VZ - Earnings call transcript Q2 2018 | Verizon Communications Inc.

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Operator

Good morning, and welcome to the Verizon Second Quarter 2018 Earnings Conference Call. At this time all participants have been placed in a listen-only mode and the floor will be open for questions following the presentation. [Operator Instructions] Today's conference is being recorded.

If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to your host Mr. President, Vice Senior Connor, Investor Relations. Brady

Brady Connor

Chief Good earnings conference Brad. here Executive Lowe Chairman Officer; morning, incoming Ellis, Vestberg, Connor, Officer. and quarter second with and our , Chief our and to McAdam Officer; call. Chief I'm Hans our welcome and Thanks, Executive our This Financial Matt Brady is

and this our operating presentation slides the will a our Investor website. made our As Relations and available reminder, of earnings website. information, release, a A be also replay available call financial on transcript and on are

of to financial Before is a slides website. This statement basis I are the our on are and uncertainties. get the we and contained draw in presentation unless about started, results your factors X. financial comparable of with financial growth SEC, GAAP Slide our The our rates which Discussion materials events our as most remarks have included to formal I this quarterly Harbor forward-looking Reconciliations may would results presentation Safe future to noted contains affect are future statements like in measures expected subject our risks in Information disclosed measures available in that website. which during filings presentation certain attention Verizon's on non-GAAP to sequential. the on directly posted and measures. are these contains otherwise on non-GAAP and that year-over-year

X. a Before earnings Slide quarter through second I remarks, of consolidated for his let me turn call walk start with Low the over to on the

results a I GAAP $X of earnings few basis. special quarter to reported These would second highlight. like of the that per share For we items on a include reported XXXX

or and for Oath. pertaining reported goXX million, of Our related The charges this integration impact of the these $XXX million of and $X.XX to quarter million, costs approximately related to per discontinuation items consisting after-tax mainly primarily of of platform associated share. the billion $XXX charge acquisition Severance charges was product realignment content. $XXX included $X.X of net earnings

Excluding the second the adjusted comparable a revenue recognition of effects X.X% net share compared was of On the before year reform in to the per items standard tax special the ago. earnings revenue these $X.XX basis adjusted up effect and tax per $X.XX adoption quarter and reform year-over-year. share of impacts recognition were and the earnings of a

Let's illustrates table on results. revenue the to recognition quarter effects Consistent of a financial Slide now adoption turn provided the the last our standard X. the approach that established with have we ongoing we from

of a fairly increase results revenue the wireless change by been consistent of recognition deferral reminder, both from our the of service an in the segments. of On in a of impact As adoption basis, two was the in The wireless as this well share. has quarters offset per as standard the revenue, wireline revenue throughout commission cumulative expense XXXX. impact equipment revenue $X.XX wireless year-to-date first recognition reduction a and the

The unless provide will $X.XX. the as we financial be timing results call But moderate and now that, in the the impacts this is clear to year operating XXXX commission otherwise over this impact to the expect and and revenue expected share With remainder costs the turn of accounting with I of of noted. XXXX per comparability converge. Lowe. call, change impact between benefit to to become accretive will periods exclude full prior to the earnings $X.XX XXXX in then to insignificant For income in

Lowell McAdam

today, the minute you Thank for and were to driving ecosystem LTE financial penetration flexibility were We is new in XXXX, When the pushing that our the past so the Fios, in Ivan our to CEO as leading by the years. business, and balance good charge look profile first the we Verizon future. and after you, the Verizon This took positioned I the take for well where fiber sheet the perspective markets. expanding discuss launch is everyone. company company positioned over have some user with like service. and We execute whatever so we we a a Brady company home I robust the growing at from chose. last well of highly had future. offer morning with wireless strategy serving and to seven I'll for If to time was The in again XG experiences are I'd competitive once the strong results industry had

for results are cash our first our of XXX% and business has and industry-leading service operating it's flow customer Verizon growth. revenue, as and financial by earnings and base. of half network strong XXXX Our ownership the evidenced wireless

but new fourth bigger for consumer will requires the enhancing revolution. first smart at will provide the a the our we the IoT Oath that poised this base, We adopt This our to digital generation XG impact consumers positioned mobile be on growing and are we have added customer to as be driven by be of industrial the on impact the as several ability any is of education the and as clear to original engineering of based information XG believe experience, areas forefront few. of the know in leadership attracting ecosystem are biggest platforms We technological I be XG and leader next-generation much the over-the-top industry deployment meet than to such asset expertise, expectations. services demand. ahead transportation, such And we businesses pushing a and the position cities, our have TV, in platform just businesses healthcare; spectrum opportunities the talent portfolio. the to on name previous years

will our customer a has expansion in outstanding be of share unique will business world. strategy focus solutions of extend also Verizon can be demand our always pleased leadership XXXX; August balance The through proven financial I'm labor to Fios to leadership give to deliver sheet our customers one markets. cornerstone assets, tentative our team, our and of profile strong contracts strategies to Our and in disruption. on portfolio digital have this employees and solid the without fiber-based a our with ability take the enables execute all mention that an and fiber recently continue to recent unions that high agreement will on network network announced our us of the promise significant and mature experience. our

