Citing intensified wireless competition, Verizon reported lower Q4 and full-year 2016 revenues and profitability.
Total consolidated operating revenues in fourth-quarter 2016 were $32.3 billion, a 5.6 percent decrease compared with fourth-quarter 2015. Full-year 2016 revenues were nearly $126.0 billion, a 4.3 percent decline. Excluding revenues from since-divested local landline businesses and AOL, adjusted full-year total operating revenues on a comparable basis (non-GAAP) would have declined approximately 2.4 percent.
Net income was $4.6 billion in fourth-quarter 2016, and net income margin was 14.2 percent. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled $12.0 billion, and the consolidated EBITDA margin (non-GAAP) was 37.1 percent in fourth-quarter 2016.
Fourth-quarter 2016 EPS came in at $1.10,and full-year EPS at $3.21. Adjusted fourth-quarter 2016 EPS (non-GAAP) of 86 cents excluded 24 cents in net gains related to mark-to-market pension and OPEB (other post-employment benefits) adjustments and severance-related costs.
During 2016, Verizon invested in its networks with $17.1 billion in capital expenditures, completed wireline divestitures of three markets, negotiated new labor contracts, executed successful technical trials of 5G wireless service and expanded its new growth businesses.
“We are positioning Verizon for future growth and continued sustainable shareholder value,” said Chairman and CEO Lowell McAdam. “In the fourth quarter we expanded our customer base in highly competitive wireless and broadband markets. This capped a year in which we delivered solid results and returned value to shareholders, including $9.3 billion in dividends. We enter 2017 with confidence, based on our investments in next-generation networks and the new capabilities we have acquired. Our goal is to continue to earn our customers’ loyalty every day in a rapidly expanding mobile-first digital world.”
Verizon Wireless highlights
- Verizon reported 591,000 retail postpaid net additions in fourth-quarter 2016.
- At year-end 2016, Verizon had 114.2 million retail connections, a 1.9 percent year-over-year increase. Verizon’s retail postpaid connections base grew 2.1 percent to 108.8 million, and retail prepaid connections totaled 5.4 million. Full-year postpaid net additions of 2.3 million included 1.8 million 4G smartphones and 1.4 million 4G tablets, offset primarily by declines in basic phones and 3G smartphones.
- Total revenues were $23.4 billion in fourth-quarter 2016, a decline of 1.5 percent compared with fourth-quarter 2015, as more customers continued to choose unsubsidized device payment plans. For the full year, revenues totaled $89.2 billion, a decline of 2.7 percent. Service revenues plus device payment plan billings increased 1.7 percent in fourth-quarter 2016, compared with fourth-quarter 2015.
- At year-end 2016, approximately 67 percent of postpaid phone customers were on a non-subsidized service pricing plan, ahead of target due to high volumes in fourth-quarter 2016.
- In fourth-quarter 2016, overall traffic on LTE increased by approximately 49 percent compared with fourth-quarter 2015, while Verizon extended its lead in the industry’s third-party network performance studies across the country.
Wireline highlights
- Total wireline revenues decreased 3.1 percent, to $7.8 billion, comparing fourth-quarter 2016 with fourth-quarter 2015. Retail consumer revenues grew 0.2 percent, to $3.2 billion, supported by consumer Fios revenue growth.
- Total Fios revenues grew 4.4 percent, to $2.9 billion, comparing fourth-quarter 2016 with fourth-quarter 2015. Full-year Fios revenues were $11.2 billion in 2016, a 4.6 percent increase compared with 2015.
- In fourth-quarter 2016, Verizon added a net of 68,000 Fios Internet connections and 21,000 Fios Video connections. Customer demand for Custom TV continues to remain strong. At year-end, Verizon had 5.7 million Fios Internet connections and 4.7 million Fios Video connections.
- In the fourth quarter, Verizon began offering consumer and business fiber-based services to customers in Boston, as part of the company’s One Fiber initiative.
- Wireline operating income was $414 million in fourth-quarter 2016, compared with $7 million in fourth-quarter 2015. Segment operating income margin was 5.3 percent in fourth-quarter 2016. Segment EBITDA (non-GAAP) was $1.9 billion in fourth-quarter 2016, up 17.7 percent from fourth-quarter 2015. Segment EBITDA margin (non-GAAP) was 24.1 percent in fourth-quarter 2016, compared with 19.8 percent in fourth-quarter 2015.
- During the fourth quarter, Verizon Enterprise Solutions entered into new agreements, continued or completed work with a number of clients, including AECOM, ICICI Bank, LBC Tank Terminals Group, Nanyang Technological University and Target Corporation.
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