VZ - Earnings call transcript Q2 2019 | Verizon Communications Inc.

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Operator

Good morning and welcome to the Verizon Second Quarter 2019 Earnings Conference Call. At this time, all participants have been placed in a 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

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

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

to like Harbor forward-looking I'd and which Verizon's in your future attention two. started, in uncertainties. Safe get the I that with contains and filings events draw to our risks affect and results our expected Discussion statement Information is are available Before to financial are SEC on results future slide of contained on subject may website. statements factors this presentation about that

in most formal our disclosed otherwise to presentation This on GAAP measures presentation non-GAAP these and in contains measures included financial basis year-over-year as certain a of are noted non-GAAP directly our sequential. growth during rates comparable Reconciliations slides The quarterly measures. the materials the remarks our financial unless are website. on

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

debt adjusted resulting per of costs. reported to XXXX, of after per early the billion X.X% impact share, compared ago. adjusted $X.XX of reported For quarter The in second an a basis year $X.XX earnings earnings share $X.X $X.XX. tax was represents on approximately of share GAAP include per pretax redemption we a billion charge to This $X.X growth or related $X.XX a on results These basis. of approximately

a for ASC last second to as earnings slide with the of approach ASC quarter. the earnings at accounting adoption discussed from revenue illustrated to our standard look for as XXX move impacts closer XXX now we of recognition ongoing adoption the leases. four for well have Consistent the and we the quarter, take Let's profile

quarter, XXX earnings we from benefit The in in reported $X.XX adjusted headwind impact last share share. ASC quarter the than last deferral out pointed we due creates and reduction expect of year-over-year was expense. smaller a primarily the XXXX $X.XX we and per As earnings of year per to both realized The year-to-date. to adoption a and benefit a the commission headwind

As a reminder, expected continue of to this headwind the until is XXXX. end

sheet year, of XXX the At we the for accounting operating leases. in this resulted ASC balance beginning leases, for standard adopted gross-up on which all the

of affects lease the earnings certain addition, per share, to our lease costs. the In standard primarily expensing due

expect headwind this to result per a in per throughout As we $X.XX highlighted quarter share $X.XX previously, XXXX. on earnings

second For earnings was headwind the $X.XX share. the per on quarter, this

and the see standard the performance the of growth the related commission the revenue you in key business. in from Matt recognition later on of the highlights includes strong the leasing of EPS adoption impacts take As standard. This the and the call. details adjusted drivers to you can through X.X% slide, expense both the deferral the will underlying

to now the I'll that With over Hans. turn call

Hans Vestberg

second strong second adjusted everybody, growth joining revenue a We as EPS service good a very fueled earnings well wireless thanks, and as Brady, this well. a It quarter. call. Thanks, had for -- EPS as was strong quarter by growth

additions operation well lot of low had as side, the the metrics think on churn. with our very I So wireless good the a a quarter same good as At the was team a time execution. focus net on with

stranded process, all-in-all capital That our all capital as a up in out flow. allocation, coming very solid very efficiency good combination cash a to allocation as well from with

financially. quickly, So if good I quarter very us sum it very a up from

consecutive won our when also won We account as third-party the from we is important as the top there all to which straight the win service, XXrd well. work our building we're XXth in the us with RootMetrics, when network Together so time, J.D. measurements. network Power, a the

is measurements really the getting in right market really the are we from and feedback the So this valuable market. that

can coverage, we now about I've we the means be millimeter-wave and X capacity time, At with have is the portfolio want adding that to our all up said same build more spectrum the where the we for to currencies we build which that portfolio can in time, the XG real we some in talked which a we which all auction, before. the won XG-era

CTLs to that we devices the different add was we said we're of and same the have new so are recently We now for and one this the launched latest time devices lately year. will Inseego, continue adding XG. on-track At MiFi we that we on quite also have a launched XX the lot portfolio, the markets device we up, to XG four do

also We're you're the need on if ultimately because XG, focused to the very fiber fiber. going you

quarter XG in than so is route average Our quarter this now had XX cities miles first build the which Edge deployment our more the on we that and continued overall we're fiber doing. means in Network deployment increase in and for a month this for important we X,XXX Intelligent

one When the of and we're today points Business segments as Consumer to we doing course release the X.X it Group today. Verizon that comes now earnings Verizon are Verizon in Group won of a transformation reporting proof that

customers support we traction new with go-to-market the enterprise and that, have say with seeing the we with meeting have, new right the the also we lot of for get good people the portfolio support a our and full of show that can Verizon customers the customers also line, we especially in can I everyday. where our

we with a TV offer up going service but we're to continued we customers. time where YouTube both customers, announced are Fios also the our now wireless same collaboration our the as where concept, At Network

for we efficient ourselves can very where earlier with seamless and content outlined seeing ourselves customer, partner that investing motto in our how for year, for of the and our your of customers. making we on working can instead players Again we this also bring these service some but it it

and quarter finalized a quite cost have done recently. lot in that actually and have lot quite Separation a base these continued we and to and have puts down us of now in also total We changes a the that the Program Voluntary of competitive up

