Verizon reported Q4 and full-year results in line with its outlook, as cost savings helped offset a drop in revenues caused by the pandemic. Verizon said it aims for a return to growth in service revenue this year and a similar rise in adjusted earnings as last year.
Fourth-quarter revenues fell 0.2 percent to USD 34.7 billion, as lower equipment sales offset growth in revenues from wireless services and media (+11.4%). Adjusted EBITDA rose 5.3 percent to USD 11.7 billion, as Verizon reached USD 9.5 billion of the USD 10 billion in cost savings targeted for 2021. The company said it's on track to complete this year the cost-reduction programme started in 2018.
Covid headwind in full year
Net profit fell nearly 10 percent to USD 4.7 billion in Q4, hurt by a loss of USD 119 million on the sale of HuffPost and USD 404 million in severance charges. Excluding one-time items, adjusted EPS rose to USD 1.21 from USD 1.13 a year ago, and on an annual basis, the figure was up 2 percent to USD 4.90, in line with the company's outlook. Verizon estimates that the net impact from Covid-19 was a 2-cent benefit in Q4 and a 21-cent headwind for the full year.
The main wireless business recorded quarterly service revenues of USD 16.7 billion, up 2.2 percent from a year earlier and in line with the company's outlook issued in October. Verizon added a net 703,000 retail postpaid lines in the quarter, for a total of 26.5 million at year-end. That included 279,000 phone net additions, down sharply to around a third the level of Q4 2019. The slower handset sales led to overall lower revenues from wireless, but helped improve margins and cash flow thanks to lower costs.
Home broadband did better than the year-earlier period, with 66,000 consumer broadband connections added in Q4 and Fios internet growth more than doubling to 92,000 new customers. Over the full year, Verizon's broadband base grew by nearly 3 percent to 6.64 million connections. Fios video continued to lose customers, down by 72,000 in the three months to 3.85 million.
Business revenues fell 0.3 percent year-on-year to USD 8.1 billion in Q4 and were down 1.5 percent over the full year. Expansion in the wireless market was offset by the continued pressure on legacy wireline products and lower handset sales. The adjusted EBITDA margin was still up, to 25.4 percent in the full year.
For the new year, Verizon aims to return to service revenue growth of at least 2 percent, including at least 3 percent growth in wireless service revenue. Adjusted EPS is expected to show at least the same growth rate as last year, reaching USD 5.00-5.15, and capex is estimated in the same range of USD 17.5-18.5 billion, after USD 18.2 billion was spent in 2020. Investment will go towards expanding 5G coverage and the continued deployment of the company's fiber infrastructure.
Verizon ended the year with net debt largely stable, at USD 96.3 billion or 2.0 times adjusted EBITDA. Annual free cash flow jumped 32.4 percent to USD 23.6 billion, helped by one-off tax items and lower working capital. The company said its capital allocation policy remains unchanged.
