Verizon Reports Revenue Growth and Continued Improvement in Cash Flow in 2Q

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Consolidated Earnings

  • 52 cents in EPS and 63 cents in adjusted EPS (non-GAAP), compared with 2Q 2008 EPS of 66 cents and 67 cents, respectively. 


  • 87.7 million total customers, up 27.7 percent; 85.2 million retail customers, up 27.8 percent; 1.1 million net customer additions, excluding acquisitions and adjustments, all retail.
  • 27.7 percent increase in total revenues; industry-leading retail postpaid churn, 1.01 percent; data revenues up 52.6 percent; 28.8 percent operating income margin and 46.3 percent EBITDA margin on service revenues (non-GAAP).
  • Integration of Alltel operations on schedule.


  • 300,000 net new FiOS TV customers and a record 303,000 net new FiOS Internet customers, for a total of 2.5 million FiOS TV customers and 3.1 million FiOS Internet customers.
  • 13.7 percent increase in consumer ARPU.
  • 3.0 percent increase in strategic business services revenues.

NEW YORK - Verizon Communications Inc. (NYSE:VZ) reported today that consumer demand for the company's wireless, broadband and video products in the second quarter 2009 showed resilience despite the U.S. recession, as the company added a high number of new FiOS customers and posted another strong quarter of wireless growth.  Verizon continued to generate improved cash flow and, in the midst of a challenging environment for business sales, the company continued to grow consolidated revenues.


Verizon reported diluted earnings per share (EPS) of 52 cents in the second quarter 2009, compared with 66 cents per share in the second quarter 2008.  On an adjusted basis (non-GAAP), second-quarter 2009 earnings were 63 cents per share, compared with second-quarter 2008 earnings of 67 cents per share.


Verizon's total operating revenues grew 11.3 percent to $26.9 billion, compared with the second quarter 2008, including revenues from Alltel Corporation, which was acquired in January 2009.  On a pro forma basis (determined by consolidating the operating results of Verizon and the former Alltel as though the acquisition had occurred on Jan. 1, 2008), operating revenue growth was 1.9 percent.


Cash flows from operations totaled $14.1 billion for the first six months of 2009, up 11.9 percent, or $1.5 billion, over the same period last year.  With capital expenditures totaling $8.1 billion in the first half of 2009, free cash flow (cash flows from operations minus capital expenditures) totaled $6.0 billion, up $1.8 billion from the first half of 2008.


New Levels of FiOS Success


"Verizon posted continued strong wireless revenue growth and new levels of sales success with FiOS in the second quarter," said Verizon Chairman and CEO Ivan Seidenberg.  "This resilience in consumer demand for our wireless, broadband and video products has again produced overall revenue growth despite cyclical impacts, especially in business markets.  Verizon's continued strong cash flow reflects the exceptional focus and disciplined execution across our business."

Continued Strong, Profitable Wireless Growth


Verizon Wireless delivered sustained high margins and solid net customer additions.  In the second quarter 2009:


  • Wireless retail (non-wholesale) gross customer additions were up 26.0 percent over the second quarter of 2008.  On a pro forma basis, retail gross customer additions were down slightly, by 0.6 percent, due in part to fewer additions in the business market.

  • Verizon Wireless had 87.7 million customers at the end of the quarter, an increase of 27.7 percent year over year and 7.9 percent on a pro forma basis.  Verizon Wireless is the largest wireless company in the U.S. in terms of total customers and revenues.

  • The company also has the most retail customers of any U.S. wireless provider and continued to grow its high-quality base, adding a net of 1.1 million retail customers in the quarter, for a total of 85.2 million retail customers.

  • Verizon Wireless continued to lead the industry in customer loyalty, as measured by total churn and retail post-paid churn.  Both improved over the first quarter 2009, to 1.37 percent and 1.01 percent, respectively.

  • Revenues totaled $15.5 billion, up 27.7 percent year over year and up 7.6 percent on a pro forma basis.  Service revenues were $13.3 billion, up 27.2 percent year over year and up 9.0 percent on a pro forma basis, as demand continued to grow for data services.  Data revenue grew to $3.9 billion, up 52.6 percent and up 33.2 percent on a pro forma basis.