So in I'm months and for leader to delivering changes I a market. and these really the this results this doing at have team of us to continue the the competitive these very transformation that we up time. continue and are in that definitely the last XX all proud same it of this be sets transformation in really from be would positional say done market and And strength,

quarter. we're So, I'm the this producing proud team what and of

more I Matt in By to go it to over the that, detail. hand over financials

Matt Ellis

good everyone. and Thanks, morning, Hans,

consolidated prior with our results. On offset as recap a was $XX.X Wireless a revenue operating growth consolidated and wireless was wireline revenue to of the service revenue. was quarter which financial basis, by reported lower compared service year. slightly start billion, and down second Let's revenue equipment

year-to-date up X.X%. slightly consolidated basis, a is at revenue On

that full of of year of consolidated EBITDA the maintaining the Brady was standard of low our consolidated in single-digit XXXX. are from points up the second for impact earlier. approximately mentioned XX.X%, We from expense quarter and GAAP margin lease deferral guidance XX.X% which adjusted percentage commission and XX growth a was the accounting revenue headwinds includes basis year basis, On prior

in the year continued or X.X% than operational to across million revenue over as well service business. wireless EBITDA due efficiencies performance Adjusted increased prior improvement $XXX the more as

cumulative program since realized in excellence savings initiatives billion XXXX. started cash business have of the Our $X.X

We of Separation have of have savings $XXX now and year-to-date. Program three realized completed all million phases Voluntary expense approximately our

by track With the on third to XXXX. achieve late June, incremental of of savings quarter. savings We goal the exiting remain last in of billion $XX tranche employees in additional we cash expect cumulative our

mentioned, to an growth from $XXX for was slightly in The of in the more than increase adjusted $X.XX earnings million by higher year approximately $X.XX adjusted Brady per As tax by resulted EBITDA quarter our $X.XX, were rate headwind ago. earnings per higher share a offset share. a adjusted driven The tax per share rate. in earnings up

As a year. tax Tax not this and Act, reminder which one-time related rate last do the repeat Jobs included Cuts to benefits certain year's

XX% at XX% tax end now to For to XXXX, effective in range. our adjusted come lower is of rate the the expected

wireless the margin of new us our lease momentum track achieve low growth standard. single-digit accounting and on percentage performance solid impact Continued guidance of the in excluding EPS revenue service keep to adjusted

the accounting $X.XX remains for headwind year to unchanged $X.XX lease to XXXX. approximately expectation full of Our

move on X. slide review on the of consumer operating with starting Now, X.X the to let's Verizon new segments under

our a well encompasses as As new reminder, both wireline our as products consumer wireless operations. retail targeting and segment and wholesale customers wireless services

to total legacy revenue service the $XX.X the prior consumer is In second strong wireline file by primarily results by in equipment wireless declines compared continued in flat These driven offset year. offerings wireless service revenue were quarter, billion, and growth which and services. was operating

within base Unlimited as on plans. in higher account. XX% increased customer revenue service Less step-ups unlimited plans to plans migration per by are as X.X%, an Consumer driven wireless our and of tier by increase customer account connections than unlimited well to

In the percentage offerings. the as phone as wireless of This of EBITDA was X.X% new than total commission mentioned. points and deferral the Fios primarily to due second upgrade increase equipment adds. consumer revenue decreased demand increased Consumer in the our quarter rates gross revenue lower a by an offset more Consumer for X.X% broadband margin as includes prior which previously approximately basis a XX.X%, headwinds lease revenue in up standard XXX of accounting year. from the XX expense points basis quarter from was

including of phone more XX% compared by consumer, a prior take wireless at year-over-year. XX,XXX additions consumer to quarter is the to X% as XX,XXX very operating last the turn additions, a additions which strong, from for metrics. slide now net closer XXX,XXX, were was smartphone are up in performance environment. Let's year. highly operating up Within and driven while This than look gross Phone postpaid net competitive X year

net XXX,XXX our line additions X.XX% losses tablet churn well customer connected with XXX,XXX, Postpaid including around This in phone efforts patterns. last results. focused as of wearables other normal net retention by improved XXX,XXX. additions performance as net Postpaid sequentially offset due device strong seasonal to was of primarily base year totaled high-value of

with continue Our personalized our superior resonate network offerings customers. quality and to

which postpaid up were was down activations, X.XX% compared last to year. X.X%. Total were churn phones, X.XX% retail device of postpaid Total of XX%

postpaid down from elongation rate upgrade the a continued reflecting handset retail the X. year of X.X%, X% cycle. was Our upgrade ago,

In loss year. the last compared a of XXX,XXX second to net XXX,XXX quarter, prepaid were losses

high-value focus retail to profitability in wireless prepaid on continue and offerings. We our account

fiber high-quality demand video over-the-top adopt totaled video our XX,XXX XX,XXX to broadband Fios continued as additions continue traditional products. offerings. were by Internet driven to replace consumers losses of services Video Fios for linear net

move segment to slide X. business on let's Now our

secular wireline customer pressure segment as products decreased growth from segment ongoing the and and X.X% Total in operating business Small Wholesale Sector Public were Enterprise, for and business offset revenues Connect. products Other, Business, technologies. fiber provided and wireless wireless Verizon across quarter our high-quality legacy four services which the Our includes and includes services Global in Medium groups; and by

the In wireline approach business wireless quarter, This customers. network best-in-class from and Revenue from our wireless our quality, quarter. revenue reflects Verizon's products including grew revenue products X.X% X.X% performance business service solutions-based growth. our the in strong X.X% declined reliability with

driven Global traditional data technology and From pressure pricing growth perspective, voice and by a services. offset wholesale Customer driven shifts. Small increased service business and Enterprise partially declined by primarily revenue Group ongoing and X.X% by legacy X.X% wireless medium Fios in XX.X% and respectively, and declines

quarter expense sector down from prior the revenues. and This of compared standard lease for headwinds and which EBITDA declines accounting the growth as mentioned. a was product result wireless wireline other deferral points Public the and and by year basis previously points XX commission X.X% increased services. was products XX Business the in wireline revenue approximately driven includes as of segment in legacy basis of margin to XX.X% new

