VZ - Earnings call transcript Q4 2018 | Verizon Communications Inc.

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Operator

Good morning, and welcome to the Verizon Fourth Quarter 2018 Earnings Conference Call. At this time, all participants have been placed in listen-only mode, and the floor will be opened 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

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

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

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

website. will City, leadership this Verizon on we February the IR addition York information be about hosting webcasting will Hans In and Investor be on event an event our XXst, comments posted More New to Day in presentations our team. today, will and be by

results of per we In several like for full-year special that share would to the of share the $X.XX a highlight. These reported consolidated earnings items take let's fourth quarter fourth earnings reported $X.XX basis. Now, and GAAP look and on per include earnings I of at full-year. XXXX, quarter a

and loss and This about earnings quarter from for consists include and fourth pension of net billion. million, pre-tax OPEB Oath items $XXX previously mark-to-market of annual million. impairment charges announced and of reported $XXX liability $X.X goodwill of billion, special of net for loss integration acquisition Our our severance for a the a $X.X

recognized addition, benefit an of of wireless to reorganization internal billion deferred entities. $X.X related we legal In tax the

items, the was per effect quarter. Excluding of fourth earnings in the share these adjusted $X.XX

Excluding the effect adoption items the the compared recognition year tax of standard, fourth and X.X%, up and a of adjusted the the revenue these share per effects net to special earnings $X.XX $X.XX reform in quarter, ago. was of

adjusted recognition adoption reform full-year, per of of effect ago. and $X.XX, On a is now the year year of accounting the full has The for tax compared table new the since up revenue to the adoption the recognition. the standard basis share excluding change illustrated $X.XX same It the a on earnings in revenue for four. this standard been was X.X% slide

per share As of an fairly in segments. the commission in results we wireline it from creates offset fourth $X.XX been consistent $X.XX quarter wireless our expect In in effect share a change due this in wireless higher headwind, volumes. of wireless reduction a full-year. for to costs. XXXX each fourth to EPS of from deferral wireless reduction slightly of revenue commission in standard in to year-over-year about and expected the half has the a due the benefit and of the impact and impact The which with is XXXX smaller seasonality revenue and increase The both throughout the XXXX, the XXXX adoption XXXX. the a of be benefit deferral quarter The reminder, expense in was per equipment service by

prior periods. change of a to For exclude results take the XXXX. the revenue accounting of I comparability impact through Hans now that, will to recognition financial otherwise noted, recap With the with will you the to this of remainder call provide call, turn unless over clear

Hans Vestberg

morning good was what XXXX. great of in and This have Brady, accomplished they you, proud to team truly Verizon. everyone. Thank our a and I’m year so for

around loyal customers, with and met focus I work the solutions, our needs. in on customer value are firsthand I traveled doing have they As meeting creating employees and pioneering and great seen that

and We’re solid customers was balance as We sheet on strengthened experience our provide we continue financials, innovation our networks. as on our returned year. profile. trajectory fantastic our to XXXX the value forefront delivered rating credit a remarkable to of technology a with to on shareholders achieve pre-Vodafone our

put we best basis, on XXXX invest Our wireless as growth. and and remains best on a providing in a to a approach was and experience wireless the allocation network. to dividend. nation's a Verizon maintain our on like networks in by Board revenue highlighted consistent earnings service the our disciplined strong our like-for is testament This capital focused Financially, to the position

of drove Company. in business revenue which and position these initiatives, Our leadership our and savings momentum XXXX widened delivered network our was combination a solid continued operational financial across and cash bottom growth excellence our line in performance delivering the We through performance.

data of Home data first complete a smartphone. October, were overlay to in world proudly complete in we the enhance XG best-in-class Our XG the for recent experience all transmission was were XXXX first performing evidenced And to network better first our on ever, than wins were as from the firsts. XG our our extended and RootMetrics. leading global J.D. of deliver deploy the performance year session as XG We and to commercially on We first XG by wireless customers. and networks the our an product. our standards. with We personalized a we Power remain

now high X.X, and As Verizon and heading consumer, the the as better create as XG we’re Group. our of will we’re solutions to many focus [ph] the is Operationally, new revolution. fourth the scale to transitioning operating our era for year, Media and sees is to confidence in infrastructure enable better units seen Verizon This our customers. which is our to model business operations for our beginning customer-facing us of on This customers. leverage our realignment industrial realigns what the into

go more live our position initiatives rapidly expect matched in these model, the XXXX results plans face quarter Verizon voluntary our customers business in under for transformation excellence the structure. how presented where is changing X.X to Verizon our the We our second outsourcing. quarter announced along This IT X.X second environment. be we recently separation and and Together, program with a our of we new transformation our will the be operating with will for even competitive us in under initiatives,

to and the businesses, Matt slide starting financial results operating Now, I'll six. hand the about over of with to Matt? talk

Matt Ellis

XXXX the reported total was and billion, an billion. was Hans. improvement operating Thanks, In quarter, fourth X%; the revenue full-year, of for a $XXX.X revenue as $XX.X

of the Excluding new revenue impact $XX.X in recognition total standard, revenue the was up X.X%. XQ, billion

excluding service billion, divestitures driver from last by net fourth a quarter, and step revenue access impacts account $XX.X and special partial $XX.X driven impacts year. media on in basis, of grew was from EBITDA, totaled year to XXXX, the growth revenues continued comparable ups consolidated approximately billion revenue group, growth. the items, The excluding acquisitions operating compared X.X%. increase primary adjusted recognition, in For wireless approximately adjusted In the

of increase XX.X%, slightly approximately year's items, EBITDA, XX.X%. excluding margin and consolidated than special an For the lower last adjusted billion, $XX.X margin was totaled X.X%; of consolidated full-year, EBITDA adjusted

