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SECURITY: VZ (Common)
EXCHANGE: New York Stock Exchange CURRENCY: US Dollar
Verizon Communications
Inc. (NYSE:VZ), a New York-based Dow 30 company, is a leader in delivering
broadband and other wireline and wireless communication innovations to
mass market, business, government and wholesale customers. Verizon
Wireless operates America's most reliable wireless network, serving nearly
57 million customers nationwide. Verizon's Wireline operations include
Verizon Business, which operates one of the most expansive wholly-owned
global IP networks, and Verizon Telecom, which is deploying the nation's
most advanced fiber-optic network to deliver the benefits of converged
communications, information and entertainment services to customers
http://www22.verizon.com/
Strong
Sales of Verizon Wireless Services, FiOS Internet and TV, and Strategic
Business Services; Continued Solid Revenue and Cash Flow Growth
3Q
2008 HIGHLIGHTS
Consolidated
Results
59 cents in diluted EPS and 66 cents in adjusted EPS (non-GAAP), compared
with 3Q 2007 diluted EPS of 44 cents reported and 63 cents adjusted.
$24.8 billion in quarterly revenues -- adjusted growth of 5.4 percent (non-GAAP).
Wireless
1.5 million organic net customer additions, all retail (non-wholesale);
2.1 million total retail net additions including customers from acquisitions.
70.8 million total customers; 68.8 million retail customers, up 11.3 percent.
Industry-leading low churn -- 1.33 percent total churn and 1.03 percent
retail post-paid churn.
12.5 percent increase in total revenues; data revenues up 42.5 percent;
44.2 percent EBITDA margin on service revenues (non-GAAP).
Wireline
233,000 net new FiOS TV customers and 225,000 net new FiOS Internet customers.
12.8 percent increase in consumer ARPU in legacy telecom markets; 45.3
percent growth in consumer broadband and video revenues.
15.4 percent increase in Verizon Business strategic services revenues.
8th consecutive quarter of year-over-year pro-forma Verizon Business revenue
growth.
Note:
Comparisons are year over year unless otherwise noted. See the accompanying
schedules and www.verizon.com/investor for reconciliations to generally
accepted accounting principles (GAAP) for non-GAAP financial measures cited
in this news release. Discontinued operations relate to the disposition
of Telecomunicaciones de Puerto Rico, Inc. that was completed on March
30, 2007. Reclassifications of prior-period amounts have been made,
where appropriate, to reflect comparable operating results for the spinoff
of the Wireline segment's non-strategic local exchange and related business
assets in Maine, New Hampshire and Vermont in the first quarter of 2008.
Verizon
Communications Inc. (NYSE:VZ) today reported strong results in the third
quarter 2008, supported by Verizon Wireless' continued strong performance,
accelerating numbers of new FiOS customers, and continued increased sales
of strategic business services.
Verizon
reported 59 cents in diluted earnings per share (EPS) in the third quarter
2008, compared with 44 cents per share in the third quarter 2007.
On
an adjusted basis (non-GAAP), third-quarter 2008 earnings were 66 cents
per share, compared with 63 cents per share in the third quarter 2007.
Continued
Growth in 3Q
"Verizon
again reported solid revenue, earnings and cash flow growth this quarter,"
said Chairman and CEO Ivan Seidenberg. "The strategic investments
we made over the past few years continue to drive growth in wireless, enterprise,
broadband and video.
"Although
the capital markets and economy may present challenges, we will continue
to execute on our business plan and invest for future growth," he said.
"We increased the dividend 7 percent this quarter, reflecting confidence
in continued growth opportunities. Verizon has a great set of assets
and an employee team focused on creating value for our customers and shareholders."
Strong
Revenues and Cash Flows
Verizon's
total operating revenues grew 4.1 percent to $24.8 billion in the third
quarter 2008, from $23.8 billion in the third quarter 2007. This
is an increase of 5.4 percent when adjusted for the spinoff of non-strategic
local exchange and related Wireline business assets earlier this year (non-GAAP).
Total operating expenses increased 5.2 percent to $20.6 billion, or 5.4
percent on an adjusted basis, comparing third-quarter 2008 with third-quarter
2007.
Cash
flows from continuing operations were $19.1 billion through the first nine
months of 2008, up 5.9 percent compared with the same period last year.
Capital expenditures were $12.6 billion through the first nine months of
2008, down more than $200 million over the same period last year.
