VZ - Earnings call transcript Q3 2018 | Verizon Communications Inc.

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Operator

Good morning, and welcome to the Verizon Third 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

President Good earnings conference Brad. am with Executive morning, Officer. Connor, and quarter third here Vice our Ellis, our to Matt Chief call. I Financial welcome and Thanks, and This Brady is

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

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

Now let's period. take a look at the consolidated earnings for

earnings include walk per share $X.XX to basis. results we on of would reported special a few For reported the items XXXX, through. quarter third GAAP These that you of like a I

earnings impact was share pertaining and $XXX Oath; redemption of costs and million; million. adjusted The pension $XXX or primarily share pre-tax of $X.XX. million an resulting after debt of with include to integration-related million $XXX million associated the acquisition net earnings a early benefit credit $XXX a primarily per $X.XX and loss reported per charges tax of in approximately Our of remeasurement net $XXX

the to and tax $X.XX table quarter for effect revenue X.X% year revenue standard, the since quarters up slide is items the was the adoption adjusted net compared recognition within X. new effects share Excluding has earnings The It third reform three of of ago. and special these the effect a adoption per of this the illustrated accounting of the in on the of change standard recognition. been $X.XX

a during reminder, As of in in third increase of impact XXXX and per has offset wireless the and quarters an with The segments. reduction in change it deferral wireless equipment all revenue results expense three commission impact service quarter. wireless from a of both this fairly a consistent by $X.XX our wireline been the in revenue share

XXXX full both insignificant in We revenues create per and earnings commission expect then will the moderate to and XXXX in to EPS be The is pressure accretive the in converge. impacts in accretive expected costs XXXX. between year-over-year to to benefit continue as XXXX to year $X.XX income and operating This benefit share become XXXX timing $X.XX. and to

clear comparability this the of results over provide the With quarter. now for turn prior to accounting otherwise with exclude will the results financial call, the the remainder through change you will impact of For Matt periods. this I take unless that, to to noted call

Matthew Ellis

our retaining quarter, our financial technology. customer service of this began we in world's focus and of the high-value proud first the Brady, the laser the the and everyone our XG new continuing fundamentals with history this relationships. you, earnings of executing It Verizon, and ever innovation. just third is by to operational first earlier on XGs Thank In performance first by strong welcome call come continued driving on product, era. and Home month to while many XG expanding exciting the Installations commercial

increase transforming across evolving are all the Critical in our consecutive more quarter, us year, affords demands initiatives IT and approved adoption of restructuring model included XXth In budgeting the and business XXXX, to strengthening win allocation our on in that zero-based in strategy we this parts Board voluntary dividend. has best-in-class doing evolving our the the are capital efficiencies network meet the began initiatives balance announcement our competitive to during disciplined customers and methodology, value in and program. investing from methodical These to our last our excellence is years shareholders. sheet, our flexibility environment. compete of driving capital us to a for focused returning Also, are Company. marketplace come from the Our the while separation of the our and networks, annual the ongoing the work positioning profitability the to rapidly recently

next to X our move technology. and slide network to Let's discuss

for row performance During a customers. our valued other in we U.S. won highest delivering in a time streaming continue quarter, percentage of the XXst ranks position, wins leadership and we to wireless our to the We our network J.D. best performance RootMetrics the extend and quality, provider overall network extended reliable the Power report video recent position Nielsen in awards our And record any experience data than regions of ranked wireless more highest on obtaining In leadership finally, all network in highest six the nationally. most success ratings.

the continue XG are will excited network of come. dawn a XG be era, our the to LTE our we many be for services While to years foundation to at of

to will well requires At to our fiber full solution, of technologies deployment and XG XG functionality densification XG array the cases Verizon, utilizing true enhancements small and network spectrum as current above new use address through meaningful network that XG to of enables. continue millimeterwave ultra-wideband the an provide additional cell we make experience. to as the technology We provide believe that quality. value

deployment spectrum of requires array edge critical and fiber deep cells, Our network preparation mobile a computing nationwide resources, for small XG holdings vast capabilities.

of consumer continues firsts. legacy been we which our XG have by years. of Home All assembling for Verizon

a offers four broadband proprietary on in that now available products spectrum. launch initial Internet for broadband capacity millimeter positions and leading a XXXX. rollout providing us wireless using markets wide speeds wave experience standards with are We wireless rival in of revolutionary Home The larger service XG in-home This today. customers product

gaining are of industry to will global that the insights We experience of equipment. to valuable refinements prior standards-based the drive customer arrival the ahead

