Telecommunications giant Verizon Communications Inc. (VZ, Financial) reported second-quarter earnings that topped revenue and earnings estimates on July 24.
The quarter was marked by strong subscriber growth, adding 398,000 monthly-pay customers, as the company introduced unlimited data plans. As a result, Verizon issued strong full-year guidance.
Key metrics
For the second quarter, the company reported earnings per share of $1.20. Revenue came in at $32.2 billion, beating analysts' forecasts of $31.78 billion.
Verizon’s operating revenue was $32.30 billion, up 5.4% from the year-ago quarter. The company’s net quarterly income was $4.12 billion, or $1 per share, down from $4.36 billion, or $1.07 a share.Â
While the company’s cash flows from operations were $9.8 billion, its capital spending totaled $3.3 billion.
Wireless and wireline
In the wireless arena, the company saw its retail postpaid net additions grow to 531,000, posting a churn of 0.75%, which remained below the 0.8% mark for the fifth successive quarter. Service revenues surged 2.5%, excluding the impact of revenue recognition standards.
In the wireline segment, the company’s net Fios internet additions came in at 43,000. This brought the company’s total Fios revenue growth to 2.3% for the quarter. The company lost 37,000 Fios video connections as well.
In a statement, outgoing Verizon CEO Lowell C. McAdam commented on the quarter.Ă‚
"Verizon is extremely well-positioned for the future," he said. "Our financial and operating results for the first half of 2018 were strong, as evidenced by service revenue, earnings and operating cash flow growth delivered in a highly competitive marketplace."
5G plans
According to Zacks, the telecommunications giant is planning to roll out its next-generation 5G wireless residential broadband services this year in three to five U.S. markets. It has already begun field tests of the network. The company is also trying to make use of its 5G technology in mobile hotspots and home-based fixed wireless. Once the company completes the testing phase, a full-fledged 5G wireless network will hit the market in 2020.
Guidance
Full-year revenue is projected to grow at low- to mid-single-digit percentage rates. Taking into account the 5G launch, the company expects its capital expenditures for 2018 to be between $17 billion and $17.8 billion. Further, the company estimates its effective tax rate will be between 24% and 26%.
Disclosure: I do not hold any positions in the stocks mentioned in this article.
