Verizon Communications Inc. has continued to face pressures in its business wireline operations, and it said Wednesday that it will be taking a roughly $5.8 billion impairment charge related to this part of the business.
The noncash goodwill impairment charge for the fourth quarter comes after Verizon
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finished a five-year planning review of its business reporting segment, which yielded lower financial projections than the prior five-year review did.
Verizon pointed out in a Wednesday filing that it saw “secular declines, as well as continuing competitive and macroeconomic pressure, in wireline revenue across its customer groups” during 2023.
When Verizon reports results, it breaks them up across its business and consumer units. Within those segments, the company offers both wireless service and wireline service, with the latter including legacy voice and data services.
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“The impairment test determined that the fair value of the Business reporting unit was less than its carrying value,” Verizon said in the filing with the Securities and Exchange Commission.
Shares of Verizon were off 0.8% in morning trading Wednesday.
MoffettNathanson analyst Craig Moffett recently wrote that business wireline generally is “a badly challenged segment,” adding that he and his team “don’t expect things here to get better.” He estimates that business wireline revenues at Verizon fell 4.9% on a year-over-year basis during the latest quarter when excluding impacts from the Universal Service Fund, a program meant to make connectivity services more affordable.
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Chief Financial Officer Tony Skiadas said on Verizon’s last earnings call that the company was “being very disciplined in business wireline by de-emphasizing low-margin deals.”
He added at a Morgan Stanley conference in November that Verizon was “still in the middle innings on the business wireline part of the equation … as customers continue to transition their services off of legacy products.” He noted that customers were moving more into Verizon’s mobility and fixed-wireless-access services, a trend he said he hoped would persist.
Verizon will post fourth-quarter results in the morning on Jan. 23.
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