We first have intend that we XG to along said commercial all the not to deliver consumers. first but launching XG the be mobility true initial world's in also only product to

call we completed Minneapolis. with global first the standards using smartphone During quarter, network a facilities compliant our world's device test the end-to-end in

on as residential will soon devices XG the As XG network and the are begin ultra-wideband in era. standard our available new the mobility deployment and global of broadband equipment for

up slide closer highlights at reported a basis to take revenue and $XX.X consolidated X.X%. a quarter. turn Let's On X was consolidated financial look of billion the third-quarter

service as operational margin excluding from year's the consolidated to efficiencies On wireless as higher or XX.X% across service new improved and business. EBITDA was basis increase EBITDA a customer to margin total of X.X%. to revenue billion continued impact revenue the an due up of was billion revenue standard the step-ups up third-quarter wireless $XX.X of The items due per primary prior which was X.X% recognition improvement access primarily performance special Excluding adjusted in Adjusted well increase revenue increased was the the in driver plans account. connections average XX.X%. $X.X

to $X.X year-to-date, billion activities. expenditure business the capital our track of billion from and The a Our operational remains mix initiatives goal cumulative four-year savings excellence savings cash on of have program for period. of of achieve produced cumulative $XX

focus on Let's slide on now cash results flow X.

structure driven $XX.X reflects deployment Year-to-date totaled $XX.X XG flow and of business planned billion benefits an deploy Year-to-date We benefits tax billion on has third program cash architecture $XX.X transforming sheet expenditures to $X.X strong supported the from strong operating securitization to full by the services. compared will our of expect supplemented advancing quarter the we from from of The the OpEx Home, our between from activities of operations capital increased while additional and This the the results XG the generation. earlier of to capital allowed This completion the was is launch Edge spending be and During the XG to flow by the this pre-positioning excellence of of all the significant $XX.X cash cash the reform provide now Network. billion. continue for payment aggressively transition and $XX.X efficiencies month, billion capital operating the for past. from both billion markets to Intelligent spending in device CapEx of and cash and year. networks make drive our industry-leading free plan net ecosystem flow This nationwide investments year increase us XG the network, on-balance to financing. which fiber result prior demand year-to-date. billion of

provides us and strong Our financial balance is sheet with flexibility.

through continue confidence different of levels to comprised billion billion which which maturities We of maintain total of near-term on-balance billion $X.X was give operate $XXX.X of financial and environments. low market sheet the $XXX.X ended us We debt, debt at unsecured quarter with securitizations. to

year-to-date strengthening a year $X.X tax reform Operational We cash total from $X.X net X.X of to allowing discretionary has goal balance our times of make of change the the billion made the the progress to have in from and of of in to driven year. beginning programs. adjusted a good times benefits to billion while us resulted EBITDA benefit this employee sheet. X.X flows contributions our debt towards decrease have since This debt the ratio in

the revenue. plans revenue higher let's customer Total X.X% trends to move in on quarter of service to average operating reviews equipment increase into by the operating step-ups Wireless primarily connections billion slide revenue segments an third driven increased Now with service per primarily increased and strong X.X% by wireless X. price and in account. driven in wireless by starting $XX.X

increased unlimited customization superior a third individual higher-priced wearables. sales match quarter, our experience. while by of and a handsets basis network and needs to mix on options equipment Our provides of XX.X% providing suit revenue driven increased customers In year-over-year offering the the

has the end XX% device plan prior year an an the year-over-year. customer stabilized of our growth $XXX combination Comparatively, business postpaid pricing growth the to phone consistent was prior had gained Approximately the postpaid to to with revenue EBITDA segment the XX%. in of Our The base. quarter X.X% of phone of million, within the unsubsidized XX% increase of efficiencies have year. same of at and service quarter led migration our outstanding payment base

revenue wireless quarter EBITDA a as percent margin total of XX.X%. the was For

now addition a smartphone the quarter, to of take operating wireless the from were XXX,XXX. phone is losses compared tablet XXX,XXX look sustained to last including of with quality ads and and editions relationships to closer performance net our churn postpaid XXX,XXX compared of expanding net X.XX% X.XX% by other diversification coupled year device and XX,XXX quarters postpaid Let's including postpaid experience connected our in by Total phone network momentum a with the net XXX,XXX wearables.\ Total at personalization of reliability previous retail of postpaid led operational up metrics. wireless customers. offerings. turn XXX,XXX X.XX% unlimited was XX the prior slide of net Postpaid third result In and totaled subscriber Our and of year. churn gains our

increase phones were down due We phone postpaid fourth activations expect postpaid Total the approximately season. device to X.X%. seasonally to quarter through were of holiday which the churn XX%

rate to Our net upgrade on increase additions retail focus we offerings additions the the prepaid an the this The in size Within In X.X% year. declined to overall smartphone was of X.X% change in XX,XXX base activity our XX,XXX. third in net prior the segments. by our down of prepaid reflects our value-added prior prepaid of XXX,XXX from ongoing postpaid compared had quarter, year.

