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Verizon closes 2017 with strong wireless customer growth and retention, well-positioned in new markets
[January 23, 2018]

Verizon closes 2017 with strong wireless customer growth and retention, well-positioned in new markets


4Q 2017 highlights

  • $4.56 in earnings per share (EPS), compared with $1.10 in 4Q 2016; adjusted EPS (non-GAAP), excluding special items, of 86 cents, compared with 86 cents in 4Q 2016.
  • Verizon Wireless: 1.2 million retail postpaid net additions, including 647,000 postpaid smartphone net adds; retail postpaid churn of 1.00 percent, with strong customer loyalty demonstrated by retail postpaid phone churn of 0.77 percent -- less than 0.90 percent for the 11th consecutive quarter.
  • Fios total revenue growth of 2.3 percent, driven by Fios Internet customer growth.

NEW YORK, Jan. 23, 2018 (GLOBE NEWSWIRE) -- Verizon Communications Inc. (NYSE:VZ) (Nasdaq:VZ) closed 2017 with another quarter of strong Verizon Wireless customer growth and retention, and with core and emerging businesses positioned for 2018 and beyond.

“Verizon finished 2017 with great momentum, led by some of the best customer growth and loyalty results Verizon Wireless has delivered in recent years,” said Chairman and CEO Lowell McAdam. “In 2018 we look to drive long-term shareholder value by deploying next-generation network services, leveraging global platforms such as Oath, and using our strategic Humanability approach to turn innovative ideas into realities.”

Tax-reform legislation will have a positive impact to cash flow from operations in 2018 of approximately $3.5 billion to $4 billion. The incremental cash flow will be used primarily to strengthen Verizon’s balance sheet. Additionally, Verizon will announce later today how employees will further share in the company’s success, and the company will also be increasing contributions to the Verizon Foundation by $200 million to $300 million over the next two years. These two initiatives have a projected EPS impact of 5 to 6 cents for each of the next two years.

For fourth-quarter 2017, Verizon reported EPS of $4.56, compared with $1.10 in fourth-quarter 2016. On an adjusted basis (non-GAAP), fourth-quarter 2017 EPS was 86 cents, compared with 86 cents in fourth-quarter 2016.

Fourth-quarter 2017 adjusted EPS included a net pre-tax loss from special items of about $2.6 billion: a severance and mark-to-market adjustment of pension and OPEB (other post-employment benefits) liabilities of $1.2 billion dollars; early debt redemption costs of $681 million; a $671 million charge for product realignment of early-stage developmental technologies; acquisition and integration-related charges of $154 million; and a non-cash pre-tax gain on spectrum license transactions of about $144 million. As Verizon noted in an 8-K filing on Jan. 17, the federal Tax Cuts and Jobs Act also resulted in a one-time, after-tax increase to earnings provisionally estimated to be approximately $16.8 billion, or $4.10 per share. This is primarily related to the re-measurement of the company’s net deferred tax liabilities at the new corporate income tax rate. 

The cumulative net impact from these items, after tax, was approximately $15.2 billion, or $3.71 per share, in fourth-quarter 2017.

For full-year 2017, Verizon reported $7.36 in EPS, compared with $3.21 in full-year 2016. On an adjusted basis (non-GAAP), 2017 EPS was $3.74, compared with 2016 EPS of $3.87.

Consolidated results

Total consolidated operating revenues in fourth-quarter 2017 were $34.0 billion, up 5.0 percent from fourth-quarter 2016. Full-year 2017 consolidated operating revenues were $126.0 billion. On a comparable basis excluding divestitures and acquisitions (non-GAAP), full-year consolidated revenues declined approximately 2 percent in 2017, compared with 2016.

Net income was $18.8 billion in fourth-quarter 2017. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled approximately $9.2 billion. Consolidated operating income margin was 14.1 percent. Consolidated EBITDA margin (non-GAAP) was 27.2 percent in fourth-quarter 2017, compared with 37.1 percent in fourth-quarter 2016. Adjusted EBITDA margin (non-GAAP) for 2017 was 35.7 percent and 35.5 percent in the same periods, respectively.

Cash flow from operations totaled $25.3 billion in 2017, and capital expenditures totaled $17.2 billion. In 2017, Verizon made $9.5 billion in cash dividend payments to shareholders.

In Verizon’s media business, Oath revenues were $2.2 billion in fourth-quarter 2017, up approximately 10 percent from third-quarter 2017, driven by increased customer advertising spending during the holidays. Verizon expects a normal seasonal trend in Oath revenues between fourth-quarter 2017 and first-quarter 2018.