XX metrics. and other business on strong. net devices. move discuss operating includes slide adds to XX,XXX consistent Business wireless let's transforming XXX,XXX and XX,XXX Now phones were is XXX,XXX Postpaid tablets which connected to

points of the postpaid our postpaid prior postpaid from rate while prior up churn the activations device retail basis X.XX% X.X% were improved of churn increased slightly X.XX% at year. was sequentially, year. in Total upgrade Phone to X while total X.X%, down compared X.X%

XX slide Media Verizon Group. now to to on Let's move discuss

versus X.X% quarter For reported $X.X Verizon down in year-over-year significant decline which is quarter. the a Group revenue first prior X.X% billion improvement year, the the from second Media was the

Gains build in by native be offset in mobile key positive desktop to areas. to declines momentum advertising and in though business continues advertising on continue the

and to with our continuing simplifying platforms, partners the are within advertising customers synergies We interactions migrate recently integrated business. driving to

mail. engagement our news, super our remain growing includes home monetization on and channels sports, audience, We which across finance, focused and entertainment,

subscription During our the quarter we launched and that a Yahoo! of Plus HuffPost two services Premium enhance most is media Finance assets. the experience popular of which

Verizon legacy to Let's Verizon slide now which move to our reconciles X.X X.X XX, results. results

webcast reporting this and our remainder we of through year. mid during providing Verizon results segment As be wireless mentioned in overall June, X.X the we will wireline

our in results find information supplemental You can these website. included our on

X.X shows a from business to from shows Verizon and to X.X to for revenue. reconciliation both XX business the and chart voice from Slide bridge wireline. revenue Verizon wireless full revenue The consumer consumer

shows The top total consumer subtraction the $X.X of had wireless $XX.X in of in billion. of $XX.X the $X.X wireless and The billion addition which in quarter. consumer billion revenues chart resulting of wireline revenue business billion removes brings

$X.X in of quarter. in to $X.X the billion revenue wireline wireline The wireline were declined a chart shows total reconciliation with while XX.X%. then add Verizon of business to and of We wireline bottom wireline business similar consumer ultimately $X.X quarter X.X% billion billion of billion at wireless billion revenue revenues operating arrive Connect from start $X.X business the Total margins and subtract revenue. $X.X of

highlights our legacy wireless XX, Let's move to overall results. slide which

results, total in driven wireless Looking revenue X.X% business at service billion and the primarily in overall consumer increased wireless, increase X.X% both $XX.X second revenue. by wireless quarter, a which operating to includes

For percentage continue the range. of headwinds the EBITDA we a revenue in remainder the from Total primarily as as total includes basis deferral XX.X%. within the the to commission XXX of to new revenue expect expense accounting lease growth be to quarter wireless was wireless service previously the of X% and X% mid overall standards margin approximately of This mentioned. points, year,

Postpaid quarter. were includes of retail X.XX% were the phone XXX,XXX. X.XX% total basis basis were smartphone impact from of XXX,XXX additions in up Total the adds XX.X%, ago. phone year accounting points the Postpaid postpaid adds to was similar net the from up net was year-over-year. year EBITDA a quarter in standards, of quarter year-over-year. churn which This five was while churn XXX,XXX last second XXX,XXX, net XXX postpaid Excluding up points margin

an increase device a year X.X% as by X.X%. For to down offset driven rate X.X million the from upgrade year Total from the X.X% decrease in postpaid by quarter, a last was This X,XXX of X.X loss customer activations prior postpaid growth XX,XXX of accounts retail year. of additions compared the in postpaid quarter million in we our in to increased a ago. by second were

$XX.X Voluntary totaled during Let's now consolidated on billion, XX. flow cash down $XX.X a balance higher sheet Year-to-date and prior XXXX. benefits Benefits our of improvements from recognized payments half on operating the related Program. realized were tax tax Separation focus the and related offset the cash The last slide in one-time by results from from the payments primarily activities flow billion to to year. cash year operational first reform were

the the year. for slightly $X.X half was up spending of which the billion, first Capital from prior year is

our Intelligent Wideband markets outside and LTE growth Our of our fiber and in industry data capital expenditures XX-plus ILEC to launch on architecture XG Edge Network continue in video to deployment XG leading the traffic significant footprint. our network, the continued support build-out and the Ultra upgrade our network,

CapEx cash ended the billion which quarter sequentially lower by $XXX.X $X.X net billion. total We from the We $XX.X and to which billion $X.X capital with free flow billion than was of of by billion the of is flow prior The year-over-year cash of maintain half gross $X.X $XXX.X balance year. and spending is $X.X debt, The of results range for our guidance $XX.X lower full-year first unsecured the lower is debt billion. operations year billion. XXXX billion

times of X.XX year, of X.X down from our net the quarter continued of ratio sheet. X.X balance versus to the targeted times times is adjusted last Our was at reflecting strength debt to unsecured EBITDA our end and X.X range the

near-term actively capital. our debt our maturities, our footprint lower funding of overall portfolio cost and to optimize minimize continue We manage to

predominantly tendered of During $X.X the notes the that mentioned is earlier. in non-cash. The quarter charge we that Brady billion $X.X billion resulted pretax of charge

Our financial with our strength strategy. execute us balance flexibility on sheet provide to

cycle. throughout maintain at to continue the We us levels business giving and maturities invest operate to near-term confidence low

second continuation our summary, in We strong customer while So service the relationships made to of and Verizon grew X.X. transition increased we saw performance revenues. quarter a

the also The earnings flow to operational which by results quarter. was strong in led from our the for performance business driven growth cash

approach and our balance to We to in allocation strengthening remain our continue disciplined committed we sheet. capital be to

the turn questions. to your so I'll can call to that, get With over Brady, we

Brady Connor

Brad, ready questions. Matt. we're now Thanks, take to

Operator

Cusick Your comes first [Operator Instructions] question from JPMorgan. of Philip

open. is line Your

Philip Cusick

short and Thanks guys. if One term one I long-term, may.

should headwinds X.X% your on First seems we very half in point that growth get think at to below X% guide will service X%? Are half. revenue back this there the X.X% conservative average down first the versus the

backhaul, market progress us when to start you. more you early that And Hans of any into as on well dig And marketing business help build? consumer fiber in-sourcing or you out Thank the XX as will understand second, can region?

