Verizon Communications

Verizon announced new fees on customers after warning investors about a 40
year high in inflation

In May 2022, Verizon announced new fees for wireless and business customers.“Many Verizon customers are going to see a few extra dollars on their next phone bill. Starting in June, Verizon is raising the administrative fee it charges postpaid customers by $1.35, bringing it up to $3.30 per voice line. The fee increase only applies to voice lines — if you have a data-only line for a tablet, for example, there’s no change….The company is also adding a new “Economic Adjustment Charge” to some business accounts starting June 16th. That’s a $2.20 monthly charge per line for each smartphone and data device and 98 cents for each basic phone and tablet on an account.” (Verge, 5/16/2022)

Verizon’s CEO: “this is high in 40 years on inflation. So we are planning for all scenarios. We have plans to be prepared for what it takes. So that will, of course, include different type of cost adjustments, but also looking into what we can do with pricing.” “HANS VESTBERG, CEO: Thanks, Phil. I’ll start with the overall macro, and maybe Matt will fill in a little bit about the gross adds, the other question you had. On the inflation, I mean as Matt said in the prepared remarks, I mean we haven’t seen so much impact so far of it. But of course, this is high in 40 years on inflation. So we are planning for all scenarios. We have plans to be prepared for what it takes. So that will, of course, include different type of cost adjustments, but also looking into what we can do with pricing. But again, we don’t know how this will impact us. But clearly, these levels of inflation, we have never seen before in the wireless industry. So of course, that also — the measurements need to be thought through in a good way. And we are doing that, and we have already plans ready for it. So we’re going to see what’s going to happen. But clearly, we are in a moment in the economy where we really don’t know how this is going to impact finally. But the levels are, of course, very high when it comes to inflation. Matt?” (Verizon Communications Q1 2022 Earnings Call, 4/22/2022)

Verizon’s CFO: “we’ll continue to look at the pricing proposition and maximize both the value for customers, but also the opportunity for us as well.” “MATT ELLIS, CFO: Yes. So just a couple of things to add on that. So Simon, as you think about the volumes we had in the first quarter, remember, that’s not a full quarter of C-Band. That came on in middle of January. And of course, you have that time period where the sales teams are building up the sales motion of selling a new product. So I certainly think that we can continue to see good numbers there as we go through the rest of the year, and we’re just getting started with what you saw, the 194,000 in the first quarter. And from a pricing standpoint, as Hans said, it’s — you should think about it that, that price point you mentioned is for a customer who’s also taking wireless products from us as well. On a stand-alone basis, it’s higher priced. But we’ll continue to look at the pricing proposition and maximize both the value for customers, but also the opportunity for us as well.” (Verizon Communications Q1 2022 Earnings Call, 4/22/2022)

Verizon’s CEO did specify that labor costs had yet to become a significant impact on their bottom line 

Verizon’s CEO said that labor related costs “have not had a significant impact on our overall results to date” but could drive more expenses later on. “HANS VESTBERG, CEO: Lastly, let’s move to guidance for the remainder of the year. I want to provide some additional detail around our view of the macro environment in which we operate and give context around our guidance for 2022. We saw inflationary pressures building towards the end of the first quarter and expect those to continue given the current environment. The major areas of exposure for us are energy-related costs for our network operations and transportation as well as labor-related costs, including both our direct workforce and third parties. While these items have not had a significant impact on our overall results to date, they represent a meaningful portion of our direct cost structure and have the potential to drive additional expense pressures throughout the rest of the year. We also believe that the inflation we have seen throughout the economy may alter both the consumer and business landscape in which we compete. It is too early to predict how this changed landscape may impact our near-term results or how long it will last, but we are confident that the strategy we have put in place will allow us to achieve our long-term growth plans.” (Verizon Communications Q1 2022 Earnings Call, 4/22/2022)