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Verizon’s shares spike on Q4 subscriber adds

 

Wednesday, January 24, 2024

Today’s headlines

What’s happening: Shares of Verizon Communications gained on Tuesday, after the company released results for its fourth quarter.

What happened: The telecom major recorded its highest quarterly subscriber additions in almost two years.

Verizon also issued a strong profit guidance for the year on upbeat demand for its wireless plans.

How were the results: The New-York based company reported a slight decline in sales in the last three months of 2023.

  • Sales fell 0.3% year-over-year to $35.13 billion, topping the consensus estimates of $34.64 billion.
  • Adjusted earnings came in at $1.08 per share, beating Wall Street expectations of $1.07 per share.

Why it matters: Verizon had been lagging its wireless rivals in subscriber growth for years. However, its fourth-quarter results benefited from Black Friday promotions and Apple’s iPhone 15 release, which provided a boost to mobile upgrade activity.

Last March Verizon had named Sowmyanarayan Sampath as CEO of the consumer division, which accounted for 76% of the company’s overall revenues in the fourth quarter. The unit reported 318,000 net mobile subscriber additions for the quarter, after recording a decline in subscribers for three consecutive quarters. The figure also topped market estimates of 95,900 net adds.

Verizon added a net of 449,000 monthly bill-paying wireless phone subscribers last quarter, topping expectations of 223,800. Total wireless service revenues grew by 3.2% year-over-year to $19.4 billion, driven by price hikes.

Verizon’s business group revenue fell 3.6% year-over-year to $7.6 billion, while consumer revenue increased by 0.7% year-over-year to $27.0 billion during the quarter.

Consumer wireless retail postpaid churn came in at 1.08%, while wireless retail postpaid phone churn was 0.88% during the quarter.

Verizon’s consumer segment EBITDA margin expanded by 60 bps, amid growth in service revenues and lower upgrade volumes, while the EBITDA margin for the business segment came in flat at 21.1%.

Free cash flows grew to $18.7 billion in 2023, from $14.1 billion in the earlier year.

Management guided to 2.0%-3.5% growth in wireless service revenues and adjusted earnings of $4.50-$4.70 per share for 2024.

How shares responded: Verizon’s shares climbed 6.7% to close at $42.23 on Tuesday, following the release of quarterly results. The stock has gained around 13% over the past month.

What to watch: Investors will continue monitoring the company’s subscriber numbers, which are expected to significantly impact its overall results in the coming period.

The markets today

The Canadian dollar will be in focus today ahead of the Bank of Canada’s interest rate decision

Context: The CAD/USD forex pair moved higher on Tuesday, despite a decline in crude oil prices.

Details: The Bank of Canada is scheduled to announce its policy decision today and is widely expected to keep its key overnight rate unchanged at a 22-year high of 5%.

The BoC will also provide an update to its projections on inflation and economic growth. Markets could begin speculating on earlier rate cuts in case the central bank reduces its economic growth estimates.

Data released on Tuesday showed new home prices in Canada coming in unchanged in December from a 0.2% decline in November.

Weakness in price for crude oil, one of Canada’s major exports, limited the gains for the loonie. WTI crude oil prices fell 39 cents to settle at $74.37 per barrel on Tuesday.

Strength in the US dollar also exerted some pressure on the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.3% at 103.62 on Tuesday.

The CAD/USD forex pair rose around 0.2% to 1.3462 on Tuesday. The S&P/TSX Composite Index gained 0.53% to settle at 21,034.59, extending gains for the fourth session.

What to watch: Investors await the Bank of Canada’s interest rate decision today. The country’s central bank is expected to keep rates unchanged for the fourth straight meeting.

Other Markets: US trading indices closed mixed on Tuesday, with the S&P 500 and Nasdaq 100 up by 0.29% and 0.43%, respectively, and the Dow Jones index down by 0.25%.

The news shaping the markets

Ukraine’s Minister of Foreign Affairs, Dmytro Kuleba, said Western allies were not providing enough ammunition for its ongoing war with Russia. The news sent the safe-haven US dollar index lower in forex trading this morning.


Australia’s Westpac-Melbourne Institute Leading Economic Index declined to 0.01% in December, from 0.1% in November, exerting pressure on the AUD/USD forex pair.


Japan’s au Jibun Bank services PMI rose to 52.7 in January, from a reading of 51.5 in December. The country’s service sector expanding for the 17th straight month sent the JPY/USD pair higher in forex trading this morning.


Argentina’s economic activity estimator fell by 0.9% year-over-year in November, compared to a 0.6% increase in the prior month, which exerted pressure on the ARS/USD forex pair.


New Zealand’s annual inflation rate slowed to 4.7% in the fourth quarter, from 5.6% in the prior quarter, which sent the NZD/USD pair lower in forex trading this morning.

What else to watch today

South Africa’s consumer price index, France’s composite PMI, manufacturing PMI and services PMI, Germany’s composite PMI, manufacturing PMI and services PMI, Eurozone’s composite PMI, manufacturing PMI and services PMI, UK’s composite PMI, manufacturing PMI, services PMI, CBI’s quarterly gauge of manufacturing optimism and CBI industrial trends orders, India’s money supply M3, Mexico’s economic activity and mid-month inflation rate, US MBA mortgage applications, composite PMI, manufacturing PMI, services PMI, crude oil inventories, gasoline stocks and distillate inventories, Russia’s producer price inflation, as well as Argentina’s retail sales.


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