Verizon is paying an expensive price for dealing with the reality of a struggling wireline business.
The New York telecommunications giant disclosed on Wednesday that it would take a non-cash charge of $5.8 billion to write down the value of its Verizon Business Group in the fourth quarter. The move will be reflected in its fourth-quarter results, which are expected to come out on Tuesday.
The write-down comes after Verizon completed a five-year strategic review of its Business unit. The result were a series of financial projections that were lower than the prior five-year planning cycle.
The business, which provides data and voice services to businesses and government entities, has long struggled due to cord cutting from customers, which are increasingly shifting to wireless plans. Verizon also faced increased competition, including from burgeoning players such as T-Mobile, as well as rival AT&T.
Following the change, Verizon said the goodwill balance of the Business unit was $1.7 billion as of December 31.
In the third quarter, Verizon reported its Business unit saw revenue fall 4 percent to $7.5 billion, w ith operating income down 22.8% to $539 million. While its business wireless unit saw an increase in revenue, it wasn’t enough to offset the declines in its wireline segment.