Verizon profit and revenue grow in Q3 as iPhone 5 boosts subscriber additions

Verizon Q3 2012 Earnings

Boosted by the launch of Apple’s (AAPL) iPhone 5, Verizon (VZ) on Thursday reported a solid quarter with net subscriber addition figures that crushed Wall Street’s lofty expectations. Analysts saw Verizon adding 901,000 net postpaid subscribers last quarter but heavy iPhone demand pushed the key metric to 1.5 million, with total net subscriber adds reaching 1.8 million in the quarter. The carrier earned $0.56 per share, up more than 14% from $0.49 in the year-ago quarter, and revenue grew 4% to $29 billion. Operating income margin grew to a record-high 31.8%, and Verizon now claims 95.9 million total retail connections including 90.4 million total retail postpaid connections. The company said on its earnings call that it activated3.4 million Android phones and 3.1 million iPhones in the third quarter, including 651,000 iPhone 5 handsets. Verizon’s full press release follows below.

Verizon Reports Third Consecutive Quarter of Double-Digit Earnings Growth, Continued Strong Cash Flow

Verizon Wireless Again Posts Record-High Margin, Supported by Strong Service Revenues; Wireline Consumer Revenue Growth Continues to Accelerate

NEW YORK, Oct. 18, 2012 /PRNewswire/ –

3Q 2012 HIGHLIGHTS

Consolidated

  • 56 cents in diluted earnings per share (EPS), compared with 49 cents per share in 3Q 2011 – a 14.3 percent increase.
  • 64 cents per share in adjusted EPS (non-GAAP), which excludes 8 cents per share in charges, compared with 56 cents in adjusted EPS in 3Q 2011 – a 14.3 percent increase.

Wireless

  • 7.5 percent year-over-year increase in service revenues in 3Q 2012; 7.9 percent year-over-year increase in retail service revenues; 31.8 percent operating income margin and 50.0 percent segment EBITDA margin on service revenues (non-GAAP), both record highs.
  • 1.8 million retail net additions, excluding acquisitions and adjustments, including 1.5 million retail postpaid net connections; low retail postpaid churn of 0.91 percent; 95.9 million total retail connections, 90.4 million total retail postpaid connections.
  • 4G LTE service now available to more than 250 million people in 419 markets across the U.S.

Wireline

  • 4.6 percent year-over-year increase in consumer revenues, the highest in a decade; consumer ARPU (average revenue per user) up 10.3 percent year over year, to $103.86.
  • 136,000 FiOS Internet and 119,000 FiOS Video net additions, with continued increased sales penetration for both products; 5.3 million total FiOS Internet, 4.6 million total FiOS Video customers.

Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported a third consecutive quarter of double-digit percentage growth in year-over-year earnings, as Verizon Wireless generated a second consecutive quarter of record-high margins and Verizon’s Wireline segment posted accelerated growth in consumer revenues.

Verizon reported 56 cents in EPS in third-quarter 2012, an increase of 14.3 percent compared with third-quarter 2011 earnings of 49 cents per share.

Adjusted third-quarter 2012 earnings (non-GAAP) of 64 cents per share exclude 8 cents per share for charges related to patent litigation settlements.  Comparable adjusted third-quarter 2011 earnings of 56 cents per share excluded 7 cents per share for a non-operational charge related to an actuarial valuation of pension plans.

On Track to Meet 2012 Financial Objectives
“In the third quarter, Verizon continued to deliver double-digit earnings growth and strong cash generation, and we remain solidly on track to meet our financial objectives for the year,” said Lowell McAdam, Verizon chairman and CEO.  “With our 4G LTE network advantage, well-received Share Everything Plans and unmatched product portfolio, Verizon Wireless continues to do an outstanding job of balancing growth and profitability.  Wireless achieved record profitability in a quarter in which we reported the highest number of retail postpaid gross and net adds in four years.”

McAdam added:  “Based on the strength of our FiOS fiber-optic network, we reported the highest growth in U.S. consumer wireline revenues in 10 years.  Additionally, strategic services growth in our Enterprise business helped offset weaker revenues caused by global economic challenges.  We are confident that we have the right plans in place to meet these challenges while improving the long-term profitability in both Consumer and Enterprise.”

