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A Detailed Look at Verizon’s Cost-Savings Program

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Mar. 13 2019, Updated 10:32 a.m. ET

Verizon’s cost-savings program

Verizon Communications (VZ), the largest mobile operator in the United States, is on track to deliver on its goal of generating $10 billion in cumulative cash savings from its operations by 2021. The company’s cost-cutting initiative includes zero-based budgeting, which has resulted in $2.3 billion of cumulative cash savings in 2018. Verizon’s Voluntary Separation Program is also one of the company’s initiatives to cut costs. On the operating profitability front, Verizon’s consolidated adjusted EBITDA continued to strengthen year-over-year in the fourth quarter of 2018.

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Verizon posted adjusted EBITDA of $11.6 billion in the fourth quarter of 2018, up from $10.7 billion in the fourth quarter of 2017 as the company concentrates on driving profitability by cost and capital efficiencies across its operations. Verizon had reported an adjusted EBITDA margin of 33.8% in the fourth quarter of 2018 and 36.2% in the full-year 2018. The company had reported an adjusted EBITDA margin of 35.7% in the full-year 2017.

Peer comparison

As per company filings, AT&T’s (T) combined domestic wireless operations EBITDA margin was 40.1% in the fourth quarter of 2018. Meanwhile, Sprint (S) and T-Mobile (TMUS) had reported a consolidated adjusted EBITDA margin of 54.4% and 36.0%, respectively, in the same quarter.

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