Verizon Communications Inc. (NYSE, Nasdaq: VZ) closed 2020 with fourth-quarter results highlighted by increased cash flow, wireless service revenue growth, and the launch of nationwide 5G.
“Verizon finished the fourth quarter with strong financial performance,” said Verizon Chairman/CEO Hans Vestberg. “2020 was marked by transformational change, including the launch of our 5G nationwide network. We witnessed a mass shift toward virtual collaboration, touchless retail and delivery, remote work, distance learning, and telemedicine. We continued to execute our multi-use network strategy.”
Capital spending was reported as being in the $17.5 billion to $18.5 billion range, including the further expansion of 5G Ultra Wideband in new and existing markets, the densification of the wireless network to manage future traffic demands, and the continued deployment of the company’s fiber infrastructure.
Jonathan Chaplin of New Street Research said Verizon predicted of soft trends in consumer and strength in business, and that is what the telecom delivered.
“Consumer was a little worse than expected,” Chaplin said. “Postpaid phone adds missed; prepaid adds missed; service revenue missed; EBITDA was in line. Business was better than expected: wireless service revenue grew seven percent, margins expanded almost 400bps helped by mix shift, lower equipment subsidies, and cost cutting. Consolidated EBITDA and EPS beat due to strength in business,” he said.
Craig Moffett, Senior Analyst of Moffettnathanson, said before the C-band auction, Verizon’s balance sheet could be listed as one of the company’s strengths. But now the C-band auction threatens to turn that strength into a weakness, according to Moffett. “Reported leverage was 2.3x EBITDA at the end of Q4,” he said, “and even after accounting for operating leases, unfunded pension obligations, and post-retirement health care benefits, ‘real’ leverage was a ‘manageable’ 3.3x.”
For fourth-quarter 2020, Verizon reported EPS of $1.11, compared with $1.23 in fourth-quarter 2019. On an adjusted basis (non-GAAP), fourth-quarter 2020 EPS, excluding special items, was $1.21, compared with adjusted EPS of $1.13 in fourth-quarter 2019.