Hans Vestberg

Thank you.

the good since, I team start Let me growth the shown wireless has structure. on with that. say, work new come would quarters But last then in I will back think we Matt that, really service the have of couple and this really a here

confident have in Rolling more continue I'm how on momentum in will probably their business. they good to market. quarters team thinking this the have a our some we sleeves, compete up

So least, to service on we revenue think lot it's so growth on far. have of we’re the our rolling in that continue at team the done and have we confidence progress I a

for we fiber And that that's build in miles very route month XXXX XXXX, was build, coming everywhere quarter the we quarter first definitely the have a in up. talked important for in this quite the speed yes per now Remember for while quarter. right average the been On us. so in about a on and

in of time going Right to going that we're now own may enterprise of next year, offer build, this our to to to roll fiber is customers say. of et in part sites cetera. course and I the also when wholesale our be able over the later to year majority we But if

So whole essential XG how fiber. Edge it's working have more the and Network, right so because whole that XX so we're and building Intelligent it this we're in just have play that's now to the it for is for essential we

efficiency. quite on we're a offer But longer our we our The say speed sites, have own bit has important there improvement now would our we're good Matt? customers. so very will for a to now. I all it it before right we to been can little So a is taking and for mainly team take which while,

Matt Ellis

Yeah.

So good Phil. morning

revenue, of X.X% service the driven year, second over first business seen results the on segment. half in in quarter, So by with the certainly in pleased the we've X% the

products momentum great over wireless as the across second as how the plays see We year segments a total half had growth growth. momentum of year. we see we We in wait the So second revenue terms now. for year service to head half revenue service and the have continued of or we services off we've the into jump like the path we'll and both on back and of a into the half certainly the so continue in out

Philip Cusick

can Hans or cost, to the really sites, up your follow-up start in-sourcing take as you lowering to backhaul begun I are of And light yet? that fiber you your that has starting if to not

Hans Vestberg

Intelligence you're network Kyle Intelligent talked CapEx, And going multipurpose is all starting, that's we're on last remember the a the and build today efficiencies. couple course year the you We in significant of what more. network Edge this years But the Network, the Edge is we not cost seeing as have, have part it's about yet. building been of but total the our two of

the growth and well that -- areas. a definitely come of now certain which remember as this opportunity own is a of that them out fiber, we're in economics should definitely building course, we and that one it believe us more have long-term also for also we, that is their as efficient get So

Philip Cusick

Thank you.

Brady Connor

Brett, Hey, ready question. the we’re Phil. next Thanks, for

Operator

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

is open. line Your

Brett Feldman

for the Thanks questions. Matt. This taking one's for

more do outlined Should getting XX, become you as below, of to a point? your on we be that you or achieving at that two months target point as you're prioritizing dry As churns about powder look we spectrum, couple how it think actually close the incremental where CapEx analyst for meeting to of about share are at to you net generating closer leverage a leverage on question a repurchases unsecured ago. may to you slide a show and you. be think you'll priority? immediate get the higher up and a capital Is you Thank flex which very down getting bit,

Hans Vestberg

with me let is we seen you here are and CapEx very we need outlined So and have CapEx confidence. the start working into last of very Number clear we're the and with everything disciplined capital what course we that we something disciplined our have one We we of there. what me where and in levels allocation. the February, the years. and continue this business, Matt historical Remember to on done couple do will be is

dividend to how in have Secondly, with work Board we been we working that the want a debt. we position work to put our our all a we ultimately make That's and time.

business, it’s debt. So and dividend

to get And want commitment we but a made me, to we -- company range to commitments. and the remember this are you was longer that deliver as before we on know always this that into commitment continue

it's important there. and So why we will ultimately get that's

it. then we company. and board to we’re working Matt? That's have We structure how it. conversation And optionality balance our capital this the the the allocation sheet I with to that great with going to a of do have right will see Matt what is see get of to daily course

Matt Ellis

Hans. Yes

just back on And that. be building may So points. thanks for of those end the

that – So we're close we to in And good as having we're past to flow get we've years. good drive range that to progress that making and the progress you see able there the strong been are as been so, and comes results cash you said Brett, we’ve -- from make. X-plus as

that to to what long that go to said. couple of X.XX say range Hans end past range be It's the we add-on instead a just we a of either. But don't That we want of points term. want means,

be expect then operating also range the And normal up sheet the on beyond and we our the build then cash into level. in to don't balance get so And range.

we opportunities So shareholders. in of use as which for our at Hans that we the talk cash appropriate into We'll number get of to have is that and one, the value rest may about. decide the the range drive business we the priority the look then invest long-term items most to

Brett Feldman

you. Thank

Brady Connor

Brad Thanks for Brett. ready are question. Hey right. next the we All

Operator

Thank you. The of question Simon next comes from Flannery Morgan Stanley.

