Summary
Verizon Communications Inc. (VZ) filed an 8-K on October 28, 2008, detailing discussions from an October 27, 2008 conference call regarding its third quarter 2008 results and its outlook for the remainder of the year. The company reaffirmed its expectation for full-year earnings growth from continuing operations to be approximately 8%. Key operational updates included strong performance expectations for Verizon Wireless, with anticipated double-digit revenue growth and robust EBITDA margins. Additionally, Verizon provided positive insights into its FiOS network, noting that it achieved EBITDA positivity in the third quarter and projected significant increases in homes available for sale, along with strong penetration rates within two years. The report also addressed the anticipated financing for the Alltel acquisition, outlining plans to utilize a bridge facility and capital markets financing, with repayment expected from cash flow, asset sales, and further financings. While the acquisition is still expected to be accretive to earnings in the first year, the company revised this outlook to a lower level than originally estimated. The filing also noted expectations for continued decreases in capital spending as a percentage of revenue for 2009.
Key Highlights
- 1Full year earnings growth from continuing operations projected at approximately 8%.
- 2Verizon Wireless expected to maintain double-digit revenue growth and 43%-45% EBITDA margins.
- 3Verizon Wireline anticipates maintaining its fourth quarter EBITDA margin at third quarter levels.
- 4FiOS achieved EBITDA positive status in the third quarter of 2008.
- 5Expectation for FiOS homes open for sale to increase by approximately 1 million in the fourth quarter.
- 6FiOS TV penetration averages 17% within 12 months and over 26% within two years.
- 7Alltel acquisition financing to involve bridge facility and capital markets financing, with a revised lower accretion estimate for the first year post-closing.