it's employees for Houston, be the quality our second least Texas; the strike that morning in the and four our my celebrate when is valuable us spend in are this with you our about to days of was What Brady in the talk CEO us an fond I'm time share customers this experience. call city. of started taking that area in tell results, honor over; as of five to One won't after glad Houston didn't Hans great today memories a he quarter

with the matters It best level great when Verizon our initial most. progress residential ones, our tirelessly Houston here are be during community and be an launch industry; out We Verizon proud excellent Harvey. company our and for relationship to announce Mayor third broadband times we overall pleased couldn't very I like to of of the have responders that today this Houston Hans of experience, we that of unparalleled leadership an as service Hurricane customer network our the four nation's commercial company with of appointment the rolled hardest with markets especially come. recent the involvement, is and exciting CEO great more it and of the greater later and solidifies This is the for for provide that first with is as pleasure with the an loved wireless some XG worked and with this and our the customers, will area, making city, network years Turner, year. Vestberg performance reliability time and quality

take said about second before, turn opportunities force Matt lie he results the Matt. Verizon is of to to next ahead. details highlight strength energizing will call will confident the I've I'll Hans our that, right then into upcoming it's to With position now chapter fourth and to the need As lead of that which we revolution. and outline industrial person quarter our bring the is you the Verizon. Hans over that I'm strategic talk and through the financial the priorities Verizon

Matthew Ellis

X. for you impacts thank all Consolidated of basis consolidated on and leadership of the and was a billion and revenue encouragement to the many on results Lowe, years reviewing support including the $XX.X Slide provided have the like start by Thanks reported recognition. revenue of us. to you I'd

for service revenue to GAAP of consolidated revenue the generating billion, The due to On the reported divested equipment primary than mid-single X.X%. driver are an solid growth update basis, to Excluding revenue of approximately we is increase expected digit growth wireless Oath guidance $XX.X impact full consolidated of The continues businesses, be the low is year. full business results. trends. of percentage a better expecting year revenue revenue and

performance efficiencies from revenue quarter drive down $X.X of Excluding year's across service we XX.X%. special XX.X%, margin increased solid items, revenue operational EBITDA margin to billion the to prior EBITDA in growth percentage XXXX and tax momentum digit to the and net us adjusted the reform margin low revenue and impact keep single Strong before on-track EPS was of second adjusted as continue Adjusted business. performance recognition. due achieve and

XXXX of guided be effective We the rate our to of of low the year at to full range expect tax XX% end XX%. the for

Slide cash Let's balance and now on focus X. the results sheet flow on

cash Our business segments are generating flows. substantial

cash guided of of excellence Edge to capital lower and our year was deploying the from debt. and as residential broadband quarter $XX.X -- second billion with billion, year from Network strong for activities well quarter. sheet reform, to driven payment by both, process, on During completion the expect $X.X benefits $XXX.X XG XXXX range from include currently billion the the quarter billion. debt the to of of for capital receivables. design. expenditures balance end XXXX the We debt comprised $X.X billion capital the secured results initiatives increase billion CapEx year-to-date second business spending and second We $X.X the of sequentially; efficiencies totaled full flow billion which was billion $X.X from in $X.X quarter the from and our tax cash $X.X was spend closer the be operating But Free secured to prior driven management $XX financing of to and Intelligent flow of $X.X by ended billion from bringing launches. of the as billion business, totaled of total an plan our $XXX the transition expenditures device billion mobility this

We began of we beginning sequentially. declined As to our the the reform year, the tax second total billion realize use we $X.X strengthen sheet. balance intend benefits to in stated from the to of debt and at benefits majority quarter these balance XXXX the during the by

improving allocation capital having methodology balance to with continuing our remains in Our our strong invest on consistent credit to while metrics businesses a shareholders. and focused returning value sheet

by unsubsidized state, quarter as compared In on a first on on more payment base by than increased year. recognition a service revenue a step-ups move the service Service revenue X.X%. operating wireless the XX% to X.X% year-over-year quarter second starting consistent to continues plans steady offsetting and impact a handsets recognition, equipment connections volumes. segments increased XX% postpaid the outstanding Sequentially, On X.X% ago, driven Approximately year revenue our let's plan revenue continues quarter second from phone for to higher the and customer in to reported impact Now the of with increased a XX% X.X% results Slide quarter. at X.X% the average access revenue the end increase activation X. in quarter. basis increases to an including migration of Total the at by to per Customer of account. prior to approach revenue basis. XX% currently in in with increased higher pricing revenue device the driven the producing generate billion reviews operating reduction of by priced strong wireless $XX.X the had excluding a

was $XX.X an quarter represents EBITDA wireless increase X.X%. of the billion which Our in second

basis. As a EBITDA margin was a percent of was relatively and XX.X%, total a sequential up flat XX.X% year ago revenue from on

the to including In take a tablet turn at look of strong additions were operating smartphones, X and now solid net by quality retention. driven customer of the XX,XXX closer wireless Wireless other deliver network metrics. our including connected XXX,XXX adds by to experience XXX,XXX and Let's continues XXX,XXX phone wearable's. devices results second losses net led by XXX,XXX totaled quarter postpaid net offset Slide

retail postpaid on experience X.XX% consecutive Total or at nation's X.XX% to X.X% in quarter, In represents year about the the of a of prior churn compelling postpaid the activations our quarter churn X.XX% than were slightly year. of which was customer phone of postpaid better. Our prior up phones. result is the best customer compared of were network. the lower X.XX% fifth retention device This XX%

