Verizon Communications Inc (NYSE:VZ) disclosed a substantial $5.8 billion write-down in the value of its business services division, reflecting challenges in its enterprise operations.
This non-cash goodwill impairment charge, reported in a recent filing, is attributed to ongoing declines and pressures from competition and macroeconomic factors, leaving the business unit with a balance of $1.7 billion at the end of 2023.
The write-down is primarily linked to Verizon’s legacy wireline operations, which provide fixed-line communications services to businesses.
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This segment has experienced a significant decrease in demand, overshadowed by the growth of the company’s mobile business service, Bloomberg reports.
With a revenue decline of 8.1% through the third quarter, the wireline business will likely continue facing muted performance into 2024.
This move marks one of Verizon’s most significant write-downs in years, surpassing the $4.6 billion reduction in value of its AOL and Yahoo media acquisitions in 2018.
While the company’s wireline revenue has been declining, its wireless segment showed a 2.9% growth in the same quarter, along with robust net additions.
Verizon’s primary revenue source remains its consumer unit, encompassing mobile subscribers and broadband services.
Facing slow mobile growth and intense competition, the company has been concentrating on expanding this consumer segment.
Despite the challenges in its business services division, Verizon reported a total revenue of $33.3 billion for the third quarter. It will announce its full-year and fourth-quarter earnings on January 23.
Price Action: VZ shares traded lower by 0.50% at $39.10 on the last check Wednesday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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This article Verizon Reports $5.8B Write-Down in Business Services Division Due to Market Challenges originally appeared on Benzinga.com
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