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Verizon Q2 Profit Tops Estimates; Operating Revenues Down 5.1%

Verizon Communications Inc. (VZ) reported second quarter adjusted earnings per share, excluding special items, of $1.18, compared to $1.23, prior year. On average, 23 analysts polled by Thomson Reuters expected the company to report profit per share of $1.15, for the quarter. Analysts' estimates typically exclude special items.

The company estimates that second-quarter earnings included approximately 14 cents of COVID-19-related net impacts, primarily driven by impacts to wireless service revenue and lower advertising and search revenue from Verizon Media.

Second quarter total consolidated operating revenues were $30.4 billion, down 5.1 percent from prior year. Analysts expected revenue of $29.93 billion for the quarter. The company said this decline was primarily the result of significant declines in wireless equipment revenue in the Consumer and Business segments, primarily due to limited in-store engagement and the impact of COVID-19 on customer behavior.

For the second quarter, total Verizon Consumer revenues were $21.1 billion, a decrease of 4.0 percent year over year, primarily driven by a significant decrease in wireless equipment revenue due to low activation levels. It recorded 72,000 retail postpaid net additions, including 97,000 phone net additions and 199,000 postpaid smartphone net additions. Total retail postpaid churn was 0.69 percent, and retail postpaid phone churn was 0.51 percent.

For the second quarter, total wireless service revenue was $15.9 billion, a 1.7 percent decrease year over year. It recorded 352,000 retail postpaid net additions, including 173,000 phone net additions and 287,000 postpaid smartphone net additions.

The company projects third quarter total wireless service revenue in a range of a decline of 1 percent to flat year over year.

For full-year 2020, the company continues to expect: adjusted per share results to be in a range of a decline of 2 percent to an increase of 2 percent. Capital spending is anticipated to be in the range of $17.5 billion to $18.5 billion.

The company ended first-half with free cash flow (non-GAAP) of $13.7 billion, an increase of 74.1 percent year over year. Second-quarter total debt reduction was $4.9 billion, and net debt (non-GAAP) reduction was $5.7 billion.

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