Summary
Verizon Communications Inc. (VZ) filed an 8-K on January 7, 2013, providing a financial and operational update delivered by its CEO at the Citi Global Internet, Media and Telecommunications Conference. The update highlighted strong performance in both its wireless and FiOS segments, with expectations for significant retail postpaid net additions for Verizon Wireless and customer growth for FiOS. However, the filing also disclosed substantial expected charges for the fourth quarter of 2012. These include a significant pre-tax charge related to pension and postretirement liabilities due to actuarial assumption changes, alongside non-operational charges for debt retirement and restructuring. Additionally, the company anticipates a direct impact from Superstorm Sandy, though a portion is expected to be covered by insurance. Investors should note the positive operational trends alongside these significant one-time charges impacting reported earnings.
Key Highlights
- 1Verizon Wireless expects to achieve 2.1 million retail postpaid net additions in Q4 2012, with approximately 87% of postpaid phone sales being smartphones.
- 2Smartphone activations increased over 15% year-over-year for full-year 2012, leading to an expected near-term negative impact on Verizon Wireless' segment EBITDA service margin and EPS.
- 3Verizon expects over 130,000 customer net additions for its FiOS service in Q4 2012, despite resource dedication to Superstorm Sandy restoration efforts.
- 4The company anticipates a pre-tax charge of $7 billion to $7.5 billion in Q4 2012, primarily related to the non-cash remeasurement of pension and other postretirement liabilities.
- 5Additional non-operational pre-tax charges of approximately $1.0 billion to $1.5 billion are expected in Q4 2012 for debt retirement and restructuring.
- 6Superstorm Sandy is estimated to have a direct impact of approximately $1 billion, with over half as operating expenses and roughly one-third expected to be recovered by insurance.