Verizon reports strong first quarter 2018 results

Verizon Communications Inc. (VZ) reported a 6.6% growth in consolidated operating revenues to $31.8 billion for the first quarter of 2018, compared to the prior-year period.

Net income grew 31.3% year-over-year to $4.7 billion. GAAP EPS came in at $1.11 while adjusted EPS was $1.17.

Verizon’s Q1 2018 results beat market estimates. Shares rose 3% in premarket trading.

Total wireless revenues grew 4.7% to $21.9 billion from the prior-year but service revenues dropped 2.4%. Total wireline revenues fell 1.8%, while total Fios revenues grew 1.9% year-over-year.

Verizon expects full-year 2018 consolidated revenue growth at low single-digit percentage rates on a GAAP basis. Service revenue growth is expected to turn positive by 2018-end. The company also expects low single-digit percentage growth in adjusted EPS for 2018.

In 2018, capital expenditures are expected to be in the range of $17 billion to $17.8 billion, including the commercial launch of 5G.

Tax reform savings are expected to provide an uplift of $3.5 billion to $4 billion to cash flow from operations in 2018, which is projected to result in a $0.55 to $0.65 increase in EPS.

In 2017, Verizon said it plans to achieve $10 billion in cash savings over the next four years. The company has achieved around $200 million in savings thus far and is on track to achieve its goals over the four-year period.

Total Verizon Connect revenues were $234 million in Q1 2018. Internet of Things (IoT) revenues, including Verizon Connect, grew around 13% year-over-year.

Tax reform savings are expected to provide an uplift of $3.5 billion to $4 billion to cash flow from operations in 2018, which is projected to result in a $0.55 to $0.65 increase in EPS.

Verizon saw a net increase of 260,000 retail postpaid connections in Q1 2018. Postpaid smartphone net additions were 220,000. Total retail postpaid churn was 1.04%. The company added a net of 66,000 Fios Internet connections and lost 22,000 Fios Video connections, reflecting the cord-cutting trend.

The DOJ is carrying out an investigation into whether the four major wireless carriers – Verizon, AT&T (T), Sprint (S) and T-Mobile (TMUS) – were involved in suppressing technology that would help customers easily change providers. The agency has asked all four carriers for information on this matter.