(Reuters) -Verizon Communications on Friday forecast annual free cash flow and profit below Wall Street estimates, as the major U.S. telecommunications company spends heavily to expand high-speed Internet services and attract customers in a saturated wireless market.
The company has been investing billions of dollars in C-band spectrum, prized for its balance of speed and range, to improve its 5G offering and overtake rivals AT&T (NYSE 🙂 and T-Mobile.
The spending is also key to reaching its goal of doubling its fixed wireless service subscribers to 9 million by 2028.
Shares of the New York-based company rose about 1% in premarket trading.
The 2025 forecast came after a strong Q4 for subscriber growth as wireless additions hit a 5-year high thanks to its customizable myPlan, Black Friday promotions, and trade-in offers for the powered iPhone 16 series. of artificial intelligence.
Verizon (NYSE 🙂 expects 2025 adjusted earnings to grow between 0% and 3%, with the midpoint below analyst estimates of 2.7% growth, according to data compiled by LSEG.
Free cash flow, a metric that helps investors determine dividends, is expected to be between $17.5 billion and $18.5 billion this year. The midpoint was below estimates of $18.44 billion, according to Visible Alpha.
With growth slowing in the U.S. telecommunications market, Verizon and its rivals have been betting on a surge in high-speed Internet services to attract subscribers. The company agreed to buy Frontier Communications (OTC:) in a $20 billion deal last year.
In October, it projected 2025 capital spending of between $17.5 billion and $18.5 billion, compared with $17.1 billion in 2024.
In the fourth quarter, Verizon added 568,000 monthly bill-paying wireless subscribers, beating FactSet estimates of 487,500 additions. It benefited from price increases implemented in 2024 and the popularity of myPlan, which comes with streaming benefits including Disney+, Hulu and Max for an additional cost.
Wireless equipment revenue grew about 1% to $7.5 billion in the fourth quarter thanks to higher device upgrade volumes. Total revenue was $35.7 billion, slightly above estimates of $35.32 billion.