shifts driven Now, core continues our X.X% the and legacy decreased in ongoing cutting segment high-quality the XX,XXX broadband Internet operating due competition. offerings. segment the for Fios technology high-quality to quarter in of secular growth Consumer Fios wireline from connectivity. ongoing be video products pressures shifts on legacy to technologies decreased our XX. markets by revenue declines from by to of offset customers for cord by continue due in X.X% partially to revenues Total revenue Fios with let's losses our growth results be and impacted video to by X.X% offset wireline move offerings Fios linear demand away Consumer broadband XX,XXX growth. fiber-based broadband primarily slide increased experienced Internet as and quarter. by

pressures quarter constant respectively. and on Our Results revenues the Enterprise these price XX.X%. the time Enterprise businesses X.X%, Solutions and by the and Solutions, continue of revenues Markets a Solutions declined on for in X.X% by fiber-based X.X% was at Partner X.X% which in basis. each EBITDA products. products declined this compression, currency Segment Business to offset margin growth legacy reflect

trends secular on products, compression margins. increasing to on price wireline expect We pressure continue and put content legacy costs to the

IoT to slide businesses. Let's media now and XX discuss to our on move

same billion, third below Oath year. which revenue quarter the was For was last X.X% quarter, $X.X

news, and AOL previous services across target integration media billion realize offsetting XXXX. We are The business all meet focused finance we Oath majority in to is mobile from of expect to by by continue, and the advertising partnership growth content growth seeing distribution Yahoo! initiatives core of completing search up and of by video $XX around those usage, platforms our is and implementing desktop and to not revenue with on at the Because revenue than believe leadership pillars including pressure which sports, and search the of in entertainment. returning synergies and positive more the likely we legacy team our is pressure desktop make of products, our usage building the sectors Oath products year-end, revenue NFL. assets do to of our

utilizing reality Total approximately we and XX% Verizon. business, our all such revenue artificial of was including are total IoT Connect was capabilities reality as telematics Verizon year-over-year. revenue In Additionally, technical augmented Oath's intelligence, $XXX Verizon million. up across Connect virtual

while now third base on focused summarize networks developing to solutions. remain move quarter We expanding platforms Let's our invest new in strategy customer results. slide and quality XX to and our our high to our

in for lead continue XG building while We momentum XG to network. our performance, LTE ultra-wideband

of people signals of XG work. era world's beginning the that the Our and commercial launch first transform product the will way live an

Edge enabling efficiencies the Intelligent throughout future flexibility Our network. in the and the delivering to at through requirements our the investments foundation customer meet core infrastructure edge for Network of strategy the lays

of are will I so our get can the in With ahead We your to excited the financial the current about our back that positioning to marketplace turn questions. us. opportunities strength call we and Brady,

Brady Connor

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

Operator

Thank you.

the first begin question-and-answer from session. your comes now of Feldman question Your with Goldman question. Instructions] Please will ahead We Sachs. [Operator Brett go

Brett Feldman

certainly mind. don't and of program. to timing cost wondering two back sounds Thanks are come there, if any outlook some as Yes. efficiencies enjoying to it the if result considerations. your want am CapEx and there you are I I a you just savings lower like

then pocket in bit. a to as it are ARPU down ARPA on maybe bit hit some it to ramp trends but you you could So spend was level we rate is for being driven I phones And as How example in to haven't strong of are you hoping people XG? deconstruct air you continue strength devices the more product that see little unlimited? quite of little particularly much an run XG accounts? on Thanks. a take And attached is what as there. extent

Matthew Ellis

Good Brad. morning. Thanks

adoption how and some management whole really benefit using to certainly systems, and host seeing ago procurement we So the of excellence changes and of organization we activities organization models, of have see inventory run on utilization you the are CapEx our network doing the tools capacity This year things. reorganized year. a our when other of new throughout been a the changes we benefits started we operational that analytical

is year. last year. I to everything this you this done we done that get will is tell showing XXXX. that are So in we activity It began up wanted getting

air We pocket don't originally air an pockets. - see expected are we I used here. just see you initially I more don't it to. efficiently doing the word than And

XG We for the now. network the XG transition a have years for from been pre-positioning of to number

and open just done so get up And done for we more got doing when great job team our on more it efficiently everything go So forward. expected we January. us this views year opportunities as to. talk into the that a of we again in But has we will will obviously XXXX beyond we've

ARPA you it's side and On mentioned coming been some seen the increase from largely we've as certainly good this year step-ups.

from a they amount increase results been in We of But they the per and of customers have is another unlimited there the seeing step as there an onto will have I good then and tell seeing we ARPA. good experience up still been to well. runway in plan you connections some see as we account. plan quality overall there one get

at we think there So in go the wireless with excited to and some momentum moment way the with that have still it. I is

Brett Feldman

Great. Thanks the for taking questions.

