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Verizon CEO: Fiber deployment rate up in Q2, 5G rollout on track

Verizon Communications Inc. ramped up its fiber deployment in the second quarter as the company looks to offer the infrastructure to all of its enterprise and wholesale customers by next year.

Speaking during an Aug. 1 earnings conference call, Verizon CEO Hans Vestberg said the company's rate of fiber deployment averaged 1,400 route miles per month in the second quarter, higher than the 1,000 route miles per month discussed at the start of the year.

"Our fiber deployment is now in more than 60 cities," Vestberg said. "It will take a little bit longer before we can offer it to all our customers."

The CEO also confirmed that Verizon is on track to launch its 5G services in its previously planned 30 markets this year as well as add new devices to support the technology.

"The development we're doing on [5G] technology is actually extremely fast compared to what I saw in 4G," Vestberg said, noting that 5G speeds are easily averaging up to 2 Gbps, in comparison to 4G's average of 600 Mbps.

Turning to 5G Home, Verizon's in-home fixed wireless broadband offering, Vestberg said appetite for the service is good so far in the four markets where it is available in a limited capacity. While Verizon plans to continue expanding the service in the latter half of this year and in 2020, it will start having a significant impact on the company's revenue in 2021, Vestberg added.

For the second quarter, Verizon reported its financial and operational results under its new reporting structure, Verizon 2.0, under which there are two reportable segments that the company operates and manages as strategic business units: consumer and business.

Total consumer group revenues were flat year over year at $22.0 billion. The consumer group added 126,000 wireless retail postpaid subscribers in the second quarter, consisting of 73,000 phone net additions and tablet net losses of 134,000, offset by 187,000 other connected device net additions, primarily wearables. Postpaid smartphone net additions were 209,000, up 17% year over year.

The consumer group also added 28,000 net Fios internet customers and lost 52,000 net Fios video customers.

Total business group revenues for the quarter were about $7.8 billion, down 1.1% year over year. The business group added 325,000 wireless retail postpaid subscribers in the second quarter, consisting of 172,000 phone net additions, 90,000 tablet net additions and 63,000 other connected device additions.

Total second-quarter Verizon Media revenues were $1.8 billion, down 2.9% year over year, as gains in native and mobile advertising continued to be offset by declines in desktop advertising.

Total operating revenues in second quarter were $32.07 billion, down 0.4% from $32.20 billion in the second quarter of 2018.

Verizon reported net income attributable to the company of $3.94 billion, or 95 cents per share, down from $4.12 billion, or $1.00 per share, in the second quarter of 2018. Adjusted to exclude special items, second-quarter EPS was $1.23, compared with adjusted EPS of $1.20 in second quarter 2018.

The S&P Global Market Intelligence consensus EPS estimate for the quarter was $1.19 on a GAAP basis and $1.20 on a normalized basis.

Looking ahead, Verizon expects low single-digit percentage growth in adjusted 2019 EPS, excluding the impact of a new accounting standard, and low single-digit percentage growth in full-year consolidated revenues on a GAAP reported basis. Cash taxes are expected to be $2 billion to $3 billion higher than in 2018 due to benefits that were realized in 2018 that are not expected to repeat in 2019, while capital spending for the year is forecast to be in the range of $17 billion to $18 billion, including the expanded commercial launch of 5G.