Verizon reported a strong fourth quarter, with a net 1.2 million retail postpaid subscribers added and its first growth in mobile revenues in two years. The company forecast a return to mobile service revenue growth from the second half of 2018.
Total operating revenues for the quarter rose 5.0 percent from the year before to USD 34.0 billion. Wireless revenues lifted 1.7 percent to USD 23.8 billion, the first growth in two years, driven by higher equipment and 'other' revenues. Wireless service revenues were still down 2.9 percent to USD 15.9 billion. Wireline revenues increased a marginal 0.1 percent to USD 7.6 billion, as growth in business markets offset lower consumer revenues.
At Verizon Wireless, the 1.2 million net postpaid customers added in Q4 were good for more than half the growth over the full year. The company also reported net phone additions of 431,000 in Q4, including 647,000 smartphones versus 456,000 the year earlier. Churn continued to fall, reaching 1.0 percent for retail postpaid and 0.77 percent among postpaid phone customers.
Verizon's adjusted EBITDA margin fell to 27.2 percent from 37.1 percent a year ago amid a sharp jump in SG&A expenses. The wireless division improved its EBITDA margin to 39.8 percent from 36.9 a year ago, while the wireline margin fell to 20.9 percent from 23.3.
Net profit rose to USD 18.8 billion from USD 4.6 billion the year before, thanks to a one-time gain of USD 16.8 billion on revaluing tax assets after the corporate tax reform in the US. The company said it expects savings from the latest government tax reform to generate a net USD 3.5-4.0 billion uplift to cash flow from operations in 2018. This will be used to reduce debt, shared with employees through USD 380 million in restricted stock units and lead to higher contributions of USD 200-300 million to the Verizon Foundation in the next two years.
Adjusted EPS was unchanged year-on-year at 86 cents and included net pretax charges of about $2.6 billion. The latter included USD 1.2 billion for severance and pension charges, USD 681 million for early debt redemption, USD 671 million for product realignment of early-stage developmental technologies, acquisition and integration charges of USD 154 million and a gain on spectrum license transactions of about USD 144 million.
For the full year 2018, the company is guiding for total revenues and adjusted EPS to grow at a low-single-digit percentage rate. That compares to flat revenues and a small fall in adjusted EPS in 2017. Excluding the impact of a new revenue recognition standard, the company expects to return to year-on-year growth in wireless service revenue by mid-2018. On a GAAP basis, service revenue growth is expected positive by the end of the year, or in early 2019.
