. Another negative was that Verizon shed a net 292,000 consumer postpaid phone subscribers during the quarter, which management said was due to “the competitive dynamics within the industry.”
In its earnings report, the company preferred to focus on the expansion of its 5G Ultra Wideband network to nearly 113 million people around the country and elevated demands for its 5G mobility and nationwide broadband services. Verizon’s performance produced what management called its best broadband result in over a decade, a surge in upgrades and increased wireless service revenue growth.
During the first quarter, Verizon Consumer Group delivered top-line growth that was driven by the first full quarter of ownership of TracFone Wireless Inc., (TracFone), higher equipment revenue and strong wireless service revenue growth.
“Our operational performance in the first-quarter further positions Verizon for long-term growth and increases our competitive standing in mobility, nationwide broadband, the value market, and above the network business solutions and applications,” said Verizon’s Chairman and CEO Hans Vestberg. “The January launch of C-Band and expansion of our 5G Ultra Wideband network helped to amplify our fixed wireless momentum in both Consumer and Business, with quarterly additions 2.5 times that of our fourth-quarter performance, and drove momentum in wireless upgrades.”
The company continues to accelerate C-Band network building with a goal of reaching at least 175 million people by the end of the year. With its recent early clearing spectrum announcement, the company says it now has the ability to deploy more of this spectrum a full year sooner.
At their Investor Day in March, executives presented their strategy for investing in and growing the business to generate an incremental $14 billion of service and other revenue by 2025. The bottom-line performance of these results shows the strength of Verizon’s core business to deliver profitability, even during a period of significant investment, said Verizon’s Chief Financial Officer Matt Ellis. Management expects that over 75% of growth over the next four years will come from 5G mobility and nationwide broadband. “In the first-quarter, we saw growth in our wireless sales, customer loyalty, and rapid expansion of our fixed wireless product, fortifying our confidence in our growth prospects.”
By sector, total wireless service revenue growth was 9.5%, reflecting the first full quarter of TracFone ownership as well as continued execution of the Network as a Service strategy. Service and other revenue was down 2.5%, as the revenues lost from Verizon Media Group (Verizon Media) more than offset incremental revenue from TracFone. Excluding the impact of the sale of Verizon Media, service and other revenue was up 4.2% from first-quarter 2021.
For full-year 2022, Verizon is updating its prior guidance for service and other revenue, which is now expected to be approximately flat compared to 2021. Executives are looking for wireless service revenue growth at the lower end of the previously guided range of 9% to 10%. Adjusted Ebitda growth should also end up at the lower end of the previously guided range of 2% to 3%. Adjusted EPS is expected to be in the range of $5.40 to $5.55.
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