When companies report earnings, it’s easy to get excited about top-line revenue. But in a higher interest-rate world, don’t miss what may be buried deeper in the balance sheet.

Post-COVID, borrowing costs hit historic lows. Companies rushed to lock in cheap cash. They sold record amounts of corporate bonds to investors. At the time, it made perfect sense.

Telecom giants like Verizon Communications and Charter Communications are good examples. They are not in financial distress. They are not zombie companies struggling to survive. Both generate massive, utility-like cash flows from millions of paying subscribers.

However, they operate with high leverage. They borrow heavily to fund spectrum purchases, network upgrades, and capital returns.

Now the cycle is turning. Older, cheaper bonds must be refinanced at today’s higher interest rates. As borrowing costs rise, a larger share of profits goes to lenders.

Verizon is a telecom staple. Investors view it as a safe haven. They see steady cash from millions of monthly phone bills. They see a reliable dividend.

Headline numbers for 2025 even back that up. Verizon generated $138 billion in revenue, only modestly higher than the $134–$137 billion range it has posted for the last five years.

Yet interest expense has surged. Verizon now pays $6.7 billion per year in interest, nearly double the $3.4 billion it paid in 2021.

Profits are still there. Dividends are still being paid. However, even stable businesses must pay their lenders first.

Verizon also reported $29.3 billion in operating income. That means more than one out of every five operating dollars now goes to interest payments.

If refinancing costs rise, that share grows. Less cash remains for dividends, buybacks, or new investment.

Cable giant Charter Communications tells a similar story, but with an even heavier balance sheet.

Top-line numbers again look solid. Charter generated $54.8 billion in revenue in 2025, consistent with the $52–$55 billion range it has reported since 2021.

Yet it carries $95 billion in long-term debt, built up from major network investment and aggressive share buybacks.

Much of this leverage traces back to its 2016 merger-acquisition of Time Warner Cable and Bright House Networks. The deal built the company’s national broadband footprint but also loaded the balance sheet with debt that has largely been refinanced rather than paid down.

In addition, Charter has spent years shrinking its share count. Outstanding shares have fallen from 225 million in 2018 to 126 million today. Buybacks can boost earnings per share. But when funded with borrowed money, that capital has a cost.

Charter is already refinancing in this higher-rate environment. In January, the company issued $3.0 billion in new senior notes at interest rates over 7.0%, compared with borrowing costs closer to 3–5% during the cheap-money years.

Interest expenses hit $5.0 billion last year, while operating income totaled $12.9 billion. This means nearly 40% of operating profit now goes to servicing debt.

The business is steady. The revenue is predictable. But the filings show how much of that earnings power belongs to lenders.

Debt usually has a claim on profits before shareholders do. When interest rates rise, that claim becomes more expensive.

Revenue shows how big a company is. The balance sheet shows who really owns the earnings.

Disclaimer: This article should not be considered investment advice. Always review a company's full SEC filings before making portfolio decisions.