Verizon CEO Says Company Continues to Execute on Basics In Challenging External Environment
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NEW YORK - Ivan Seidenberg, CEO of Verizon Communications (NYSE:VZ), today reiterated the company's guidance of EPS (earnings per diluted share) in the range of $3.05 to $3.09 for 2002.
In remarks to analysts at the Goldman Sachs Communacopia XI conference in New York City, Seidenberg said, "Contrary to conventional wisdom, consolidation will not be the driving force in this next phase of growth in the telecommunications sector. Innovation and execution will."
Seidenberg said Verizon continues to "execute on basics," and he outlined the steps the company is taking to navigate the challenging environment caused by the persistent economic downturn and the imbalanced regulatory policies that subsidize Verizon competitors.
"We believe we have a sustainable business model that blunts the revenue and margin impacts of competition. Our model will drive profitable growth as we deliver on the promise of our scale and unleash the potential for innovation in our technology platforms," Seidenberg said.
He said the company expects to bolster revenues from services such as Verizon Wireless' new Get It Now* service, which provides customers with downloadable applications and is designed to drive further growth in wireless data use. In addition, Seidenberg highlighted new marketing efforts to consumers, including the "Veriations All" bundle of local phone service, long distance, wireless and DSL on a single bill.
He said the regulatory policy of "managed competition," under which competitors can use Verizon's network at prices below cost, discourages industrywide innovation and investment.
"While we intend to win the competitive war in the marketplace," Seidenberg said, "we are painfully aware that regulatory policy has leeched value out of telecom, to the detriment of the entire economy. We intend to continue to be vigorous advocates of an investment-oriented public policy that will help get telecom -- and the economy as a whole -- back on the path to growth."
$8 Billion Debt Reduction
Beyond revenue growth and regulatory reform, Verizon is also highly focused on exercising the fiscal controls that will drive margins, improve capital returns and lower debt -- resulting in generation of an estimated $3 to $4 billion in free cash flow from operations during 2002, Seidenberg said. He cited Verizon's continued outstanding cost management and said the company's first priority for the use of free cash flow is to further strengthen its balance sheet.
Reporting on significant strides in this area, Seidenberg estimated that total debt at the close of the third quarter 2002 would be approximately $57 billion. He said he expects total debt at year-end 2002 in the range of $56 to $57 billion -- an approximate $8 billion reduction from the year-end 2001 total of $64.3 billion.
Net debt (total debt less cash on hand) is expected to total approximately $53 billion at the close of the third quarter, with commercial paper balances below $4 billion, he said. Verizon had held $12.8 billion in commercial paper at year-end 2001.
Seidenberg also reiterated Verizon's revenue and capital expenditure guidance for 2002. Revenue guidance is 0 to minus 1 percent; capital expenditures are expected in the range of
$13 to $13.5 billion.
Verizon will issue its third-quarter earnings report Oct. 29.
Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services. Verizon companies are the largest providers of wireline and wireless communications in the United States, with 135.1 million access line equivalents and 30.3 million Verizon Wireless customers. Verizon is also the largest directory publisher in the world. With more than $67 billion in annual revenues and approximately 241,000 employees, Verizon's global presence extends to more than 40 countries in the Americas, Europe, Asia and the Pacific. For more information on Verizon, visit www.verizon.com.
* Get It Now is a service mark of Verizon Wireless
NOTE: This press release is being issued concurrently with the presentation referred to in the text. This press release contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the duration and extent of the current economic downturn; materially adverse changes in economic conditions in the markets served by us or by companies in which we have substantial investments; material changes in available technology; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations; the final results of federal and state regulatory proceedings concerning our provision of retail and wholesale services and judicial review of those results; the effects of competition in our markets; our ability to satisfy regulatory merger conditions and obtain combined company revenue enhancements and cost savings; the ability of Verizon Wireless to achieve revenue enhancements and cost savings, and obtain sufficient spectrum resources; the outcome of litigation concerning the FCC NextWave spectrum auction; our ability to recover insurance proceeds relating to equipment losses and other adverse financial impacts resulting from the terrorist attacks on Sept. 11, 2001; and changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings.