Consumers Couldn’t Stop a Decline in Verizon’s Wireline Revenue



Verizon’s 4Q14 results

In our previous series on Verizon (VZ), Verizon Reports Growing Wireless Segment Revenues in 4Q14, we covered the telecommunication company’s wireless business. In this series, we’ll analyze the results of the company’s wireline division. Like AT&T (T), Verizon operates in both wireless and wireline segments. Verizon has the second-largest wireline telecommunication operations in the US. AT&T has the largest. However, wireless is the largest segment for both these telecommunications companies.

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Verizon’s wireline revenues continued their declining trend in 4Q14. The company’s wireline division has three large sub-segments. These segments Global Enterprise, Global Wholesale, and Consumer retail. The enterprise and wholesale sub-segments of Verizon’s wireline division were responsible for this year-over-year decline in revenues.

The revenues of the enterprise division fell ~4.6% year-over-year to reach ~$3.4 billion in 4Q14. Wholesale revenues decreased by ~5.8% year-over-year to ~$1.5 billion during the quarter. Together, these segments contributed to more than half of the wireline segment’s top line during the quarter.

Consumer wireline revenues continued their growth trend in 4Q14

The modest performance of the wireline segment’s consumer business couldn’t offset the decrease in enterprise and wholesale revenues during the quarter. Nonetheless, the ~4.1% year-over-year growth in consumer wireline revenues helped limit the segment’s revenue decline to ~1.6% year-over-year in 4Q14. Consumer wireline revenues of ~$4 billion constituted ~42% of the total wireline segment’s revenues in 4Q14.

If you want to take on diversified exposure to Verizon, you can invest in the Technology Select Sector SPDR Fund (XLK). The ETF held ~5% in the company on March 19, 2015. The ETF also held ~4.2% in AT&T and ~0.9% in the wireline telecommunication companies CenturyLink (CTL), Frontier Communications (FTR), and Windstream (WIN).


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