Our to retail compared X.X% a ago. X.X% was as upgrade rate postpaid year

phones loss to basic net During quarter plans. compared prior of million the activity losses X.X prepaid the the net in payment were of device the activated prepaid quarter quarter, the XXX,XXX total XX,XXX year. reflected adds a devices Prepaid in XXX,XXX were on phones. in

primarily driven declined in fiber-based our X.X%. impacts Enterprise ongoing competition, copper-based products. segment for sales on products customer revenues to legacy XX,XXX growth services. trends legacy secular video X.X% business offset continue On opportunity Within and XX.X% were revenue from Fios Solutions added by a the segment revenue XX. offset broadband by for due recognition. to currency margin becoming to significant to broadband ads segment X.X% customers offset of Slide component by was from quarter. to Fios Now margin the results macro and partially is our technologies legacy fiber quarter wireline we before. more Fios more markets on fiber-based the strong value excluding from a chord-cutting in this basis, In face operating is ever increasing let's X.X% move from decreased of ongoing partially mainly increased revenue services driven offerings. the their losses and revenue Price the cost Wireline content pressures in to down our XX,XXX grow X.X% access growth. due revenue than consumer connection growth and and X.X%, Fiber-based by Solutions [ph]. declines X.X% revenue business demand performance. from markets decreased EBITDA revenue Total our as mitigating revenue. in pressure Video Consumer wireline Internet growth legacy constant quarter legacy increasing CPE quality is partially of declines internet demand pressures decreased by driven and core wireline products. recurring the to Partner a for declines reductions headwinds by decreased secular continue compression products. are in due high products, customers by continue had from

to impact from near-term. be recognition revenue for the expect around XX% the margins Excluding we

now Media on discuss to Let's move Slide to XX our and IoT businesses.

content the During it's and continue and interlinked one solution. to platform cross Oath the second team device progress quarter build out towards and make of into cross strategy integration the products operationalize Ad

our the As integrated the video we highlighted became on in quarter. call, platform last first

the platform and of quarter, on-track the of remaining inventory demand side half for is integrating year. complete to Oath During half platform integrated of was the components the the Ad the second second within

on a expect to us ability We the come owners platform. momentum build single have to advertisers see content and to after

revenue our sequential business, revenue For which Verizon relatively Connect $XXX telematics billion In was was Connect Total a million. approximately the Verizon revenue XX%. basis. $X.X IoT second is flat quarter including was on total up Oath

inclusive XX was Let's into results. wireless of now move revenue growth positioned strong Consolidated to financial service from and summarize our the delivered to turning headwinds second positive, business of We our recognition. Slide led growth revenue another is results quarter revenue for well by future. quarter the

satisfaction announced cumulative period. a customer business flexibility excellent to of the the our to and Last over cash year enabling $XX evolving unlimited nation's signaling Churn savings billion nation's their experience best a Our remain on drive wireless throughout of low customize base. offerings we to people in goal rates retention network. provide four best are new year the level customer

year-over-year quarter of network in Adjusted for Our excellence is deliver on on-track the which initiative second the XXXX, of the business. has related a share million yielded by the cumulative strength goals Most remains approximately four driven revenue the budgeting includes across lower to business zero-based earnings period. program cash savings quarter spend. incremental it to start against in savings our over year-to-date performance to basis. increased a and off cash operational of in are capital efficiencies per realized and solid the the activities realized $XXX The reflected year our total

balance to priorities. XG. strides making Finally, upcoming in We for turn I'll to our within the now With discuss of the substantially debt strategic business honoring we we to that, as are significant our Hans sheet. prepare strengthen flows is strong the reduced the commitment generating net over call quarter and the cash launch

Hans Vestberg

and Matt you, everyone. good Thank morning

successor honor in decades forward and a lead significantly to industries digitalization market to great the me impact I'm Lowell, great opportunity company. will more the named leading humbled our First, for this to which of let to that looking to have technology part be on world it's say the come. I'm advanced era the and by society into being positive consumers,

tenure my company Verizon setting and for rest the team. the alongside and been the leadership priorities the with actively During Lowell, the in strategy involved I've your board, of

a our have execution provide Verizon efficiencies sustainable creation. Network. in called and to allocation, We driving we're which a throughout business. performance the committed the positioning capital Verizon's the of for network next-generation relationship, customer network develop future position, has on announcing on growth, leadership Edge the business our financial long-term disciplined laid and remain and most We value place assets Intelligent we strengthening advanced focus to approach driving to our fundamentals, maintaining

current positioned wireless in fully capture to generation of ahead opportunity transition the significant the the fifth We leading to and that in way the lies the for generation services. are growth are we

growth innovation, capabilities further new driving enhance opportunities our performance XG in leader clear will further the and experience. that be to network customer's continue implementing We

XG services. strategic [ph], the ultra-wideband millimeter made that spectrum invest in have enable way We