Matthew Ellis

question. Brady, next ready the we for are

Operator

Thank you.

Flannery comes Stanley. Your from question Simon next Morgan of

go your ahead You may with question.

Simon Flannery

then think and talked about Good in XG path you Great. so we early Matt. And self-installed that. think Thanks. and standards-based are to accelerate know us Thanks and for getting far. a XG the a you particular any don't the can next Home? is quite you lot. timeline launches about the morning. bit. looking a what at year solution I terms if seeing is commentary there you that What having gear as in said give I like of would a you on

Matthew Ellis

Simon. Thanks,

mentioned in install into that part an these will to I global would impact more big get expand as in that on standards we will you have of started we're coverage XXXX. on start learning beyond. to equipment larger as as markets we since performance we've And doing the the our this yeah, those are as XG add are when seen roll-out now next So, a which started excited we us we learning we in we've are benefit A become experience the and audience. expected expected they will process. Home four say I that we technology And XXXX is revenues what good era. you installs that and we month. consolidated getting installs. significant doing works, would that much of XG getting expect product and year the The we And customers we that earlier lot self-installs. are get

global about a of will the broader us else. everyone across will that we next standard differentiate when just get customer out level year, rolling geography learning a experience we the to on So from have

Simon Flannery

Okay.

that is of coming we mid-XXXX in gear sort on to scale? start this So that see

Matthew Ellis

to Yes, we are develop industry really dependent on it. the

to the is side on from and the ready network the network both when be manufacturers. the will ready OEMs customer We deploy or the equipment equipment whether that customer side be

push to sometime will happens. possible the get industry we quickly So XXXX, how we that in will as see soon as there and

Simon Flannery

you. Great. Thank

Matthew Ellis

next Brad, we the for are question. ready

Operator

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

You ahead your go with may question.

David Barden

for you little guys. voluntary the the could taking elaborate questions. on a Matt, Hey, kind separation program. Thanks of

pike the to And that With are next to sheet What potentially and the the millimeter balance from the inform parameters organizations? What had on the coming wireless so know on expected margin got what looking what XX sheet the question the is the operations. C-band that of And kind tax You is where goal there anticipate and the down then to of wireline balance willing months? is in across see where we that spectrum to you've the spectrum the and you can market, looks the around reform do market. with impact windfall what is? the timetable like from we've second coming delevering spectrum cash and wave flow limits we to respect back good be? success are Thanks. the

Matthew Ellis

David. Thanks,

program of are progress we zero-based future while certainly marketplace. overall take what opportunities the have are that adoption methodology, focused be into I done. that along come And and So there you can to are at whether we we we the is today would the glad and the any about think of financial Hans of not budgeting on can it's voluntary that our have as Really part in that see on successful what looking the but today are business making excellence well. separation - is made things of way sure initiative good suggest the advantage is other that successful some I the we we be the performance it just we that

around way do there significant have business would So the today process it saying what are is? you - that this we improvements us. really is we up if scratch setting it about And up you our is the have set were from

the business And continue way the so driving those to XX of the to is and we we improve the do of voluntary be next transform the business continuing to over the part will changes separation and months. program course across efficiencies evolve

In is impact of terms of to - it soon of too the tell. it the size

in We the are where accept choose to offer. can employees the middle of the period

of to industry start we compete the are of come will look size this everyone. the share cost the soon terms is get size transform But too we certainly the When that be to sure business, it that the charge to successful irrespective continued to that will in right in and in will the the benefits So say. XXXX we make is the part through information have fourth able of or that how initial just have run of drive long to it in of quarter we with to to the base develops. on

the flow driving balance see by tax sheet, the to we've certainly glad this helped that certainly the the a operation lot cash year. progress of of made On Strong also but business reform, benefit.

sure of the glad have progress you the about times leverage see may key comes going balance so advantage get into flexible or start I'm So, parameters that that may up. acquisition at be from sheet structure any us a to that come that times now, making whatever X.X gives and we else. about specifics we spectrum not down to The do anything what the not to is have year type of to whether X.X for us or there. the seen of take around

across advantage we'll that think you got we we kind along. of the questions balance cost if structure sheet balance any come that of make those two opportunities we to to And along. flexibility that advantage then take of can So we've of got sure along. we've sure you we any take opportunities take that make got the And then had, advantage sure sheet come make flexibility can opportunities the come can

develops be very can industry we matter no come the up. So forward opportunities and how that adaptable going the

David Barden

Matt. Thanks,

Matthew Ellis

ready are the question. for next we Brad,

Operator

Your from Philip next Cusick comes of JPMorgan. question

question. your with ahead go may You

Philip Cusick

Hey, Matt. Thanks.

