Summary
This 8-K filing from Verizon Communications Inc. (VZ) dated April 24, 2020, primarily focuses on the company's operational and financial impacts stemming from the COVID-19 crisis in the first quarter of 2020. Verizon details the extensive measures taken to protect employees and maintain connectivity for customers, including shifting a large portion of its workforce to remote work and temporarily closing most retail stores. The company also highlights its commitment to the FCC's 'Keep Americans Connected' pledge, which involved waiving late fees and not terminating services for customers unable to pay due to COVID-19. Financially, Verizon noted an estimated $0.04 per share impact on Q1 2020 earnings due to increased credit loss allowances. While retail consumer and small business activity saw significant declines, the company experienced increased demand from Global Enterprise and Public Sector clients for critical connectivity. Verizon maintained a strong liquidity position with $7.0 billion in cash and cash equivalents as of March 31, 2020, and $9.4 billion in unused revolving credit capacity, though it acknowledged increased borrowing costs and potential capital market access restrictions.
Key Highlights
- 1Verizon has implemented extensive business continuity plans in response to COVID-19, including moving over 115,000 employees to remote work and closing nearly 70% of company-owned retail stores.
- 2The company participated in the FCC's 'Keep Americans Connected' pledge, waiving late fees and suspending service terminations for eligible customers, which led to an increase in delinquencies.
- 3Q1 2020 earnings were impacted by an estimated $0.04 per share due to a $228 million increase in the allowance for credit losses, driven by higher expected customer payment relief.
- 4Verizon saw significant declines in wireless retail postpaid gross additions and device activations for consumer and small business segments, alongside reduced Fios internet net additions.
- 5Conversely, the Global Enterprise and Public Sector segments experienced increased demand for critical connectivity services, with wireless retail postpaid gross additions growing significantly in these areas.
- 6Verizon maintained a strong liquidity position with $7.0 billion in cash and cash equivalents as of March 31, 2020, and had substantial unused capacity on its revolving credit facility.
- 7The company raised $3.5 billion through commercial paper issuance in April 2020, despite acknowledging increased borrowing costs and potential restrictions in capital markets due to the crisis.