Verizon navigates through stormy Q2 waters

Verizon Communications produced a mixed bag of results for Q2, but shareholders may well be pleased with the overall performance.

As expected, the company received some COVID-19 punches to the top line.

Consumer wireless service revenue – largely because of a softening pre-paid market – fell 2.7%, year-on-year, to a shade under $13.1 billion.

On the flipside, across both its consumer and business segments, Verizon managed 173,000 phone net additions.

This was well above an average analyst average estimate of 61,200, compiled by FactSet (as reported by Reuters).

Total wireless revenue (consumer and business) was down 1.7% year-on-year, to $15.9 billion. The company pegs total wireless service revenue "growth" for Q3 2020 at between minus 1% and flat, year-on-year.

Although Verizon gained 10,000 Fios Internet additions, that was down markedly from the 59,000 Fios Internet subs that Verizon tacked on in Q1. The telco has nearly 6 million Fios Internet customers.

The top-line plus-sides were not enough to outweigh the downsides, however, and consolidated Group operating revenue slipped 5.1%, year-on-year, to €30.4 billion (US$35.4 billion).

Even so, this beat an average estimate of $29.93 billion, according to IBES data from Refinitiv.

Cash flow and earnings
Free cash-flow from operations increased dramatically by $7.7 billion, to $23.6 billion – admittedly helped by a deferral in tax payments to the next quarter – and total debt decreased by US$4.9 billion (although that makes only a small dent in the overall debt, which stands at more than $100 billion).

Verizon reported an EPS of $1.13, compared with $0.95 during the same quarter in 2019.

The company estimated that Q2 EPS included about 14 cents of "COVID-19-related net impacts," primarily because of the dip in wireless service revenue and increased financial strain at Verizon Media.

— Ken Wieland, contributing editor, special to Light Reading

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