Verizon lost significantly more mobile subscribers than market watchers anticipated during the first quarter, with the telecommunications giant pointing to federal spending reductions as a key factor behind the disappointing numbers.
The company reported a loss of 289,000 postpaid phone subscribers in its Tuesday earnings release, far exceeding analyst expectations. The figure represents a significant reversal from the 568,000 subscribers added in the fourth quarter and more than double the decline recorded at the same point last year. Analysts surveyed by Bloomberg had expected a much smaller decline of approximately 185,000 subscribers.
During the company’s earnings call, Hans Vestberg, Verizon’s chairman and CEO, specifically identified reduced federal agency spending as a contributing factor to the subscriber exodus. Vestberg said he “saw some impact of the new government and their efficiency work,” referring to budget-tightening measures implemented since the new administration took office in January.
The losses represent a stark contrast to Verizon’s performance just months earlier. In late January, the company had reported strong customer growth for the end of 2024, highlighting significant gains in its fixed wireless access and broadband businesses.
Despite the phone subscriber losses, Verizon’s quarterly earnings still managed to exceed analysts’ expectations. The company reported adjusted earnings per share of $1.19 on revenue of $33.49 billion, outperforming forecasts on both metrics. These financial results initially helped buffer negative market reaction to the subscriber numbers.
The telecom giant’s stock fluctuated on Tuesday as investors processed the mixed report. The company has faced intensifying competitive pressure in recent years from rivals like T-Mobile, which has aggressively expanded its network capabilities and customer offerings.
This subscriber decline occurs as the new administration moves to slash thousands of jobs across federal agencies. While Vestberg did not specify which particular budget cuts had affected Verizon’s business, the White House Department of Government Efficiency Office has targeted agencies across the federal government, cutting employee positions and terminating some public-private contracts. Several company executives have anticipated these cuts would impact their bottom lines.
The telecommunications sector has historically maintained stable revenue streams through government contracts, making any reduction in federal spending particularly noticeable in quarterly performance metrics. Verizon’s attribution of subscriber losses to government spending cuts may signal broader impacts across industries that rely heavily on federal contracts.
Despite these challenges, Verizon affirmed its full-year guidance, expressing confidence in meeting its annual financial goals. However, the company noted that current forecasts do not account for potential impacts from “the evolving tariff environment,” suggesting further uncertainty in the telecom market for the months ahead.