talked this from And tailwind should about and next two still continued a to $X.XX about pressure. we do that zero call called ASC your from of about the from fade out then stable, some you think you second, last but Is in essentially or you comment year, a years. wireline here? level were that XX% XXX good First, expect degradation? margins will to that $X.XX pretty the How

about do EBITDA growth the think think XXXX can driving revenue we in in underlying earnings, Company you reported and the As earnings we XXXX? expect grow and Thanks. to

Matthew Ellis

Phil. Thanks,

So, range be on wireline, revenue certainly level. margin. yes, provide pressure below term depending the we the that last see quarter. certainly on on a But some to over in margins on expect the little that the in discussed near XX% above, Would to with a call be little that that around will the trajectory business that

are continuing while business, wireline we we've both the revenue on something the address and keep we'll it. So but on cost working doing been that's side trajectory and the a focused for to of

an this As when year. of year-over-year $X.XX that basis you back still GAAP and growth focused talk certainly we you about we XXX, about what the out benefit to on are doing. But of X.X% on $X.XX impact see adjusted yeah, and EPS that's

some you year, really put year's in and financials as all the rate from get year will level around out top over are the the comparing its to this and way year's net-net accounting we $X.XX, or But So next at benefit EPS that the both on prior way so our we the flows But, XXX put got $X.XX go we this for as right and And we take the about ballpark. next have showing obviously around think the next a growth line. current half-ish growth couple - noise you number focused the year. on and are the year to then to. through at of certainly just in back years, getting of you

Philip Cusick

Matt. Thanks,

Matthew Ellis

are the ready please. we next question for Brad,

Operator

UBS. Your of next John from comes question Hodulik

You your ahead may with go question.

John Hodulik

if Two Thanks. I Great. could.

this as get profitability that have Does to $X commentary declines we than and to the and there growth change small the more Does cost as in the at you XG allow rollout the cell there we year? business Any XXXX? less You for about internal have of well on as faster or look could infrastructure some you cells the approach go and Oath. in then closer rollout you have maybe change find passed sort Oath citing guess in to out reform. some broadly and to targets possibly savings XXXX? Thanks. XXXX got, of losses revenue of FCC look commentary XXXX a some mean XG the billion for that out the And little there on sort I on you the small you and that to

Matthew Ellis

Thanks John. XG small Yeah see. the that the cell the velocity around we on necessarily rollout the rules certainly to we FCC were see doesn't glad adoption, increase

are plans. providing XG. for little municipalities permits with build the that Certainly out engaged I small a fact been material the on or XG have more to that don't see happen. impact guidance it teams country they across Our getting should to a how up But put for quickly like our cells having whether

while local are the as a helpful going are federal fast And We as municipality-by-municipality. we activity it very is still level can. rules

progress coming now year that is the the out Yahoo their We complete. The of substantially have by will closing in on there. a certainly from profitability said the integration we On an as fast going work good as year. we standpoint comments the a ago. good on not of end lot we'd complete largely of from as the EBITDA quite progressing a synergy Oath So like, standpoint over but revenue on team's made targets think

are too So its Oath then business what with business. potential well, side just and managed we need of of doing that and business will we the to is cost we being achieve the the in happy the be revenue side

John Hodulik

Okay. Thanks, Matt.

Matthew Ellis

the Brad one please. next we for are ready

Operator

next Your comes MoffettNathanson. from of Craig question Moffett

You may ahead with your go question.

Craig Moffett

couple I ago guys. morning, question guess if a questions about want of return I Good to Hi. growth. just to the

that the a If grower to be get pieces you You've of business results are GDP point? the today's grower. at can past moving said something this a in like GDP that always kind some I what back back being from step

Matthew Ellis

Yes.

we results get the posted today, back at say we to not to level. to what look have you would sure when that Craig So take it I'm

advantage to by are have we the and the and and to by And consumer see and it do have our up the wireless offerings is want top results the you customers when way up still get driven think ability paired seeing When runway of largely growth step we I the we have line year as in best We business see at you significant terms what's business. got it up. the they take in so in bottom date the network can wireless we as customers the right I network the with on and line. have. both that for step consumers earlier to you said of going

connections is So of core the stability during well, the as we of continuing focused and we number quarter that in in very ARPA momentum. on our a level had There business. the like increase increasing high of

So that's will to And as results. the we the good we driving have then continue think to we I morning. post reported as this top-line opportunity growth manage also side cost

Craig Moffett

get to an this do industry you unforeseen in competitive ARPA think follow-up intensity. just get of ARPA penetration you just obviously you I eventually with to respect barring big What ARPU could and maturity the ARPU I XG. or in any to changes given that presumably the mean could If of story kind it's business, as presumably growth

