Verizon ends 2021 with strong wireless service revenue and EPS growth

Verizon Communications Inc. (NYSE, Nasdaq: VZ) closed 2021 with another quarter of strong wireless service revenue growth and increased 5G phone adoption, as more than one in three Consumer wireless phone customers now have a 5G-capable device. 

“2021 was a transformational year for Verizon that will serve as a catalyst for us,” said Verizon Chairman and CEO Hans Vestberg. “We delivered on all of our goals in 2021 and made great progress on our five paths of growth, finishing the year with strong operating and financial momentum. As we move into 2022, we have the necessary assets to realize our strategy that we laid out in 2019. We are laser focused on executing our 5G strategy and providing value to our customers, shareholders, employees, and society, as 2022 will be the most exciting year yet for Verizon.”

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For fourth-quarter 2021, Verizon reported EPS of $1.11, compared with $1.11 in fourth-quarter 2020. On an adjusted basis*, fourth-quarter 2021 EPS, excluding special items, was $1.31, compared with adjusted EPS* of $1.21 in fourth-quarter 2020, an 8.3 percent increase year over year.

Fourth-quarter 2021 EPS included a net pre-tax loss from special items of approximately $1.2 billion. This included a charge of $2.4 billion for the early extinguishment of debt, a $106 million charge related to severance, a $1.2 billion credit pertaining to annual mark-to-market for pension and OPEB (other post-employment benefits) liabilities, and a net gain of $131 million primarily related to the disposition of an investment. Fourth-quarter 2021 results also included the revenue associated with the acquisition of TracFone, as the deal was completed on November 23. The revenue associated with TracFone in 2021 was approximately $700 million higher than the revenue from TracFone in fourth-quarter 2020.

For full-year 2021, Verizon reported $5.32 in EPS, compared with $4.30 in full-year 2020. On an adjusted basis*, excluding special items, 2021 EPS was $5.39, compared with 2020 EPS of $4.90, a 10.0 percent increase year over year. 

“Verizon delivered another strong earnings performance this quarter,” said Verizon Chief Financial Officer Matt Ellis. “Our financial discipline enabled us to deliver attractive service revenue growth and profitability this quarter as we expanded our portfolio with the TracFone acquisition and saw strong demand for our products and services. In 2021 we delivered on raised adjusted EPS* expectations, grew revenue, achieved our $10 billion cost savings goal, and funded our C-Band spectrum investment.” 

Consolidated results

  • Total consolidated operating revenues in fourth-quarter 2021 were $34.1 billion, down 1.8 percent from fourth-quarter 2020. Adjusting for the sale of Verizon Media on September 1, operating revenue grew 4.8 percent year over year. Strong wireless service revenue growth and wireless equipment revenue were offset by continued declines in legacy wireline products. Full-year 2021 consolidated operating revenues were $133.6 billion, up 4.1 percent year over year.
  • Cash flow from operations totaled $39.5 billion in 2021, a decrease from $41.8 billion year over year. Continued strong performance in the business was offset by higher working capital from device payments receivables, and higher cash taxes.  
  • Full-year 2021 capital expenditures were $20.3 billion. Capital expenditures continue to support the growth in traffic on the company’s 4G LTE network as the company initiates the first phase of C-Band deployment covering more than 95 million people in the U.S. Capital expenditures related to C-Band were approximately $2.1 billion in 2021.
  • The company ended 2021 with free cash flow* of $19.3 billion, a decrease from $23.6 billion at year-end 2020.
  • Verizon’s unsecured debt as of the end of fourth-quarter 2021 increased by $18.2 billion year over year to $136.7 billion, but improved by $4.9 billion sequentially from the end of third-quarter 2021. The company’s net unsecured debt* balance increased year over year by $37.5 billion to $133.7 billion at the end of fourth-quarter 2021, but decreased by $3.7 billion from the end of first-quarter 2021, with its net unsecured debt to adjusted EBITDA ratio* at approximately 2.8 times at the end of fourth-quarter 2021.

