Stronger Premium Plan Demand and Tax Reform Drive Outlook
Verizon has raised the lower end of its annual profit forecast, citing stronger-than-expected demand for premium wireless plans and a significant financial lift from recent U.S. tax reforms. The company now expects adjusted 2025 profit to grow between 1% and 3%, up from its prior estimate of 0% to 3%.
Shares of Verizon rose 3.5% on Monday following the announcement. The company reported revenue of $34.5 billion for the June quarter, surpassing Wall Street’s estimate of $33.74 billion. Adjusted earnings per share came in at $1.22, also beating projections.
Cash Flow Surges on Equipment Deduction Rules
A key driver of Verizon’s improved outlook is the Trump administration’s new tax legislation, which allows businesses to immediately deduct the full cost of qualified new equipment. CFO Tony Skiadas said the rule change will add between $1.5 billion and $2 billion to the company’s free cash flow in 2025.
This has prompted Verizon to raise its annual free cash flow forecast to a range of $19.5 billion to $20.5 billion, up from the previous $17.5 billion to $18.5 billion. Analysts at Wells Fargo noted earlier this month that Verizon pays the highest cash taxes among U.S. telecom firms and is therefore poised to benefit significantly from the reform.
Wireless Growth Mixed Amid Subscriber Pressures
Wireless service revenue rose 2.2% in the second quarter, contributing to the earnings beat. However, Verizon surprised analysts by reporting a net loss of 9,000 monthly bill-paying wireless subscribers. Analysts had expected a gain of 13,000. The drop follows subscriber churn linked to January price hikes.
To retain users and compete with AT&T, T-Mobile, Comcast, and Charter, Verizon has launched aggressive price-lock promotions and bundled broadband-wireless offers. Despite the subscriber dip, the company’s strategy appears to be stabilizing wireless revenue growth in a competitive environment.
Broadband Push Accelerates with Frontier Acquisition
Verizon’s strategy to pivot toward fiber-optic broadband is bearing fruit. The company recorded 293,000 broadband net additions in the second quarter. In May, it secured regulatory approval for its $20 billion acquisition of Frontier, a major fiber-optic internet provider. Verizon agreed to end its diversity programs as part of the deal.
The acquisition is expected to bolster Verizon’s broadband footprint and improve service capabilities as demand for high-speed internet continues to rise. This focus on infrastructure expansion is aligned with the telecom sector’s push to meet surging data consumption across consumer and enterprise markets.