In telematics, revenues were more than $230 million in fourth-quarter 2017. IoT (Internet of Things) revenues increased approximately 17 percent year over year, and 8 percent on an organic basis (non-GAAP).

Wireless results

  • Verizon reported a net increase of 1.2 million retail postpaid connections in fourth-quarter 2017. Net phone additions of 431,000 included 647,000 smartphones, compared with 456,000 smartphone additions in fourth-quarter 2016. Total retail postpaid net adds in fourth-quarter 2017 included 193,000 tablet and 550,000 other connected device net adds, led by wearables.
  • Full-year 2017 postpaid net additions of 2.1 million included 1.8 million smartphones, Verizon’s highest total since 2015. It also included 31,000 tablets and 1.3 million other connected devices.
  • For the third consecutive quarter, Verizon increased customer accounts, adding 40,000 to its base in fourth-quarter 2017. The company ended 2017 with 116.3 million total retail connections
    -- 110.9 million postpaid connections and 5.4 million prepaid connections.
  • Total retail postpaid churn was 1.00 percent in fourth-quarter 2017, a year-over-year improvement of 10 basis points, driven mainly by retail postpaid phone churn of 0.77 percent. This is the 11th consecutive quarter of retail postpaid phone churn of less than 0.90 percent.
  • Total revenues were $23.8 billion in fourth-quarter 2017, an increase of 1.7 percent compared with fourth-quarter 2016 and the company’s first year-over-year wireless revenue growth in two years. The momentum in service revenue trends continued, increasing sequentially for the second consecutive quarter, to $15.9 billion, while the year-over-year decline improved to 2.9 percent. For full-year 2017, total revenues totaled $87.5 billion, a decline of 1.9 percent.
  • Verizon now has approximately 80 percent of its postpaid phone base on unsubsidized service pricing plans, compared with approximately 67 percent at year-end 2016.
  • Segment operating income in fourth-quarter 2017 was $7.1 billion, and segment operating income margin on total revenues was 29.9 percent. Segment EBITDA (non-GAAP) totaled $9.5 billion in fourth-quarter 2017. Segment EBITDA margin on total revenues (non-GAAP) was 39.8 percent, compared with 36.9 percent in fourth-quarter 2016.

Wireline results

  • Total wireline revenues increased 0.1 percent year over year in fourth-quarter 2017 and 0.6 percent for the full year, compared with 2016, to $7.6 billion and $30.7 billion, respectively. On an organic basis, excluding revenues from acquired operations (non-GAAP), total wireline revenues declined 3.6 percent year over year in fourth-quarter 2017.
  • Total Fios revenues grew 2.3 percent, and consumer Fios revenues grew 1.7 percent, comparing fourth-quarter 2017 with fourth-quarter 2016.
  • In fourth-quarter 2017, Verizon added a net of 47,000 Fios Internet connections and lost a net of 29,000 Fios Video connections, continuing to reflect the shift from traditional linear video to over-the-top offerings. At year-end 2017, Verizon had 5.9 million Fios Internet connections and 4.6 million Fios Video connections.
  • Wireline operating income was $62 million in fourth-quarter 2017, and segment operating income margin was 0.8 percent. Full-year 2017 segment operating income was $380 million, and segment operating income margin was 1.2 percent.
  • Segment EBITDA (non-GAAP) was $1.6 billion in fourth-quarter 2017. Segment EBITDA margin (non-GAAP) was 20.9 percent in fourth-quarter 2017, compared with 23.3 percent in fourth-quarter 2016. For the full year, segment EBITDA margin was 21.1 percent in 2017, compared with 18.6 percent in 2016 (which included impacts from a work stoppage).

Outlook and guidance

For 2018, Verizon expects the following:

  • Full-year consolidated revenues will grow at low-single-digit percentage rates on a GAAP basis. Excluding the impact from the new revenue recognition standard, Verizon is on track to achieve year-over-year wireless service revenue growth by the middle part of 2018. On a GAAP basis, Verizon expects service revenue growth to turn positive around the end of 2018 or early 2019.
  • Low single-digit percentage growth in adjusted EPS, which includes the dilutive impacts from a full year of depreciation and amortization costs from 2017 acquisitions, the Straight Path acquisition expected to close later in the first quarter, and the ongoing impact of last year’s data center divestitures. This is before the impact of tax reform and the revenue recognition standard.
  • Capital spending for 2018 will be in the range of $17.0 billion to $17.8 billion, including the commercial launch of 5G.
  • The expected savings from tax reform will generate a net $3.5 billion to $4.0 billion uplift to cash flow from operations in 2018. This is expected to yield a 55 to 65 cent increase in 2018 EPS, net of impacts from the employee and Verizon Foundation initiatives. The resulting 2018 effective tax rate is projected to be in the range of 24 to 26 percent.

