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The telecom sector recorded a robust performance over the past year, highlighted by the impressive gains of the S&P Telecom Select Industry Index, which outperformed the broader S&P 500. The telecom sector index has added about 31.98% over the past year, as compared to the S&P 500’s gain of 22.93%.
The sector’s outlook remains optimistic, driven by optimistic AI forecasts. Additionally, interest rate cuts throughout 2024, coupled with expectations of further reductions driven by President Trump's push for lower rates also creates an optimistic outlook for the sector. Both AT&T and Verizon Communications Inc. reported relatively healthy fourth-quarter results.
Below, we highlight fourth-quarter earnings results of these companies.
Earnings in Detail
Verizon Communications
On Jan. 24, before market open, Verizon Communications VZ reported relatively healthy fourth-quarter results, with the bottom and top lines beating the Zacks Consensus Estimate.
Shares of the company has gained about 2.8% after the earnings release (as of Jan. 27). VZ has a Value Score of A, along with Zacks Rank #3 (Hold). This indicates that investors should hold on to VZ shares with a strong value bias.
The company recorded consolidated postpaid net additions of 1,413,000 in the quarter, along with retail postpaid phone net additions of 568,000.
Net income in the quarter was $5.11 billion or $1.18 per share, on a GAAP basis, against a net loss of $2.57 billion or a loss of $0.64 per share in the prior-year quarter. The significant improvement was primarily attributable to a pre-tax gain from special items of $477 million in the reported quarter and a goodwill impairment charge of $5.84 billion in the year-ago quarter.
Excluding non-recurring items, quarterly adjusted earnings came in at $1.10 per share compared with $1.08 in the prior-year quarter, beating the Zacks Consensus Estimate by a penny. For 2024, Verizon recorded a net income of $17.95 billion or $4.14 per share compared with $12.09 billion or $2.75 per share in 2023.
Total quarterly operating revenues improved by 1.6% to $35.68 billion, beating the Zacks Consensus Estimate of $35.4 billion, driven by growth in service revenues and higher wireless equipment revenues. For 2024, revenues improved 0.6% to $134.79 billion.
Total operating expenses decreased 18.2% year over year to $28.3 billion, while operating income improved to $7.42 billion.
For 2025, Verizon expects wireless service revenue growth of 2%-2.8%. and adjusted earnings to grow by 0-3%.
AT&T
On Jan. 27, before market open, AT&T T reported relatively healthy fourth-quarter 2024 results, with the bottom and top line beating the Zacks Consensus Estimate. AT&T recorded strong subscriber growth backed by a resilient business model and robust cash flow position, driven by a diligent execution of operational plans.