Verizon Earnings: Slashing Capital Spending Acknowledges Network Leadership Is In the Past

Key Morningstar Metrics for Verizon Communications

• Fair Value Estimate: $53.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium

What We Thought of Verizon Communications’ Earnings

Verizon Communications VZ delivered improved customer metrics during the fourth quarter, adding 22% more postpaid wireless phone customers than the prior year. Wireless service revenue growth slowed to 1.0% from around 2.5% over the prior several quarters, reflecting competitive intensity in the market.

Why it matters: Verizon is radically shifting course. Rather than investing heavily in its network and charging premium prices, the firm has slashed its 2026 capital budget and eliminated thousands of jobs. This isn’t the shift toward competitive balance we’d anticipated, but it is functionally similar.

• Management has long said “business-as-usual” capital spending is in the range of $17.5 billion annually. Recently acquired Frontier has been spending about $3 billion annually to expand its networks. Verizon plans to spend $16.0 billion-$16.5 billion in 2026, a roughly $4.0 billion cut.
• Verizon plans to maintain the pace of fiber network expansion, which we estimate implies that wireless network spending will decline by more than $2 billion, more closely matching T-Mobile’s annual budget.

The bottom line: We maintain our $53 per share fair value estimate. We’ve cut our 2026 wireless service revenue estimate sharply (from 1.5% growth to flat), but we have also trimmed our capital spending expectations. We expect network investment to increase beyond 2026 but remain below our prior estimates.

• Verizon provided postpaid phone customer addition expectations for the first time (0.75-1.00 million in 2026). AT&T has consistently said it expects to add at least its “fair share” of industry growth, which has translated into about 1.6 million annually. T-Mobile now knows where both rivals stand.
• Our narrow moat ratings on Verizon, AT&T, and T-Mobile rest on our belief that competition will remain rational, as no firm can gain in the long run through efforts to price aggressively or invest heavily. Lowering industry capital intensity would improve cash flow for all firms.