We know two major things from Verizon’s latest spending forecast: First, the company got a big tax break this year. Second, it won’t be using its newfound savings to upgrade its broadband networks.
Verizon will receive $3.5 to $4 billion from tax reform along with its operating cash flow, which totaled $25.3 billion in 2017. The tax savings boosts earnings by 10 cents a share for the full year, according to CNBC. The amount is a result of the tax overhaul bill signed into law by President Donald Trump last year, according to the New York Times.
The announcement comes after Federal Communications Commission chairman and former Verizon lawyer Ajit Pai claimed repealing net neutrality rules will boost network investment. But Verizon’s network spending won’t change much this year. According to Ars Technica, the company will instead primarily use the savings to strengthen Verizon’s balance sheet—a snapshot of the company’s assets and debts.
Verizon will be doing some good by passing a portion of tax savings onto employees. The telecom giant announced 50 shares of restricted stock will go to full-time workers who aren’t executives, according to CNN.
But some are saying the stock shares are just a drop in the bucket compared to the benefits Verizon will be reaping without making real efforts to improve its networks. Companies including AT&T, American Airlines, Bank of America, and Comcast promised their workers $1,000 bonuses before Verizon, so the telecom giant seems to be just following suit.
today in shocking trickle down news https://t.co/YeAo0A23TC
— Pumpkin Fright👨⚕️🍕 (@DrPizza) January 24, 2018
Verizon CEO Lowell McAdam said on CNBC’s Fast Money: “What tax reform allows is for us to go hard when we get the results we’re expecting.”
Some Twitter users are debating what results the company is actually trying to get.
They are going to pay off debt and buy back stock. Anyone who thought otherwise doesn’t understand anything about how and when these companies spend.
— SirIDropMyPhoneALot (@dystoopia) January 24, 2018
McAdams said that “employees will further share in the company’s success,” but unfortunately for consumers, it’s clear that improving network connection is not high on Verizon’s to-do list this year. So for consumers: Happy Wi-Fi hunting.