Verizon is on track to deliver lower overall capital spending in 2008,
compared with 2007. Total debt was $44.8 billion, compared with $43.1
billion at the end of the second quarter 2008.
Details
of 3Q Adjustments
Adjusted
earnings in the third quarter 2008 excluded $164 million after-tax, or
6 cents per share, for severance, pension and benefit charges recognized
primarily as a result of workforce reductions; and $32 million after-tax,
or 1 cent per share, for merger integration costs. Adjusted earnings
in the third quarter 2007 excluded charges of 19 cents per share in special
items: 16 cents per share for international taxes, 2 cents per share for
costs related to the spinoff of non-strategic Wireline assets and 1 cent
per share for merger integration costs.
Wireless
Continues Strong and Steady Growth
Verizon
Wireless continued its uninterrupted record of industry-leading customer
loyalty and profitability. In the third quarter:
Wireless retail gross customer additions were strong, up 5.3 percent over
the prior year.
Organic growth (growth from sources other than acquisitions) was 1.5 million
retail net customer additions, essentially all post-paid.
Total growth was 2.1 million retail net additions. This included
630,000 retail customers from the Rural Cellular Corp. acquisition, and
Verizon expects to have a net loss of approximately 120,000 of these customers
under an exchange agreement with another carrier. Verizon Wireless
had 70.8 million total customers at the end of the quarter.
The company continues to have a high-quality customer base, with 68.8 million
retail wireless customers -- the most of any wireless brand in the U.S.
Verizon Wireless had industry-leading (lowest) total churn for the 16th
consecutive quarter, at 1.33 percent. Among the company's retail
post-paid customers, churn was even lower at 1.03 percent.
Verizon Wireless continued its double-digit revenue growth, with total
revenues of $12.7 billion, up 12.5 percent year over year. Service
revenues were $10.9 billion, up 12.2 percent year over year, driven by
customer growth and demand for data services.
This revenue growth was driven by ARPU (average monthly revenue per customer),
which increased year over year for the 10th consecutive quarter.
Total service ARPU of $52.18 was up 0.9 percent year over year, reflecting
strong growth in total data ARPU, which was up 28.3 percent.
Wireless operating income margin was 27.3 percent, up 20 basis points year
over year.
EBITDA margin on service revenues (non-GAAP) was 44.2 percent. (EBITDA
is earnings before interest, taxes, depreciation and amortization.)
FiOS
Customer Growth Accelerates
Verizon
Wireline reported accelerated growth of FiOS sales and continued increased
sales of enterprise strategic services. In the third quarter (with
prior-period comparisons adjusted to reflect the impact of the spinoff
of non-strategic Wireline assets):
Verizon added 233,000 net new FiOS TV customers, compared with 176,000
in the second quarter 2008. The company has 1.6 million FiOS TV customers,
compared with more than 700,000 FiOS TV customers at the end of third-quarter
2007.
Verizon added 225,000 net new FiOS Internet customers, compared with 187,000
in the second quarter 2008. The company has 2.2 million FiOS Internet
customers, compared with 1.3 million FiOS Internet customers at the end
of third-quarter 2007.
FiOS Internet sales penetration (sales as a percentage of potential customers)
increased to 24.2 percent, compared with 20.0 percent in last year's third
quarter. FiOS Internet is available for sale to nearly 9.1 million
premises.
FiOS TV sales penetration increased to 19.7 percent, compared with 15.2
percent in last year's third quarter. Verizon made FiOS TV service
available for sale to a record 1.2 million additional premises in the quarter,
bringing the total to 8.2 million.
Broadband and video revenues from consumer customers totaled $1.1 billion
in the third quarter, representing year-over-year growth of 45.3 percent.
Growing revenue from broadband and video services drove consumer ARPU in
legacy Verizon wireline markets (which excludes consumer markets served
by the former MCI) to $66.67, a 12.8 percent increase compared with last
year's third quarter.
Verizon Business had total revenues of $5.4 billion, or growth of 1.2 percent
compared with last year's third quarter. This was Verizon Business'
eighth consecutive quarter of year-over-year pro-forma revenue growth (non-GAAP,
calculated as if Verizon and MCI had merged on Jan. 1, 2005).
Sales of strategic services -- such as IP (Internet protocol), managed
services, Ethernet and optical ring services -- continued to drive growth
at Verizon Business. These services generated $1.6 billion in revenue,
up 15.4 percent from third-quarter 2007.