Matthew Ellis

Yes.

pockets of there. we demand to continue out look So for new

but now XXX,XXX for quarter. long net You talked know, the we've we time a posted this smartphone of adds comment during maturity bXut about

opportunity base So customers. to add do to still is significant of There our continuing to that. are we a

often current customers of of We opportunity to step-up in time there have unlimited. different bucketed a their And have a to the customers stepped they over up and for device price now to They our plans into on then step-up we data get number come unlimited too. plans. options from levels

So XG the be in we runway in developing we here customers still before have wireless industry the of of base in XG transitioning too. we then it world. know to business talking And devices the wireless largest about the terms will over

we So forward. as our business will to go I wireless that grow am certainly comfortable continue

Craig Moffett

you. Thank

Matthew Ellis

next we for Brad, are ready the question.

Operator

Citi. with of next ahead question question Please comes go from Your Michael Rollins your

Michael Rollins

Thanks.

past a I an $X the cadence in And year. think cutting. cost billion you incremental the the looking about bit a were talked for You was

years. cumulative a So that through you would over $XX billion get four

mentioned You $X.X months. are billion you nine through at

$XX there some more just over just cost And over is those even from Thanks. future create time us to-date cost-cutting an is years the than next in pulling about broad Or is the secondly the forward pulling then cadence billion you if the could So savings savings? terms? opportunity billion? progress couple the right of help to $X.X just what think

Matthew Ellis

Thanks, Mike.

as they ways gone the the made see in about now in of and executing looking are a cutting think in show the those. we business year. opportunities we progress have of glad number lots the are phase as So the have And And cost certainly different of we at started up. against teams this to seeing different really

certainly to the will provide there glad we get made. we that as the and can continue. but this certainly see. I as We years? will can at and not and change running number billion possibly progress point we a efficient we So we time sure Is are as $XX in have four being as any opportunity to than that wait cumulatively good business more making to are aggressive am over

really period the savings update. of terms nothing to those the over cadence year four In of

I you think want opportunities first deciding program going of start the imagine lot the just this upfront identifying you energy how you are can still is year. a go And like do deciding are we to after as a the as things you to in them. there

savings them necessarily not turning you are And so immediately. into

we've think us a I still got So standpoint. ahead from good of opportunity cadence some

Michael Rollins

Thanks.

Matthew Ellis

are ready Okay, Brad, the we next one. for think I

Operator

question Fargo. Fritzsche Wells Jennifer of from next comes The

go may question. ahead with You your

Jennifer Fritzsche

about seeing they with TAM your as officially X Great. like a talk Obviously their for there? Are Because these any signs of ask bit AT&T exposure seems it the after churn strategy onto having have Can to wanted subs. early you identified I that? seeing public you little you in taking is many What hold are sector. you. in the Thank sector FirstNet you Thank advertising are have safety which to million about question. that? you the anything some the or as customers. hard going this

Matthew Ellis

strong people on market focus be will large continue many segments We it and of you in when sector we sector. that have continuing on and share is and well partnerships, years perform things with years very that attack to to in them, Look, it'd built as the whether it'd it seen to do, be provides public over be other few opportunities whether go different we've sector to past in FirstNet decide we of the for or some competitors do years.

have. customers, based that reliability builds relationships building a see I been on It's basis. the with on market effective defending our that and deep on they the think and at performance the very have we consistent we share

of across will we just all win. it's typically do we business, Jennifer, And we that execution. do and parts really that consistent about on So, basis a service when to continue our

Jennifer Fritzsche

you. Thank Great.

Matthew Ellis

question Brad, move next let's Okay. the please. to

Operator

from of Jeff The Nomura Kvaal Instinet. is next question

ahead question. may You with go your

Jeff Kvaal

Thanks I may. questions a lot. if Two

first is The CapEx. on

been the we I be XG. that that pretty where think not clear from where measuring a or associated wondering should surge that or be with am should in you have that Is if began we guidance spending year we with from. you in us how in we can secondly tell I has expecting XXXX with am surge although about from obviously great improvement the over here. wondering And a what year what bit. expect on are churn with then little I that past happening us can couple from CapEx? Thanks. the ending what's churn, we reversed years and with XXXX improvement premise

Matthew Ellis

give you guidance level. XXXX We'll as On CapEx, for Jeff. we Thanks, really Year. the into no New surge get when say so

XG. on spending be will We

but are may see on XG spending You in we a change not intensity, today.

of about But continue a will we in lot as in to place. we've talked assets have just XG the past, we already as quickly We uses spend XG the as can. on

we've network four XG for the eye densifying network over pre-positioning the As doing also past benefit we've the with that. the been of we years three, been an seeing to it now, XG. are And

us CapEx, been it's think not that XG the to ready out consistent I get starting surge network and on messaging, to massive deploy seeing and see roll we've and pretty you in and a As show up.