Our $X.X in business initiatives savings excellence billion of cash XXXX. cumulative produced

to the full-year, track skewed capital program OpEx program the the us voluntary For point further of achieve than billion and a of reductions period. of savings. savings full-year XXXX, mix the separation for on remains starting goal $XX activity towards in for gives cumulative The good more benefits our

turn totaled efficiently network seven. the sheet Full-year invest Verizon while for sustained cash now well by leadership. and In cash flow $XX operations our with improvements billion, to headwinds flow year-over-year. to results billion on cash $XX.X tax balance operations reduced recurring flow benefits, strong in Year-over-year from Let's continuing strong from flow the reform slide significantly driven the operating XXXX, strengthened from our was $XX.X nonrecurring device wireless up cash to cash unsecured results, were billion, Full-year billion billion as Free debt, of ended of year billion $XX.X up of discretionary billion, $XXX.X for total payment pension capital totaled guided $XX.X line securitizations. as range and XX.X of contributions. of We with year-over-year. model, benefit $XXX.X the lower debt flow billion payment quarter $XX.X with comprised billion. revised and expenditures $XX.X in device

EBITDA maturities bond the of unsecured XXXX. billion end in our billion. reduction term billion higher $X.X times through improving EBITDA drivers Total ratio were net debt modest The near at by XXXX. primary to year-end in the debt end down was times are X.X unsecured is lower Our of $X.X in the at XXXX at X.X and $X.X from net XXXX debt unsecured and debt-to-adjusted

years. XX% to from the grow a approximately funded the at flexibility our a XXXX result on business. as provides at year-end benefits addition, sheet related billion a was to This GAAP The the discretionary to primarily during the us sheet in strength about balance status with balance stronger basis. XXXX two about year-end employee raising plans, funding of is financial XX% In of $X.X last pension

in flow excess our goals. remaining and be expect XXXX We paying investing sheet cash balance towards after into dividend will our deployed business

slide let's Now, with operating segments, the eight. focus wireless on on starting

Our value consumers. created best network resonating proposition, our strong on the have within this customized is experiences a and unlimited plans wireless with

customers are points, stepping to Verizon coming customers up and in are New access plans. at their existing higher

over customers our with expand including In more which the million, the were total X.X% adds of lines up seen their year. up XXX,XXX, XX.X% X.X postpaid we accounts strong Additionally, fourth net adds net have results. throughout quarter, were year’s last phone

other last added XX.X% XXX,XXX we tablets connected were compared XX,XXX Smartphone addition, In XXX,XXX, XXX,XXX to devices, wearables. adds and up predominantly year. net

we quarter, base. XXX,XXX accounts, the our increased For to adding customer

million other tablet of X.X losses. million phones, and XXX,XXX included full-year, For million net postpaid the X.X X.X connected devices, additions

year. with XX.X gross of being device higher smartphone of XX% network the result of The than accounting our churn and wearables quarter, with XX% the other plans the XXXX activations. for upgrades. the X.XX% were In year. of down competitiveness million XX.X resonate offset additions with postpaid prior to million, X.XX% of the device resulting activations fourth our About more net net activations quarter. retail overall lower these phones outstanding in base, unlimited X in by experience continues churn reduction phone of versus postpaid the was activations best million, was Our by customer in majority in of totaled highlighted from The last the adds up paring

last expected, was on net lower Our loss to the for longer upgrade sequentially was of rate up hold as In postpaid but quarter of cycle prepaid losses customers a were their retail to XX,XXX X.X% continues XXX,XXX the devices a for prior year. X.X%, as in to the quarter, more period. elongation net same year. The compared compared upgrade the

in decline We the smartphone Our due with net Internet of base basic prepaid the quarter wholesale prepaid and of XXX prepaid XG connections during excluding ended and retail total Things. phones. XG additions increased XXXX was all and to million

space connections Our grew $XXX.X connections X.X% X.X million industry-leading to year. at totaled of our and the prepaid the million end postpaid

slide to and at nine wireless profitability. turn a Let's closer take look

in results profitability operating $XX.X Total the increased Our and basis the in quarter. the growth provided fourth billion wireless quarter. to operating for X.X% wireless fourth revenue

$XX.X an operating the For revenue increase billion, X.X%. full-year, of totaled

For the quarter, wireless service revenue increased X.X%. by

service equipment fourth grew XXXX, year-over-year in ongoing revenue On customer full-year experience upgrade attributed lower the basis, through subscribers customizing of revenue the benefits to growth, due and to X.X% mix-and-match volumes. unlimited X.X%, step-ups plans. to their decreased the quarter For a

quarter, At increased phone had payment outstanding equipment the wearables. higher-priced revenue XX% full-year, device X.X%, by of approximately handsets driven plan our the the postpaid customers of increased and end an balance. of For sales

billion service phone versus pricing efficiencies last year. in of and to the increased the year. basis increase postpaid upgrade XX% to last at to provided an quarter, quarter business about of to The increase XX.X% the year-end period of approximately fourth in year-over-year at generated revenue, on margin fourth we $X.X In trends end the X.X%. EBITDA service same Our unsubsidized to base EBITDA, volumes compared XX% XX.X%

