Verizon Communications Inc.

Good morning and welcome to the Verizon second quarter 2021 earnings conference call. At this time, all participants have been placed in a listen-only mode and the floor will be open for questions following the presentation. To ask a question, press star 1 on your touch-tone phone. If at any point your question has been answered, you may remove yourself by pressing star 2. Today's conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to your host, Mr. Brady Conner, Senior Vice President, Investor Relations.

Thanks, Brad. Good morning, and welcome to our second quarter earnings conference call. This is Brady Conner, and I'm here with our Chairman and Chief Executive Officer, Hans Vestberg, and Matt Ellis, our Chief Financial Officer. As a reminder, our earnings release, financial and operating information, and the presentation slides are available on our Investor Relations website. A replay and transcript of this call will also be made available on our website. Before we get started, I'd like to draw your attention to our safe harbor statement on slide two. Information in this presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Discussions of factors that may affect future results is contained in Verizon's filings with the SEC, which are available on our website. This presentation contains certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials posted on our website. Now let's take a look at consolidated earnings for the second quarter. In the second quarter, we reported earnings of $1.40 per share on a GAAP basis. Reported second quarter earnings included net pre-tax gain from special items of $182 million, consisting of a pre-tax gain OF APPROXIMATELY $1.3 BILLION RELATED TO A PENSION REMEASUREMENT CREDIT, AS WELL AS A PRE-TAX LOSS OF $1.1 BILLION FROM EARLY DEBT REDEMPTION COSTS. EXCLUDING THE EFFECTS OF THESE SPECIAL ITEMS, ADJUSTED EARNINGS PER SHARE WAS $1.37 IN THE SECOND QUARTER. IN MAY, WE ANNOUNCED AN AGREEMENT TO SELL VERIZON MEDIA TO APOLLO FUNDS WITH AN EXPECTED CLOSE DATE IN THE SECOND HALF OF 2021. UPON THE ANNOUNCEMENT, certain assets of the Verizon Media business were classified as an asset held for sale. As a result, we no longer depreciate or amortize these assets, which resulted in a partial quarter benefit of $0.03 per share in the second quarter, and this benefit will continue until the deal closes. With that, I'll now turn the call over to Hans to take us through a recap of the second quarter.

Thank you, Brady, and thank you for joining our second quarter earnings call. It is remarkable what a difference a year can make. We're quickly resuming pre-pandemic norms, and at Verizon, our network and in-store traffic is almost back to pre-pandemic volumes, and our office employees are gradually coming back to office. Of course, some behaviors are changed permanently. The mass shift toward online activity speed up the timeline for work from home, distant learning, banking, entertainment, telemedicine, etc., All of these societal and behavioral shifts have had an impact on the business, and they reaffirm our network as a service strategy and our focus on delivering on our five vectors of growth. Finally, after a year of virtual meetings, I've been spending time in the field with customers and partners, and importantly, we are frontline workers who have done such heroic work throughout the past year serving our customers. All in all, we have a very enthusiastic and cautiously optimistic stakeholder base. As we conclude the first half of 2021, I have to say I'm extremely proud of the achievements we have made to strengthen Verizon in all aspects. Let me mention a couple of the milestones. We strengthened our strategic focus with our divestment of Verizon Media Group, which we believe will close around the end of the quarter. We invested in the best portion of the C-band in order to accelerate and amplify our multi-purpose network and service model. We have also improved our 2.0 organization structure, and we brought in a diverse slate of top leaders. Our finance and treasury team did an outstanding job of strengthening our balance sheet with low cost of borrowing and maturity for our debt. We also laid out a long-term financial goal with focus on growth. All this focus on strategy execution and to deliver profitable growth by our teams have paved the way for a continued great financial performance. And in the second quarter, we not only generate our strongest earnings on record, we also produce good growth and profitability in all our units and segments. We demonstrated continued strength in our wireless service revenue growth. And combined with our scale and operation efficiency, we produce 5.6% adjusted EBITDA growth. Given the strength on our first half results, we're raising our full year guide. And Matt will provide details later in the call. When it comes to our operations, Our recent investments in our customers through the biggest 5G upgrade promotion and innovative trading, coupled with a mix and match for both wireless and 5S customers, have led to strong performance across both our offerings. On the network side, we just continue to offer our customers the industry's best network experience. For the 16th consecutive time, RootMetrics awarded Verizon the best overall network performance. And for the 27th consecutive time, J.D. Power named us the number one network quality. Our C-band build, we're on track to build 7,000 to 8,000 sites by year-end. And we're on plan to launch the first 46 markets. And we are also strengthening our network by expanding our fixed wireless access reach. If we look to the traffic in the network, the customer activity is near pre-COVID levels. And as mobility traffic comes back, we have seen millimeter wave usage increase 290% June year to date. And as we continue to deploy millimeter wave sites and we get more device penetration, We expect these numbers to continue to increase fast and track towards 5-10% of traffic in most dense urban areas by year-end. We are making progress in executing across all our five vectors of growth. On the 5G adoption, approximately 20% of our wireless phone base are now on 5G devices with the majority of them C-band capable. In the second quarter, the step-by rates were very, very healthy. And this reflects value and differentiated experience for our customers. We also had a record high new accounts that opted for a premium unlimited plan. The next generation business application. We launched the first commercial available private 5G network solution in the U.S. It's an on-site private 5G that brings on-premise 5G capabilities to large enterprises and public sector customers. The team in Verizon Business Group continued to make very important partnerships, and one of them in the quarter was with MasterCard, where we will work together with MasterCard on 5G mobile edge compute, transforming the contactless payment for consumer as well as small and medium-sized businesses. The customer differentiation that we continue to develop further strengthen in the quarter with new content and experience to our mix and match platform with a broken device trading, the biggest upgrade ever promotion. And we also added through partnership content with Apple Arcade and Google Play Pass. Expansion into new markets, we have been focusing and continue to have broadband nationwide, and we expanded our five-year home services, which is now available across 47 markets. On the four-year home, we expanded to more suburban and urban areas, and it's now available in parts of all 50 states. At the same time, we launched a new home router, which is compatible with the CBAT. We have recently expanded our 5G business internet also to parts of 42 cities. In summary, our strategy is working and it's more relevant than ever, driving value for our investors and to our customers and society as they embrace new ways of living and working. We have great momentum on all five vectors of growth, delivering on profit growth with alignment to our long-term growth targets. With that, I'll now turn it over to Matt to discuss the financial results.