ii view: Verizon makes history

Telecommunications company Verizon saw monthly subscribers grow.

Second-quarter results

• Revenue down 0.4% to $32.1 billion
• Net income down 4.4% to $3.94 billion
• Earnings per share down 5% to 95 cents
• Adjusted earnings per share up 2.5% to $1.23
• Dividend payment unchanged from the prior quarter at 60.25 cents per share 

Chief Executive Hans Vestberg said:

"Verizon finished strong in the first half of 2019 by delivering solid financial results while transforming the business under the new operating structure and advancing our leadership in 5G. Verizon made history this quarter by becoming the first carrier in the world to launch 5G mobility. We are focused on optimizing our next-generation networks and enhancing the customer experience while we head into the second half of the year with great momentum."

ii round-up:

Telecommunications group Verizon Communications Inc (NYSE:VZ) is today primarily a mobile wireless business – generating around 70% of its revenue and nearly all of its profits. 

Having previously operated through the divisions of Wireless and Wireline, it now breaks its results into Consumer and Business segments. 

Management is currently focused on plans to build the group’s 5G capabilities and pay down debt. 

The company reported quarterly results which beat analyst forecasts. It added a net 245,000 phone subscribers, exceeding the consensus estimate of below 200,000. Adjusted earnings per share also marginally surpassed estimates. 

First half 2019 capital expenditures of $8.0 billion continued to support the launch and build-out of its 5G Ultra-Wideband network. It made history in the quarter, by becoming the first carrier to launch 5G mobility.

Wireless service revenue growth was offset by lower wireless equipment revenue and wireline service revenue.

The share price rose by just over 1% in midday US stock market trading. 

ii view:

Operationally, the rollout of fast 5G services heads management’s agenda. Debt reduction is a financial focus. 

For investors, the dividend yield of over 4%, covered twice by earnings, provides a key attraction.
The valuation also appears unstretched, with the price earnings ratio sat at a significant discount to the 10-year average. However, network operators have arguably become commoditized. Price is now a key consumer consideration. 

Positives

Verizon has rolled out its 5G offer in a number of US cities

It is focused on paying down debt while building its 5G capabilities

Negatives:

The company’s net long-term debt is over $100 billion

Huawei may be demanding that it pays licensing fees on hundreds of patents

The average rating of stock market analysts:

Buy