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Verizon Wireline Workers Strike Hits Revenue, Profit

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Edward GatelyAfter enduring a seven-week wireline workers strike, Verizon reported drops in both profit and operating revenue for the second quarter, with declines of 13,000 FiOS Internet connections and 41,000 FiOS video connections.

Revenue totaled $30.5 billion, down from $32.2 billion for the same quarter in 2015 and below analysts’ expectations. Profit was $831 million, down from $4.35 billion in the year-ago quarter.

Verizon's Lowell McAdamIn late May, Lowell McAdam, Verizon’s chairman and CEO, indicated the strike might impact the telco’s second-quarter results. The work stoppage negatively impacted wireline operating income with a loss of $463 million during the second quarter.

Total revenue for FiOS fiber-optic-based services grew 3.7 percent, to $2.8 billion, compared to second-quarter 2015. Verizon said it made “significant progress in working through a backlog of FiOS installations in June and has since returned to its normal run rate of FiOS connection growth.”

The earnings also took into account a non-cash charge of $2.2 billion, mostly from new labor contracts and the sale of local landline businesses to Frontier Communications.

New labor contracts will generate about $500 million in cash savings, Verizon said.{ad}

“Verizon’s second quarter shows that the company continues to deliver strong results while evolving operations and advancing a strategy to sustain network leadership, build new ecosystems and deliver the promise of the digital world to customers,” McAdam said.

On Monday, Verizon announced it is acquiring Yahoo’s operating business for about $4.8 billion, in a deal expected to close in first-quarter 2017.

“By acquiring Yahoo, we are scaling up to be a major competitor in mobile media,” McAdam said. “Yahoo is a complementary business to AOL, giving us market-leading content brands, and a valuable portfolio of online properties and mobile applications that attract over 1 billion monthly active consumer views. We expect this acquisition to put us in a great position as a top global mobile media company and give us a significant source of revenue growth for the future.”

Verizon also is in the process of acquiring XO Communications’ fiber-optic network business for $1.8 billion. However, the Federal Communications Commission last week announced it has paused its 180-day review of the deal as the companies didn’t …

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… comply with information requests.

New revenue streams from the Internet of Things (IoT) continue to grow, with revenue of about $205 million in the second quarter, a year-over-year increase of about 25 percent.

Verizon added 615,000 net retail postpaid wireless subscribers, excluding wholesale device and IoT connections. At the end of the quarter, Verizon had 113.2 million retail connections, a 3.3 percent year-over-year increase, and 107.8 million retail postpaid connections, a 3.9 percent year-over-year increase.

Growth in 4G device adoption continues to drive increased data and video usage, according to Verizon. About 93 percent of the telco’s total data traffic is on the LTE network. Overall data traffic on LTE has increased by about 44 percent year over year.

In its earnings report, the carrier also highlighted Verizon Enterprise Solutions’ new second-quarter agreements with big name clients such as AAA, Cisco and McGraw-Hill Global Education Holdings.


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