NOTE: See the accompanying schedules and www.verizon.com/about/investors for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York City, generated $126 billion in 2017 revenues. The company operates America’s most reliable wireless network and the nation’s premier all-fiber network, and delivers integrated solutions to businesses worldwide. Its Oath subsidiary reaches about one billion people around the world with a dynamic house of media and technology brands.

VERIZON’S ONLINE MEDIA CENTER: News releases, stories, media contacts and other resources are available at www.verizon.com/about/news/. News releases are also available through an RSS feed. To subscribe, visit www.verizon.com/about/rss-feeds/.

Forward-looking statements
In this communication we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words “anticipates,” “believes,” “estimates,” “hopes” or similar expressions. 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. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The following important factors, along with those discussed in our filings with the Securities and Exchange Commission (the “SEC”), could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: adverse conditions in the U.S. and international economies; the effects of competition in the markets in which we operate; material changes in technology or technology substitution; disruption of our key suppliers’ provisioning of products or services; changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks; breaches of network or information technology security, natural disasters, terrorist attacks or acts of war or significant litigation and any resulting financial impact not covered by insurance; our high level of indebtedness; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets affecting the cost, including interest rates, and/or availability of further financing; material adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or treaties, or in their interpretation; changes in 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; the inability to implement our business strategies; and the inability to realize the expected benefits of strategic transactions.

 

        
        
Verizon Communications Inc.       
Condensed Consolidated Statements of Income
      (dollars in millions, except per share amounts)
         
  3 Mos. Ended3 Mos. Ended  12 Mos. Ended12 Mos. Ended 
Unaudited12/31/1712/31/16  % Change   12/31/1712/31/16  % Change
         
Operating Revenues       
Service revenues and other$  27,480 $  26,610  3.3  $  107,145 $  108,468  (1.2)
Wireless equipment revenues  6,475   5,730  13.0    18,889   17,512  7.9 
Total Operating Revenues  33,955   32,340  5.0    126,034   125,980  — 
         
Operating Expenses       
Cost of services  7,836   7,006  11.8    29,409   29,186  0.8 
Wireless cost of equipment  7,339   7,356  (0.2)   22,147   22,238  (0.4)
Selling, general and administrative expense                                 9,531   5,968  59.7    30,110   31,569  (4.6)
Depreciation and amortization expense  4,456   3,987  11.8    16,954   15,928  6.4 
Total Operating Expenses  29,162   24,317  19.9    98,620   98,921  (0.3)
         
Operating Income  4,793   8,023  (40.3)   27,414   27,059  1.3 
Equity in losses of unconsolidated businesses  (6)  (35) 82.9    (77)  (98) 21.4 
Other income (expense), net  (634)  98  *     (2,010)  (1,599) (25.7)
Interest expense  (1,219)  (1,137) (7.2)   (4,733)  (4,376) (8.2)
Income Before Provision for Income Taxes  2,934   6,949  (57.8)   20,594   20,986  (1.9)
Benefit (provision) for income taxes  15,849   (2,349) *     9,956   (7,378) *  
Net Income$  18,783 $  4,600  *   $  30,550 $  13,608  *  
         
Net income attributable to noncontrolling interests$  114 $  105  8.6  $  449 $  481  (6.7)
Net income attributable to Verizon  18,669   4,495  *     30,101   13,127  *  
Net Income$  18,783 $  4,600  *   $  30,550 $  13,608  *  
           
Basic Earnings per Common Share         
Net income attributable to Verizon$  4.57 $  1.10  *   $  7.37 $  3.22  *  
          
Weighted average number of common shares (in millions)  4,087    4,081      4,084    4,080    
        
Diluted Earnings per Common Share (1)       
Net income attributable to Verizon$  4.56 $  1.10  *   $  7.36 $  3.21  *  
        
Weighted average number of common       
 shares-assuming dilution (in millions)  4,090    4,087      4,089    4,086   
         
         
Footnotes:       
 (1)Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represents the only potential dilution. 
         
