Verizon (VZ) is scheduled to report quarterly results before the market opens on April 24, while AT&T (T) is scheduled to report on April 25 and Sprint (S) and T-Mobile (TMUS) have not yet announced their earnings release dates. 1. OUTLOOK: When Verizon reported its second quarter results on January 23, it said it expected FY18 consolidated revenues would grow at low-single-digit percentage rates on a GAAP basis. Excluding the impact from the new revenue recognition standard, Verizon is on track to achieve year-over-year wireless service revenue growth by the middle part of 2018. On a GAAP basis, Verizon said it expected service revenue growth to turn positive around the end of 2018 or early 2019. Capital spending for 2018 will be in the range of $17B to $17.8B, including the commercial launch of 5G. The expected savings from tax reform will generate a net $3.5B to $4B uplift to cash flow from operations in 2018. This is expected to yield a 55c-65c increase in 2018 EPS, net of impacts from the employee and Verizon Foundation initiatives. When AT&T reported its Q4 results, it announced that it expects FY18 EPS around $3.50, against consensus estimates of $3.05 at that time. AT&T said it further expected FY18 free cash flow about $21B vs. $17.6B in FY17, and saw capital expenditures approaching $25B- $23B net of expected FirstNet reimbursements and inclusive of $1B incremental tax reform investment. When Sprint reported its Q3 results on February 2, it raised its FY17 operating income view to $2.5B-$2.7B from previous expectation of $2.1B-$2.5B. 2. MERGERS AND ACQUISITIONS: Regarding AT&T’s merger with Time Warner (TWX), on April 18, the New York Times reported that Time Warner CEO Jeff Bewkes defended the proposed $85.4B tie-up with, saying the deal was necessary to battle “tectonic changes” in entertainment caused by internet competitors such as Netflix (NFLX) and Amazon (AMZN). On April 19, the Wall Street Journal reported that AT&T CEO Randall Stephenson took the stand on Thursday to defend the proposed takeover of Time Warner, calling it a “vision deal” that was crucial for AT&T to compete in a quickly changing digital-media landscape. Regarding Sprint and T-Mobile, on April 10, the Wall Street Journal reported that the companies restarted their merger talks. 3. WIRELESS COLLUSION: On April 20, the Department of Justice had opened an antitrust probe into potential coordination by AT&T (T), Verizon (VZ), and GSMA, a mobile industry standards-setting group, to hinder consumers from easily switching carriers, the New York Times reported, citing six people with knowledge of the inquiry. AT&T and Verizon face accusations that they colluded with GSMA to attempt to set standards that would give them the ability to lock a device to their network regardless of whether it had eSIM technology, the report said.
previous post