US operator Verizon remained bullish on its 5G prospects, adding a third city to its 2018 launch list, as it took a heavy hit to its media business.
In Q2, Verizon recorded charges of nearly $1 billion related to its media operations, including product realignment costs of $658 million and severance charges of $339 million stemming from the shutdown of its go90 mobile video service, and $120 million of acquisition and integration charges “primarily pertaining to Oath”.
Outgoing CEO Lowell McAdam said that in future the operator is “not going to be owning content”, but will instead set itself up as a prime distribution partner for other content providers using its Oath network of properties.
He added 5G is a key part of that plan, noting content providers have expressed a keen interest in the technology in recent meetings. “Every one of them, when they know what is going on with 5G and when they see the latency, their eyes light up about what is possible.”
The operator also expanded on its 5G launch plan, as McAdam revealed Houston, Texas will be the third of four cities to receive 5G fixed wireless access (FWA) service later this year. It joins Verizon’s previously announced 5G markets of Sacramento and Los Angeles, California. The operator said it will unveil its fourth FWA 5G market “soon”.
Incoming Verizon CEO Hans Vestberg, who will take over from McAdam on 1 August, declined to specify whether the 5G launches would begin in Q3 or Q4, but said the operator will be ready to rollout the technology as soon as equipment is available from its vendors.
Though the initial launch will use proprietary Verizon software, Vestberg noted the operator is upgrading its entire network to an intelligent edge architecture that will support the launch of standards-based 5G in 2019.
Despite Verizon’s work on 5G, capital expenditures dropped sharply in the quarter to $1.65 billion from $2.44 billion in Q2 2017. Vestberg maintained the operator is “doing much more than before when it comes to deployments”, and attributed the drop to increased efficiency from multipurpose equipment and a shift in spending from macro towers to small cells.
The operator also noted it signed a new agreement with union workers a year before the previous contract was set to expire, in a move it said would help it avoid an incident like the seven-week worker strike it faced in 2016.
Verizon published solid Q2 results, with wireless service revenue that returned to positive growth after a long downward slide.
Wireless service revenue of $15.75 billion inched up from $15.62 billion in Q2 2017, with total operating revenue up 5.5 per cent to $22.4 billion. Segment operating income of $8.3 billion was up 11.7 per cent.
Total postpaid subscriber additions, including tablets and wearables, of 531,000 were down slightly from 614,000 in the year-ago period. The company was also down 236,000 retail prepaid customers.
Fixed operating revenue of $7.5 billion was down 3.4 per cent from $7.7 billion. An operating loss of $19 million in the quarter compared with a prior-year profit of $47 million.
Oath revenue, excluding the impact of changes in revenue recognition, was $1.9 billion, which was relatively flat sequentially, the company said.
Consolidated profit of $4.25 billion was down slightly from $4.48 billion in Q2 2017.