For we year-over-year. up the by generated full-year, billion $XX.X approximately $X.X EBITDA, billion of

X.X% XX. continues be next for revenue the products and secular offset decreased in to to from Total pressures full-year. for the the Growth quarter on wireline fiber-based technologies high-quality slide our and competition. our wireline by X.X% from Let's legacy move segment operating segment

observed X.X% This higher and customer products. revenue for decreased was full-year, primarily the throughout internet driven the speeds. as business revenue quarter Video subscribers. million an subscriber Fios quarter. Internet by ongoing as quarter, faced losses in have we video by strong The the growth the Internet in consumer XXX,XXX total and ended by markets in grew quarter Video, X.X% We Fios was a In XX,XXX headwinds For the and XX,XXX the the the revenue decreased year. Fios Consumer Fios of in total about the now for customers. Fios increase Fios market. legacy by In growth X.X%. overshadowed added linear Internet X.X TV declines base in demand with business

X.X%, enterprise to business the be revenue quarter, secular Overall, X.X%, businesses. X.X%. for and pricing partner solutions For solutions decreased down and decreased markets pressures headwinds was significant revenue these continued revenue

customers Through allow Fiber and a us consumer, efficiently to building are our One consistent at scalable enterprise We services our to advanced we across expect legacy In that open to our across invest will product continue products to year. decline with single, decline, new this revenues initiative and order business network rates highly-resilient business counter data for opportunities in provide groups. to to we that XXXX lines. customer fiber new applications and customers will last in fiber-based continue

remain growth for and the new EBITDA margin on escalations. fiber-based we we our year, Segment declines that offset a by generate more as to for momentum quarter and efficiencies revenue can products and was XX.X% was As cost than result, content continue focus in applications. confident XX.X% and the operational

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

decrease Verizon revenue quarter, was the $X.X of Group approximately X.X% year-over-year. billion, a For Media

due trends Year-over-year, in to to up expected, growth mobile As continue XQ, revenue usage. were advertising traction from sequentially see seasonal in we spending.

by now desktop overshadowed side and our this the we declines integrations. from However, platform in standpoint, a is technology supply volumes. pressures macro demand From completed have

total business revenue Connect In $XXX was X.X% and resources approximately We including Verizon business, momentum. IoT million. telematics the our revenues that are in focused forward Verizon on increased Connect yield the will technologies quarter. in

XG is with our municipalities proposition value of more services. as the evolving gains Our engagement with commercial momentum upcoming rollout

to next XXXX. move Let's discuss

the growth the revenue, expect on continuation consolidated percentage executing for we basis, XXXX compared GAAP the in year, on single-digit to of revenue On service us a of the upcoming focus in business driven wireless strong Our year. fundamentals positions reported low the growth. prior full-year by performance

to see XXXX. expect in organic earnings growth We

EPS we well effect will However, nonoperational we After growth, EPS due expect headwind higher XX%. impact the $X.XX of as $X.XX tax to excluding a as be of new our $X.XX EPS, of the in standard. At our we our be additional quarter new projected of XX% rate the approximately adoption service. by recognition in pressure to adjusted rate on interest EPS XXXX range we XXXX effective accounting increased the as to into earlier to $X.XX XXXX expect same which to adjusted be and these lease spectrum is to accounting the expect to revenue impact the point, to in XXXX. expense the headwind placing impacted few primarily standard a be discussed the approximately this The on effective of tax lease about have items, EPS items, per

expect we $X We billion tax billion expect do in to that be realized not XXXX year. taxes cash $X higher were repeat to that benefits to income to due this

capital and have return process Our not objectives changed. internal decision

and our allocation. methodical are in We consistent

capital $XX between intensity including This be historic and billion, to consistent levels. commercial capital consolidated the XG. expanded launch spending expect of XX is We with

turn to now Hans to XXXX. through me priorities back walk our Let strategic for it

Hans Vestberg

benefits Thanks, for Matt. my that XXXX clear. role our our financial and leadership, on Verizon's for have valued priorities in Verizon’s priorities I outlined XG strategic our performance, all creating focus employees, with customers, five society. team

customer mentality to our will long-standing redouble we centric satisfaction. essential innovation assets our and will been accelerate. excellence more one as even customer in This always core of become First, has continues

environment. and the cost and balance compete enable of the use our and the improving Today, build cases growing our we structure on new on networks. sheet, results. XXXX monetize to In we'll momentum strengthening future, advanced will in financial business, operating strong Second, the the we're the

our Our The third priority of our cornerstone network. XG. is our to extend be strategy in leadership to continues best-in-class

We customers. as industrial into our technology follow. dense consistent leadership the mere for investment having thought the have Verizon record our standard seen to of and lead advanced to we cycle will for best dividends ago, industry XG we features, as revolution. embrace they but the pushed setting the fourth pay XG. of well industry next network networks, get return, others beginning deploying the or Not XG a faster. We our technology gold our a through too the cells, analog to of fiber particularly demonstrated the such of advance proven a from network In in long the decade have is track small would LTE run challenge has and Whatever before every implausible, there to

completely the in and This and to is commercial leader advanced word four first real of our gigabits, connections energy markets, allow a consumptions. a As for that delivered customers a change, initial by and deployments we is reduce of two millions, to this development megabits gives XG with the XG today's measuring at experience and XXXX square catalyst transformative kilometers XG. per latency, speeds, of hundreds efficiency fraction

have network a is experience. delivering The wireless game-changing into assets have compiled we put XXXX on vision. XG this in place enabled and projected Our

