Mobile revenues dropped 4.0 percent to USD 21.7 billion, with a 5.4 percent fall in services and 4.1 percent lower equipment sales. Wireline revenues declined 2.4 percent to USD 7.8 billion, as nearly flat consumer revenues were offset by continued weakness in business and wholesale.
Operating profit tumbled 41.8 percent to USD 4.6 billion, after a sharp rise in SG&A costs. Net profit was down 80.9 percent to USD 831 million, after a gain of USD 139 million from selling the landline activities, a USD 2.2 billion loss from adjustments to pension obligations and costs for retiring around USD 10.7 billion in debt during the period. On an adjusted basis, earnings fell to USD 0.94 per share from USD 1.04, with an estimated impact of 7 cents a share from the strike.
Verizon maintained its outlook for adjusted earnings this year to be at a similar level to 2015, excluding the strike impact, as well as a stable adjusted EBITDA margin. Revenues are expected to return to growth next year, in line with US GDP growth. Capital expenditure is estimated at USD 17.2-17.7 billion this year.
In the mobile market, Verizon's customer net additions nearly halved compared to a year ago to 585,000, with 615,000 postpaid users added and a loss of 30,000 in prepaid. In total it had 113.154 million retail connections, up 3.3 percent from a year ago, and churn was largely stable year-on-year at 1.19 percent. The postpaid base was divided over 35.637 million customer accounts, which each generated average revenue of USD 145.09, down 5.6 percent from a year ago.
With over half of postpaid phone customers now on unsubsidised plans, Verizon said it expects the decline in service revenue to stop by the end of 2017. The lower equipment costs helped adjusted EBITDA at Wireless increase 3.8 percent to USD 10.8 billion, giving a margin of 47.5 percent.
The wireline division suffered an operating loss of USD 463 million in the quarter due to the strike, and adjusted EBITDA was down 26.5 percent to USD 1.1 billion. Verizon said made changes in its cost structure and expects benefits from the new labour contracts struck with unions to be realised during the remainder of 2016 and into the future.
While the Fios fibre services grew revenue 3.7 percent to USD 2.8 billion in Q2, the work stoppage hurt growth in connections, and the company lost a net 13,000 Fios internet connections and 41,000 Fios video subscribers in Q2. Verizon said it made significant progress in working through the backlog of Fios installations after work resumed in June and has since returned to its normal run rate of Fios connection growth. It's also seeing strong demand for its Custom TV 'skinny' bundles, which represented nearly 40 percent of new video subscribers in the quarter.
