Revenues for the quarter fell 1.6 percent from the year before to USD 31.6 billion, pulled down by sharply lower equipment revenue after social distancing measures. Earnings per share fell to USD 1.0 from 1.22 year-on-year. Adjusted EPS however lifted to USD 1.26 from 1.20. Both the GAAP and adjusted figures include a negative impact from covid-19 related measures of 4 cents. The GAAP EPS also included a pre-tax one-off loss of USD 1.4 billion related to the FCC’s recently completed spectrum Auction 103 and to pension liabilities. Introduction of the new revenue recognition standard had an impact on results of 3 cents. The net profit fell almost 17 percent to USD 4.3 billion.
Meanwhile, cash flow from operations lifted by USD 1.7 billion in the quarter to USD 8.8 billion, helped by working capital improvements and an end to Voluntary Separation Program payments and voluntary pension contributions that affected Q1 the year earlier.
Capex amounted to USD 5.3 billion and went to support the rise in capacity needed to meet the higher demand for data, as well as for the deployment of fibre and extra mobile sites for the company’s 5G Ultra Wideband rollout. Verizon ended the quarter with USD 7 billion in cash on hand, up by USD 4.5 billion year-on-year. The higher cash balance is in line with Verizon’s liquidity planning strategy, which included a USD 3.5 billion bond completed in March. The quarterly cash dividend was kept at USD 0.6150 per share.
Consumer segment hit by store closures but Fios Internet bucks the trend
At Consumer, revenues went 1.7 percent lower to USD 21.8 billion, with strong service growth offset by less mobile equipment revenue due to low volume activity. With the pandemic, the company closed nearly 70 percent of its retail locations and reduced the hours of stores staying open. This resulted in a significant drop in customer activity and devices sold. The number of mobile retail postpaid losses went to 525,000, from gains of 852,000 in the previous quarter. The decline in Q1 included 307,000 phone net losses and 227,000 tablet net losses, offset by 9,000 other connected device net additions. Postpaid smartphone net losses went to 167,000.
Fios Internet added 59,000 customers, higher than the 35,000 added in Q4, helped by more people working and going to school from home. However, Fios Video losses went to 59,000, reflecting the ongoing shift from traditional linear video to OTT offerings. Consumer adjusted EBITDA dipped 0.4 percent lower to USD 10.1 billion, with an adjusted EBITDA margin of 46.4 percent, up from 45.8 percent year-on-year.
Wireless: loss of 50,000 of retail postpaid customers
At Wireless, revenues slipped 0.5 percent to USD 22.6 billion. Retail postpaid net losses amounted to 50,000, including 68,000 phone net losses and 95,000 postpaid smartphone net additions.
Demand up at Business
At Business, revenues were off 0.5 percent to USD 7.7 billion, though demand rose in March for mobility products, jetpacks, VPN services and high speed circuit capacity. Mobile retail postpaid net additions rose to 475,000, from 264,000 the year before. The figure included 239,000 phone additions, 60,000 tablet additions and 176,000 other connected additions. Segment adjusted EBITDA weakened 5.8 percent to USD 2.0 billion, with the margin falling to 25.6 percent form 27.1 percent.
At Media, revenues decreased 4.0 percent to USD 1.7 billion.
Higher capex, less profit for 2020
Looking ahead, Verizon has withdrawn its revenue guidance for the full year. EPS growth is now seen ranging from minus 2 to 2 percent, with capex at USD 17.5-18.5 billion. The company had earlier forecast revenues up by low-to-mid-digit percentages year-on-year, adjusted EPS growth of 2-4 percent and capex at USD 17-18 billion.
