Verizon announced savings of $200 million in the first quarter of 2018 as part of the strategy to achieve $10 billion in cumulative cash savings from the business over the next four years.
The US-based telecom operator said it is following business excellence initiative, including implementing zero-based budgeting to achieve cost savings.
“The program is on track to deliver against Verizon’s goals over the 4-year period,” Verizon said.
TBR analyst Steve Vachon said efficiencies gained by Verizon’s adoption of virtualized network technologies, such as NFV and SDN, will be a main driver of the carrier’s goal of cutting $10 billion in operating costs by 2020. Verizon is also monetizing NFV and SDN technologies through its expanding Virtual Network Services portfolio.
Verizon posted $26.732 billion revenue (+2.6 percent) in Q1 2018. Verizon generated $21.9 billion (+4.9 percent) from wireless business, $7.557 billion (–1.6 percent) from wireline unit, $1.9 billion (–13 percent) from media business and $234 million (+13 percent) from IoT division.
Verizon, the No. 1 U.S. wireless carrier, said its capital spending (Capex) for 2018 will be $17-$17.8 billion, including the commercial launch of 5G.
Verizon lost 24,000 phone subscribers that pay bills on a monthly basis.
Verizon said it reported a net increase of 260,000 post-paid connections in first-quarter 2018, consisting of net phone losses of 24,000 and tablet losses of 75,000, offset by 359,000 other connected devices gains, primarily wearables. Postpaid smartphone net additions for the quarter were 220,000.
Total post-paid churn was 1.04 percent. Retail post-paid phone churn of 0.80 percent was the fourth consecutive quarter of retail post-paid phone churn of 0.80 percent.
Verizon added 66,000 Fios Internet connections and lost 22,000 Fios Video connections, indicative of the cord-cutting trend regarding traditional linear video bundles.
The company expects savings from tax reform will generate a net $3.5 billion to $4 billion uplift to cash flow from operations in 2018, resulting in an 55 to 65 cent increase in 2018 earnings per share.
Analyst comments
Oath revenue rose 166.7 percent to $1.9 billion, buoyed by the Yahoo acquisition, as Oath is attracting advertisers through its programmatic capabilities and data analytics tools. Revenue will continue to grow in 2018 as Verizon leverages content including NBA and NFL programming to bolster ad traffic on multiple Oath platforms, including Yahoo, AOL and go90, TBR analyst Steve Vachon said.
Verizon, the number one telecom operator in the U.S., is focused on leveraging its Oath assets to maximize ad traffic and revenue from customers of all wireless carriers, rather than bundling in free subscriptions to streaming services such as HBO Now or Hulu to attract new wireless customers, as its competitors are doing.
Though this strategy is helping to boost Oath revenue, refraining from mobile video bundles is hindering Verizon’s wireless subscriber growth as the company lost 24,000 postpaid phone customers as consumers are being incited by rival offers such as T-Mobile’s Netflix on Us and AT&T’s DirecTV Now bundles.
Baburajan K
