Verizon Communications reported a profit for the third-quarter 2018 that increased 36.0 percent from last year.
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Total operating revenues rose 2.8 percent from last year. Both adjusted earnings per share and quarterly revenues topped analysts' expectations. The company reaffirmed its outlook for fiscal year 2018. It is on track to deliver against a goal to achieve $10 billion in cumulative cash savings by 2021.
"Verizon has posted a third quarter of strong operational and financial performance. With the beginning of the 5G era in this fourth quarter, we expect that trend to continue," said CEO Hans Vestberg.
Looking ahead, Verizon still expects full-year consolidated revenue growth at low-to-mid single-digit percentage rates on a GAAP reported basis.
The company expects the impact of revenue recognition on earnings per share for full-year 2018 to be between 27 and 31 cents. The accretive benefit to full-year 2018 consolidated operating income is expected to moderate in 2019 and become insignificant in 2020, as the timing impacts to revenues and commission costs converge.
It still projects low single-digit percentage growth in adjusted earnings per share in 2018, before the net impact of tax reform and the revenue recognition standard.
Capital spending for 2018 is expected to be in the range of $16.6 billion to $17.0 billion.
Verizon said it is on track to deliver against a goal to achieve $10 billion in cumulative cash savings by 2021. This initiative includes zero-based budgeting, which has yielded approximately $1.3 billion of cumulative cash savings on a year-to-date basis, and the recently announced Voluntary Separation Program.
Net income attributable to the company for the third-quarter increased 36.0 percent to $4.92 billion from last year's $3.62 billion, with earnings per share improving to $1.19, from $0.89 in the previous year. The company's reported earnings included a net impact of 3 cents per share from special items. Charges for early debt redemption and integration-related expenses --primarily pertaining to Oath-- were partially offset by a pension and benefit re-measurement credit.
On an adjusted basis, third-quarter 2018 earnings per share was $1.22, compared with $0.98 in third-quarter 2017. The latest-quarter result included approximately 21 cents due to the net effects of tax reform and accounting changes for revenue recognition. Analysts polled by Thomson Reuters expected the company to report earnings of $1.19 per share for the third-quarter. Analysts' estimates typically exclude special items.
Total consolidated operating revenues for the third-quarter 2018 were $32.61 billion, up 2.8 percent from $31.72 billion last year. Excluding the impact of the revenue recognition standard, consolidated operating revenues were up about 2.6 percent year over year. Wall Street analysts had a consensus revenue estimate of $32.51 billion for the quarter.
In Verizon's media business, Oath revenues were $1.8 billion in third-quarter 2018, 6.9 percent below the same quarter last year. The company expects Oath revenues to be relatively flat in the near term and does not expect to meet the previous target of $10 billion in Oath revenues by 2020. In the telematics business, total Verizon Connect revenues, excluding the impact of the revenue recognition standard, were $241 million in third-quarter 2018. IoT or Internet of Thing revenues, including Verizon Connect, increased about 12 percent year over year, excluding the impact of the revenue recognition standard.
In the Wireless segment, total revenues were $23.0 billion, an increase of 6.5 percent year over year. Excluding the impact of the revenue recognition standard, total revenues were $22.9 billion in third-quarter 2018, an increase of 6.1 percent compared with third-quarter 2017.
Verizon reported 515,000 retail postpaid net additions in third-quarter 2018, consisting of net phone additions of 295,000, postpaid smartphone net additions of 510,000, tablet losses of 80,000 and 300,000 other connected devices additions, primarily wearables.
Total retail postpaid churn was 1.04 percent in third-quarter 2018, compared with 0.97 percent year over year. Retail postpaid phone churn was 0.80 percent in third-quarter 2018. The company expects retail postpaid phone churn to increase seasonally during fourth-quarter 2018.
In the Wireline segment, total wireline revenues were $7.4 billion. Excluding the impact of the revenue recognition standard, total wireline revenues decreased 3.7 percent year over year in third-quarter 2018.
In third-quarter 2018, Verizon added a net of 54,000 Fios Internet connections, indicative of continued strong customer demand for high quality internet connectivity. Verizon lost 63,000 Fios Video connections in third-quarter 2018, impacted by ongoing shifts away from linear video offerings. ■