Verizon Communications Inc. (NYSE: VZ) today reported second-quarter 2013 results before markets opened this morning. The telecom giant reported adjusted diluted quarterly earnings per share (EPS) of $0.73 on revenues of $29.79 billion. In the same period a year ago, Verizon reported EPS of $0.64 and revenues of $28.55 billion. Second-quarter results also compare to the consensus estimates for EPS of $0.72 on revenues of $29.83 billion.
On a GAAP basis, the company reported quarterly EPS of $0.78, which included a one-time gain of $0.05 related to its pension costs.
Operating expenses are up 1.4% year-over-year, with SG&A expenses up 2.2% to more than $8 billion. This could indicate that promotional and advertising spending need to increase to continue to drive sales of new and more expensive subscription plans. It is worth watching.
The company said it was increasing its capital spending guidance from $16.2 billion in 2013 to a new range of $16.4 billion to $16.6 billion, citing demand for wireless data and deployment of new advanced wireless services spectrum in the second half of this year.
The company’s CEO said:
Verizon’s consistent strategic investments in wireless, FiOS and global networks drove strong financial performance in the first half of 2013. Having posted double-digit earnings growth in five of the last six quarters, we are focused on continuing to provide the best portfolio of products on the most reliable networks; capturing incremental revenue growth in broadband, video and cloud services; and sustaining our earnings and cash-flow momentum.
Verizon Wireless, a joint venture with Vodafone PLC (NASDAQ: VOD), generated $20 billion in second-quarter revenues, up 7.5% year-over-year. Postpaid average revenue per account (ARPA) rose 6.4% to $152.50. Wireless operating margin came in at 32.4%, up from 30.8% a year ago.
The number of retail postpaid customers grew by 941,000 in the quarter, bringing Verizon’s total number of retail connections to 100.1 million, up 6.3% compared with the second quarter of 2012.
In the wireline business, revenues increased 4.7% to $3.6 billion in the second quarter, with most of the growth coming from the company’s FiOS service. Verizon added 161,000 new customers to its FiOS Internet service and 140,000 to its FiOS video service. FiOS Internet service is up 12.2% compared with the second quarter of 2012, and FiOS video service is up 12.6%.
Verizon did not offer any revenue or earnings guidance, but the consensus estimates for the third quarter call for EPS of $0.75 on revenues of $30.18 billion. For the full 2013 fiscal year, estimated EPS totals $2.80 on revenues of $120.49 billion
Shares are up about 0.6% at $50.44 in premarket trading this morning, in a 52-week range of $40.51 to $54.31. Prior to today’s release Thomson/Reuters had a consensus price target of around $54.50 on the company’s shares.