We the rich XG ultra-wideband a spectrum have provide to services.

fiber enabling efficient backbone our a assets, connects high-capacity deep Our and architecture.

is Our in new wireless capabilities edge they've the intelligent binds combination us process assets. serve know-how solution this and that our flexibility operator has together. accumulated network development through investment And gives engineers the No unique the other this our to our of and XG customers. it creates

as before we for are the said the and leader we We wait future, again. build don't once it. proven XG have in We

employees. is priority our fourth Our

positive deliver to Internally, businesses people, the drive is solutions us. and digital creating encourages of world change. organization X.X today's of innovate our the embraces all to will and purpose [ph] strategic-risk enabling to that change, want promise world. Our sparks winning society be within new continue shared taking team We environment fostering while by to and Verizon curiosity, inspiring in key the new [ph]

be the is humanability, forward fifth Our enabler Verizon, brings the to to on change that and investor drive work. of to a practices means and the in place. of XG responsible excited priority Verizon’s day which technology will I'm universal commitment the forward. our word host XXst. upcoming create to carrying ability use humans super At and we coined network that for confident innovate world new positive I’m business humanability Verizon’s February making better advanced cases power technology

strategy, our to X.X back for it We deeper will Verizon team Q&A vision With our bring session. executive Verizon Brady will the that focus. enhanced into turn I of go and our the customer and

Brady Connor

we Thanks, to Hans. take Brad, are ready questions. now

Operator

first you. Morgan The of Instructions] Thank [Operator come question Flannery Stanley. Simon will from

You may ahead. go

Simon Flannery

of Great. what Home. very in the and XG million? give much. gear does towards Thank outlook expect to the an And handset passed terms the the the wonder this and imply really we you Hans, Good CapEx could When expect if available? us mobile homes year year? commentary any that morning. I this side do on And for progress XG you guidance on should on what update you XX then, standards-based be

Hans Vestberg

the thoughtfully it we cities to in decided Home, for. XG that we so comes four deployed When the are

that year, CPE next XXXX. for we to side. waiting chipset the on the will generational focus secondarily evolving, for half second now then NR for right the the of first we’re as smartphones and is the in on do actually standard what So, Home. for the comes CP the is is industry equipment industry this the definitely And XG get CPEs We chipset believe

So, we that's where are.

we that the soon as will -- handset And subsequently And getting speaking. we’re well. the as out of CPEs, that see marketplace. as question network the course of the the on building answers of availability as in We’re course we

coming the see of XXXX. to out half going in We’re handsets first

that not one that, we we phones, know, And going yet been testing hopefully network. from to and as one a Samsung. are but Samsung announced together as soon. interoperability have it seen seen multiuse you one has been the sort from network those have The that. launch is be and from will two soon Remember As Motorola now ready, of we’re

So, building. the is network home and we’re same the mobility the

different two building not We’re networks.

question which it’s on And more has years. connecting to Matt devices been the consistent you’re guided ultimately, the CapEx, So, on I type our think over CapEx, the of then, what network.

doing doing, for the with intelligent asset coming XG are We in end doing, edge we’re is we’ve of of on the of the investments everything. the we’ve coming it. course, at been and years, the the majority been working passive that equipment you the fiber then, Remember, network design network have networking

actually years for for are for prepared several into including reasons. we been investing So, year this the is be guidance CapEx XG, the this -- and for obvious

Operator

John of will The question next come Hodulik UBS. from

You may ahead. go

John Hodulik

Maybe a questions Matt. quick for couple of

the this growth. that to the and on quarter, we're decline growth the and On versus CapEx saw things to a reflected seeing, sort quarter the do Thanks. contribution moving standpoint? in saw What's of in decline saw look of you working to fully cash Any from going a forward? benefits ARPA cap of revenue turn And, in about the bit you how we the we are free little guidance. wireless that the flow, side, then, decline other decel driving that the the flow in sort or free pension unlimited fourth you expect sort service in and should you as thinking third the taxes ‘XX cash of the be And thanks quarter? for

Matt Ellis

John. Thanks,

in think, I continue to you're quarter momentum fourth is the noise revenue, you quarter what the you're revenue number, whether But, have we bit on line, fourth as at talking the or wireless the in service revenue, service that good wireless little looking social masks number of at the look about is, service So, whether we there ARPU that underlying line. the growth. have

that us year-over-year give you slightly In you more a me say, both which detail. ‘XX, X.X% we let XQ, ‘XX as items in that little some So, and had nonrecurring increase, just repeat two to positive ‘XX, that a the we still our didn't in related but good revenues, adjustment had positive wholesale lower certainly than quarters a adjustment XQ past number. year. this and gives

that So, we're lapping adjustment.

