Like competitor AT&T, Verizon Communications took a hefty charge related to the new health care reform law and it saw an unexpected slowdown in business.
The New Jersey-based telecom giant saw its first quarter profit fall to $2.28 billion, or 14 cents per share, from $3.21 billion, or 58 cents per share, in the same quarter last year.
The company disclosed that it took a non-cash charge of $970 million due to tax breaks it will lose under the new health care law. Excluding that and other one-time items, Verizon said it earned 56 cents per share in line with analysts’ expectations.
But new customers were harder to find as the ownership level for cell phone customers is reaching a saturation point in the U.S. Verizon reported fewer net new customers in the quarter.
However, revenue rose 1.2 percent to $26.92 billion in a year-over-year comparison boosted by more spending from wireless customers who are adopting higher-cost data plans.
Alltel Transaction Nears Completion
Look for more action in the next few days as the final regulatory hurdles are cleared in the divestiture of former Alltel assets by Verizon Wireless. When Verizon bought Alltel for $28.1 billion in January 2009, it was forced to sell a portion of its markets to other wireless carriers in order to preserve competition.
About 20% of 105 markets were sold to Atlantic Tele-Network Inc. (ATNI), parent company to Little Rock-based Allied Wireless Communications. The remaining divestiture markets were sold to AT&T.
Trade pub Wireless Week reports that the Federal Communications Commission has approved the ATNI sale, which was also approved by the Dept. of Justice two weeks ago. That pretty much finalizes that portion of the transaction.
The DOJ and FCC sign-offs on the AT&T portion of the deal are rumored to be pending.