*Not meaningful       
         


   
Verizon Communications Inc.  
Condensed Consolidated Balance Sheets  
   (dollars in millions) 
         
Unaudited12/31/17 12/31/16 $ Change 
       
Assets     
Current assets     
Cash and cash equivalents$  2,079  $  2,880  $  (801)
Accounts receivable, net  23,493    17,513    5,980 
Inventories  1,034    1,202    (168)
Assets held for sale  —    882    (882)
Prepaid expenses and other  3,307    3,918    (611)
Total current assets  29,913    26,395    3,518 
Property, plant and equipment  246,498    232,215    14,283 
Less accumulated depreciation  157,930    147,464    10,466 
Property, plant and equipment, net  88,568    84,751    3,817 
Investments in unconsolidated businesses                                 1,039    1,110    (71)
Wireless licenses  88,417    86,673    1,744 
Goodwill  29,172    27,205    1,967 
Other intangible assets, net  10,247    8,897    1,350 
Non-current assets held for sale   —    613    (613)
Other assets  9,787    8,536    1,251 
Total Assets$  257,143  $  244,180  $  12,963 
       
Liabilities and Equity     
Current liabilities     
Debt maturing within one year$  3,453  $  2,645  $  808 
Accounts payable and accrued liabilities  21,232    19,593    1,639 
Other  8,352    8,102    250 
Total current liabilities  33,037    30,340    2,697 
Long-term debt  113,642    105,433    8,209 
Employee benefit obligations  22,112    26,166    (4,054)
Deferred income taxes  31,232    45,964    (14,732)
Other liabilities  12,433    12,245    188 
Total long-term liabilities  179,419    189,808    (10,389)
       
Equity     
Common stock  424    424    — 
Additional paid in capital  11,101    11,182    (81)
Retained earnings  35,635    15,059    20,576 
Accumulated other comprehensive income  2,659    2,673    (14)
Common stock in treasury, at cost  (7,139)   (7,263)   124 
Deferred compensation – employee     
stock ownership plans and other  416    449    (33)
Noncontrolling interests  1,591    1,508    83 
Total equity  44,687    24,032    20,655 
Total Liabilities and Equity$  257,143  $  244,180  $  12,963 
       
       
Verizon - Selected Financial and Operating Statistics  
       
Unaudited12/31/17 12/31/16  
       
Total debt (in millions)$  117,095  $  108,078   
Net debt (in millions)$  115,016  $  105,198   
Net debt / Consolidated adjusted EBITDA(1)2.6x  2.4x   
Common shares outstanding end of period (in millions)           4,079    4,077   
Total employees (‘000)  155.4    160.9   
Quarterly cash dividends declared per common share$  0.5900  $  0.5775   
       
Footnotes:     
(1)  Consolidated adjusted EBITDA excludes the effects of special items and operating results of Divested Businesses, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
 


      
Verizon Communications Inc.     
Condensed Consolidated Statements of Cash Flows  
    (dollars in millions)
       
  12 Mos. Ended 12 Mos. Ended  
Unaudited12/31/17 12/31/16 $ Change
       
Cash Flows from Operating Activities     
Net Income$  30,550  $  13,608  $  16,942 
Adjustments to reconcile net income to net cash provided by     
operating activities:     
Depreciation and amortization expense  16,954    15,928    1,026 
Employee retirement benefits  440    2,705    (2,265)
Deferred income taxes  (14,463)   (1,063)   (13,400)
Provision for uncollectible accounts  1,167    1,420    (253)
Equity in losses of unconsolidated businesses, net of dividends received  117    138    (21)
Changes in current assets and liabilities, net of effects from     
  acquisition/disposition of businesses  (4,947)   (5,636)   689 
Discretionary contribution to qualified pension plans  (3,411)   (186)   (3,225)
Net gain on sale of divested businesses  (1,774)   (1,007)   (767)
Other, net  672    (3,097)   3,769 
Net cash provided by operating activities  25,305    22,810    2,495 
       
Cash Flows from Investing Activities     
Capital expenditures (including capitalized software)  (17,247)   (17,059)   (188)
Acquisitions of businesses, net of cash acquired  (5,928)   (3,765)   (2,163)
Acquisitions of wireless licenses  (583)   (534)   (49)
Proceeds from dispositions of businesses  3,614    9,882    (6,268)
Other, net  772    493    279 
Net cash used in investing activities  (19,372)   (10,983)   (8,389)
       
