TLDRs;
- Verizon stock drops after FCC changes phone-unlocking rule to limit fraud.
- Company lost nearly 785,000 devices last year due to criminal activity.
- Investors await Q4 earnings for cash flow and churn updates.
- CEO stock award revised, adding another focus for shareholder attention.
Verizon Communications Inc. (VZ) shares saw a modest decline on Monday as investors reacted to a recent Federal Communications Commission (FCC) update altering the company’s phone-unlocking policy.
The new rule change comes after Verizon highlighted significant financial losses tied to device fraud, prompting the FCC to revise the previously mandated 60-day unlock period following activation.
Verizon Communications Inc., VZ
Policy Shift Sparks Market Attention
The FCC described the adjustment as an effort to “close a loophole” exploited by criminal groups involved in phone theft and dark-web reselling. Verizon argued that its earlier unlock rule made stolen devices easier to sell, contributing to hundreds of millions of dollars in annual losses. The regulatory tweak aims to balance consumer flexibility with anti-fraud protections, but the market’s response was cautious.
On Monday, Verizon shares closed at $39.84, down 1.5%, with roughly 31.3 million shares traded. The drop roughly mirrored the company’s quarterly dividend of 69 cents per share, which will be disbursed on Feb. 2 to shareholders of record as of Jan. 12.
Analysts note that while the immediate financial impact appears limited, investors remain focused on how the policy change may influence subscriber behavior and overall revenue in the coming quarters.
Fraud Losses Under Scrutiny
Verizon reported losing approximately 784,703 devices to fraud across both prepaid and postpaid plans in 2023, costing the company hundreds of millions of dollars. Notably, the carrier experienced a 55% surge in fraud cases after TracFone’s lock period shifted from one year to Verizon’s 60-day policy, a move tied to FCC approval of TracFone’s acquisition.
Experts caution that relaxing the unlock rule may not fully resolve losses, as criminals may simply adapt their methods. The issue continues to highlight broader challenges for major telecom providers, who must navigate network investments, competitive promotions, and increasingly sophisticated fraud schemes.
Investor Focus on Upcoming Earnings
Wall Street attention now turns to Verizon’s fourth-quarter earnings report, scheduled for Jan. 30. Executives are expected to provide an update on cash flow, subscriber churn, and other operational metrics, with a webcast planned at 8 a.m. ET. Investors will closely watch how the recent FCC rule change might affect subscriber retention and overall revenue, especially amid the company’s efforts to manage rising operational costs.
Additionally, a recent SEC filing revealed that Verizon modified the terms of a $30 million stock-based performance award for CEO Daniel H. Schulman. The award will vest at the end of 2027, contingent on adjusted earnings per share and total shareholder return, factoring in both stock price changes and dividends.
Legal Challenges and Market Dynamics
Verizon also faces separate legal pressures, with Acer filing patent infringement lawsuits against Verizon, AT&T, and T-Mobile US. These legal developments add another layer of risk for investors already weighing fraud losses, network investments, and competitive pressures in the telecom sector.
Market watchers emphasize that while the FCC’s revised unlocking policy addresses some of Verizon’s fraud-related concerns, the long-term impact remains uncertain. Analysts note that broader industry trends, such as device security, customer churn, and evolving regulatory standards, will continue to shape Verizon’s performance in the months ahead.
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