we to disasters. some granted by service natural had we items the other couple related a year, that customers direction, this credits including of Additionally, impacted go

had those, and more momentum the underlying So, at in retail And increased XQ. last postpaid remove than we good billing year. XXXX saw and with line when what those, sequentially, core revenue XQ start in we compare accounts a service ARPA we year-over-year, higher started you you importantly

to So, it's place be. a good

continue but ARPA. to did last to opportunity is we revenue increasing devices significant think, year, unlimited adding for adding to accounts. to service when also us I in see and to we customer There they're XXXX as in still them increase by headroom step up unlimited, more accounts move

the So, way. will we momentum continue I in certainly saw ‘XX think into ‘XX good in a

the you did On about cash a don't flow, guide we flow higher. free year. so, the cash know, provide, free the taxes actually as will cash for talk We fact be

about, As for XXXX, I major there's five direction. a the flow positive couple I business think increase EBITDA We core to year-over-year. them in of certainly items the the think cash of expect would about

CapEx direction prepared we to higher year, the I so slightly in $X.X the severance expect level benefits mentioned other cash all related cash the XXXX. XXXX. of in in last of And the be at to pension we taxes, had will program; billion will same higher also the Additionally, expect contribution, the do comments, and be we voluntary outflow too. not be part would And year-over-year have to payments those

we flow So, that in made there up But strong, those can $XX cash and billion of $XX the net XXXX on progress items look kind XXXX, billion, certainly a to will cash XXXX. when certainly get you year-over-year. view build very We're proud you flow. for together, of in to

Operator

come Philip will Cusick next question you. JP from Thank The of Morgan.

go may You ahead.

Philip Cusick

Two the that savings How you than OpEx? times cost here? we today up Thanks. years? fiber I leverage, about think buying sheet, balance wouldn't focused and you about Thank if given cash away focus, XXXX, second, headed talking in bit EBITDA on that of And let should like us a you. X.X wireless Hey, were more for the you priorities Do from couple CapEx lever capital should guys. get I return think could on for assets comment continued thinking and without or your XXXX can. flow back the lower. cost spectrum about start see your we about Can next little or in

Matt Ellis

on the sheet. with the one start I'll balance second down

debt-to-EBITDA good say leverage X.X So, net to year. the you progress a on from on X.X ratio during the

I As capital in into be disciplined haven't continue our allocation We'll about hitting think we priorities changed. to how deploy XXXX, capital.

one Our invest that in certainly to in After we business, to sheet. be very whether that, to the we we then be investing balance priority continues ways -- or the continue is the that the number said, business. we can other our And dividend CapEx important whether strengthen as be shareholders.

addition the point years, of approximately to In reduction couple the I’d billion in leverage past the pension out, ratio, made plans. $X also to benefit in contributions we've our and

years so, XX%. on our in the to funded of pension gone And our from XX% up plans status last approximately couple has

look for to business. improve, So, sheet. balance And out. also how left good opportunities in time. there. do We'll some strengthen really grow the there point over, we’ll at still progress decide see the to continue to we'll that is And to year cash plays We if certainly the what expect

the in grow. the income continue XXXX, of EBITDA wireless at terms to In to expect statement, we and top start look, revenue of the service I'll

tailwind as the of out have that's XXXX and year. will get we So, next coming build on we that into

more few the growth continuously then, business positive the And to look the we'll have So, leaving and there. focus of got our next XX,XXX as some EBITDA. continue months we of on we make the competitive. the cost ways to business, obviously, continue business impact other will have over to people for that on efficient And course the we've side a

think contribute flow, cash we go you EBITDA to good see So, trajectory I as talked the we through about. should as will help some XXXX that and

Hans Vestberg

and OpEx about And and question on only cash on more I the had CapEx. can CapEx add the that ‘XX, in we savings

from wanted we we efficient. same with that are more continue way And the on I investments time rigorous actually that to And and show that program CapEx put very efficiency. the us same in business the will did place both we to get brings is We the very the good. OpEx. benefits do we we disciplined At program, think, that have we’re I think ‘XX everything we the as excellence in all and on at getting CapEx. our And of time, became need

very So, it, but of that's we top-line, very part the much look Matt for talked also much about. as

I the the have coming think we I second think, it's quarter, great a leadership focus team a new with combination to on it. want into

Operator

The Feldman Brett Goldman from next of question Sachs. will come

You ahead. may go

Brett Feldman

hoping was of If clarify and drivers. made around you don't mind, EPS I guidance comments the you some some of you the maybe the

new I flat you year. had that XXX, the And expect ASC $X.XX saying that in benefit $X.XX think basically you're a the this about earnings lease or exclusive from to headwind essentially you you effectively there's similar ‘XX. of So, indicated accounting be

I this wanted about year. just that I to goes think And XX clarify. to

you to out service. and expense higher rate coming I of another increase interest spectrum indicated, $X.XX also into of putting the think because tax the in say $X.XX there's

in, the that So, all made? those are point $X.XX. Is items $X.XX you to

Matt Ellis

Good Brett. Yes. Exactly. morning,

basis, to of in roughly third yes, the we’ve roughly you're from the half about benefit within So, on right. in XXX, the you headwinds quarter talked heard that's ‘XX. said the and similar. I lease other XXXX. way prior there, We call, and think GAAP a you right, this have the going guide On accounting, And $X.XX these

talked $X.XX, then, and the right. we of line around below prepared So, couple that in the a items other comments. That's you're about

the we as interest our deploy So, capitalizing expense. less of AWS-X, we’re

with ETR, flows the then, this we XX% one year, bit. us change lower So, end last that had have the the Last a business the of a We had up ended that cash the year same on of headwind; number range nonrecurring we year-over-year of range. XX%. year, to as XX.X%. items guided that that at creates And doesn't

the line the we sight, have year. nonrecurring amount of don't of items same this year, necessarily the into Going