The
Board of Directors of Verizon Communications Inc. (NYSE:VZ) has declared
a quarterly dividend of 43 cents per outstanding share, unchanged
from the previous quarter. The dividend is payable on Aug. 1, 2008,
to Verizon Communications shareowners of record at the close of business
on July 10, 2008.
Verizon
has approximately 2.4 million shareowners and approximately 2.9 billion
shares of common stock outstanding. The company made $4.8 billion
in dividend payments in 2007.
Verizon
Reports Continued Strong Growth in 1Q 2008
Wireless
Delivers Industry-Leading Fundamentals; FiOS Growth Accelerates; Sales
of Strategic Services to Large Businesses Continue to Increase
1Q
2008 HIGHLIGHTS
Consolidated
Results
.
57 cents in EPS and 61 cents in adjusted EPS before discontinued operations
(non-GAAP), compared with 1Q 2007 EPS of 51 cents and 54 cents, respectively.
.
$23.8 billion in revenues, up 5.5 percent; $4.3 billion in operating income,
up 14.1 percent.
Wireless
.
Highest net adds in the industry -- 1.5 million net customer additions;
67.2 million total customers; 65.2 million retail customers, most in the
industry, up 11.5 percent.
.
Industry-leading churn -- 1.19 percent total churn and 0.93 percent retail
post-paid churn.
.
13.2 percent increase in total revenues; data revenues up 48.9 percent.
.
44.9 percent EBITDA margin on service revenues (non-GAAP).
Wireline
.
263,000 net new FiOS TV customers and 262,000 net new FiOS Internet customers,
for a total of 1.2 million FiOS TV customers and 1.8 million FiOS Internet
customers; 8.5 million total broadband customers, up 14.9 percent.
.
More than $1 billion in consumer and small-business broadband and video
revenues.
.
9.6 percent increase in consumer ARPU in legacy telecom markets.
.
23.5 percent increase in Verizon Business strategic services revenues.
Note:
Comparisons are year over year unless otherwise noted. See the accompanying
schedules and www.verizon.com/investor for reconciliations to generally
accepted accounting principles (GAAP) for non-GAAP financial measures cited
in this news release. Discontinued operations relate to the disposition
of Telecomunicaciones de Puerto Rico, Inc. that was completed on March
30, 2007.
Verizon
Communications Inc. (NYSE:VZ) today reported another quarter of strong
sales and operational results. In the first quarter 2008, Verizon
Wireless continued to lead the industry in key metrics, and Verizon's Wireline
business reported continued strong growth in sales of domestic FiOS services
and global strategic business services.
Verizon
reported first-quarter 2008 earnings of 57 cents in diluted earnings per
share (EPS). This compares with first-quarter 2007 earnings of 51
cents per share, both before and after an extraordinary item and income
from discontinued operations that have been divested.
On
an adjusted basis (non-GAAP), first-quarter 2008 earnings were 61 cents
per share. This is a 13.0 percent increase, compared with 54 cents
per share before discontinued operations in the first quarter 2007 -- Verizon's
fifth consecutive quarter of a double-digit percentage increase in adjusted
EPS.
Adjusted
earnings in the first quarter 2008 excluded 4 cents per share in special
items: 3 cents per share for costs related to the spinoff of wireline
access lines in three states, completed March 31, 2008; and 1 cent per
share in merger integration costs. Adjusted earnings in the first
quarter 2007 excluded an extraordinary loss of 5 cents in EPS from the
nationalization and sale of Verizon's interest in Compañía
Anónima Nacional Teléfonos de Venezuela.
Strong
Results in Face of Economy
"Verizon
has weathered the current economic uncertainty with strong first-quarter
results," said Verizon Chairman and CEO Ivan Seidenberg. "I am also
confident of our position over the long term because we have further opportunities
to drive revenue growth and further opportunities to eliminate costs.
"With
our strong cash flows, we continue to invest in growth, evolve our business
and return value to shareholders," he said. "In a larger sense, Verizon
is leading an industry transformation. In wireless, we are changing
the game with our open development initiative, our plans for next-generation
technology deployment, and our strategic investment in spectrum for nationwide
broadband services. In wireline, we have spun off nonstrategic access
lines, and we continue to introduce innovative FiOS and enterprise services."
Consolidated
Growth and Share Repurchases
Verizon's
total operating revenues grew 5.5 percent to $23.8 billion, compared with
the first quarter 2007. Total operating expenses increased 3.8 percent
to $19.5 billion over the same period.