XX the way over build ILEC of take will on Our XG. in advantage outside the markets of used out footprint to allow come bear will would many cases fiber to that us our that in higher full [indiscernible]

Intelligent meet Edge at customer requirements. design by significant flexibility utilizing edge common the to and Network network of efficiencies the Our allows [ph] infrastructure to core us providing in realize the

of Oath roll-up use the participate broadband Our the enable. rapidly use services. will provide case with and will in to platform XG We're first IoT XG a a launch residential cases approaching that assets of for for us our

Houston heard Sacramento know, you initial two commercial and Angeles As you market announce are and four minutes Los of earlier ago. Lowell launch few

and broadband first XXXX. of soon. market we be cases in will for assets cases News is will remain have use way opportunities we're the many full the XG our place and and focused ahead. on full in Residential the advantage take is XG [ph] well of on use future, of on be the network. on the industrial the all fourth of here deployed our cusp provided Progress updates for to that multi-use mobility revolution I'm we that providing super-excited the on lie the across

to back the to will I Now turn questions. we over so Brady call your can get

Brady Connor

Hans. you, take now questions. Brad, Thank to we ready are

Operator

from The first of comes Hodulik John question Instructions] [Operator UBS.

John Hodulik

congrats you really at been going quickly career like working your Hans, as I've -- Verizon, be over Lowe, And also you take the for the it's will to you reins I'd working on first forward. years. and it with your retirement say great really with enjoyed

you've XG advantage companies diversify Thanks. How confident tenure ahead we have Verizon during other of as carriers wireless sustainable really widen adjacent look is create right while really are gap can believe the -- has Verizon deployment leadership a path? and into stuck to moved other it's to do as the you this you [ph]? versus adoption, to and network core And sort CEO that that areas. competency Lowe, So of your

Lowell McAdam

XG Matt done the that sheet, I'm the we've assets with assets to the like every portfolio now we've us proudest some the in is to and strategy, lot things say want we to progression that company, a put you position you I are usually changes that success. to that on the of the we based have where the have didn't looked We've to we've Verizon and going of, will to network what individual and we're competing us had of and is a that core clear of is branching we think think If bankers gains to we in of I mover between a do those. we a competition; play talk think glad it's where on first a your near high a leadership; you you a on share, strengthen here going it's mentioned got core, envelope my very and values little outlined smile at follow with stayed got put is We XG. market strategy at we've do forward. Oath your we on the and logical out and go of with to advantages XG close a done, Connect that's and significant that about things the bit network that in of can a though the are I'm the that told the I pushing a for things we've love we generation with face, significant leadership also network we balance at degree core, and position play, win, strong think and on things us play the want things amount that of distance into analysts and to look part the we win. I us, proud see the the don't and the

Operator

The Morgan next Stanley. of question comes from Simon Flannery

Simon Flannery

going you the I thinking broadband, of we'll your over hear us the are of you how a side, about bit markets your about we've $XX talk think how my to for some that to some residential you How going about you're competitors or Good more, about of months? luck do And terms retirement. share many also rapidly going to you're best lower opportunity good that? this for [ph] pacing roll the you've the then mobility in How wishes million mobility many year; to covered you. see initial on timing about pops think microwave of Houston; heard XX-XX the that be XG? to that to a out? markets starting you're talk with wanted And launch to rollout? next the can help the plus news talked about is balance all Thank to just the use Lowell,

Hans Vestberg

when markets access, our the comes I commercial the beginning, beginning software fixed have in an this it [ph]. four we calling of that's going launch wireless So so year, in of to said as initial the will to developed on we sort be that TS based

whole now; to are XG preparing [ph] standard Intelligent are Edge to and Network coming We -- and preparing vendors OEMs that the network right with now. ready again, is manufacturers right the on and/or equipment be based and out launch

which majority be as to soon So for we million have ambitions our customers; will the that own has that is to be full so we our households when as we'll the will ready that explained go XX come released they before. back

the we are fixed where wireless that's access. So on

the mobility, same Intelligent station the provide fixed is wireless On is a Remember same. we multi-use so Network that access Edge it's our rate a base as going mobility. network, to do the

mean more and than said I in before, as now we are cities. on deployment in are we I fiber So XX

and in equipment the now right well cities and of CPE ready I and be markets we ready deploying point the So majority you in the the the as [ph], those as are with ambitions for XX we of important an to not named that's but everything can here we XXXX, having as see and are we fiber products, that's handset launching software's for preparing have think market it. the sales

the back continue new will flow doing and the on doing time XG. excited third So launching that's over we you are we're now today things we're give and so all and the to we're we super information the that; Houston, updates on we're where in on here we'll all what come city

Simon Flannery

quarter likely And the the the fourth? going the Sacramento, when of more in or should to third Is launch you LA, be first that Houston?

