Verizon, AT&T Might Face Pension Problems

A new report says Americas biggest telcos, Verizon and AT&T, could get themselves into trouble with their pension funds.

Bernstein analyst Craig Moffett expects the phone giants might have to make cash payments to the funds, according to Bloomberg. Thats because they are projecting bigger returns and fewer expenses than some of their fellow companies in the Standard & Poors 500 Index. Moffett says Verizon and AT&T account for 12 percent of the indexs pension gap, with the two biggest unfunded liabilities for retirees.

Moffetts ratings for Verizon and AT&T are underperform” and market perform,” respectively. He thinks the telcos might be getting overconfident, worry[ing] about the ability of these companies to continue to earn attractive returns,” he said. The analyst says the wireless market better continue to drive big numbers to keep pace with the companies pension obligations.

Moffett believes the carriers might have to make unexpected cash payments” to the funds, but a Verizon spokesman told Bloomberg that wont happen his year, and he cant predict beyond that. AT&T didnt comment for the article.

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