So, the efficiencies. Whether within things in Network spoke Edge excellent will bounds seen continue doing you've reasonable us of earlier. look, through to the the which I network design, the I advantage business it's we're is think we you'll Intelligent from create across side past. see on about what efficiencies will that stay the the whether take And other of CapEx in

the We will experiences, we but ways customer it for provide lowest want capital doing build the continue to that best network look the to to possible at intensity. build to

combination long obviously of whether customer get proposition churn for which results XXXX the when we've couple you obviously about have churn good that's on XX the And the or And year over we the well, the right will XXXX. or as we've so, days past more plans you that great adds get have churn activity and when now best the get a the on feel had good I in over for complete a network, So, you We've of that's you the on network pretty years. seen of equation. about a we the are performance time past, but whether side standpoint we mentioned, talk the in as net From the for right. as seen side.

things. using the some is there with players and look in additional agreements obviously MVNO other today the So marketplace

continue churn and strong few up we do see performance So have so. expect but we'll as there, to look here just very points may tick forward a to we

Jeff Kvaal

Thank you.

Matthew Ellis

Brad, Thanks, next move question let's please. Jeff. to Hey,

Operator

of Your Guggenheim question next comes from Partners. Mike McCormack

check your your you may ahead to with mute You question. McCormack the phone. button go on Mr. may need

Mike McCormack

sorry seemed a unlimited what year maybe - a be guys Obviously Thinking adds Matt on gross appears there. on you phone earlier about gross Hey, be just might the what about had a adds that. maybe in year good comp. like in introduced year-over-year had pretty basis. to quick you last a drivers Hey, the tougher it uptick plan comment the so

connects get sense we we real we are seeing prepaid trying should downtick lack video surprise Is a be Just function Fios else sub an churn whether yes the on but no migrations on aware video of? for in really the the that site? just to of Thanks. guess anything then any there. of I in Fios uptick And seeing marketplace or are a in losses or side

Matthew Ellis

Yes. Thanks Mike.

in comp I'm mentioned adds revenue year as we the everyone you on and was years. when So gross the sequential And XQ three saw phone XQ. in about recalls the sure first growth last

a So came quarter year ago. a as from we into quarter we were we good knew this lapping

When us we that to our at standard have tested the been fact what experience. pleased we team And had phone set rest performed performance have about about industry. think experience. improve. since the wireless the in as combination network the to sit the XXXX, are all to prepped are for was as network quarter to that see think continuing we I and of adds, this the the we you I widen really in And we it's So we happen half here we lead time to for organization see of the is And is And way the went the unlimited network the continue people when that certainly talked on on marketplace. moving the concerned seen the gross network second the unlimited. something going of were great has said performance in with unlimited in the

there. get it. you out the that's And of then offer So, part right

to since unlimited. it. see enjoying launched to So unlimited we And other so. we to added we flavors experience have customers do that and continue them launched We expect

the net we of prepaid migration terms is the attention positive within to third XX,XXX. the quarter In our I thing smartphone adds prepaid-to-postpaid of your in point had business

while level prepaid adds that not recorded certainly there So of driving the postpaid the quarter. net we some to is smartphone in from migration it's XXX,XXX

experience to happen performance with we and proposition happy at the that and right there. combining point. things good saw customer comes that the very network the back And are right again we So

broadband. fashion. touched or Fios cord-cutting that side I just what great that the a have you experience. What is OTT the certainly the now we got saw - those rely business in-home it you those or cord-nevers to for to seeing is in-home their I out we to is XG. And Fios customers strong We there going have OTT best entertainment the Whether who am Internet of pleased broadband net your be entertainment says believe make it's continues. customers side want you're think video who video can get you Fios the an there are through for we broadband demand broadband be as if get adds trend. have On said experience sure And from of on XX,XXX. is before for is about on here for That whether we secular on want

on side TV numbers, pressure continue would we to the our to the of broadband continue So to but Fios expect will grow see us I franchise.

Mike McCormack

I churn it less there the side? is on Do am video connects in or sorry you coming just Matt. in an uptick see

Matthew Ellis

only. coming come But us would off of start traditional too. triple in coming in come Well And the seeing the more of with less new as in broadband part see number is side, less adds customers versus - and think mix and as equation upfront more only the connects its we customers play. see I as a We certainly still in play. it's triple churn new I gross broadband customers

Mike McCormack

Matt. Thanks Great.