Your open. line is

Simon Flannery

Good Thanks. could you a on wonder bit I here Hans morning. update if little us more XG.

talked bit where talk up the you've year panning mobile talked markets if market. stand out? can spectrum your broadband new before we Perhaps about the that a see and expect later new you think You do about on opening that Home? hitting Verizon we when learning and And I so is network? far XG this sharing. Thanks. about expanding to How dynamic

Hans Vestberg

questions. Thanks. Great

you our quarter. the progress in seen have So the on XG,

on basically that nine the the the full to way have We now talked year. get markets about launched XX to we have for

a extremely gone XG also I have has mean, where we improvements can the take doubled in markets basically how the pace of Mobility, footprint see the since and launched on the fast. this couple onto. that's we we're the this You cities

remember doing same XXX doing that easily going time handset we're on part what development averaging I X as compared XG. to want on XG technology now is is in fast the X.X and to actually of you roughly extremely up tell are was gig. X.X, we At having And the What I we're megabits the well. saw from in I to speed

are three have we nine scaling. starts into the as technology we At well out to we means is have launched, handsets we again with of mean the are launched XG. quarter all your Inseego for we a proposition sort vendors to of all we three the here and now these time which in have infrastructure markets the from scaling we all that are coming beginning, getting and launched have work our which we the that, I same business MiFi sort now

antenna of of developing. think you see. out is a improvement. team So I it's intelligent every the that's But in technology lot sort a that, we're We day. what that field the still great The see

continue I'm So here. confident to will we well that do

right populated sort that the And with of a dense performance areas that where We're wideband remember XG XG now of in really now. its know, right, the we're there. doing out to is most fantastic coming doing you in

that's it. So

When we then you're Home I right. we're to said talk that and/or year XG Home, or chipset. absolutely about with going launch this the XG later XG

so come of there's next changes that will piece still the Ultimately is wants for So which do about sharing, That coming to those DSS, on an is half in dynamic anyone question first plans. your that spectrum no is coverage XG. back, important which to year.

I what the our case our before, experience. in is But said important most the to best get customer

We experience now. XG right on have the best

the we it with it's coverage benefit just position a off/on our in We're we to and for turn see giving are capacity going on the customers. We on an extraordinary be optionality to experience to Wideband. when give when Ultra going turn that and we're

the Verizon engineering ground I city, in working extremely high the in But every right the doing level team is team, fiber activity in the the say would on now.

I focus the is remember awards. the continue neither. to previously, our also I said absolutely RootMetrics, to so the in XG I win that one. I right is network neglecting So our part that number mean, see now we're in all what not J.D. place Power third-party network this think the quarter,

you. front think of you have So about need in a when customer that you to

Simon Flannery

Great. Thanks lot. a

Brady Connor

Thanks, question. ready for Simon. we’re Brett, the next

Operator

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

Your line open. is

David Barden

mix per the guiding of our be or end for the could. taking rate that improvement questions. be If Hey up, the for tax are we're should we're the earnings guys, growth guess in One right share there to the taking XXXX, for line? for I steering things two if I then Matt. low we other bottom we thanks that shouldn't thinking that

business would just then for to respect X.X the the segment. second be, the And legacy with question reporting

as result of time. was stability, the think in have you AT&T and of surprises that they I and things they some showed outlook think out other Randall to business was relative about the the strength that said good I for price one came that unit this talked that at for history the enterprise

I strength. should it the the quarter to Thank seem didn't and bit on can to a But you performance you. the Verizon reflect that? start there. see of in same elaborate the to do reorganization we wonder if think if I'm kind that little with wondering something that some improvement I had

Hans Vestberg

when with the blended, hand the it. last mean start the on of for was business, called you And medium good the and there little that to wireline tougher can bit I the other But about I comes a on I it small bit governmental side out what little question us. business the have and side. Yeah. growth think the business it enterprise

we think to that good enterprise. the see very I the possibility accelerates, in with of, sort see a to decline So continue

We funnel the well. business have as enterprise in great

we remember to we've going say set a mean us a mean would of XX reorganization transformation done. the no have up that the five then, have to I there's strength from last in I in XX delivered the impact we to the which done in done stronger I we I doing positional strength be forward. the it's think I that, the opposite. will go I even last units, and company of what results are months compared hey changes years the and we all really a will these

portfolio, and with enterprise from our we with my XG XG it's previously, Tam if daily the and course, or be when -- full compute. mean edge of come the coming in so the I And, as mobile working with or solution, customers customers also it are said fiber I excitement team our

good compelling a have to we on think there. continue to work and story I

of a legacy course for enterprise which now. that's how quarters declining see some we right the of I the business. we'll have have in So business couple Then side still

work all the to that is see time. accelerated Our Matt?

Matt Ellis

Yes.

I ago on that the impacts you remind I on at basis is the ETR, the the year-over-year up look so ETR David, as the reform. largely a So is from that's prepared the adjusted mentioned year of tax that, actually adoption in of and remarks because a onetime as

headwind of basis with year-over-year. despite approximately accounting even also So quarter we in headwind the that see a on do that ETR higher from be continuing up the was EPS $X.XX year-over-year standard. to some from $X.XX and the But the

second in So performance so kind to good similar of momentum us. for EPS there first both and strong year-over-year first the quarter, quarter quarter,

we of but the back We half and off good see plays and platform be building from. where very into certainly so the I so far feel strong a end this we'll second jumped about to out, year are how the year

David Barden

guys. Thanks,

Brady Connor

Thanks, David. Hey, next Brett, we are ready question. for the

Operator

The you. comes John Thank next question Hodulik UBS. of from

Your line open. is

John Hodulik

get grow growth first XG Home. the once think the could of the expansion about footprint Hans base standards-based subscriber Great. out? equipment? market higher on us you questions, tell XG Home anything sort Thanks. expected in the of And should target or how Two on to you the we

Thanks. Is there for spectrum. point? spectrum a you of competitor relative its much out that situation smaller disadvantage competitors And that competitive that at second a then And base? worsen with megahertz subscriber with question we're Sprint with guys on you Obviously T-Mobile base spectrum second is a -- at coming current the then over XXX would this and with your to less control spectrum. looking certainly deal,

Hans Vestberg

Okay.

