10-KPeriod: FY2012

VERIZON COMMUNICATIONS INC Annual Report, Year Ended Dec 31, 2012

Filed February 26, 2013For Securities:VZ

Summary

Verizon Communications Inc. reported its fiscal year ended December 31, 2012, highlighting its robust performance driven by its two primary segments: Verizon Wireless and Wireline. The company, a leader in communications, information, and entertainment services, maintained a strong market position, particularly within its wireless division, which accounted for approximately 66% of total revenues. Verizon Wireless demonstrated significant growth, fueled by its extensive 4G LTE network coverage and the introduction of innovative data-sharing plans like 'Share Everything.' The segment's focus on network reliability and expansion, including investments in advanced technologies, positions it well for continued data traffic growth. The Wireline segment, while a smaller contributor to overall revenue, showcased advancements in its FiOS offerings for consumers and a comprehensive suite of enterprise solutions, including cloud and security services, underscoring Verizon's strategy to be a full-service provider across multiple platforms.

Financial Highlights

53 data points
Beta

Revenue

$115.85B

60.1% Gross Margin

Net Income

$875.00M

0.8% Net Margin

EPS (Diluted)

$0.31

Total Assets

$225.22B

Cash & Equivalents

$3.09B

Free Cash Flow

$31.49B

Financial Statements
Beta
Revenue$115.85B
Cost of Revenue$46.27B
Gross Profit$69.57B
SG&A Expenses$39.95B
Operating Expenses$102.69B
Operating Income$13.16B
Interest Expense$2.57B
Net Income$875.00M
EPS (Basic)$0.31
EPS (Diluted)$0.31
Shares Outstanding (Basic)2.85B
Shares Outstanding (Diluted)2.86B

Key Highlights

  • 1Verizon Wireless is the largest wireless service provider in the U.S. by retail connections and revenue, with 98.2 million retail connections and $75.9 billion in revenue for 2012 (66% of total revenue).
  • 2The company's 4G LTE network covered nearly 89% of the U.S. population by year-end 2012, with plans to expand coverage further in 2013.
  • 3Verizon Wireless launched 'Share Everything' plans, which accounted for approximately 23% of its retail postpaid accounts by the end of 2012, offering shared data allowances across multiple devices.
  • 4The Wireline segment generated $39.8 billion in revenue (34% of total revenue), with Mass Markets, Global Enterprise, and Global Wholesale as its key sub-segments.
  • 5Verizon continued to invest in its FiOS network, passing over 17.6 million homes with speeds up to 300 Mbps, and expanded its global IP network with 100G technology deployments.
  • 6The company completed strategic acquisitions, including HUGHES Telematics for its telematics offerings and Terremark for cloud services, to bolster its enterprise solutions.
  • 7Verizon is actively managing its spectrum portfolio, engaging in acquisitions, exchanges, and sales, such as the agreement to sell 700 MHz B block licenses to AT&T.

Frequently Asked Questions

Verizon operates through two primary segments: Verizon Wireless and Wireline. In 2012, Verizon Wireless was the dominant segment, accounting for approximately 66% of the company's aggregate revenues ($75.9 billion), driven by wireless voice and data services. The Wireline segment contributed the remaining 34% ($39.8 billion), offering a range of services including voice, broadband internet, video, and enterprise networking solutions.

Verizon is heavily invested in its 4G LTE network, which covered nearly 89% of the U.S. population by the end of 2012. The company plans to continue expanding this coverage in 2013 to match its existing 3G footprint. This focus on 4G LTE is driven by its higher data throughput performance, lower cost, and increasing customer demand for data services, with nearly 50% of wireless data traffic already on the 4G LTE network by year-end 2012.

Verizon is addressing the growing demand for data through several strategies. This includes expanding its 4G LTE network, introducing innovative data plans like the 'Share Everything' plans that allow data to be shared across multiple devices, and offering a wide array of data-capable devices such as smartphones and tablets. For its Wireline segment, it is enhancing broadband speeds with FiOS Quantum and investing in its global IP network infrastructure.

Key risks identified include intense competition in the telecommunications industry, the need to adapt to rapid technological changes and evolving consumer demand, dependence on key suppliers for network equipment and devices, and potential adverse effects from changes in the regulatory framework. The company also faces risks related to cybersecurity, natural disasters, economic downturns, and labor relations.