January 24, 2023, 11:10 AM EST
While the carrier’s consumer business has struggled in recent quarters, Verizon’s Business segment, led by SMB growth, helped the company close out its fiscal 2022 year on a strong note.
Verizon is leaning on its strength in its core networking capabilities and its rising Business and SMB segments as it focuses on its wireless strategy and growing number of subscribers.
The telecom titan’s final quarter of fiscal 2022 (ended Dec. 31) saw gains in Business mobility after Verizon struggled to win over customers — namely, consumers and enterprises — due to macroeconomic pressures throughout the year.
“Network quality is the foundation of our strategy and growth … Although we have more work to do, I’m encouraged by the improvements and expect to build on the momentum in 2023,” Verizon CEO Hans Vestberg (pictured) said during the carrier’s earnings call Tuesday morning.
The carrier has been taking actions to more efficiently run its business. In October it revealed the creation of the Verizon Global Services (VGS) organization, which the carrier said would streamline shared services teams to free up more capital to the tune of $2 billion to $3 billion so Verizon could further invest in its core networking and telecom services. Later in December, Vestberg took over direct control of the Verizon Consumer Unit from Manon Brouillette after she served less than a year in the role in an effort to return the unit to growth as it continued to lose consumer subscribers to AT&T and T-Mobile.
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Verizon during its fiscal 2022 Q4 posted total broadband net addition of 416,000 customers, marking the best total broadband performance in more than a decade, which the carrier said reflected a strong demand for Fios and fixed wireless products.
Vestberg said Verizon is looking to grow its fixed wireless access business. The company hopes to gain up to 5 million fixed wireless access customers by 2025, especially as more businesses consider private wireless and 5G connectivity options and edge computing, he said.
“We’re making the appropriate investments to ensure such services provide a meaningful contribution to future growth in the years ahead, which differentiates us in the industry,” Vestberg said.
Verizon Business reported 455,000 wireless retail postpaid net additions in the third quarter of 2022, including 176,000 phone net additions. The results marked the six consecutive quarter that Business reported more than 150,000 postpaid phone net additions.
Business wireless service revenue was $3.3 billion, an increase of 4.7 percent year over year. Full-year 2022 Business wireless service revenue was $12.8 billion, an increase of 3.9 percent compared to 2021.
Total operating revenue for Verizon Business, which includes the company’s Global Enterprise Solutions, SMB, public sector and wholesale businesses, climbed 1.2 percent with revenue of $7.90 billion during the fourth quarter compared with $7.81 billion in the year-ago quarter.
Global Enterprise Solutions revenue, which has felt the brunt of the financial fallout during the pandemic, continued to decline, falling 4.2 percent to $2.43 billion in revenue in fourth-quarter 2022 compared with $2.53 billion a year ago.
SMB revenue, on the other hand, continued to grow, increasing 5.5 percent during the quarter to $3.28 billion from $3.11 billion in the year-ago period. Public sector grew by a modest 0.9 percent to $1.53 billion during the quarter compared with $1.52 billion last year. Wholesale revenue grew by 1.7 percent to $662 million during the fourth quarter of 2022 from $651 million one year before.
Verizon reported operating revenue of $35.25 billion for the fourth quarter, up 3.5 percent from $34.07 billion in the fourth quarter of 2021. The carrier’s net income climbed 41.4 percent in the quarter to $60.70 billion compared with $4.73 billion during the same period last year. Verizon reported diluted earnings per share of $1.56 in the fourth quarter of 2022, a 40.5 percent increase compared with $1.11 in Q4 2021.
The Basking Ridge, N.J.-based carrier bested Wall Street’s expectations of $35.09 billion in revenue during the final quarter of the year. However, Verizon’s expectation that of adjusted earnings per share of $4.55 to $4.85 for full-year 2023 came in lower than Wall Street’s expectation of $4.96, which affected its stock price on Tuesday.
For all of 2022, Verizon posted total operating revenues of $136.84 billion, up 2.4 percent from $133.61 billion in 2021. The carrier reported net income of $21.75 billion for the year, down 3.8 percent from $22.62 billion in 2021. Diluted earnings per share were $5.06 in 2022, down 4.9 percent from $5.32 one year earlier.
Verizon’s stock dipped 1.4 percent on Tuesday following the release of its fiscal Q4 2022 earnings and 2023 guidance.