U.S. telecom giant Verizon revealed that its fourth-quarter results are expected to be impacted by a $5.8 billion charge. The charges are attributed to a write-down in the value of its unit serving businesses and government clients, primarily due to a decline in wireline revenue.
The decision to incur these charges follows a five-year review of the unit, which uncovered financial projections significantly lower than those anticipated in the previous planning cycle. This information was disclosed in a regulatory filing by the company.
Verizon’s wireline business, encompassing legacy voice and data services, has been grappling with intensified competition, economic uncertainties, and a broader industry shift towards wireless services. The company acknowledged that these factors have put considerable pressure on the unit.
As of December 31, following the write-down, the goodwill balance of the affected unit stands at $1.7 billion, according to Verizon.
During the third quarter, Verizon Business witnessed a 4 percent decline in revenue, primarily attributed to reduced wireline and wireless equipment revenue. It’s noteworthy that this unit contributes to more than a fifth of the company’s overall revenue.
Verizon will reveal its fourth-quarter results on January 23, providing with an overview of the financial impact and potential strategic adjustments in response to the challenges faced by its business and government-focused unit.