Verizon Hasn't Decided Whether To Bid in Incentive Auction, CFO Says
Verizon hasn't decided if it will be a player in the TV incentive auction, Chief Financial Officer Fran Shammo said Tuesday during the company’s Q2 earnings call, pointing out that decisions on part of the auction rules got pushed from last week’s FCC meeting to the Aug. 6 meeting. Verizon was the first of the major telecom carriers to report its earnings.
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“We’ll have to wait to look at what the auction rules are and decide whether we’re going to participate,” Shammo said. “Based on the AWS-3 auction, hopefully we have some lessons learned with what we shouldn’t do with multibillion dollar companies getting favorable treatment.” Designated entities affiliated with Dish Network got about $3 billion in bidding credits, which a draft order addresses (see 1507160054). A Verizon spokesman confirmed that Shammo was discussing the Dish DEs.
Verizon doesn't have a “great need” for more low-band spectrum because of its 700 MHz holdings, he said. Verizon also has 1.9 GHz PCS spectrum it's starting to refarm, and spectrum bought in the AWS-3 auction it has yet to deploy, he said. “Keep in mind that of our licensed portfolio only 40 percent … supports LTE and 87 percent of the data traffic is now running through LTE,” Shammo said. “We have plenty of capacity.”
Verizon employees in Massachusetts and Rhode Island recently gave union negotiators authority to strike if they deem it necessary after the contract expires (see 1507200062), and the company expects negotiations to continue beyond the Aug. 1 expiration of the current contract, Shammo said. Verizon needs to restructure its contract to remain competitive, he said: “It’s early on and we still have a lot of work to do.” Negotiations started June 22.
Verizon has to negotiate 27 collective bargaining agreements covering 38,000 workers in nine Eastern states, Shammo said. “To jump-start the negotiations the company put … a comprehensive offer on the table, which included wage increases and changes to current contracts to help us manage our costs,” he said. “We will need to monetize our legacy contracts to better position us to compete in the digital age.”
Verizon reported Q2 earnings of $1.04 a share, compared with $1.01 per share in the year-ago quarter, 3 cents above estimates. Revenue was $32.22 billion, up from $31.48 billion. Verizon said it added 1.1 million postpaid wireless subscribers, which is down 21 percent from adds during the same quarter last year. Verizon said it added a net 852,000 tablets and a net 321,000 handset subscribers. In the face of strong pressure, in particular from T-Mobile, Verizon said its postpaid churn rate fell to 0.90 percent from 0.94 percent a year ago.
"One of our priorities this year was improving customer retention," Shammo said on the analyst call. “We're doing it with a disciplined approach focusing on high-value customers."