Verizon Communications

01/20/2015 7:00 am EST


Roger Conrad

Chief Analyst/Managing Partner, Capitalist Times

In the American communication sector, capital spending is the key to keeping up with the ever-increasing consumer and business demands on capacity, reliability, and quality, observes Roger Conrad, editor of Conrad's Utility Investor.

Verizon Communications (VZ) outspends almost everyone, quarter after quarter, year after year, while maintaining a pristine balance sheet and paying a rising stream of dividends.

Third quarter free cash flow covered the dividend by a 1.84-to-1 margin. That’s after $4.1 billion in capital expenditures.

A consensus of Wall Street analysts obsesses every quarter—and often in between—about the potential impact of rivals’ price cutting on Verizon’s profits. And still others seem to second-guess their every strategic move.

Through it all, however, Verizon has continued to excel where it counts; its operating numbers show a company becoming increasingly profitable, dominant, and virtually unassailable in US communications markets.

Third quarter earnings per share of 89 cents were up 15.6%. Revenue increased 4.3%, topping management’s target (4%), and including gains in both wireless (up 4.6%) and consumer wireline (up 4.5%) operations.

Verizon added 1.53 million retail wireless connections, more than 99% of which were post-paid contract users. Post-paid churn was—as usual—among the lowest in the industry at 1%.

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