Verizon revenue climbs on sturdy mobile growth
By Sinead Carew
NEW YORK (Reuters) - Verizon Communications Inc reported faster subscriber growth and stronger profits than expected at its Verizon Wireless venture with Vodafone Group Plc, easing some concerns about intensifying competition if only temporarily.
Investors are worried market leader Verizon Wireless, which is paying $130 billion for Vodafone's 45 percent share in their venture, will cut prices as discounts from No. 4 U.S. mobile service T-Mobile U.S. have drawn responses from No. 2 service AT&T Inc and No. 3 ranked Sprint Corp.
While investors still worry about competition in 2014, Verizon's ability to beat profit and subscriber estimates for the fourth quarter show that it did not overpay to keep customers from switching to rivals so far at least, analysts said.
Verizon, which also announced a small acquisition of the media assets of Intel Corp on Tuesday, saw its shares fall more than 2 percent, despite the strong results.
Some investors appeared to be selling their Verizon shares to hedge their investments ahead of the Vodafone deal, which is expected to close February 21, according to Wells Fargo analyst Jennifer Fritzsche. She said that others, while happy with the fourth quarter, sold from frustration that Verizon has to wait until after the deal close to set financial targets for 2014.
"Nothing in this quarter's results made me worry they weren't holding their own versus the competition," Fritzsche said. But she noted that investors may have wanted more reassurance Verizon will not get roped into a price war.
Chief Financial Officer Fran Shammo said Verizon would respond to competitive pressure when it needs to, and that it tends to set its pricing agenda for the year in January and February, but declined to provide further details.
"What he said adds fire to the worry rather than calming it," Fritzsche said. Continued...