Cash Flows from Financing Activities     
Proceeds from long-term borrowings  27,707    12,964    14,743 
Proceeds from asset-backed long-term borrowings  4,290    4,986    (696)
Repayments of long-term borrowings and capital lease obligations  (23,837)   (19,159)   (4,678)
Repayments of asset-backed long-term borrowings  (400)   —    (400)
Decrease in short-term obligations, excluding current maturities  (170)   (149)   (21)
Dividends paid  (9,472)   (9,262)   (210)
Other, net  (4,852)   (2,797)   (2,055)
Net cash used in financing activities  (6,734)   (13,417)   6,683 
       
Decrease in cash and cash equivalents  (801)   (1,590)   789 
Cash and cash equivalents, beginning of period  2,880    4,470    (1,590)
Cash and cash equivalents, end of period$  2,079  $  2,880  $  (801)
       
Footnotes:     
Certain amounts have been reclassified to conform to the current period presentation.
       


        
Verizon Communications Inc.       
Wireless - Selected Financial Results     
   (dollars in millions)
         
  3 Mos. Ended 3 Mos. Ended   12 Mos. Ended 12 Mos. Ended  
Unaudited12/31/17 12/31/16 % Change 12/31/17 12/31/16 % Change
         
Operating Revenues       
Service$  15,880 $  16,346  (2.9) $  63,121 $  66,580  (5.2)
Equipment  6,475   5,733  12.9    18,889   17,515  7.8 
Other  1,416   1,298  9.1    5,501   5,091  8.1 
Total Operating Revenues  23,771   23,377  1.7    87,511   89,186  (1.9)
         
Operating Expenses       
Cost of services  1,983   2,056  (3.6)   7,990   7,988  — 
Cost of equipment  7,339   7,356  (0.2)   22,147   22,238  (0.4)
Selling, general and administrative expense  4,987   5,335  (6.5)   18,772   19,924  (5.8)
Depreciation and amortization expense  2,344   2,321  1.0    9,395   9,183  2.3 
Total Operating Expenses  16,653   17,068  (2.4)   58,304   59,333  (1.7)
         
Operating Income$  7,118 $  6,309  12.8  $  29,207 $  29,853  (2.2)
Operating Income Margin 29.9% 27.0%   33.4% 33.5% 
         
Segment EBITDA$  9,462 $  8,630  9.6  $  38,602 $  39,036  (1.1)
Segment EBITDA Margin 39.8% 36.9%   44.1% 43.8% 
         
         
Footnotes:       
 The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
        
 Intersegment transactions have not been eliminated. 
         


        
Verizon Communications Inc.       
Wireless - Selected Operating Statistics     
         
Unaudited    12/31/17 12/31/16 % Change
         
Connections (‘000)       
Retail postpaid      110,854    108,796   1.9 
Retail prepaid      5,403    5,447   (0.8)
Total retail      116,257    114,243   1.8 
         
         
  3 Mos. Ended3 Mos. Ended  12 Mos. Ended12 Mos. Ended 
Unaudited12/31/1712/31/16% Change 12/31/1712/31/16% Change
         
Net Add Detail (‘000) (1)       
Retail postpaid   1,174    591  98.6     2,084    2,288  (8.9)
Retail prepaid   (184)   (9) *      (43)   (133) 67.7 
Total retail   990    582  70.1     2,041    2,155  (5.3)
         
         
Account Statistics       
Retail Postpaid Accounts (‘000) (2)       35,404    35,410  — 
Retail postpaid connections per account (2)       3.13    3.07  2.0 
Retail postpaid ARPA (3)$  135.78 $  141.89  (4.3) $  135.99 $  144.32  (5.8)
Retail postpaid I-ARPA (4)$  167.19 $  169.10  (1.1) $  166.28 $  167.70  (0.8)
         
Churn Detail       
Retail postpaid 1.00% 1.10%   1.01% 1.01% 
Retail 1.24% 1.34%   1.25% 1.26% 
         
Retail Postpaid Connection Statistics       
Total Smartphone postpaid % of phones activated 96.7% 95.2%   95.4% 93.4% 
Total Smartphone postpaid phone base (2)     90.1% 87.3% 
Total Internet postpaid base (2)     19.0% 18.3% 
4G LTE devices as % of retail postpaid connections     88.3% 85.0% 
        
Other Operating Statistics       
Capital expenditures (in millions)$  3,383 $  3,464  (2.3) $  10,310 $  11,240  (8.3)
         
         
Footnotes:       
 (1)Connection net additions exclude acquisitions and adjustments.
         