Continued Strong Revenue Growth; Year-to-Date Free Cash Flow Up 49.9 Percent
In third-quarter 2012, Verizon’s total operating revenues were $29.0 billion on a consolidated basis, an increase of 3.9 percent compared with third-quarter 2011.

Consolidated operating income was $5.5 billion in third-quarter 2012, compared with $4.6 billion in third-quarter 2011.  Consolidated EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled $9.65 billion in third-quarter 2012, compared with $8.8 billion in third-quarter 2011.

Cash flow from operating activities totaled $24.8 billion in the first nine months of 2012, compared with $21.5 billion in the first nine months of 2011.

With capital expenditures of $11.3 billion in the first nine months of 2012, free cash flow (non-GAAP, cash flow from operations less capex) was$13.4 billion through third-quarter 2012, compared with $9.0 billion through third-quarter 2011 – an increase of 49.9 percent.

For full-year 2012, capital expenditures are expected to be lower than 2011 capital expenditures of $16.2 billion.

Verizon Wireless Results: Record Profitability, Strong Customer and Revenue Growth
In third-quarter 2012, Verizon Wireless delivered the highest number of retail postpaid net additions in four years; strong growth in revenues; an increase in smartphone penetration; and the highest segment EBITDA margin on service revenues (non-GAAP) in the company’s history, surpassing last quarter’s previous high.

Wireless Financial Highlights

  • Service revenues in the quarter totaled $16.2 billion, up 7.5 percent year over year.  Retail service revenues grew 7.9 percent year over year, to $15.5 billion.
  • Total revenues were $19.0 billion, up 7.3 percent year over year.
  • Retail postpaid ARPA (average revenue per account) grew 6.5 percent over third-quarter 2011, to $145.42 per month.  Following the recent introduction of the Share Everything Plan and as customers continue to add multiple devices to accounts, Verizon Wireless now reports ARPA instead of ARPU since customers can share data among multiple devices.
  • Wireless operating income margin was 31.8 percent and segment EBITDA margin on service revenues (non-GAAP) was 50.0 percent, setting record highs for the second consecutive quarter.

Wireless Operational Highlights

  • Verizon Wireless added 1.8 million retail net connections in the third quarter, including 1.5 million retail postpaid net connections, the highest in four years.  These additions exclude acquisitions and adjustments.
  • At the end of the third quarter, the company had 95.9 million retail connections, a 5.7 percent increase year over year, including 90.4 million retail postpaid connections.
  • Verizon Wireless had 34.8 million retail postpaid accounts at the end of the third quarter, a 1.0 percent increase over the third quarter 2011, and an average of 2.6 connections per account, up 4.0 percent year over year.
  • At the end of the third quarter, smartphones constituted more than 53 percent of Verizon Wireless’ retail postpaid customer phone base, up from 50 percent at the end of second-quarter 2012.
  • Retail postpaid churn was 0.91 percent in the third quarter, an improvement of 3 basis points year over year. Total retail churn was 1.18 percent in the third quarter, an improvement of 8 basis points year over year.
  • Verizon Wireless continued to roll out its 4G LTE mobile broadband network, the largest 4G LTE network in the U.S.  As of today (Oct. 18), Verizon Wireless 4G LTE service is available to more than 250 million people in 419 markets across the U.S.
  • The company introduced seven 4G LTE smartphones in third-quarter 2012: the DROID Incredible 4G LTE by HTC, Samsung Galaxy S III, Pantech Marauder, Intuition by LG, Samsung Galaxy Stellar, DROID RAZR M by Motorola, Apple iPhone 5; and one 4G LTE tablet, the Samsung Galaxy Tab 2.  The company also announced the availability of the DROID RAZR HD and the RAZR MAXX HD by Motorola, which are launching today.
  • After receiving FCC approval in late August, Verizon Wireless purchased AWS spectrum from SpectrumCo and Cox Communications, and also completed its spectrum transactions with T-Mobile USA Inc., Leap Wireless and Savary Island Wireless.

