Verizon faces slowdown in core business

Telecoms group looking to reinvent itself as broader media group to rival Facebook and Google

A pedestrian walks past a Verizon Communications store in San Francisco, California. Photographer: David Paul Morris/Bloomberg

A pedestrian walks past a Verizon Communications store in San Francisco, California. Photographer: David Paul Morris/Bloomberg

 

Verizon Communications continues to face a slowdown in its core wireless business, putting more pressure on the phone giant to show progress in its plan to transform into a media and advertising rival to Facebook and Google.

The largest wireless carrier in the US sacrificed profits in the fourth quarter by cutting prices and offering giveaways like free iPhones, but lured fewer customers than expected. The company added 591,000 subscribers, compared with 1.5 million a year earlier and the 744,056 projected by analysts. By comparison, T-Mobile US gained 1.2 million in the period.

Shares of Verizon sank as much as 4.6 per cent to $50 in New York Tuesday, their biggest intraday drop since August 2015.

Thousands of Irish investors hold shares in the company as a legacy of their original investment in Telecom Éireann.

As challenges mount in the wireless industry, Verizon is turning the business in a new direction. Using go90, its video-streaming business, AOL’s web properties and possibly Yahoo!, the company is hoping to collect enough web users to challenge Alphabet’s Google and Facebook in the mobile video and advertising market.

Those plans are off to a rocky start. Go90 hasn’t been a blockbuster with viewers. The mobile streaming service cut 155 staff late last week, with most affected working out of main go90 office in San Jose.

Fourth-quarter earnings, excluding some items, fell to 86 cents a share, the company said in a statement. That missed the 89-cent average of analysts’ estimates.

Sales were $32.3 billion, a 5.6 per cent decrease compared with $34.3 billion a year earlier. Analysts were projecting $32.07 billion.

Capital spending for 2017 will be between $16.8 billion to $17.5 billion

Full-year 2017 revenue will be “fairly consistent” with last year, the company said. – Bloomberg