I Home, software as development well capped now a have On remember limited markets Home and of how solution. we both on four how think the cities. the many our on proprietary XG sort right in the That's we did XG we --

is be our It good win I share good thing to can only appetite those say, for seems XG The in markets. really Home.

going of second year, part this or performance with good And half year Home going the XG NR we're it. CP of a back equipment. have for We come of this of to then the we're sort

need do, that that I us. makes market sense what to of certain size a for we -- And think we're it so going

we we're a going significant mean So when impact revenue. to I think is I our have on the XXXX before, this said as

for So the course now XXXX the out at this coming of be latter and starting year is year and of markets very in be important important. part time an us to the going all will

the the spectrum headwind I always think team would people that is, the say don't we this engineering spectrum On mean, that. with enough what think side, this is we is all and spectrum of and mean that I doing magnificent. I I have have organization

when you of team about network, you more get all the -- And softer think good its that plan, that Now how build spectrum you time. we how remember has so is sometimes done the very utilization it I talk it? how much the out

other going added feel XG I my coverage, be wideband, have the it comes going it capacity spectrum all ultra have. But a to XG compelling high where have ultimately both time And continue very that on could bands. bands well There we now opportunities said a to but millimeter that to we when deploy previously, As for in to be wave the up I launch position in the when it also on performance. might we confidence also is and network to can spectrum. confident doing assets be right we comes market have all is where the leadership have to we come the team

John Hodulik

Thanks. Great.

Brady Connor

Hey, Thanks, question. the Brett, we’re next John. ready for

Operator

comes from Fritzsche Thank of Fargo. Jennifer you. Wells question next The

is open. line Your

Jennifer Fritzsche

Great. you If I for I revisit fiber on wanted to the may, Thank taking activity. just the question.

every you X,XXX. you're of route now miles said X,XXX month think -- I miles versus fiber adding

you tower that or and with issues companies a have utility. that and Some increase seems is cited XX% finding harder? Are a lately jump. big like some companies municipalities Because just monthly power easier

Hans Vestberg

third engineering, planning, warning decided working factory, the invest route with the for you X,XXX this work. couple years the the in I easy month. what we people in mean, actually a I municipalities, we to remember is way working to with working of with around And an at. is all This fiber from since with have Verizon we really Thank great come say would together question. is the not parties. miles have

a that have doesn't the role I as a with you're we always even the them, confidence do have team definitely but and place really, but mean to we machine going them. now, have it. on really team yes that have it's on to to is But scaling are right, good We're easy I in of it. you into So demands higher think put demands lot right have that internal we now responding can right see the we

Jennifer Fritzsche

we gain scale? you the more And throughout year that as see Hans number if may, increase to continue I should

Hans Vestberg

much. so Not

we we we has on all think doing I and the there start be up stand, to this believe to because there of of CapEx where market, on been course getting order the are we that's and on because almost higher questions are in the market, important need are that. it. Remember will serve we technicalities volume the really to go of on volumes

now not be So actually I think maybe right high have a that much executing There is might so increases we machine more. some very the well volume. on but

now where broad now markets deploying I right deployment more of the fiber. all we these in think it's are about

Jennifer Fritzsche

Terrific. Thank you.

Brady Connor

the for question. Brett, Hey, ready Jennifer. Thanks, we’re next

Operator

next The from Michael you. Citi. Rollins question Thank of comes

is line Your open.

Michael Rollins

Hi thanks. Couple of questions.

First, how in as wholesaler a any there been has of industry? your do see you MVNO the changes to capacity cable recent And to deal? continuing evolve role the

could wireline the then on in how is on whether have? it's proceed there you the update the make out strategic to the or secondly to with trying optimization asset you And potential of that any an size moves maybe Thanks. video side, current business figure

Hans Vestberg

you. Okay. Thank

cases -- whole in important On then the side, sometimes our we believe differences platforms we and no and the outlined on model. sometimes do Remember of where MVNO, good top to connectivity we're being MVNO there we in doing major are no, we network-to-service the others is but the the have some strategy. we do this we connectivity that, its strategy

us maximum happy our the assets, that MVNO for cable investments utilization are usage doing So be that how we're getting to doing. important which and part the of actually I our we we're think month of of with continues is partnership with a

So as straight have the into a is as for long-term this goals company. playing we us

optimization, but wireline relations have I we and is we are -- of the the have, biggest assets would that have we infrastructure working. here On course say customer we all the we also the

the which I areas market very reviewing normal demanding. Of not the is all to course way strategy are And the think looking of into fortify a time. all drop areas we was or all that's the the need we we should

the heating. around areas how with you is And But Tammy optimize, that efficiency. major, you maybe the is need team you to what and are in customers the products do optimize work to just where place now we daily for it is quarter, customer your this in capital we talking confident fortify and they order how and some your need to the do and in grinding no to where

course of with and this Fios announced for comes wireless add also to linear it TV of TV we the can that, the going for in the we're I optionality customers. as YouTube sort the when both to And as work quarter that well

with that in that. So with again, working just continue model the outlined we February and