 (2)Statistics presented as of end of period.       
         
 (3)Retail postpaid ARPA - average service revenue per account from retail postpaid accounts.
         
 (4)Retail postpaid I-ARPA - average service revenue per account from retail postpaid account plus recurring device installment billings.
         
 The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
         
 Intersegment transactions have not been eliminated.      
         
*Not meaningful       
 


        
Verizon Communications Inc.       
Wireline - Selected Financial Results     
       (dollars in millions)
           
  3 Mos. Ended 3 Mos. Ended   12 Mos. Ended 12 Mos. Ended  
Unaudited12/31/17 12/31/16 % Change 12/31/17 12/31/16 % Change
         
Operating Revenues       
Consumer Markets$  3,188 $  3,232  (1.4) $  12,777 $  12,751  0.2 
Enterprise Solutions  2,285   2,276  0.4    9,167   9,164  — 
Partner Solutions  1,209   1,205  0.3    4,917   4,927  (0.2)
Business Markets  885   822  7.7    3,585   3,356  6.8 
Other  50   72  (30.6)   234   312  (25.0)
Total Operating Revenues  7,617   7,607  0.1    30,680   30,510  0.6 
         
Operating Expenses       
Cost of services  4,465   4,357  2.5    17,922   18,353  (2.3)
Selling, general and administrative expense                   1,558   1,478  5.4    6,274   6,476  (3.1)
Depreciation and amortization expense  1,532   1,435  6.8    6,104   5,975  2.2 
Total Operating Expenses  7,555   7,270  3.9    30,300   30,804  (1.6)
         
Operating Income (Loss)$  62 $  337  (81.6) $  380 $  (294) *  
Operating Income (Loss) Margin 0.8% 4.4%   1.2% (1.0)% 
         
Segment EBITDA$  1,594 $  1,772  (10.0) $  6,484 $  5,681  14.1 
Segment EBITDA Margin 20.9% 23.3%   21.1% 18.6% 
         
         
Footnotes:       
 The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
         
 Intersegment transactions have not been eliminated.      
         
 Certain amounts have been reclassified to conform to the current period presentation.  
         
*Not meaningful       
         


          
Verizon Communications Inc.       
Wireline - Selected Operating Statistics     
         
         
         
         
Unaudited    12/31/17 12/31/16 % Change
         
Connections (‘000)       
Fios Video Subscribers     4,619  4,694 (1.6)
Fios Internet Subscribers     5,850  5,653 3.5 
Fios Digital voice residence connections     3,905  3,895 0.3 
Fios Digital connections     14,374  14,242 0.9 
         
HSI     1,109  1,385 (19.9)
Total Broadband connections     6,959  7,038 (1.1)
         
Primary residence switched access connections     2,708  3,230 (16.2)
Primary residence connections     6,613  7,125 (7.2)
         
Total retail residence voice connections     6,804  7,355 (7.5)
Total voice connections     12,821  13,939 (8.0)
         
         
         
  3 Mos. Ended 3 Mos. Ended   12 Mos. Ended 12 Mos. Ended  
Unaudited12/31/17 12/31/16 % Change 12/31/17 12/31/16 % Change
         
Net Add Detail (‘000)       
Fios Video Subscribers (29) 21 *   (75) 59 * 
Fios Internet Subscribers 47  68 (30.9)  197  235 (16.2)
Fios Digital voice residence connections (15) 13 *   10  23 (56.5)
Fios Digital connections 3  102 (97.1)  132  317 (58.4)
         
HSI (66) (68)2.9   (276) (282)2.1 
Total Broadband connections (19) - *   (79) (47)(68.1)
         
Primary residence switched access connections                (122) (129)5.4   (522) (569)8.3 
Primary residence connections (137) (116)(18.1)  (512) (546)6.2 
         
Total retail residence voice connections (146) (127)(15.0)  (551) (594)7.2 
Total voice connections (279) (255)(9.4)  (1,118) (1,096)(2.0)
         
Revenue Statistics       
Fios revenues (in millions)$2,959 $2,892 2.3  $11,691 $11,236 4.0 
         
Other Operating Statistics       
Capital expenditures (in millions)$1,981 $1,648 20.2  $5,339 $4,504 18.5 
         
Wireline employees (‘000)     57.1  57.6  
Fios Video Open for Sale (‘000)     14,287  13,693  
Fios Video penetration     32.3% 34.3% 
Fios Internet Open for Sale (‘000)     14,582  13,982  
Fios Internet penetration     40.1% 40.4% 
         
         
Footnotes:       
 The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
         
 Intersegment transactions have not been eliminated.      
         
