Verizon Stores ‘Close to Fully Open’ July 31 -- ‘Conditions Permitting,' Says CFO
Verizon took a 14 cents a share COVID-19 hit, said Chief Financial Officer Matt Ellis on a Friday investor call. The carrier said the pandemic sent revenue declining 5.1% to $30.4 billion mainly due to lower equipment sales amid store closures and the pandemic's impact on “customer behavior.”
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Business metrics improved in June compared with all Q2, said Ellis. June’s upgrade growth was flat with a year earlier compared with a 9% decline in the quarter, he said. Fios gross internet additions were down 35% in Q2 from a year earlier but declined 13% in June, he said. Postpaid device acquisitions, down 17% in Q2, declined 9% in June, he said.
Fios internet net additions were 10,000 in the quarter, down sequentially and year over year, said Ellis. Fios installations "were limited during the quarter due to temporary restrictions put in place on work in customers' homes," he said. "Our team responded with innovative solutions in developing self-install capabilities. In June, we resumed technician in-home visits across our footprint." Fios video net subscriber losses in Q2 were "consistent with previous quarters, as cord-cutting trends continued," he said.
As lockdown restrictions began to ease in Q2, “we gradually started reopening our company-operated stores with limited hours,” said Ellis. More than 60% of Verizon stores were reopened at the June 30 end of Q2, “up from roughly 30% in April,” he said. “We expect to be close to fully open by the end of July, conditions permitting.”
Verizon “exited the quarter with significantly better levels of consumer activity" than at the beginning, said Ellis. But the recent spike in coronavirus cases and hospitalizations brought renewed “uncertainty” to the outlook for Q3, he said.
The carrier signed onto the FCC's Keep America Connected pledge not to disconnect customers in financial distress (see 2004240040), which ended June 30 with Verizon seeing about 1.5 million accounts signed up for payment relief, “right in line with our expectations 90 days ago,” said Ellis. About a third of the account balances were “current” at June’s end, he said. The “vast majority” of accounts “made some payments” during the program’s three months, he said. “I am very, very encouraged by what we’ve seen. My expectation is that the majority of these customers will be customers of ours a year from now.”
CEO Hans Vestberg declined comment on the rumored Q4 introduction of Apple’s first 5G iPhone. “It’s a big event, whenever it comes,” he said. “The U.S. market has a very high penetration of iOS, and customers are reluctant to change between the different operating systems.” A 5G smartphone from Apple will be “a very important event,” especially when it’s used on Verizon’s “transformative” 5G network, he said.
Verizon stands by February's “bold statements” on 2020 5G deployments, including the goal of achieving “nationwide coverage,” said Vestberg. “We’re on track with that, and in some cases even ahead of the plan.” In 2020’s second half, “we have a lot of new things happening, and building on the foundation of the strategic priorities Verizon has outlined the last couple of years,” he said.