Verizon’s Post Strong Full-Year Results

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The full-year earnings report published by Verizon at the end of last month showed balanced and consistent results, reaffirming the company as a good potential buy for telecoms focused investors.

Positive Results

For the full 2015, Verizon reported a 3.6 percent increase on overall revenue, with the number slightly reduced to 2.6 percent if the AOL acquisition is not included. Over the same period, adjusted earnings per share saw growth of a respectable 7.7 percent. Revenue from wireless went up by 4.6 percent for the year, while there was a slight decline of 1.8 percent on the company’s legacy wireline business revenue.

Verizon’s customer base remained relatively stable, as the churn came out to under 1 percent, with 1.5 million new customers added to wireless post-paid contracts. Verizon’s 4G LTE devices went up by an impressive 4.4 million to 84.4 million, now comprising over 79 percent of company’s postpaid connections. The growth of the wireless segment of Verizon’s business is consistently pushing profits up for the company. EBITDA margins within wireline services performed well, up by 5.8 percent to 38.4 percent compared to 2014.

2016 Prospects

As far as this year is concerned, it is expected that the earnings for the company will level off. While wireless will remain the main growth driver, especially with testing of 5G ready and expected to start soon, earnings will feel the hit of the sale of its high margin enterprise landline operations to Frontier Communications. However, the loss of revenue from the sale should be compensated by the ongoing increases in the wireless segment.

While the sale of what are considered non-strategic assets might affect the share value growth for investors over the short term, the strong continuous development in the consumption of data by current and future clients puts the company in a very strong position going forward.

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