Matthew Ellis

we I two are to take Brad, going Hey, think questions. more

let's Brad, So please. with you next go us? to one

Operator

The from with Walter comes BTIG. Piecyk next question

question. may ask your You

Walter Piecyk

looking my and on even has to prepaid to your the lower really tiny up give in divestitures or mean, TracFone prepaid just recent then how sell years. required to product? your can And helped make looking launched? business? be the expect to T-Mobile side, by continue were has prepaid make if EBITDA upgrade Thanks. relative sense looks fourth a going question scaling to second a maintain it like acquisition was rates? X%. us you some of the the Sprint relative rate, benefit And quarter you in business. into decline to Record cash if the overall EBITDA an Matt Thanks. interested Does sense Can been to on you was cash so Hey, upgrade lower kind that a through far would it obviously even the low, XR I And is that it in XXXX,

Matthew Ellis

Thanks, Walt.

come we board. the certainly network to our wireless the bigger want to the of on opportunity Verizon part however the want on is to customers while business, So they postpaid experience side, give prepaid

of add And So change have we approach our all value on look business there. that seen certainly us does, parts the prepaid our to our business focus that the you prepaid prepaid not value. customers. so We part segment of

offerings say, whether the You small ways prepaid, should And will spectrum evolve and full but expect are we postpaid, of whatever. a provide prepaid on us across customers continue anyone But will other any we of focused is adapt customers, that not to as to to certainly you of I'm to look is to we there. for the what be or offerings part That And on. business. important our offering business, an continue is speculate the evolve to - not it else's customers part time. there product or going over our on. so

We are do and so. offerings focused to continue on will we our

the the there fourth decline, us. season the we or ahead anytime be business. the lower into quarter, will not see the has has to couple there, fourth of some the we the in has Obviously, we Certainly in rate years upgrade it and benefit see into from saw seasonal activity decline, in to the performance of are part tell. and quarter it's operational of the bigger cash year-over-year slight flow say soon whether come at rate is that fourth a benefit rate. same uptick would one helped. of the heavy to levels upgrade the still changing as But last whether Certainly see too terms will we expect month we certainly been quarter of the would I don't I get while just soon. In upgrade the

devices there great Pixel they that be seeing had been have as are for Apple Google out device you whether as new In strong devices. that the device, there, are a terms you very out expected. And and demand as well. know, And and of we - there, also performing new the mentioned a we about is

I quarter see seen rate over will couple major past trends don't for the we've see from the whole. But as the a the comes we out change a So years. where upgrade of

Walter Piecyk

thanks. Great,

Matthew Ellis

I got Walt. for Brad, think one we Thanks, time more. Hey,

Operator

of Bank. last Deutsche Matt Your will Niknam come question from

You question. may go ahead with your

Matt Niknam

Thanks squeezing for me Hey, guys. in.

to One Enterprise ones. any share any late how has you if trends color quick going of and competitive two pricing enterprise, been there. Just have been that given players intensity would change opportunities monetization in can there to on on then whether go question back of with Oath relative you the evaluate some Oath, scale space? And relative are there Thanks. the larger on just the in

Matthew Ellis

Matt. Thanks,

things. focused the So, on on is team Oath right the

be The technical data totality across get talented came strong those some are they driving focused mentioned, in and is the the Oath really we not I assets that working is they supporting the Verizon value, it's efforts people what intelligence, out very business the for we harder And also business of hard them that'd have. there business and that And analytics, and that as and of taking assets are in and And the that's skills said, in video mobile offerings. growth this people point. VR. have significant they on, people, going value see demand skills, are of too. the is the yet whether at I of artificial consistent to deploying with team with I would As we providing point great are the but the to believe some quality there. they around

in profiles do are We're well. more, their would I change to in businesses looking say pricing seeing connectivity of change the businesses, we seeing major there and side, Enterprise intensity. no competitive as the On the certainly but pressure also

is going what's today, doing continue success looking just to wins to chance have where And we not space. focused The do as on the for continue of if we we is are And if They've had So very for, enterprises will tomorrow. success keep I team this will on we think develop year. our good determine that be products but a there to trajectory, that up. in to a we the number our that, end for determinant of that that. like

Matt Niknam

Matt. Thanks,

Brady Connor

Brad, Great. time Hey, have Thanks, Matt. the that's we questions. all for

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

Matthew Ellis

close growth points. offer. for key is advantage the to positioning few The call Company a have we of to the like are long-term Thanks, I'd they here XG and by of with Era full the taking Brady. array opportunities

financial and building again our for the our model, platforms for we customers the your today. performance confident led creating disciplined operational During quarter, further and usage, and in creating monetize competitive data allocation strategy solid marketplace. remain you our priorities a and in by maintaining a capital We time Thank value best shareholders. to networks delivered

Operator

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

You now may disconnect.

Verizon Communications (VZ) 23 Oct 182018 Q3 Earnings call transcript