Michael Rollins

you. Thank

Brady Connor

the Brett, for next Hey, question. ready Mike. Thanks,

Operator

MoffettNathanson. The comes you. Thank question Moffett next of Craig from

open. is line Your

Craig Moffett

for understand a bands if of term I back outside go Yes, XG, I position the the spectrum longer millimeter a question spectrum hi. lot have wonder, we wave. Hans, for to second. could spectrum you that of

more But market your peeling late of than your and and lot start there's committed dedicate competitors, near term for until of bands coverage concern the spectrum a may in been them. you of the away LTE that map some be your limited can XG

about And next coverage layer years transition? the few that XG make you of you about talk how over just you the issue? as the think Can

Hans Vestberg

great a question. that's No,

DSS software. all standard out the which a is of that's all solution think for I market and coming Dynamic the first Spectrum Sharing is same in

deploy how and are we're to that -- I disadvantage want I think you we So not if coverage that's on. your anyone think

don't there's transformative market start the us to them in that We want you a things enough you At best you XG, network we do want XGs. XG it's on over most rebrand to and get the same feel feeling turning want already say customer time see the is you so because out We for also the difference. handsets a when don't of important. and XG to the have and

be will our needed is market I we not right. coverage be for map anything. customers have handsets enough I and the a going going disadvantage that for you're to it's whenever and see in mean So to

position I right in that that So we are etcetera. had not with the think historically have those we feedbacks spectrum

what how are and doing others path you networks launching things. the that and with optimizing, confident where done I'm with and a the worked now, I we're saying come we're from have outside. other build markets that we're has with software’s disadvantaged. good and Verizon executing we right the I that I feel spectrum here. not feeling new I'm

Craig Moffett

if messaging perspective better that the not competitors experience the all have than marketing a from though on more even that map much concern in your may XG on will speak be ink any XG early that to XG there in networks? so your even Is

Hans Vestberg

out. there’s turns Because a lot of that how promises. see again Let's

strategy, most that I do a we talking then marketing DNA company it. contest not I'm this going in do. think we start what things have into And I is actually so I right that continue Verizon Other and who had about fantastic that's other we the that to first might has and will inherited think now.

it's I'm that’s we right our an it’s are consumer, an this customers. why a two customer, technology, working started through customers, ago. Network governmental We it's and the customers that doing enterprise IoT Intelligent it with and we myself years and for think a a that's to see weekly build Edge already

of there's think that of the continue to I understood important that know in think to going is for and success But understanding, be well. execute as the we the has a just been not on And yet. lot that. Verizon, of significance really you will market how it I And message

we that actually on performance the eight confident our with customers in and moment. give right the our all real seeing continue will XG the right to can currencies execute be that to company, Just Verizon

Craig Moffett

Hans. Thanks,

Brady Connor

Craig. Thanks, Yeah.

Craig Moffett

Thank you.

Brady Connor

we’re ready Brett, question. the for Hey, next

Operator

next you. question Thank comes Colby Synesael and from of The Cowen Company.

Your line is open.

Colby Synesael

if questions may. I Two Great.

that if have of savings cost on that could was First for implemented the seem And just secondly expect an in we quarter. Matt, plan quantify impact you flow? I didn't into free the that cash second then to the the quantify the go quarter? could you're from was third Since hoping VSP you to able as

the do and just small I to you're the miles referencing out the separate conversation on my has cells. with route call. then second And to fiber the between question wanted miles

the But route and well? Thank feel be small quarter. adding could that like necessarily as things other thing X,XXX same out your So doing might but to momentum why those some cells second are seems the go hand-in-hand I are put the miles, in getting getting adding would explain companies up you that the Because seeing miles, seeing up and not in I fiber per side? still miles the cell terms appreciate same you route actually about the you. have there like the actual small of month might be cells of two small on the lease

Hans Vestberg

start fiber will one. on with on other can and Matt start the I the

have I and as I for and wholesale. we that's, it's the important we very So several on owner I and course, fiber small fiber, the that when we remember And it customers. enterprise, the of medium, network multiuse XG, have fiber this have and that have XG can all I guys and different we have build economics can have those need a build had the I customers.

to how up But, the small are of on able we are now cells question was course, fiber far. gaining initially it. going that's much XXXX, we and quite is actually a lot earlier and the of we why coming again, to turn the But so the have about as done

the about the how early cities because building the this indicator XG. can I you an is need before we're the getting the permits in deploy fiber think with start to and you network,

prepared the early to And have cases have is we high for speed organization this So we a for that fiber. Matt? XG. use whatever indications our be and

Matt Ellis

Yeah.

I the year half year impact the employees and income think at the of yeah, June. a first XQ obviously, step-up separation, year. that quarter there's we'll piece statement tranche as charges half was the the we came of We first quarter good in the but the the largest savings the and took in and we have off of in last $XXX mentioned Certainly payroll million standpoint, end another So, of voluntary like of took positive in of in Colby, fourth in XQ first some on from final the flow cash XQ. then the

year-over-year for next until benefit get So that year, to half impact I basis over billion the June by of be first expect year and north $X the full a into run that of a full of year. rate we carry of next to on will

focus big we VSP improvement thing of cost made to continue was of on will focus positive being is the we commitment the a $XX well more that. to business on part the the meet overall billion our efficiency component of a and on-track certainly than So and that. We're

Colby Synesael

you. Thank

Brady Connor

Yeah, next question. ready are the thanks, we Colby. Hey, for Brett,

Operator

question Guggenheim you. from of Partners. The Thank comes Mike next McCormack

Your open. is line

Mike McCormack

Hey, thanks segment business you're subscriber seeing guys. Hans estimate comment seeing maybe BXB you're the a at competitive wireless. just robust from What in quick marketplace? on a for standpoint what

one your be what competitors to more Obviously thinking to know of is there? and should about I Any Thanks. takes puts loud there. back pretty half? other bigger thinking route have Unlimited. And see forward, about going ARPUs do of move ARPA the the just you about drivers getting you

Hans Vestberg

Yes.