Hans Vestberg

Well, exactly question. the we we that as will we and the you date. we XXXX; Good -- soon in out of say second as we know as say half promise come tell so

Operator

comes question next JPMorgan. of The from Cusick Philip

Philip Cusick

what's spending than talk happening the are more and to getting towers towards of And guide; move us cell? Thanks. for focus through from expected fiber the you of doing you end are the more can Hans, lower less macro in on it? this and you the side year you CapEx where small or just shift to

Hans Vestberg

coming experienced there that; of were ones XG very we especially where and two I coming important factors think the horizontal a this And want from new up in question; type see the wanted of the is together deliver and management one, network network, sort -- to great them when flip Edge the on actually horizontal we remember a with whole also Matt, decided -- the I we did to came based shortly. team services Lowell we to to whole some Network. I Intelligent of

engineering efficiency we are think moment, we and Then so the it, what At we our now; but than much nothing moment. the efficient I what efficient of spending; be right already deploying that than that a whole actually was that's much this that more if in when happy it in comes we before with spend numbers second as so using network here, seeing that in is with we're all The embedded shift I we're new our to multipurpose At put things XXXX for deployment. could the the at XG same in shift the process very sharing, in I also limiting, capital that's are we more mean the result capital you so used we making look that we're CapEx are our doing same at equipment. you're and are making also big different; we and preparing we're more are doing team time at in say in all time also very the the see. we it's Matt the investment I time capital my technologies new XXXX for

are if of And macro -- moving we we our to and and densification with making that is cells. our -- I small back cells as smaller more all investment think much will couple ago bigger today So the say, also go majority towers than years you I majority of cells. on are towers macro a on said, over was you

one dramatically and team it the the So whole of way responding the how now we and setting than I've is the shifted working to I've over but for new up part engineering seen of years been only structure. have more new year network

in the what figures. So seen that's you

Philip Cusick

anything XXXX tell follow-up; XXXX? Thank us from CapEx upward you about might where can you. can I be downward given efficiency If or that

Matthew Ellis

to on accelerate but consistent in stay our past that get expect doing we with we any pretty both early of the is process it's we've -- supports CapEx to talk as be you we've as get done think we that that commentary been consistent I the remind to a XG little densification just to spend in closer said, but in reasonably there consistent XG XXXX and look, been we'll about and we we've the as We'll too it XG. around I'll where yet. [indiscernible] spending see what Hans lot

do total spend We've for without technology and us really spend. step it here from consistent XG to before, moved and confident the a change generation to keeping requiring that significant in great So position be this CapEx again. we'll another, fairly of we're total network moving is in preposition into a done has one

Operator

of question of David next America. Barden The from comes Bank

David Barden

as Thanks. through you lower ask side, questions upside about is that did that some the the on on number flow of window -- for that you is, wireline side in then those is that this in and but some potentially the cash to finance just done on in changes well? about in I we've as and margin we tax some second side And the know guide I free about you in the that just should cash some think forthcoming I why equation, the of the historically, how do talk could the to is about give having reasons think we you need year the wireline -- one union the us structure, could number gave in -- -- cost the flowing flow XX% the negotiations that talk margin could Matt, business? contracts address impact

Matthew Ellis

the question. with tax start I'll

first for year, look a we wouldn't so the one-timers a that's but you as the end flow XX% related there, XX% So, second of half certainly tax to couple as by quarter of at the of the ETR the [ph] of to you pension that guiding contribution through why first the we year lower whole. see necessarily impacted especially the had towards the range reform in we're half the year in was to did

we our tax didn't scheduled flow; rest balance In because quarter flow cash it rate that's to by the to you that sheet quarter to flowing for and you and the first ability first the two year terms the through We second to through, through year behind the positively strengthen impacted taxes gave certainly that year. of payments so be tax I the we expect to those know, cash of tax the reform. should the of payments; would this know, started scheduled had see this see around you lower no certainly we in commentary cash expect say the year payments in have to had as flow

Lowell So question lower rate. expect union your around to continue from benefit contract. new the see answer to the tax the I'll let

Lowell McAdam

the pleased we've really built we're that David, the with with union. relationship

had as side very as get been that deal thorns During we the for last leadership at contract on issues able the with and the frequently, together the been we've the union company. well to members, level senior both, some

attempt literally a a way and decided So leadership I during like our the would for change major in of we this. was -- that union the that ahead -- get to expiration to took thank approach contract relationship, year a when to they the

that As you've projections the continue of we to way you've say seen the it seen, just it's change and far contract. projections; sort trajectory increases but would as significant was do beauty our the the and contributions your that But a thing that financial all bottom-line is after of last now instead getting and pleased I very with have of all work of about and the they and management our can families deploying XG ready can and on very, the our for this all employees we're customer so strike; and and outcome. their focus this deploying of fiber, on a customers and not focus

Operator

Goldman Brett from question Sachs. next Feldman of The comes

Brett Feldman

and becoming is phone kind of I'm guess I the the breakout of through plan; recently all not And headwind don't talk was ARPU I you us, And you shown we even is ARPA Thanks. point becoming seems to postpaid plans. to could ARPA unlimited wearable's unlimited meaningful that for lies lot pressure in was are it's you've recently. pressure to subs transition a we of the and EIP, positive driver a new other that get know behind last Are that causing to going distinguished to as was ahead. phone sure ask been have of still also the years Thanks. hoping the a for on like of the you like including into the opportunity we transition your side, congrats highlighted fully devices to several career, my that I'd entirely intrinsically, starting the the And it moved for unsubsidized course about more we although I has drivers or the I metric just lot migration on could Lowell though into It extend seeing that Do as that's where ARPU into a are Hans so was hoping well? ARPA; any a tailwind? under forward. phone EIP postpaid that come then accounts? stabilization

