Verizon says earnings may "plateau" in 2016

REUTERS - Verizon Communications Inc said earnings may "plateau" next year as consumers are driving changes to its wireless business model and the telecom company forays into new markets such as mobile video amid stiff competition.

The largest U.S. wireless service provider's shares fell about 3 percent.

Analysts on average were expecting earnings of $3.94 per share in 2015 and $4.04 per share in 2016, according to Thomson Reuters I/B/E/S.

The company cut its revenue forecast for 2015 in July, hit by rising competition from smaller players such as T-Mobile US Inc, which offer heavy promotions and discounts on tablet and phone plans to lure subscribers.

Customers are increasingly moving away from traditional two-year contracts of subsidized phones and tablets to monthly installment plans that have lower service fees.

"Although consumer demand is disrupting Verizon's traditional business models, the company is transforming around the capabilities of its high-performing networks," Chief Executive Lowell McAdam said at an investor conference on Thursday.

The company said the planned sale of its wireline business to Frontier Communications Corp also weighed on the profit forecast by affecting year-over-year comparisons.

Verizon said in February that it would sell wireline assets to Frontier Communications for $10.54 billion to help fund wireless spectrum purchases. The deal is expected to close in the first half of 2016.

Verizon said it would also be impacted by the ramp-up of new business models for wireless video and "Internet of Things."

The company has been betting on "Internet of Things", the concept of connecting household devices to the Internet, to drive revenue and profit.

(Reporting by Devika Krishna Kumar in Bengaluru; Editing by Don Sebastian)