Verizon Communications Inc. (VZ)  is the largest telecom operator in the U.S. providing high-end wireless and wireline services to individuals, business enterprises and government agencies.

Verizon provided a gloomy outlook for the fourth quarter of 2014. The U.S. telecom industry is facing severe competitive pressure at present. Aggressive pricing competition and higher promotional activities are likely to hurt the company’s financial results. In an effort to expand its customer base, the company is spending heavily on promotion and is also offering lucrative discounts. These strategies are likely to impact the company’s wireless segment EBITDA margin.

Nevertheless, management is hopeful that the company will generate healthy net customer addition for its high-end products. This may help the company to offset its losses due to cut-throat pricing strategy adopted by its competitors.

Verizon currently carries a Zacks Rank #3 (Hold). The company has generated a negative average earnings surprise of 1.02% in the previous four quarters. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: Verizon meets 4Q earnings. Our consensus earnings estimate called for an adjusted EPS of 71 cents and the company reported adjusted EPS was exactly the same. Investors should note that these figures take out stock option expenses.

Revenue: Verizon reported total revenue of $33,192 million surpassing our estimate by a significant $660 million.

Key States to Note: In the reported quarter, Verizon added 2 million retail postpaid connections. At year end, the company had 102.1 million retail postpaid connections, up 5.5% year over year. Retail postpaid average revenue per account (ARPA) increased 1% to $158.82 per month. In fourth-quarter 2014, Verizon also added 145,000 net new FiOS Internet connections and 116,000 net new FiOS Video connections.

Stock Price: At the time of writing, the stock price of Verizon was down nearly 1% (48 cents) in the per-market trade on NYSE. Clearly the initial reaction to the release is negative. We believe increased churn rate, higher customer acquisitions costs and provision for pension payment are near-term concerns for the investors.