By Kelly Hill
Verizon withdrew future revenue guidance in the face of the ongoing COVID-19 pandemic and posted customer losses that it said were largely due to most of its retail stores being shuttered. However, the network operator still plans to put additional money into network capital expenses this year. Verizon also cut its earnings per share projections for the year, from previous guidance of 2-4 per cent to between -2 per cent to 2 per cent.
Earlier this week, AT&T withdrew all future financial guidance, due to uncertainty around the impacts of COVID-19.
Verizon said it has temporarily closed around 70 per cent of its wireless retail locations. The carrier reported 525,000 retail postpaid net losses, which included 167,000 postpaid smartphone net losses and 307,000 phone net losses. Its retail postpaid churn rate was 1.01 per cent, with retail postpaid phone churn at 0.77 per cent.
Total revenues for wireless products and services was essentially flat, seeing just a 0.5 per cent decrease year-over-year to US$22.6 billion. While wireless service revenue grew in both the consumer and business segments, Verizon said, that growth was countered by sharp reductions in equipment revenue because in-store customer engagement was limited by social distancing measures. Consolidated operating revenues for the company were down 1.6 per cent to US$31.6 billion.
Chairman and CEO Hans Vestberg said that the company started off 2020 with “strong operational performance” in spite of the pandemic.
“In an unprecedented time, Verizon took decisive and balanced actions that will serve our stakeholders in the long term, including protecting our employees, maintaining our network quality and reliability, serving our customers, and supporting our communities,” Vestberg said. He said that Verizon would maintain its commitment to invest in 5G and fiber and “will emerge from this crisis stronger.”
Verizon’s capital expenditures for the first quarter were US$5.3 billion, and it said that its capex spending is focusing on capacity to support the “unprecedented traffic growth” it is seeing across its networks, as well as ongoing deployments of fiber and new cell sites for 5G deployment. Capital spending for the full year is expected to be between US$17.5 billion-US$18.5 billion, up from the US$17-US$18 billion which Verizon had originally laid out at the beginning of the year. Verizon had announced the increased capex plans in mid-March.
In terms of network usage pattern changes, Verizon said it is seeing a 9 per cent increase in wireless data use as compared to typical network usage, as well as a 38per increase in voice over LTE minutes of use, a 45 per increase in VoLTE call times, and a 65 per increase in virtual private network usage. Use of collaboration tools is up 10 times its usual traffic volume, and gaming traffic is up more than 200 per than typical. Video use is up 41 per over baseline.