Wireline Results: Accelerated Consumer Revenue and ARPU Growth
In third-quarter 2012 in the Wireline segment, FiOS revenue growth led to strong overall revenue growth among U.S. consumer customers.  In global enterprise and wholesale, increased sales of strategic services helped mitigate lower revenues resulting from continued secular and global economic impacts.

Wireline Financial Highlights

  • Third-quarter 2012 operating revenues were $9.9 billion, a decline of 2.3 percent compared with third-quarter 2011.  Wireline operating income margin was 0.4 percent, compared with 0.5 percent in third-quarter 2011.  Segment EBITDA margin (non-GAAP) was 21.7 percent in third-quarter 2012, compared with 21.4 percent in third-quarter 2011.
  • Consumer revenues grew 4.6 percent compared with third-quarter 2011.  This is the highest year-over-year quarterly revenue increase in a decade and compares with a 2.5 percent year-over-year increase in second-quarter 2012.
  • Consumer ARPU for wireline services increased to $103.86 in third-quarter 2012, up 10.3 percent compared with third-quarter 2011.  This is an acceleration from an 8.5 percent ARPU increase, comparing second-quarter 2012 with second-quarter 2011.
  • ARPU for FiOS customers was more than $150 in third-quarter 2012.  FiOS services produced 66 percent of consumer wireline revenues in third-quarter 2012.  About two-thirds of FiOS consumer customers have purchased a “triple play” of phone, Internet and video services.
  • Global enterprise revenues totaled $3.8 billion in the quarter, down 3.6 percent compared with third-quarter 2011.  Sales of strategic services increased 4.4 percent compared with third-quarter 2011 and represented 53 percent of global enterprise revenues in third-quarter 2012.  Strategic services include Verizon Terremark cloud and data center services, security and IT solutions, advanced communications, and strategic networking.

Wireline Operational Highlights

  • Verizon added 136,000 net new FiOS Internet connections and 119,000 net new FiOS Video connections in third-quarter 2012.  Verizon had a total of 5.3 million FiOS Internet and 4.6 million FiOS Video connections at the end of the quarter, representing year-over-year increases of 14.4 percent and 15.4 percent, respectively.
  • FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase.  FiOS Internet penetration was 37.0 percent at the end of third-quarter 2012, compared with 34.6 percent at the end of third-quarter 2011.  In the same periods, FiOS Video penetration was 32.9 percent, compared with 30.6 percent.  The FiOS network now passes 17.4 million premises.
  • Broadband connections totaled 8.8 million at the end of third-quarter 2012, a 2.3 percent year-over-year increase.
  • During the third quarter, Verizon continued building its network of the future by deploying 100G (gigabits per second) technology throughout the U.S.  Cloud applications, video distribution applications and wireless technologies, such as LTE, are driving the need for 100G deployment.  On its long-haul network, Verizon has connected major metropolitan areas with this next-generation 100G technology.  The company has also deployed 100G on several network routes in Europe.

Verizon Enterprise Solutions Highlights
Verizon Enterprise Solutions – a global sales and marketing organization that harnesses all of Verizon’s cloud, mobility and other platforms to serve the rapidly transforming enterprise market with integrated solutions – continued to expand and enhance its capabilities in the U.S. and abroad in third-quarter 2012.  The organization saw new customers leveraging its dynamic cloud, intelligent networks, mobility and machine-to-machine (M2M) platforms, while the organization made significant announcements and won recognition during the quarter.  Among highlights, Verizon Enterprise Solutions:

  • Initiated work with Palace Sports & Entertainment in Michigan to deliver fans a live high-tech experience, incorporating digital signage and social media, fan-friendly Wi-Fi and digital menu boards;
  • Was selected by Stefanini, a global IT services provider based in Brazil, to provide secure hybrid cloud services to manage business-critical applications and development platforms in 32 world markets;
  • Implemented a key transformative health IT initiative for Gentiva Health Services, the largest provider of home health and hospice services in the U.S. based on revenues;
  • Began leveraging synergies with Verizon-acquired Hughes Telematics Inc. to deliver advanced automotive and fleet telematics and M2M services; and,
  • Won both Gatekeeper accreditation and a Common Criteria product certification from the Australian federal government – the first company to do so – recognizing the company’s expertise in delivering specific Identity Access Management.