 Certain amounts have been reclassified to conform to the current period presentation.
         
*Not meaningful       
         


          
Verizon Communications Inc.         
Non-GAAP Reconciliations - Consolidated Verizon      
          
Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions    
        (dollars in millions)
        12 Mos. Ended
  12 Mos. Ended 
Unaudited       12/31/17
  12/31/16 
          
Consolidated Operating Revenues       $  126,034  $  125,980 
Less operating revenues from divested businesses         368    2,115 
Less operating revenues from acquisitions         4,300    — 
Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions    $  121,366  $  123,865 
Year over Year Change        (2.0)%  
          
          
          
Organic IoT Revenues       (dollars in millions)
        3 Mos. Ended3 Mos. Ended
Unaudited       12/31/1712/31/16
          
IoT Revenues       $  389  $  333 
Less IoT revenues from acquisition         30    — 
Organic IoT Revenues       $  359  $  333 
Year over Year Change        7.8%  
          
          
          
Consolidated EBITDA, Consolidated EBITDA Margin, Consolidated Adjusted EBITDA, Consolidated
  Adjusted EBITDA Margin and Consolidated Adjusted EBITDA Excluding Operating Results from
  Divested Businesses
  
        (dollars in millions)
  3 Mos.
  3 Mos.  3 Mos.  3 Mos.  3 Mos.  3 Mos.  3 Months  3 Months 
  Ended
  Ended  Ended  Ended  Ended  Ended  Ended  Ended 
Unaudited 12/31/17
  9/30/17  6/30/17  3/31/17  12/31/16  9/30/16  6/30/16  3/31/16 
          
Consolidated Net Income $  18,783  $  3,736  $  4,478  $  3,553  $  4,600  $  3,747  $  831  $  4,430 
  Add/(subtract):         
  Provision for income taxes   (15,849)   1,775    2,489    1,629    2,349    1,829    864    2,336 
  Interest expense   1,219    1,164    1,218    1,132    1,137    1,038    1,013    1,188 
  Other (income) expense, net   634    511    19    846    (98)   (97)   1,826    (32)
  Equity in losses of unconsolidated
  businesses
   6    22    28    21    35    23    20    20 
Operating Income   4,793    7,208    8,232    7,181    8,023    6,540    4,554    7,942 
Add Depreciation and amortization expense   4,456    4,272    4,167    4,059    3,987    3,942    3,982    4,017 
Consolidated EBITDA $  9,249  $  11,480  $  12,399  $  11,240  $  12,010  $  10,482  $  8,536  $  11,959 
          
  Add/subtract special items (before tax):         
Severance, pension, and benefit
charges (credits)(2)
   1,196    —    195    —    (1,589)   797    3,550    165 
Product realignment   463    —    —    —    —    —    —    — 
Gain on spectrum license transactions   (144)   —    —    (126)   —    —    —    (142)
Net gain on sale of Divested Businesses   —    —    (1,774)   —    —    —    (1,007)   — 
Acquisition and integration related costs(1)(2)   154    166    559    —    —    —    —    — 
    1,669    166    (1,020)   (126)   (1,589)   797    2,543    23 
Consolidated Adjusted EBITDA $10,918  $11,646  $11,379  $11,114  $10,421  $11,279  $  11,079  $  11,982 
Operating Results from Divested Businesses(1)   —    (17)   (50)   (104)   (107)   (115)   (120)   (780)
Consolidated Adjusted EBITDA Excluding
Operating Results from Divested Businesses
$  10,918  $  11,629  $  11,329  $  11,010  $  10,314  $  11,164  $  10,959  $  11,202 
Consolidated Operating Revenues - Quarter
to Date
 $  33,955     $  32,340     
Consolidated Operating Revenues - Year to Date $  126,034     $  125,980     
Consolidated Operating Income Margin - Quarter
to Date
  14.1%        
Consolidated EBITDA Margin - Quarter to Date  27.2%     37.1%    
Consolidated Adjusted EBITDA Margin - Year
to Date
  35.7%     35.5%    
          
(1)  Excludes depreciation and amortization expense. 
          
(2)  Certain amounts have been reclassified to conform to the current period presentation.  
          


