uploads///Telecom Verizon Q Wireline EBITDA

Inside Verizon’s Wireline Segment Earnings Trend

Ambrish Shah - Author

Nov. 7 2017, Updated 9:01 a.m. ET

Verizon’s Wireline segment EBITDA margin

Verizon Communications’ (VZ) Wireline EBITDA (earnings before interest, tax, depreciation, and amortization) came in at $1.6 billion in 3Q17, compared with $1.5 billion in 3Q16. The segment’s EBITDA margin was 21.1% in 3Q17, up from 20.3% in 3Q16 and up from 20.7% in 2Q17.

The improvement in the Wireline segment’s EBITDA margin was primarily driven by ongoing cost-control initiatives.

Verizon forecasts that new labor contracts negotiated due to the strike in 2016 could generate total cash savings of ~$500 million from 2017 to 2019. As a result, Verizon is positive about its wireline component EBITDA margin growth in 2017, though it expects seasonal fluctuations throughout the year.

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Verizon acquires XO Communications

To bolster its FiOS business, Verizon acquired XO Communications for $1.8 billion. XO Communications will provide Verizon with fiber-optic networks in some US markets.

The XO Communications acquisition offers dense metro-fiber assets in approximately 40 major US markets. In 2Q16, the telecom company divested its wireline operations in the CTF (California, Texas, and Florida) region to Frontier (FTR) for about $10.0 billion. Notably, Frontier had acquired similar wireline assets in Connecticut from AT&T (T) in 2014.

In the next part, we’ll look at Verizon’s postpaid phone subscriber net additions.


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