Lowell McAdam

to pricing the the in ago plans right the the far much in base unsubsidized more as it essentially you're difference ARPA, now shows year that as payment year-over-year the digits is complete, single is look in transition you percentage was up ARPA. terms a device of As of so that significant;

good that we unlimited phones service the whether those you the in are terms through in additional whether though our that for you ARPA a to the within [ph] coming to metered to account; -- up unlimited be to plans of wearable's continue services, then in our per see have see customers plan and is the step that from our the continued be on, in The quarter demand so things products other plans they are connections offer. see or things to continue the on we overall. on account And ARPA revenue impact we or and there even increases

we area opportunities we certainly that their to add growth help plans we additional it's to continue the offer is customers give forward. as going to plans ARPA So continue drive to and continue them can think devices the right where an to and to we stabilizing revenue

Brett Feldman

broken you how are missed out unlimited Have apologize customers I many plans? I your that. on of if

Lowell McAdam

not. have We

and between but X.X previously and As that significantly XX% over larger be point base. the Edge, have plans that the customers haven't said above Verizon unlimited we to the continues larger customers broken number of to a we our ability certainly at percentage control would becoming where at unlimited and grow out this it's certainly but

Operator

Michael of The next question comes from Rollins Citi.

Michael Rollins

And the any leading just to is what's do the underlying of you the strategic First by provider phone postpaid country? thoughts home population for this for than and Verizon sustainability how the long commentary listened business growth? goal the how phones be across would take can at driven the risen new direction have on Thanks. it much and the one were then this of if year the level side; the a thing And and the M&A? level postpaid driving twice on past to the possible investments on more become trends; has change go of at in over management growth, broadband internal this versus industry as on the is -- rate I

Hans Vestberg

you can I network the start broadband. Maybe with question on that had

now center assets a is we on announcement we right really remember today well opportunity on; of without we routers, I the actually doing did gave a about opportunity -- building, it cities I and are so we XG to and an look are communication I've and the have see access going much the into and are quite I XG have we but -- a need before talk way it, what we I to assets I us for all when we ones need XG technology, much it I look benefits when times for in to they quite mean we're that that working with this we multi-service we to from more here while; the couple there all way have that data new when now providing do is midst will deploy fiber be the is is broader unified the been that Intelligent that using continue been will Network and the us to see think as are we the opportunity. like now while -- larger, the give having I this But great. we see you have that we of the and Edge onto think are a big than undertaking I've and said we the transport,

course I already going fiber as now the but XX of it's mentioned, take cities. in right, So you're to we're have across deploying country time to it

we we of the back piece very be levering color but the for markets; networks it important are to and I us so that's it. and network come So think more a will the to you really using give preparing efficiency

Matthew Ellis

things layer too. that we -- can go deliver that we happen we're we net that above to to phone we On the connectivity place consumer comment right postpaid how about the talked have going continue the strategy, industry. to certainly of forward, addition plans, and network see broadband the expect the very continue One in forward, volumes can't to it's in certainly what we'll know plays good believe have to out important there; the we side postpaid and the network add phone, we to we've across so good the I growth is, see -- to services other the comment have give terms are provide also best once we opportunity see continue as as get we be we'll -- and of on there. great think in nation's that rest just the pace overall industry you I'll able see on but demand customers a on consumer pace you and demand to that we And we price the

questions, helps that your hopefully So Mike.

Lowell McAdam

and awful you're point and similar was years five today on point perspective pain leadership see products possibly to I'm to to smartphone thing; you and funny from brought Verizon there the so just on a penetration the and be now; that penetration that people in And I dealing were XX% Hans the areas in gotten. it's we've from that's I positioned that's to really we that much postpaid we that asked mentioned remarks, mentioned an at no people's than change be growth, with or when way don't excited you are my teams we see going my this to category to get in of five Mike, I are XX% 'XX in XXX% need much want many Sweden, one you've penetration, going with at penetration an wearable's, about indispensable look over market you're different like and applications we're and they're future around opening anymore saying, just business had the country things that. remember we're about I'd think that all postpaid on providing sorts I or any but when big and industry it points get can't you Hans's on you of as so at and to home opportunity see for customer will we're why look pointed think XG, going got now; see this, see and are at have more smartphones to penetration where penetration was back businesses the that and literally lot of going on there and years that career back -- you so questions lives. X% I so is add philosophy And way; and different going, together all headroom your now

Operator

comes of next Craig question from MoffettNathanson. Moffett The

Craig Moffett

your it to congratulations and let and to join of congratulations saying great you, a forward Good success. morning, people me pleasure parade also I really Lowell, look Hans, the to has been

the Let you I how to about with question me there could; inside reports more discontinued move be -- about instead outside about least least of have strategic successful addressable Oath if been goXX forward press and might ask wonder at advertising if company. the you've I in role discussion the quarter, Oath the play actually could video around now whether strategies some addressable a playing that at of advertising, specifically company would time that you've on you and then just see reports around situation Oath helpful. that as the talk be about part in video and and about the comment the if some -- that had could you video some with different of press you