On good it. it are wireless share. the when to taking We really side we business about comes feel

I relationship the network we great bigger think that and very course that had not we about quality no important the and no been Tam even has to businesses. that with there's there's and are becomes doubt I mean is important it team a capacity of enterprise company for coverage doing job a have, more there transformation.

to So I'm with do pleased more. that we want even

yes. So

up was the offerings with that, on say Unlimited second hand new especially to and with of question Matt. will to and ways I segmenting a to service The since team over Ronan, dealing new lean actually has with I the side But continue forward also about it have role. the ARPA. continue good been with market launch would can consumer revenue

say. the with they sleeves pleased more they that look and know I up that's call think team. so I what the And I I'm at have

company that that continue and have doing prepared marketplace to be a Matt to well. the to are transforming what I decent we're for So to together do term to closer

So good doing. about and Matt? team is what his Ronan feel I

Matt Ellis

Hans. Thanks Yes.

coming whole business. wireless growth your the of you a from So Mike as think the overall office as in about trajectory, it's

and which Just which driving the a few service space BXB total being revenue while also ARPA the things really to the space point quarter, consumer both strong very well. that's out results in performed the have obviously

positive Net that's there. second account good of up quarter in growth a this year, growth year-over-year so

can gross we've say did. We growing row yet the a the industry that something they in not participants again that gross number that done continue in not industry that. that’s of all and leading quarters adds to to a addition year-over-year And industry lead phone in adds, – in

also churn, is yet industry in there adds gross XXX,XXX The result leading the net the again. So leading of phone over in phone a industry nice year. last adds XXX,XXX net increase the

we went business puts I the the first operational about from half had financials good in the us the performance at that a off of into where and side great about nice think half momentum, good the time. continue as we the in second jump that to we on of to year year, are place So point feel as well, strong as this in the

Mike McCormack

guys. Thanks, Great.

Matt Ellis

Yeah. Thanks, Mike.

Brady Connor

Yeah. Hey, we last Brett, have for time one question.

Operator

Thank you.

come will Credit of question from last Mitchelson Your Doug Suisse.

open. is line Your

Doug Mitchelson

much. so Thanks

wireless on couple a competition. Just

competition Hans, I'm if So deal recently seeing and at I'm I wireless responder. that’s think strong not of a you I obviously, back sign if signed set competitive the you're initiative sure the impact first going Massachusetts AT&T. curious from any with a know, first quarter. forth.

bundling a or basis curious I'm is video wireless it strategy? wireless, lower with wireless then services. of spring revisit, HBO the when Is your with churn, was that And Max Thanks. just video to necessary video are that bundle with planning AT&T bundling just it promotional the to compete sort others to is launch video. and I next with hoping the of informs offering importance it to on just how

Hans Vestberg

Yes.

the second when it than performance quarter we our gained little tells So if had the competition about you need we net business. me first comes additions was to just let competitive about a we a lot say, I little churn. all in a when and quarter the same that the to low more But it that mean time and bit those bit market at in the speak talk look I consumer the

I that think I think the on of than so part business there's the And deals said again the side, doing well. we're side and the critical of course, essence, ease business are well is as I and competition wireless network But, important for performance. the before, the performance those as coverage -- the on that side we of business

well I continue well. that and in will doing think do area we to we're

robust build to more even continue we'll and more it. out coming on the offerings network and new have getting quality We

transformation and and well this is again enable would think rest that's to and preparing in I are the do and of say we're I and of we're the work I there, the in market. sort are tools Matt to the to Ronan continue And doing. I of company after the the with even quarter compete the for it year. working done in team think And So both Tami, market what well

Matt Ellis

customers network Just the – experience. there. and confident one important most question on video follow-up the very of thing wireless quality the to we're with the Look is

competitors bundled in phone and lead And video the past so to and the now, churn. to we continue the couple years seeing with continue wireless industry offerings in we for of gross industry we're lead adds in

to So continue is quality and most thing when there. you I don't network, reliability other there the important we'll of customer have the the and connection, in network quality you think things the best that in the the be out demonstrates focused best to of that same need providing connection that on to bundle way that

Doug Mitchelson

you. Great. Thank

Brady Connor

now. all the time Brett, Hey, Doug. have we Thanks, right that's

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

Hans Vestberg

Thank you, Brady.

our has of things. all just here's couple business. But a quite of range covered we've for call, because think basically a this ground in lot I question

new First is and of change we putting a We're in have network, large build structure achieved. well. the have team, all, how changed we reporting structure, the we're done And what I'm a program. new executing structure, remember we really we team proud they’ve voluntary of have

work we to transform set in to lead the continue a market I be think and to we with want company that's February. the here, a out way strong continue strategy

what Capital that the we XG out on is what to That's we're job valid in disciplined comes continue And on market. of for team great to to what then capital, lot February, so fundamentals. Markets laid a I we and to executing are circulating a do execution there. to the lead that of and back doing continue be are we're around doing aiming that's I and the questions our course think think is on also So and still then will Day

the think this the I I'm quarter so proud So and the doing and up. financial at that -- that to delivering sum it changes earnings. of same quarter time we're

attending very thank call. So I out you see you I'll for there guess And soon. much this

Operator

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

disconnect. You may now

Verizon Communications (VZ) 1 Aug 192019 Q2 Earnings call transcript