Further Verizon Enterprise Solutions third-quarter 2012 highlights are available online at http://www.verizonbusiness.com/go/Q3.

Pension Funding Details
Verizon yesterday announced an agreement to transfer pension assets to The Prudential Insurance Company of America by purchasing a single premium group-annuity contract to settle approximately $7.5 billion of Verizon’s obligations for approximately 41,000 participants under its management pension plan.  The closing of the transaction, which is subject to certain conditions, is expected to occur in December 2012.

In connection with the closing, Verizon currently intends to contribute an aggregate of approximately $2.5 billion to the plan, including a $930 millioncontribution made last month, to provide for the annuity and so that the plan’s funding percentage does not decrease as a result of this transaction.

As a result, Verizon’s revised outlook for pension funding in 2012 is estimated to be $3.4 billion, compared with the $1.3 billion estimated at the beginning of the year.  Assuming the closing of the transaction and the additional contribution, Verizon does not expect to have any cash-funding requirement for pensions in 2013.

NOTE: See the accompanying schedules and http://www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to consumer, business, government and wholesale customers.  Verizon Wireless operates America’s most reliable wireless network, with nearly 96 million retail customers nationwide.  Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and delivers integrated business solutions to customers in more than 150 countries, including all of the Fortune 500.  A Dow 30 company with $111 billion in 2011 revenues, Verizon employs a diverse workforce of 184,500.  For more information, visit http://www.verizon.com .

VERIZON’S ONLINE NEWS CENTER: Verizon news releases, executive speeches and biographies, media contacts, high-quality video and images, and other information are available at Verizon’s News Center on the World Wide Web at http://www.verizon.com/news .  To receive news releases by email, visit the News Center and register for customized automatic delivery of Verizon news releases.

NOTE: This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: adverse conditions in the U.S. and international economies; competition in our markets; material adverse changes in labor matters, including labor negotiations or additional organizing activity, and any resulting financial and/or operational impact; material changes in available technology; any disruption of our key suppliers’ provisioning of products or services; significant increases in benefit plan costs or lower investment returns on plan assets; breaches of network or information technology security, natural disasters or terrorist attacks or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any increase in restrictions on our ability to operate our networks; the timing, scope and financial impact of our deployment of broadband technology; changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; our ability to complete acquisitions and dispositions; and the inability to implement our business strategies.

