Verizon Communications Inc.

Good morning, and welcome to the Verizon Third 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 touchtone 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 third 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. Discussion 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. As a reminder, we've entered the quiet period for the 3.45 GHz spectrum auction, so we will not be able to comment on our spectrum holdings or strategy. Now let's take a look at the consolidated earnings for the third quarter. In the third quarter, we reported earnings of $1.55 per share on a GAAP basis. Reported results include a net pre-tax gain on the sale of Verizon Media of $706 million and a net pre-tax charge of approximately $247 million, which includes a net charge of $144 million related to a mark-to-market adjustment for our pension liabilities and $103 million related to a severance charge for voluntary separations under our existing plans. Excluding the effect of these special items, Adjusted earnings per share was $1.41 in the third quarter compared to $1.25 a year ago. Please note, our results include two months of Verizon Media as the sale to Apollo Funds closed on September 1st. With that, I'll now turn the call over to Hans to take us through a recap of the third quarter.

Thank you, Brady, and thank you all for joining our third quarter earnings call. We had a solid performance in the third quarter, growing total wireless service revenue by 3.9% year-over-year with earnings growth. This was supported by strong net additions in wireless and broadband, which are both translated to bottom-line growth. This definitely confirms our strategy to grow our business with high-quality offerings. As I've said throughout the year, we have all the assets we need to extend our number one position in the markets. Our strategy remains unchanged, and we're delivering on everything we promised. And we're gaining momentum on all five vectors of growth. We have more paths to grow than anybody else, and we're confident with our growth targets for the outer years based on our third quarter and continued momentum into the fourth quarter. As an evidence, we're updating financial guidance for the full year. We now expect total wireless service revenue growth of around 4%, which is on the high end of our prior guidance, and adjusted EPS of 535 to 540, up from 525 to 535. We remain on track to achieve our targeted CAPEX levels in 2021, assuming no further disruption in the supply chain. Our team is working diligently and doing a fantastic work with vendors and suppliers to ensure we have adequate equipment to meet our C-band build, and that we have devices that our customers want. Our operational excellence and our partnership strategy is the best in industry, which I've been so impressed by since I joined Verizon. And in times like this, it matters. Let's talk about business. We continue to provide the best-in-class experience across the board. On the network front, third parties continue to recognize us as the best network experience. This includes root metrics for the 16th consecutive time and JD Power for the 27th consecutive time. Our network team is doing a great job. On the commercial front, we've got great momentum in the 5G adoption, with over 25% of our consumer phone base using a 5G-capable device. This is tracking well ahead of the 4G adoption, as I've said before. For context, 12 months of the 4G launch, 10% of the devices were on 4G. Less than 12 months after 5G DSS launch, more than a double were on 5G devices, and it's growing at a rapid pace. This combined with our millimeter wave strategy is an important combination, and that is paying off. In the third quarter, the total millimeter wave use is more than double sequentially. We're doing more gigabit of uses in a month now than we did in all the first quarters. In some of our more established build-outs, we're seeing more than 20% of uses of millimeter wave. And we're on track to have 5% to 10% of all traffic in the urban millimeter wave polygons by year end. For our business segment, we continue to add wireless subscribers and take broadband share in our ILEC footprint with Fios. And finally, we deliver significant value creation and strategy refinement with the sale of the Verizon Media Group in September, the pending track phone acquisition, and also the issuance of a third green bond, which is a vital step towards our net zero goal in 2035. All this was accomplished in tandem with a strong quarter result. When it comes to the financials, we're on track to meet and exceed all of our 2021 guidance. We expect to have a strong finish of the year as we approach the launch of C-Band. We continue to deliver excellent revenue performance in wireless service and within FIOs. We have a diversified path of revenue growth with all five vectors contributing. EBITDA was up 3.3% year-over-year, and on an adjusted basis, EPS was up 12.8%. Our capital allocation stands firm. We invest in our business to create shareholder value. We continue to increase our dividend, which we did for the 15th consecutive year. And Matt and team are working diligently on our debt reduction. As we said last quarter, our guidance race is broad-based and across all our five vectors of growth. Consumer segment EBITDA increased by 2%, driven by positive trends in customer acquisition, premium plan adoption, product and services, and content, as well as prepaid and reseller growth. The service revenue momentum in the third quarter was driven by continued execution of our migration strategy to higher-valued price plans as well as high-quality net ads. But our growth is more than that. Much of our long-term growth is in fixed-wire access and mobile edge compute. Our strategy is becoming a national broadband provider with the best access to the tech for our customers includes Fios, fixed-wire access on 5G, 4G, millimeter wave, and C-band. When it comes to the mobile edge compute, we are the mobile edge compute leader, both in public and private, thanks to great partnerships. And we just announced a private mobile edge compute partnership with Amazon that we're pleased with. And this just scratches the surface on how we'll continue to utilize our assets. We're confident in our growth opportunities as we move into the investment cycle with C-band. Before I hand it over to Matt, I want to briefly touch on our broadband expansion. We're on track to meet our fixed wireless access household coverage targets with an expected 15 million homes passed by the end of the year between 4G and 5G. To date, 5G home is in 57 markets and the 4G LTE home in over 200 markets across all 50 states. In addition to fixed wireless access, we're pleased with the great performance of Fios and continue to grow the open for sales volumes within our footprint. We're on track on exceeding all the commitments for 2021 and on track for long-term growth expectations outlined in our investor date earlier this year. You can expect us to provide 2022 guidance during our Q4 21 earnings call. And now, Matt, over to you.