Verizon's
operating income grew 14.1 percent to $4.3 billion, compared with the first
quarter 2007. On an adjusted basis (non-GAAP), operating income grew
14.2 percent to $4.5 billion. Operating income margin rose to 18.2
percent, compared with 16.8 percent in the first quarter 2007. On
an adjusted basis, Verizon's operating income margin rose to 18.7 percent,
compared with 17.3 percent in the first quarter 2007.
Cash
flows from continuing operations totaled $5.4 billion through the first
three months of 2008, up 6.9 percent over the same period last year.
During the first quarter 2008, Verizon took advantage of market conditions
to repurchase $1 billion of its common stock.
Total
debt was $35.8 billion, compared with $31.2 billion at year-end 2007, and
Verizon ended the quarter with $5.5 billion in cash and equivalents.
Most of this cash, along with $4 billion in capital raised through long-term
borrowings in April, has been used to pay for the wireless licenses won
in the Federal Communications Commission's 700 MHz spectrum auction.
Verizon
Wireless Leads Industry in Key Metrics
Verizon
Wireless continued to lead the industry with the most retail customers,
the lowest churn and the highest profitability. In the first quarter:
.
Of the 1.5 million total net customer additions, 1.3 million were retail
post-paid customers.
.
Total churn was an industry-leading 1.19 percent. Among the company's
retail post-paid customers, churn was even lower, at 0.93 percent.
.
Revenues totaled $11.7 billion, up 13.2 percent year over year. Service
revenues were $10.1 billion, an increase of 12.8 percent year over year,
driven by customer growth and demand for data services. This is the
first time quarterly service revenues have topped $10 billion.
.
ARPU levels (average monthly revenue per customer) increased year over
year for the eighth consecutive quarter. Retail service ARPU was
$51.40, up 1.3 percent year over year; retail data ARPU was $11.94, up
33.4 percent over the same period last year.
.
Wireless operating income margin was 27.9 percent, the highest ever.
.
EBITDA margin on service revenues (non-GAAP) was 44.9 percent. (EBITDA
is earnings before interest, taxes, depreciation and amortization.)
Another
Quarter of Strong Growth in FiOS, Strategic Services
Verizon's
Wireline business, which consists of Verizon Telecom and Verizon Business,
reported continued strong growth in FiOS customers and in sales of enterprise
strategic services. Results through the first quarter 2008 include
operations in Maine, New Hampshire and Vermont that were spun off to Verizon
shareholders and merged into FairPoint Communications Inc. on the final
day of the quarter. In the first quarter:
.
Verizon added a net of 263,000 new FiOS TV customers. The company
had 1.2 million FiOS TV customers in total as of the end of the quarter,
having added more than 850,000 FiOS TV customers since the end of the first
quarter 2007.
.
Verizon added a net of 266,000 new broadband connections -- 262,000 from
FiOS Internet service. Total broadband connections were 8.5 million
(6.7 million DSL-based Verizon High Speed Internet connections and 1.8
million FiOS Internet connections), an increase of 14.9 percent compared
with the first quarter 2007.
.
Broadband and video revenues from consumer and small-business customers
topped $1 billion, representing year-over-year quarterly growth of nearly
50 percent (56 percent growth in the consumer segment of broadband and
video customers).
.
Growing revenue from broadband and video services drove consumer ARPU in
legacy Verizon wireline markets (which excludes consumer markets served
by the former MCI) to $61.02, a 9.6 percent increase compared with last
year's first quarter. The ARPU among FiOS customers was approximately
$129 per month.
.
Wireline data revenues -- which now represent nearly 40 percent of total
wireline revenues -- were $4.9 billion, an increase of 14.8 percent compared
with the first quarter 2007. This includes revenues from consumer
broadband services, and revenues from wholesale data transport and sales
of Verizon Business data services.
.
Verizon Business had revenues of $5.2 billion, or growth of 0.4 percent
compared with last year's first quarter. This is Verizon Business'
sixth consecutive quarter of year-over-year, pro-forma revenue growth (non-GAAP,
calculated as if Verizon and MCI had merged on Jan. 1, 2005). Global
enterprise revenue, representing retail sales, increased 2.0 percent to
$3.9 billion, compared with last year's first quarter.
.
Strong sales of key strategic services -- such as IP (Internet protocol),
managed services, Ethernet and optical ring services -- continued to drive
Verizon Business' growth. These services generated $1.4 billion in
revenue, up 23.5 percent from last year's first quarter.
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