Verizon Communications Inc.
Condensed Consolidated Statements of Income
(dollars in millions, except per share amounts)
 3 Mos. Ended  3 Mos. Ended  9 Mos. Ended  9 Mos. Ended
Unaudited  9/30/12 9/30/11  % Change  9/30/12 9/30/11  % Change
Operating Revenues $      29,007 $      27,913 3.9 $      85,801 $      82,439 4.1
Operating Expenses
Cost of services and sales 10,991 11,398 (3.6) 33,206 33,785 (1.7)
Selling, general and administrative expense 8,366 7,689 8.8 23,943 22,346 7.1
Depreciation and amortization expense 4,167 4,179 (0.3) 12,323 12,316 0.1
Total Operating Expenses 23,524 23,266 1.1 69,472 68,447 1.5
Operating Income 5,483 4,647 18.0 16,329 13,992 16.7
Equity in earnings of unconsolidated businesses 62 125 (50.4) 237 347 (31.7)
Other income and (expense), net 10 24 (58.3) 63 70 (10.0)
Interest expense (632) (698) (9.5) (1,996) (2,124) (6.0)
Income Before Provision for Income Taxes 4,923 4,098 20.1 14,633 12,285 19.1
Provision for income taxes (631) (556) 13.5 (2,150) (1,875) 14.7
Net Income  $        4,292 $        3,542 21.2 $      12,483 $      10,410 19.9
Net income attributable to noncontrolling interest $        2,699 $        2,163 24.8 $        7,379 $        5,983 23.3
Net income attributable to Verizon 1,593 1,379 15.5 5,104 4,427 15.3
Net Income $        4,292 $        3,542 21.2 $      12,483 $      10,410 19.9
Basic Earnings per Common Share 
Net income attributable to Verizon $             .56 $             .49 14.3 $           1.79 $           1.56 14.7
Weighted average number of common shares (in millions) 2,857 2,834 2,850 2,832
Diluted Earnings per Common Share (1)
Net income attributable to Verizon $             .56 $             .49 14.3 $           1.79 $           1.56 14.7
Weighted average number of common 
      shares-assuming dilution (in millions) 2,866 2,839 2,859 2,838
Footnotes:
(1)  Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represents the only potential dilution.
Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
Verizon Communications Inc.
Condensed Consolidated Balance Sheets
(dollars in millions)
Unaudited  9/30/12  12/31/11  $ Change
Assets
Current assets
Cash and cash equivalents $      9,714 $   13,362 $    (3,648)
Short-term investments 593 592 1
Accounts receivable, net 12,030 11,776 254
Inventories 1,223 940 283
Prepaid expenses and other 4,103 4,269 (166)
Total current assets 27,663 30,939 (3,276)
Plant, property and equipment 216,995 215,626 1,369
Less accumulated depreciation 129,185 127,192 1,993
87,810 88,434 (624)
Investments in unconsolidated businesses 3,625 3,448 177
Wireless licenses 77,591 73,250 4,341
Goodwill 24,048 23,357 691
Other intangible assets, net 5,830 5,878 (48)
Other assets 4,515 5,155 (640)
Total Assets $  231,082 $  230,461 $       621
Liabilities and Equity
Current liabilities
Debt maturing within one year $      6,335 $      4,849 $   1,486
Accounts payable and accrued liabilities 16,003 14,689 1,314
Other 6,432 11,223 (4,791)
Total current liabilities 28,770 30,761 (1,991)
Long-term debt   46,467 50,303 (3,836)
Employee benefit obligations 30,904 32,957 (2,053)
Deferred income taxes 26,474 25,060 1,414
Other liabilities 5,839 5,472 367
Equity
Common stock 297 297 -
Contributed capital 37,959 37,919 40
Reinvested earnings 1,968 1,179 789
Accumulated other comprehensive income 1,257 1,269 (12)
Common stock in treasury, at cost (4,247) (5,002) 755
Deferred compensation – employee
stock ownership plans and other 411 308 103
Noncontrolling interest 54,983 49,938 5,045
Total equity 92,628 - 85,908 6,720
Total Liabilities and Equity $  231,082 $  230,461 $     621
Verizon – Selected Financial and Operating Statistics
Unaudited  9/30/12  12/31/11
Total debt (in millions) $   52,802 $   55,152
Net debt (in millions) $   43,088 $   41,790
Net debt / Adjusted EBITDA (1) 1.1x 1.2x
Common shares outstanding end of period (in millions) 2,854 2,834
Total employees 184,500 193,900
Quarterly cash dividends declared per common share $      0.515 $      0.500
Footnotes:
(1)     Adjusted EBITDA excludes the effects of non-operational items.
         The unaudited condensed consolidated balance sheets are based on preliminary information.    
Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in millions)
 9 Mos. Ended  9 Mos. Ended
Unaudited  9/30/12 9/30/11  $ Change
Cash Flows From Operating Activities
Net Income $        12,483 $      10,410 $           2,073
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense 12,323 12,316 7
Employee retirement benefits 1,126 1,428 (302)
Deferred income taxes 1,665 1,901 (236)
Provision for uncollectible accounts 709 754 (45)
Equity in earnings of unconsolidated businesses, net of dividends received (197) 102 (299)
Changes in current assets and liabilities, net of
effects from acquisition/disposition of businesses (197) (2,553) 2,356
Other, net (3,154) (2,846) (308)
Net cash provided by operating activities 24,758 21,512 3,246
Cash Flows From Investing Activities
Capital expenditures (including capitalized software) (11,315) (12,546) 1,231
Acquisitions of investments and businesses, net of cash acquired (838) (1,678) 840
Acquisitions of wireless licenses, net (3,816) (176) (3,640)
Net change in short-term investments 28 43 (15)
Other, net 516 945 (429)
Net cash used in investing activities (15,425) (13,412) (2,013)
Cash Flows From Financing Activities
Proceeds from long-term borrowings - 6,510 (6,510)
Repayments of long-term borrowings and capital
lease obligations
(2,878) (7,420) 4,542
Increase in short-term obligations, excluding
current maturities
375 1,817 (1,442)
Dividends paid (3,887) (4,139) 252
Proceeds from sale of common stock 278 139 139
Special distribution to noncontrolling interest (4,500) - (4,500)
Other, net (2,369) (1,351) (1,018)
Net cash used in financing activities (12,981) (4,444) (8,537)
Increase (decrease) in cash and cash equivalents (3,648) 3,656 (7,304)
Cash and cash equivalents, beginning of period 13,362 6,668 6,694
Cash and cash equivalents, end of period $          9,714 $      10,324 $             (610)
Verizon Communications Inc.
Verizon Wireless – Selected Financial Results
(dollars in millions)
 3 Mos. Ended  3 Mos. Ended  9 Mos. Ended  9 Mos. Ended
Unaudited  9/30/12 9/30/11  % Change  9/30/12 9/30/11  % Change
Operating Revenues
Retail service $      15,538 $      14,405 7.9 $      45,654 $      42,098 8.4
Other service 616 628 (1.9) 1,686 1,953 (13.7)
Service 16,154 15,033 7.5 47,340 44,051 7.5
Equipment 1,858 1,800 3.2 5,464 5,242 4.2
Other 1,012 893 13.3 3,070 2,607 17.8
Total Operating Revenues 19,024 17,726 7.3 55,874 51,900 7.7
Operating Expenses
Cost of services and sales 5,690 5,670 0.4 17,158 17,379 (1.3)
Selling, general and administrative expense 5,250 4,867 7.9 15,773 14,412 9.4
Depreciation and amortization expense 2,037 2,040 (0.1) 5,966 5,917 0.8
Total Operating Expenses 12,977 12,577 3.2 38,897 37,708 3.2
Operating Income $        6,047 $        5,149 17.4 $      16,977 $      14,192 19.6
Operating Income Margin 31.8% 29.0% 30.4% 27.3%
Segment EBITDA $        8,084 $        7,189 12.4 $      22,943 $      20,109 14.1
Segment EBITDA Service Margin 50.0% 47.8% 48.5% 45.6%
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
Verizon Communications Inc.
Verizon Wireless – Selected Operating Statistics
Unaudited  9/30/12 9/30/11  % Change
Connections (’000)
Retail postpaid 90,354 86,175 4.8
Retail prepaid 5,545 4,533 22.3
Retail 95,899 90,708 5.7
 3 Mos. Ended  3 Mos. Ended  9 Mos. Ended  9 Mos. Ended
Unaudited  9/30/12 9/30/11  % Change  9/30/12 9/30/11  % Change
Net Add Detail (’000) (1)
Retail postpaid 1,535 882 74.0 2,924 3,045 (4.0)
Retail prepaid 228 86 * 751 120 *
Retail 1,763 968 82.1 3,675 3,165 16.1
Account Statistics
Retail postpaid accounts (’000)(2) 34,796 34,444 1.0
Retail postpaid ARPA $      145.42 $      136.57 6.5 $      143.11 $      133.44 7.2
Retail postpaid connections per account (2) 2.60 2.50 4.0
Churn Detail 
Retail postpaid 0.91% 0.94% 0.90% 0.95%
Retail 1.18% 1.26% 1.18% 1.27%