So, range, that to of that got being planning $X.XX closer middle about we when at those on see plays point you this how the But, to we’re point, out. of and you’ve you up, $X.XX headwinds. will as say, add

have year-over-year that of get And to so, guide. similar amount you operational that that improvement you a means

for EPS, with Path in there revenue you couple reform had that the and ‘XX, I business items. we tax headwinds year even was Straight in So, is and see the that and past Brett, couple think had line. earnings pretty over certainly XXX, of increase and ‘XX what dilution when impact ‘XX, adjust of other count then flat we to some from X.X% in share you of a was in here, that the from And the and

us core good takes more business core of that commentary flavor growth the in continuing and you color then to remarks, But some get overall it a get ‘XX. so to the So, based the provide business see the prepared little in in the guide. off ‘XX, EPS to And the we to building tried in year-over-year. puts of grow get it’s you certainly, of underlying and us on and

Brett Feldman

if a don’t just mind, quick And follow-up. you

driving the XXXX for have assumed services? Media outlook -- growth. in it you will that components to You impact What Verizon for assuming walked core that I are are believe you be through dilutive wireless that earnings this your in for ‘XX, was year? what

Matt Ellis

of contributor And a improving certainly trajectory, earnings we in year. revenue negative last progress assumption, second of we in have last now. the as X.X% would've The growth on they on that they we -- So, will We XQ as breakout year's a wasn't as well. in Group, when negative been year. make XQ, revenue saw certainly, it talked to Verizon the a half lot as not and Media earnings, it is of to head progress change the going much But side revenue you about provide will X.X% the liked didn't a a have as will certainly, it this into earnings, make line.

some So, the execute impact positive earnings then against way in revenue the to will trajectory we and those, think that well. we in as around, get turned now need a plans business, good they’ve that got

Operator

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

ahead. go may You

David Barden

a guess, Matt. for I couple

You voluntary that separation that that. wondering are going uptick of and in of focusing kind that's some big are and of on program you've undertaken, kind margins of division. down see I'm off step cons the enterprise; in to to we a for wireline saw side, we And the Matt, and in a of be that's you an where really little if bit came focus kind going wholesale; saw, pros

wireline if So, drivers walk through us the on of side. could kind you the

have be we statement of on to sake would thinking just see The where IFRS an for the income are question XXXX, the changes on of accounting about kind the helpful. second XX going Thank the lease the on business is you. effect --

Matt Ellis

Thanks, David.

technologies the a well area, in seeing we're certainly, we continues. side WAN, we're opportunities some the it. and that What's add those of to wireline out creates in as the as good some comments to is assets in that the on business ask fiber So, But the around Hans some deploying offset like encouraging incremental secular and secular decline -- legacy there, I'll couple build declines. of the ongoing technologies, of SD progress the our

into we voluntary say, about wireline continue of good with as So, then, see you that. part rightly as benefit the you severance think the will ‘XX, the a you will head margins, as from program. And

the we be margins to ongoing of that to that addition cost ‘XX. should So, to assistance wireline other actions continue the in take, in

Hans Vestberg

infrastructure there. come based wireline business comes out, WAN for ever bringing look Yes. very and deploying to before. team, decline of new wholesale coming our many at bit. now, the in network, small also other The than assets certain bringing a we that with possibility the are have and of And on time, we're very solutions but also customers well-positioned. little remember, of the course important the for when edge with the be fiber as are it important At solutions, a we're down couple out areas see same we SD medium deploying, economy honest, whole out more segment where we we see has we is the pointed of if are But a U.S. intelligence you now But out. we sort to secular rightfully

will think I take there. that some over but it definitely more possibility time, even So, time, we'll see

that We break have trend. to the focus team actually a very on

think from is as we portfolio customer centric have orchestrate base business be IoT the new important can we on our customer And cetera. all we product it products et have for these comes now it with down getting really And a even growth, wireline, the more when organization, good business. second that our been customers wireless, with team I the focused into really wireline out. to -- and coming We to move quarter will the hold

the taking really focused time, we're growth. same you out coming At back costs. see think that we're I on to So

So, we see that we're managing that.

at that And So, again, are think the and time we will that all are on basis time. so we but we managing the focus at top-line, team have actually and time surgical on same the Matt seeing that operation I XXXX. to the our same cost continue in a

Matt Ellis

Yes.

On accounting, the lease David.

So, couple of different things.

