Verizon raised the lower end of its annual profit forecast due to strong demand for premium plans and the benefits of the Trump administration's tax reform. The company's shares rose after exceeding Wall Street estimates for sales and profit, driven by increased wireless service revenue. To combat competition, Verizon has introduced price-lock promotions and broadband-wireless bundles. The tax reform is expected to boost free cash flow significantly, allowing revisions in financial expectations. However, a decline in wireless subscribers contrasts with overall positive growth metrics.
Verizon raised its annual profit forecast, citing strong demand for premium plans and benefits from tax law changes, leading to a notable rise in shares.
The introduction of price-lock promotions and broadband-wireless bundles aims to retain users amid increasing competition from AT&T, T-Mobile, Comcast, and Charter.
The tax reform that allows immediate write-off of new equipment costs is expected to increase free cash flow by $1.5 billion to $2 billion this year.
Despite the positive financial outlook, Verizon experienced a drop of 9,000 bill-paying wireless subscribers, countering expectations of subscriber growth.
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