Verizon reported a drop in fourth-quarter and full-year results for 2016, due to the slowdown in its mobile business, and said it hopes to return to stable organic revenues and profit in 2017. While the US operator expects to complete its takeover of XO Communications in Q1, it said it was still assessing the extent of the data breach at Yahoo before going ahead with that takeover. Yahoo earlier said at its quarterly report that the deal should close in Q2, a few months later than initially planned.
Verizon's revenues in Q4 fell 5.3 percent year-on-year to USD 32.3 billion, and EPS dropped to USD 1.10 from USD 1.32 a year ago. Adjusted EPS of 86 cents was down from 89 cents a year ago, due mainly to changes in the value of its pension funds and costs for reducing the workforce.
The lower results were due largely to the increased competitive pressure in the mobile market. Verizon Wireless' revenues fell 1.5 percent year-on-year to USD 23.5 billion, also impacted by more and more customers buying phones separately, on installment. Quarterly EBITDA fell 5.2 percent to USD 8.6 billion, and the margin was down to 36.9 percent from 38.4 a year ago and 43.8 percent in the full-year 2016.
Retail postpaid net additions of 591,000 were better than Q3 but still only a third of the year-earlier total, and Verizon also lost 9,000 prepaid users in the quarter. Total retail connections reached 114.2 million at year-end, up 1.9 percent from a year earlier. Postpaid churn continued to increase, reaching 1.10 percent compared to 0.96 percent in Q4 2015. Verizon blamed the higher churn on the tablet market, and said phone customer retention was better.
Wireline revenues were also lower, down 3.1 percent to USD 7.8 billion. Retail consumer revenues grew 0.2 percent to USD 3.2 billion, while enterprise revenues fell across all segments. The restructuring and lay-offs in wireline continued to pay off, with EBITDA up 17.7 percent year-on-year to USD 1.9 billion and a margin of 24.1 percent.
Fios customer growth slowed in Q4 compared to the rest of the year, to net additions of 68,000 internet customers and 21,000 TV customers. Verizon also lost another 68,000 DSL subscribers, meaning its total broadband customer base was unchanged compared to Q3 at 7.038 million. Voice connections fell by 255,000 to 13.939 million at year-end.
Verizon forecast capital expenditure in 2017 largely stable, at USD 16.8-17.5 billion compared to USD 17.1 billion. The company said revenues on an organic basis should be "fairly consistent with 2016, with improvement in wireless service revenue and equipment revenue trends". The company will continue to focus on the high quality of its network to support its wireless pricing, suggesting it does not plan to match the growing number of unlimited offers on the market. Adjusted EPS is expected to develop similar to revenue trends in 2017.