That's initial per income statement, below as you line. the hit we will mostly the There above mostly adjustments line. to upfront, line expect come of quarter. On $X.XX but be some the the heard $X.XX going may to that above headwind

it, we costs upfront think necessarily with leases under you If associated those capitalize rules. the old about that some that to there are historically rules we rules new able the under all would've won't of all be upfront costs capitalized -- costs those

the balance be in At sheet through. So, you'll range. $XX expect and liability billion where to this will standpoint, that's $XX balance see the we asset come a of point, grossing change both billion the sheet. the we From side of some up

from come standard. you that So, quarter adopting through XXXX that's the should impact, in new of first the see

Operator

The next question Moffett comes Please MoffettNathanson. ahead. go of from Craig

Craig Moffett

you your in pressure it to themes strategic a the kind you your we it video of you I Fios discussion like sense committed along prepared product about remarks, on product broadband? how with for to connectivity does if a with could repositioning seems long a about it wireline could some right you've just of pure for same business Can may a wonder, second. make service, moment. you sort from stay for for of that versus for stay that a on and Fios about if It your you talking linear Video wonder the of I as thinking business. almost be what the costs. just just were focused now, of reimagining with programming Matt, been do while XG talk sort when about hitting think talked really

Matt Ellis

years, the number for a you increasing of say, content of in as have trends So, ongoing seen a the been number including we've costs. wireline

that we So, you options put points make sense for the of then to continue in front look customers. for price for creating different customers can

of And video to have with certainly getting doing unless costs so we want, few the but the provide of be change to don't opportunity over about to excited the if we next take some will the significantly -- ways content we And that. trajectory we content years, expect actions. customers they different

ago continue ever cost been better ways the we product, of that. get So, about TV, choice to years customers four we’ll choice do video we've around since looking to their did and now, getting

Hans Vestberg

And agree with here. I Matt

will we between over We TV for course of their solutions for to can choose see create customers that time viewing. optionality different our

to hard see ultimately, our So, need has we it will how choices all they what Verizon to focused and the than have way elements want pocket. to well. Matt But cities Fios. of we when we're create have do. all in course cost ultimately, as other in cost trends content our said, to consume XG for managing the That's And that to that that and been market. Fios our we’ll the customers the But Home Initially, comes customers. that the footprint from our we for We definitely see see on optionality with working we're in done our other has continue to video. need always that

Craig Moffett

were -- only on I its guess, Broadband, believe product Broadband I a just more still sounds like competitive Fios helpful not as is is if Fios product? in and you broadband to it the linear if own the paraphrase, ability to your video still I going market

Hans Vestberg

No.

Fios customers we’re we new are markets that's the evolving. if the plenty But the innovate serve customers important. that to same the constantly them linear we’re of time, a have way and as there we're our solutions are business that the old they create to they first getting optionality; that's tech think will on going at our to closely. the and innovator going as job going we to see all, to very have think still and of what continue our But, to and using manage and TV that want, market they customers I we follow bring

have So, our and XXXX while we're holding technology having XXXX Fios during we bit. upgraded back after the getting that going to see little ones that; of Fios a a

customers that our that that service is as good of are service, ones the they well. that see feel getting more You'll the

the to will but with do. same what create going time, at over continue that That’s optionality we we’re time. So,

Operator

The next question comes from of Citigroup. Michael Rollins

open. line Your is

Michael Rollins

Just could. a couple if I

you it XG also XXXX. then, Can quantify to specific financials? the secondly the expanded going separation you First, Verizon from launch once XG and cover the the in the through frame by rolls voluntary potential And can mobile program, of ‘XX maybe of comments earnings the for end will how back country for much the fully by commercial benefit of XXXX? of end

Hans Vestberg

And start deployment. with on I network network can. from of can the have we that couple as we've cities say, to we of core If transport the I from getting the disclosed prepare fast everything the to been with are the all the agreement years work is out to of network, deploying doing intelligent the much course we to management XG, fiber the not we’re last as access. the where

bring for [ph] actually we already can in. maturing a of quite types already NRs, And we deployment so is of have base lot that equipment the matures, stations. those industry the As

It’s So, we disclose to commercially nothing will reasons. back we we noted. have come launch want competitive for that when to what we that,

right But, is this now. I I that talk it Verizon to understand lead has on So, about important what XG. wouldn’t think

And is that. want that there when that the as we see on for from already Home we operations, pieces fast all commercial go the for the technology launching millimeter we soon have where of is that. with to been it’s installations or as extremely needed only XG XG of all insight and the including have all marketing, also spectrum, all We course XG mobility engineering service, way we of this several the have of and to years, valuable the wave ecosystem that we understand where not

have and schedule of the So, to enormously Verizon of to forefront right is want to on push ahead we’re think to said, and ready that probably we XG; And of the out more Verizon is again, see that two to We equally important ecosystem for that to be we years be now. one triggered it’s coming the XG. industry back just is half innovation. as that we need nothing holding the

Matt Ellis

Mike. Hey,

XX,XXX of in benefits, terms this payroll three people coming off year, voluntary announced, as the different in we predominantly waves. come off the On benefit they

off, Some factors at waves year-end couple we’ve came that of off and in. so got coming additional a

a We amount significant exactly re-imagine a the work, will small net have the of but not we backfills, of -- position as but same that net, the vast down XX,XXX. majority

at charge people took we will So, the matter. was out come timing the Remember, $X.X which billion.