Lowell McAdam

in Oath There there in see The then out around questions period come it. those synergies put spinning they're is particular no from. reverse and coming don't Hans intention Let let I'll format. of know We that Oath any I in with a on order in deal where me on, the -- and had Craig are that we out to no expected the we his and we going the are hoped Matt for. do see view. talked they we that no otherwise remarks integration to are that see that efforts my so there reason in future about on-schedule, report see there's credible and and

that. clear be I'd about So

fact so it's the and to we view have assets to not we driver major up the to But to On see the overtime. criticize but expect want of we we've always do said the of video side, -- we're that look skating I'm of make, to that we is it's on the investments only fans as linear our today; we're where in that better go network the not that anybody so here, much that sports trying and strategy else's gaming, possible. latency just up of two ago, traffic digital; the know their going, certainly XG, providers, about that's I and content we going heartened those but is every them by healthcare, with with and puck what's see all with the is of in on the of Valley our Hans along light when very they the segments went what time all the met education, focused. capacity Sun when one especially, latency weeks eyes leagues, major where they the was we're

we're So the my together, the their is to other great partnerships always for he to not providers, five to perspective is, that -- Hans developed our this going to positioned to need with has be and I we of partner forward. sense one last be my distribution know going going best been that or to be from belief but not years perfectly shares we're content the successful; I over we're and the owning view a going go-to-guys where that strategies we're competing these we've going industry company see be have makes think contents it's

Hans Vestberg

can look fully the newer our and on with more constantly I to and around side creating happy when to I can great leverage and synergies in we seating about and what the AIML transformation get our [ph] both and comes at assets those and when encouraged see the we a have, them [indiscernible], also really talked about massive Oath both, the I'm for to are forward. and while, virtualization of onboard and as been been with side the a we've leverage today on the for the team, Lowell Verizon to in sort for network [ph], with have assets quite how of I've lot board to find on front of actually that them we mean together are but leading I've we And this do on we're it we we continue of of talking working Oath the that's our with just possibilities synergy Oath, us a all will the example; now confidence and ways going I all of them. Lowell, management strategic decision And the done them we I'm And them. can I'm

can have are So network, the Intelligent feel that, best; XG, we're anyone of best and going Network, that with have have when to to the agree play or to we that connectivity and work go and the attract you're you you're we to course, that and where sort develop. see about with Edge define And want again, we great think going going is to when model opportunities we with can and a only and can where and to build partners. I XG we that can in can good we we and the applications, platforms we continue to have partner I on I assets have partners that -- betting Lowell I that we of

have what So and we do the I'm about we encouraged feeling with them. assets can

Operator

question next Jennifer Fritzsch of Wells from comes Fargo. The

Jennifer Fritzsch

-- wireline wireline component comes down fall the this cities. it's begin first Can of you're I it million hear the the you see explore talk CapEx we ramp about yet -- maybe portion [ph] together? quarter $XXX build CapEx And XX and then that traditional call should here; doing Can millimeter about I'll for I part on fiber I focus guess what And on interest in wireless November, from just Matt that as fiber up spend? to coming guys you of separately do be [ph]? have lot then from a spectrum does comment might that we mean the ways just an you what that if your have of background, can auction

Matthew Ellis

piece in see ILEC CapEx we're up of of CapEx excel the network, build footprint obviously prepositioning so first look be segments, on today densifying the we the -- the wireline spectrum fiber wave and to build the we of build mentioned part the our timing of as but not XX fiber as that there; XG, also a between got outside customer second as between for where but the that largest in blurring segment for cities you is out fiber mentioned. you network business, as say, XG side, so this using deploying just certainly ready in wireless you is quarter shows So the you you'll the especially and of the the but line millimeter

as out to the see evolution from but expect would of component and you that. generation you CapEx CapEx consistency see is a our you're of there, spend next, key the and those the should what seeing to So said build total as technology of of is I continued one number a -- fiber earlier, continuation I

as the about And that of excited to as talk and a So and we deliver we're go forward. about will Network expect part Hans of you should continuation see let trends Intelligent millimeter Edge wave. those it XG, I'll

Hans Vestberg

choice between different think When ways usually of a we in we of our about to all need, data and the what of we couple define usage in we first and last decided of talk network on I order have more think is Oath densify us. the well densifying very paying out that spectrum round and that think to now spectrum, deploying we I for

three the into a we return-on-investment. order of that all best looking in spectra us carrier new to do Secondly, and coming need putting way assets to very of of optimize we disciplined type use is course what these decide in a to And have; when what have type etcetera. lastly, how out can engagement, from to we that we network everything look technology in features

pattern Of these fits see into course, so will up that's different we that how any decision-making with type of coming in that. into in and we are looking options, of that auction look

in process have then feeling and from into wave is we're this what in are be into have will approach return-on-investment. to then disciplined the the on any and way good spectrum need we new discussion looking will needed, pretty it features we However, to position but into that again, our if there we look but we looking holes also technology, the again, densification, about all the on right now; millimeter feel

Operator

[ph] of Matthew is question Nicknam next from Deutsche The Bank.