Consumer results

  • Consumer saw strong demand in fourth-quarter 2021 for its higher-tier premium mobility and broadband offerings. Strong wireless service revenue momentum, healthy profitability and significant Fios revenue growth highlighted the quarter. Consumer continued to expand its leadership in 5G adoption, ending 2021 with more than one in three wireless phone customers having 5G-capable devices.
  • Total Verizon Consumer revenues were $25.7 billion in fourth-quarter 2021, an increase of 7.4 percent year over year. This included the net revenue change from TracFone of approximately $700 million, including approximately $500 million of incremental service revenue year over year. For full-year 2021, total Verizon Consumer revenues were $95.3 billion, an increase of 7.6 percent from full-year 2020.
  • Consumer wireless service revenues were $14.6 billion in fourth-quarter 2021, a 7.7 percent increase year over year, reflecting ongoing step-ups to unlimited and premium unlimited plans, and the contribution from TracFone. For full-year 2021, total Consumer wireless service revenues were $56.1 billion, an increase of 4.7 percent from full-year 2020.
  • Consumer wireless retail postpaid churn was 0.94 percent in fourth-quarter 2021, and wireless retail postpaid phone churn was 0.77 percent. 
  • In fourth-quarter 2021, Consumer reported 667,000 wireless retail postpaid net additions. This consisted of 336,000 phone net additions and 369,000 other connected device net additions, offset by 38,000 tablet net losses. Consumer also reported 85,000 wireless prepaid net losses, which included TracFone results since November 23.
  • Consumer reported 51,000 Fios Internet net additions in fourth-quarter 2021, and 339,000 Fios Internet net additions in full-year 2021. Consumer Fios revenues were $2.9 billion in fourth-quarter 2021, an increase of 5.6 percent year over year. Consumer reported 69,000 Fios Video net losses in fourth-quarter 2021.
  • In fourth-quarter 2021, Consumer segment operating income was $7.3 billion, an increase of 3.9 percent year over year, and segment operating income margin was 28.6 percent, a decrease from 29.6 percent in fourth-quarter 2020. Full-year 2021 segment operating income margin was 31.4 percent, a decrease from 32.6 percent in full-year 2020. Segment EBITDA* totaled $10.3 billion in fourth-quarter 2021, an increase of 4.1 percent from fourth-quarter 2020, driven by service revenue growth. Segment EBITDA margin* was 40.3 percent in fourth-quarter 2021, a decrease from 41.5 percent in fourth-quarter 2020, due to higher equipment revenues associated with increased volumes. For the full year, segment EBITDA margin* was 43.7 percent in 2021, a decrease from 45.5 percent in 2020.

Business results

  • Business exited 2021 with strong momentum in business activity and demand for wireless products. Fourth-quarter 2021 was highlighted by strong phone gross additions in Small and Medium Business and the fourth consecutive quarter of wireless service revenue growth for Global Enterprise.
  • Total Verizon Business revenues were $7.8 billion in fourth-quarter 2021, down 3.0 percent year over year. Wireless revenue growth continues to offset ongoing legacy wireline declines. For full-year 2021, total Verizon Business revenues were $31.0 billion, an increase of 0.3 percent from full-year 2020.
  • Business wireless service revenues were $3.1 billion in fourth-quarter 2021, a 1.5 percent increase year over year. Full-year 2021 Business wireless service revenues were $12.4 billion, an increase of 4.8 percent from full-year 2020.
  • Business wireless retail postpaid churn was 1.26 percent in fourth-quarter 2021, and wireless retail postpaid phone churn was 1.01 percent.
  • Business reported 391,000 wireless retail postpaid net additions in fourth-quarter 2021, including 222,000 phone net additions. This was the best quarterly phone net addition performance for Business since the onset of the pandemic.
  • In fourth-quarter 2021, Business segment operating income was $796 million, a decrease of 16.2 percent year over year, and segment operating income margin was 10.2 percent, a decrease from 11.8 percent in fourth-quarter 2020. Full-year 2021 segment operating income margin was 11.1 percent, compared with 12.2 percent in full-year 2020. Segment EBITDA* totaled $1.8 billion in fourth-quarter 2021, a decrease of 7.4 percent from fourth-quarter 2020. Segment EBITDA margin* was 23.5 percent, a decrease from 24.6 percent in fourth-quarter 2020, driven by pressure in legacy wireline products. For the full year, segment EBITDA margin* was 24.2 percent in 2021, a decrease from 25.4 percent in 2020.