         
Verizon Communications Inc.        
Non-GAAP Reconciliations - Consolidated Verizon    
         
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio     
       (dollars in millions)
Unaudited      12/31/1712/31/16
         
Net Debt        
Debt maturing within one year      $3,453 $2,645 
Long-term debt       113,642  105,433 
Total Debt       117,095  108,078 
Less Cash and cash equivalents       2,079  2,880 
Net Debt      $115,016 $105,198 
Net Debt to Consolidated Adjusted EBITDA Ratio      2.6x 2.4x 
         
         
         
Adjusted Earnings per Common Share (Adjusted EPS)(1)      
    3 Mos. Ended
    3 Mos. Ended 
Unaudited   12/31/17
    12/31/16 
 Pre-tax Tax After-Tax    Pre-tax Tax After-Tax  
EPS   $4.56    $1.10 
Severance, pension, and benefit charges$1,196 $(464)$732  0.18 $(1,589)$604 $(985) (0.24)
Early debt redemption costs 681  (272) 409  0.10         
Product realignment 671  (210) 461  0.11         
Acquisition and integration related costs 154  (59 95  0.02         
Gain on spectrum license transactions (144 53  (91 (0.02)        
Impact of tax reform   (16,761) (16,761) (4.10)        
 $2,558 $(17,713$(15,155 (3.71)   $(1,589$604 $(985 (0.24)
Adjusted EPS   $0.86    $0.86 
         
         
         
    12 Mos. Ended
    12 Mos. Ended 
Unaudited   12/31/17
    12/31/16 
 Pre-tax Tax After-Tax    Pre-tax Tax After-Tax    
EPS   $7.36    $3.21 
Severance, pension, and benefit charges$1,391 $(541)$850  0.21 $2,923 $(1,118)$1,805  0.44 
Early debt redemption costs 1,983  (788) 1,195  0.29  1,822  (718) 1,104  0.27 
Product realignment 671  (210) 461  0.11         
Acquisition and integration related costs 884  (334) 550  0.13         
Gain on spectrum license transactions (270) 102  (168) (0.04) (142) 54  (88) (0.02)
Gain on sale of divested businesses (1,774) 843  (931) (0.23) (1,007) 868  (139) (0.03)
Impact of tax reform   (16,761) (16,761) (4.10)        
 $2,885 $(17,689)$(14,804) (3.62)$3,596 $(914$2,682  0.66 
Adjusted EPS   $3.74    $3.87 
         
         
(1)  Adjusted EPS may not add due to rounding.        
         


    
Verizon Communications Inc.   
Non-GAAP Reconciliations - Segments   
    
Segment EBITDA and Segment EBITDA Margin   
    
Wireless(dollars in millions) 
 3 Mos. Ended
  3 Mos. Ended 
Unaudited12/31/17
  12/31/16 
    
Operating Income$7,118  $6,309 
Add Depreciation and amortization expense 2,344   2,321 
Segment EBITDA$9,462  $8,630 
    
Total operating revenues$23,771  $23,377 
Operating Income Margin 29.9%  27.0%
Segment EBITDA Margin 39.8%  36.9%
    
    
Wireline(dollars in millions) 
 3 Mos. Ended
  3 Mos. Ended 
Unaudited12/31/17
  12/31/16 
    
Operating Income$62  $337 
Add Depreciation and amortization expense 1,532   1,435 
Segment EBITDA$1,594  $1,772 
    
Total operating revenues$7,617  $7,607 
Operating Income Margin 0.8%  4.4%
Segment EBITDA Margin 20.9%  23.3%
    
    
 12 Mos. Ended
  12 Mos. Ended 
Unaudited12/31/17
  12/31/16 
    
Operating Income (Loss)$380  $(294)
Add Depreciation and amortization expense 6,104   5,975 
Segment EBITDA$6,484  $5,681 
    
Total operating revenues$30,680  $30,510 
Operating Income (Loss) Margin 1.2%  (1.0)%
Segment EBITDA Margin 21.1%  18.6%
    
    
Wireline Operating Revenues Excluding Acquisition   
 (dollars in millions) 
 3 Mos. Ended 3 Mos. Ended 
Unaudited12/31/17 12/31/16 
    
Wireline Operating Revenues$7,617  $7,607 
Less operating revenues from Acquisition 285    
Wireline Operating Revenues Excluding Acquisition$7,332  $7,607 
Year over Year Change (3.6)%  
    

Media contact:
Bob Varettoni
908.559.6388
robert.a.varettoni@verizon.com

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