Unidentified Analyst

balance uses any do hearing using evolve of enterprise benefits if the think how tax can to your for about what next access we from about how for larger in sort year do specific benefits least reform heading the terms And demand sheet; for business this reform, your I'm on the XG, you leverage -- secondly, And how the year? at commercial Matt of today? builds tax then One, potentially should of and XXXX? maybe cases? into facilitate wondering talked acceleration that use strengthen into optimal I on customers in cash are you pace of

Lowell McAdam

think enterprise and is the when about have of all Let's -- when and the start XG receiver to different currencies I to we'll the latency, XG or that we is think with launched going throughputs that. you're right, eight enterprise; that [indiscernible] it security, explore comes

can be customers new Edge specific how how or enterprise of building an course, could see we private build of type here and with them, low do definition we enterprise, slice have services that Intelligent a dialogue with with Edge, We are for in that. latency like the our Network something we to constant of and and were XG the we network

to our that on So the some the there be important features bit if little I are we opportunity, technology them, will deep which all next our these based are doing on on real-time have see innovating XG building as that of before. is are you wireless be for service revision we come which [ph], where haven't customers as dialogue with great type technology again, your we together actually see been a and But enterprise enterprise we speak even we the customer. more that sort N with of of out enterprise done on or revision new that sick XX

are area we on opportunities far in and I very our think exploration I So great it. and see innovation in this

Matthew Ellis

through we've focused able capital is dividend reform know and about certainly sheet profile, return are and networks, allocation credit and back to pre-Vodafone the look, to and we've this helps around ability XXXX. providing strengthen numerous our invest and important also balance a shareholders, in we and get reform talked cash XX to dividend rating tax years now, row the we for in the focus we certainly those your our flowing the we've to allocation; the for on On capital accelerate said the do that's tax want a increased times to question that, and flow the being our

debt the the we what we say sheet in not half with paydown pension strengthen progress there, on the contribution the the progress -- include making we're balance just as good year, but we saw You did so first we also when well; good help we tax it. leverage otherwise XXXX updating you get us when give to you to early too quicker XXXX have closer to but certainly profile's will look to specific done as those would and on views know, reform on forward get than of we

Brady Connor

Brad, have go Matt. we let's one take Thanks, time question, and for please. one more more

Operator

question from of Oppenheimer. comes last Tim [ph] Your Hurrian

Unidentified Analyst

terms Do customer the to And you. more be curious, do it wireless basis? you of and -- converging; just in I'm have do going timely flexibility are use kind like data of this? and seem able location feel still targeted advertising the if you're secondly, timing think wireless usage kind that? on to to Do of really then these networks does of wireline networks and kind converge a unions you to Thank how the in so, about

Lowell McAdam

best thanks for thank for just and to I'd asked today, you that Tim, wishes. the question, Okay say all questions of your you

data, use hallmark don't -- transparency; unless how want it. using customer is we're Tim data know on though customers to First, we this on our

anonymous analysis very lot and customer with we've able advertising think do far and to -- our usage broad customers individual certainly overall old data not value that the of a it's so a based And got about, but clear data. I been data And we're on target to facets.

manage about and we within open of contract clear honoring convergence contract stay side, the we're areas we're we're with forward. go we're that very doing, the the outside On will union and footprint clean very the we the what union that as

view is do we're forward. any to important So again, causing exactly do we a to need hindrance can us, going our it; without to as think that open transparency so don't and what strategy we about we we footfalls

Brady Connor

today. questions That's have all we time the for

over to like end comments. closing we some it turn back to Hans I'd call, the for Before

Hans Vestberg

transition in fantastic you CEO the by yesterday close to have the prepare really but shows enormous. a points think field, handing and in start call course we're Thank Verizon and investors, for and when meeting years, key team you, the Lowell with and me it as is be done, to Brady. of the employees, the here city I'm partners, tenure of grateful to we're few think -- like over you that. fantastic and And job over I this the I would have journey this like the to and that here you're a Houston, as thanking my start relationship going I for meeting I in to And I built have

the second half So a back coming we said, first a financial and [ph] had performance are competitive as everybody, journey pleased as positioned remain achieved strength of to where and the we're led fantastic customer the and on and platforms Lowell. evolution next-generation that. network core And we our growth, all committed and business, have maintaining to is such in using developing with Intelligent to and and importance advantage the I've the as to Edge building video focused and our by will business we're chime-in full our superior positioned Network on we our to in solely of disciplined Oath start of leveraging I about data we've take it's towards to year. operational -- And the ability strategy, across pleased marketplace, also [ph] lead just the strategy, the where opportunities talked half all I many and investing assets confident and you've I'm the XG. XXXX take execute process We're shape for long-term for network, our relationship value shareholders. of the to and see where of consumption, our Verizon, capital prior in we're monetize as we We're that customers allocation for into creating further

Thank it. As today. we we we future, the wait Verizon, don't for build for time you say at

Operator

using and the services. Thank your today. and conference for for for Verizon conference Ladies conclude does you participation call gentlemen, this

now may You disconnect.

Verizon Communications (VZ) 24 Jul 182018 Q2 Earnings call transcript