  • Service ARPU (average monthly service revenue per user) decreased 0.8 percent year over year to $51.10.  On a pro forma basis, service ARPU was up 0.6 percent.  Total data ARPU was $14.96, up 18.9 percent year over year and up 22.8 percent on a pro forma basis.

  • Wireless operating income margin, adjusted for acquisition-related charges and integration costs, was 28.8 percent, up 20 basis points year over year and up 70 basis points on a pro forma basis.  Adjusted on the same basis, EBITDA (earnings before interest, taxes, depreciation and amortization) margin on service revenues was 46.3 percent, an increase of 70 basis points year over year and 10 basis points on a pro forma basis.

  • The integration of Alltel operations remains on schedule, with nearly half of the customers acquired in the Alltel merger converted to the Verizon Wireless billing system as of mid-July.

Wireline Highlighted by Growth in Consumer Markets

Verizon's Wireline segment reported continued strong growth in the number of new customers of fiber-optic-based FiOS Internet and FiOS TV services, and continued increased revenues from enterprise strategic services.  In the second quarter:

  • Verizon added 303,000 net new FiOS Internet customers, a record number for the second consecutive quarter.  By the end of the second quarter, the company had 3.1 million FiOS Internet customers, an increase of 56.1 percent compared with June 30, 2008.

  • FiOS Internet sales penetration (sales as a percentage of potential customers) increased to 28.1 percent, compared with 23.5 percent at June 30, 2008.  FiOS Internet was available for sale to 11.0 million premises by the end of the quarter.
  • Verizon added 300,000 net new FiOS TV customers.  The company had 2.5 million FiOS TV customers by the end of the quarter, an increase of 82.1 percent compared with June 30, 2008.
  • FiOS TV sales penetration increased to 24.6 percent, compared with 19.7 percent as of June 30, 2008.  FiOS TV service was available for sale to 10.3 million premises by the end of the quarter.
  • Consumer broadband and video revenues in wireline mass markets (which include both consumer and small-business customers) totaled more than $1.3 billion in the second quarter 2009 -- representing growth of 31.5 percent compared with the second quarter 2008.  This increase contributed to 2.0 percent revenue growth in consumer markets served by Verizon's wireline network.
  • Revenue growth from broadband and video services boosted consumer ARPU to $72.59 in the second quarter 2009, a 13.7 percent increase year over year.  FiOS ARPU remained strong at more than $135.
  • Sales of strategic business services -- such as IP (Internet protocol), managed services, Ethernet and security solutions -- generated $1.5 billion in revenue in the quarter, up 3.0 percent from the second quarter 2008.

Details of Earnings Adjustments


Adjusted earnings in the second quarter 2009 excluded 11 cents per share in special items:  9 cents in severance, pension and benefit charges in connection with pension settlements related to previously announced force reductions, and 2 cents for merger integration costs and acquisition-related charges primarily in connection with the Alltel acquisition.  Second-quarter 2008 adjusted earnings excluded 1 cent in merger integration costs in connection with the acquisition of MCI in 2006.

Additional Highlights


  • At the end of the second quarter 2009, retail customers (postpaid and prepaid) represented 97 percent of the company's customer base.

  • Verizon Wireless continued to lead the industry in cost efficiency.  Monthly cash expense per customer (non-GAAP) increased slightly in the second quarter 2009 to $27.42, from $27.35 in the comparable period in 2008 on a pro forma basis.
  • In the second quarter, data revenues grew to 29.3 percent of all service revenues, up from 24.0 percent in the second quarter 2008 on a pro forma basis.
  • Verizon Wireless continued to extend the reach of its broadband network, the nation's largest and most reliable 3G (third generation) network, which now covers approximately 284 million people.
  • Verizon Wireless is on schedule to offer the first commercial LTE-based service in the U.S. in 2010, having released an initial set of technical specifications for devices to run on its LTE 4G (Long Term Evolution, fourth generation) network in April and hosted a Web conference for device developers in May.  On Tuesday, July 28, Verizon Wireless will host a Verizon Developer Community conference and webcast to facilitate application development for use on the Verizon Wireless 3G and 4G networks.
  • Verizon Wireless introduced the MiFi 2200 Intelligent Mobile Hotspot and the HP Mini 1151NR Netbook during the second quarter.  The MiFi 2200 lets customers create a personal Wi-Fi cloud to share access to the Verizon Wireless high-speed 3G network with up to five Wi-Fi enabled devices, such as notebooks, netbooks and gaming devices.  With the HP Mini Netbook, customers can access the Internet, use e-mail and browse the Web in the U.S. and more than 175 destinations worldwide.  Earlier this month, Verizon Wireless launched the highly anticipated global BlackBerry Tour, the latest in the company's portfolio of 3G smartphones.
  • During the second quarter, Verizon Wireless customers sent or received nearly 146 billion text messages.  Customers also sent more than 2.5 billion picture/video messages and completed 40 million music and video downloads during the quarter.