Retail Postpaid Connection Statistics
Total Smartphone postpaid % of phones sold 78.8% 59.6% 74.8% 59.7%
Total Smartphone postpaid phone base (2) 53.2% 39.2%
Total Internet postpaid base (2) 8.8% 7.8%
Other Operating Statistics
Capital expenditures (in millions) $        2,133 $        1,784 19.6 $        6,066 $        7,186 (15.6)
Footnotes:
(1) Connection net additions exclude acquisitions and adjustments.
(2) Statistics presented as of end of period.
The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company’s chief operating decisionmaker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
* Not meaningful
Verizon Communications Inc.
Wireline – Selected Financial Results
(dollars in millions)
 3 Mos. Ended  3 Mos. Ended  9 Mos. Ended  9 Mos. Ended
Unaudited  9/30/12 9/30/11  % Change  9/30/12 9/30/11  % Change
Operating Revenues
Consumer retail $        3,555 $        3,400 4.6 $      10,474 $      10,177 2.9
Small business 670 670 - 1,999 2,047 (2.3)
Mass Markets 4,225 4,070 3.8 12,473 12,224 2.0
Strategic services 2,010 1,926 4.4 5,962 5,591 6.6
Core 1,771 1,995 (11.2) 5,491 6,102 (10.0)
Global Enterprise 3,781 3,921 (3.6) 11,453 11,693 (2.1)
Global Wholesale 1,782 1,963 (9.2) 5,470 6,035 (9.4)
Other 126 195 (35.4) 394 591 (33.3)
Total Operating Revenues 9,914 10,149 (2.3) 29,790 30,543 (2.5)
Operating Expenses 
Cost of services and sales 5,463 5,681 (3.8) 16,535 16,647 (0.7)
Selling, general and administrative expense 2,303 2,296 0.3 6,570 6,894 (4.7)
Depreciation and amortization expense 2,107 2,119 (0.6) 6,299 6,343 (0.7)
Total Operating Expenses 9,873 10,096 (2.2) 29,404 29,884 (1.6)
Operating Income $              41 $              53 (22.6) $            386 $            659 (41.4)
Operating Income Margin 0.4% 0.5% 1.3% 2.2%
Segment EBITDA $        2,148 $        2,172 (1.1) $        6,685 $        7,002 (4.5)
Segment EBITDA Margin 21.7% 21.4% 22.4% 22.9%
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
Verizon Communications Inc.
Wireline – Selected Operating Statistics
Unaudited  9/30/12 9/30/11  % Change
Connections (’000)
FiOS Video Subscribers 4,592 3,979 15.4
FiOS Internet Subscribers 5,280 4,616 14.4
FiOS Digital Voice residence connections 2,938 1,460 *
FiOS Digital connections 12,810 10,055 27.4
HSI 3,488 3,956 (11.8)
Total Broadband connections 8,768 8,572 2.3
Primary residence switched access connections 8,384 10,456 (19.8)
Primary residence connections 11,322 11,916 (5.0)
Total retail residence voice connections 12,005 12,809 (6.3)
Total voice connections 22,847 24,519 (6.8)
 3 Mos. Ended  3 Mos. Ended  9 Mos. Ended  9 Mos. Ended
Unaudited 9/30/12 9/30/11  % Change 9/30/12 9/30/11  % Change
Net Add Detail (’000)
FiOS Video Subscribers 119 131 (9.2) 419 507 (17.4)
FiOS Internet Subscribers 136 138 (1.4) 463 534 (13.3)
FiOS Digital Voice residence connections 290 265 9.4 1,054 643 63.9
FiOS Digital connections 545 534 2.1 1,936 1,684 15.0
HSI (144) (118) 22.0 (365) (354) 3.1
Total Broadband connections (8) 20 * 98 180 (45.6)
Primary residence switched access connections (459) (490) (6.3) (1,522) (1,301) 17.0
Primary residence connections (169) (225) (24.9) (468) (658) (28.9)
Total retail residence voice connections (217) (278) (21.9) (621) (807) (23.0)
Total voice connections (431) (478) (9.8) (1,290) (1,482) (13.0)
Revenue and ARPU Statistics
Consumer ARPU $      103.86 $        94.20 10.3 $      102.02 $        92.34 10.5
FiOS revenues (in millions) $        2,489 $        2,109 18.0 $        7,157 $        6,077 17.8
Strategic services as a % of total Enterprise revenues 53.2% 49.1% 52.1% 47.8%
Other Operating Statistics
Capital expenditures (in millions) $        1,484 $        1,617 (8.2) $        4,617 $        4,767 (3.1)
Wireline employees (’000) 87.4 92.8
FiOS Video Open for Sale (’000) 13,957 13,023
FiOS Video penetration 32.9% 30.6%
FiOS Internet Open for Sale (’000) 14,283 13,358
FiOS Internet penetration 37.0% 34.6%
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
* Not meaningful
blog comments powered by Disqus