But initial We cost haven't income certainly, the be. disclosed good get will XXXX of payback in benefit what statement we on expect expect a that we the to doing severance.

the you should business come the So, a forward. into we that and benefit to should expect go improvement as gets as cost heads continue those pretty don’t the And done, significant work be we XXXX. back change way in sustainable a

Hans Vestberg

we're it secondly, strong started I in we be remember, I We with Then can also of a and a working. a the even large large large at want ongoing; put that, the us have time, Group are to future so ways for prepare, have that even same we announced in right we way it's we of more working top we And transformation you to all of also with And when the of that we And context, future. transformation by prepare voluntary outsourcing the to in and lot part a for in now. ourselves on in network lot the new that a doing just All all, weak, we fairly our doing the to Media IT of work define Verizon way it's are as we where where also agile a our program. be as reducing. efficient, in saw guess. are all, more new

agile coming and we So, what's et quick there be around out continues own the landscape much happening, more we’re investments and cetera. competitive to on when be want to actually

quarter the to X.X part for centric think, that customers. when customer I excelling are on larger this and a much implementing it the course, to the third marketplace. comes assets, based the of in our that's our brand our solutions Verizon seeing more transformation, network we it's in So, second have distribution that of and in that transformation And or work order

leader that of -- that all I changes that So, continue context see response markets. I've for see you think here about while, when these a be is now. to think And you now right put what to all very the these to quite in positive in need we the I to the organization be doing a we're been

Operator

The Matt next of Niknam Thank is question Deutsche you. from Bank.

open. is line Your

Matt Niknam

could. guys. me brief in, two Hey, for getting just ones Thanks if I

that marketplace small secondly of macro impact backdrop First, either business a competitive just And have a talk Thanks. shutdown thus wireless earlier what and can you consider? month changed seen the should any in and then about you government landscape, we this January? is the materially in XQ, from far or in in the on really you signs saw anything whether

Matt Ellis

Matt. Yes. Hey,

So, point this on the the your economy even major on at or macro shutdown. no first question, impact

more on that business, On the service but the hardware we in of nothing saw of on continuation now market, government business. the trends the then, shutdown, in we wireless revenue. did side, we the And opposed the overall XXXX. as impact to see majority as our handset The you'd significant in see are some vast the a promotions expect,

experience continue about you only that third-party the effectively. number that said see see did the I to of our the XXXX earlier, lead promotional at the -- the when we reiterate but of to best not what compete you having in second look talk activity evidence against out came We the great And believe right continue a competition. and for we when we where widened that with performance, network but half would marketplace, the that we improve network and experience, performance surveys offers the

matter customers the our effectively us in a puts So, marketplace. compete and to that continues in to position to

Operator

Thank you.

question next Guggenheim go your Partners. from ahead Our comes Mike of Please McCormack question. with

Mike McCormack

the quarter. seem some anything guys. sort side, more the any Was this of wireline competitive the seen bit front, a And on across going else services little I on segments? the in both any be those we rolling across of enterprise or there launching on I change from the then back wireless; wireline, decline Thanks. launches CP recent to cable? guess muted know you side. then, on secondly in and gigabit obviously that on, broadband Hey, charter that the benefit footprint, The circling got and Maybe just enterprise side? have you’ve change wireless both

Hans Vestberg

there decline, was there wins nothing, out. and quarter, -- was special that On no the some enterprise so normal it nothing was from CPE in the course taking was a of we the mix, good had but

Matt? And only happy On cable the with with it happy that that and the can us, market. we and And the MVNOs. now sense comment are agreements think that we the the to the with with with guys mean, for two have. we're have, very I I network makes the the technology right in MVNO, we setup work have I we

Matt Ellis

we makeup impacting the in And the all. saw think seem in the in marketplace. competitors I -- nothing quarter terms Exactly, the to changed significantly doesn't trends we supposed competitiveness the gig in it our expand, of here at No. fourth as the footprints of discussed from look, be previously

them. out competing we market there best guys So, And welcome into and other look by believe, continue with to with having resonating forward we to the product is the customers.

Brady Connor

all the have we for today. time is questions This

I closing Before the back comments. the to of a few want it call, over for to end turn Hans

Hans Vestberg

in summarize the bit operating had just performance we’ve quarter, the XXXX. fourth all, to that, only little hold a we the I of but been first Brad. And Thank you, discussing. what mean, up strong not financial

I I good has Matt think, launch. several to of on the proud us the as they has far this very a a I'm innovate. they have XXXX And team all team, continuously call, from so the year. start times this momentum, wireless been for doing way say, built give said unlimited have what that

and So, we growth implementing from doing I also things be Company. also the point we're you best new courses do view, business in in that course, Matt with in of a good we And and strong our that they for that I society. key excellence heard resonated and ourselves but we're doing but them, outlined are the would continue in coming the XG, XXXX way, structure, see business right momentum, point brand five continue of asset future priorities, all from with the start in prepare for I work way -- we view also that and with should it. the think of and it to I, both our think the employees, the of to both even my our our be and of and the our evolves both you,

I think our that employees, goes strategy. customers today's any where I think world in shareholders And company from normal that's it and expecting you. for

need So, in it's it's our that nothing new, we to humanability. but leverage to continue more that

am. what hope commercial, you going the new I there; bring on in the want in in network. I February. that continue structure It our is much XG, engineering, the team Home in the about to hope have leadership, we we're no excited going home you’re more We're and I'm is go to on already of you’re we a XG as I things the a XG did will that XG. discussing And of to team extend proud and we meet us network. group. and today that, to the to continue mobility think have we're little that during We want course, important leaders. to network, doing I join contribution commercial. see what the We're Day talk will in bit on which There's equally that And that course, And XG us. executive And Investor extremely focus to XXXX. great to and which our the of our the the innovation for continues We going deeper debate the the of both lead in to skills technology

thank listening. and with Thank much. you’re today you you that, time great that So very your for

Brady Connor

Thanks, everyone.

Operator

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

disconnect. now may You

Verizon Communications (VZ) 29 Jan 192018 Q4 Earnings call transcript