  • Wireline's total second-quarter operating revenues were $11.5 billion, a decline of 5.2 percent compared with the second quarter 2008.  A 0.2 percent increase in mass market revenues was offset by declines in global enterprise, global wholesale and other services.

  • Broadband connections totaled 9.1 million in the second quarter, a 9.4 percent increase year over year and a net increase of 186,000 from the first quarter 2009.  This includes a decrease of 117,000 DSL-based Verizon High Speed Internet connections from the first quarter, which was more than offset by the 303,000 increase in FiOS Internet customers.
  • Over the past year, Verizon has added more than 1.1 million FiOS TV customers and expanded the availability of FiOS "triple-play" bundles of voice, Internet and TV services by approximately 46 percent.  By the end of the second quarter, FiOS triple-play bundles were available to 10.3 million premises of the approximately 32 million households in Verizon's wireline network footprint, compared with 7.0 million premises at the end of the second quarter 2008.
  • Verizon's FiOS network passed an additional 650,000 premises in the second quarter.  As of the end of the quarter, the FiOS network passed 13.8 million premises, or approximately 43 percent of households in Verizon's wireline network footprint.
  • Verizon Business, which serves large-business and government customers worldwide,  enhanced its IP-based strategic services, rolling out a "cloud-based" Computing as a Service solution and managed remote backup and restore services, as well as cloud-based network-management, monitoring and reporting tools.  The company also added new global professional consulting services aimed at optimizing application performance and securing corporate data, and unveiled integrated IP service packages designed specifically for mid-market customers.
  • During the quarter, Verizon installed 26 Private IP edge switches for a total of 705 across 59 countries.  It also expanded its global mesh networks, completed 1,488 miles of ultra-long-haul network in Europe, expanded remote access services to India and had suppliers begin laying cable for the 15,000-kilometer (9,000-mile) Europe India Gateway submarine cable.
  • New agreements with multinational customers included The Bank of New York Mellon and Siemens Enterprise Communications.  Verizon Business also signed new contracts with several U.S. government agencies, including an agreement with the U.S. Department of Health and Human Services valued at up to $245 million.


Notes: Comparisons are year over year unless otherwise noted.  See the accompanying schedules and  for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this news release.  Reclassifications of prior-period amounts have been made in accordance with the adoption of the accounting standard on noncontrolling interests in consolidated financial statements and, where appropriate, to reflect comparable operating results for the spinoff of the Wireline segment's non-strategic local exchange and related business assets in Maine, New Hampshire and Vermont in the first quarter of 2008.  Unless stated otherwise, segment results shown are adjusted for special items.




Verizon Communications Inc. (NYSE:VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to mass market, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, serving more than 87 million customers nationwide.  Verizon's Wireline operations provide converged communications, information and entertainment services over the nation's most advanced fiber-optic network.  Wireline also includes Verizon Business, which delivers innovative and seamless business solutions to customers around the world.  A Dow 30 company, Verizon employs a diverse workforce of more than 235,000 and last year generated consolidated operating revenues of more than $97 billion.  For more information, visit




NOTE: This news 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 effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments; the effect of material changes in available technology; any disruption of our suppliers' provisioning of critical products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural or man-made disasters or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any loss of or inability to renew wireless licenses, and the final results of federal and state regulatory proceedings and judicial review of those results; the timing, scope and financial impact of our deployment of fiber-to-the-premises broadband technology; 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; our ability to complete acquisitions and dispositions; our ability to successfully integrate Alltel Corporation into Verizon Wireless' business and achieve anticipated benefits of the acquisition; and the inability to implement our business strategies.


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