Verizon Communications Inc.

Good morning, and welcome to the Verizon 4th Quarter 2021 Earnings Conference Call. At this time, all participants have been placed in 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 regroup 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 of Investor Relations.

Thanks, Brad. Good morning, and welcome to our fourth 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 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. As a reminder, we are still in the quiet period for the 3.45 GHz spectrum auction, so we will not be able to comment on our mid-band spectrum holdings or strategy. Now let's take a look at consolidated earnings for the fourth quarter and full year. In the fourth quarter, we reported earnings of $1.11 per share, resulting in full year earnings of $5.32 per share on a GAAP basis. Reported fourth quarter earnings included net pre-tax loss from special items of approximately $1.2 billion. This includes a charge of $2.4 billion for the early extinguishment of debt, a $106 million charge related to severance, a $1.2 billion credit pertaining to the annual mark-to-market for our pension and OPEB liabilities, and a net gain of $131 million primarily related to the disposition of an investment. Excluding the effect of these special items, adjusted earnings per share was $1.31 in the fourth quarter and $5.39 for the full year. We completed the acquisition of TrackPhone on November 23rd. The revenue associated with track phone this year was approximately $700 million higher than the revenue received from track phone in the fourth quarter of 2020. All of this revenue flows through our consumer group. As noted in our press release this morning, beginning in 2022, our adjusted earnings per share will exclude amortization of acquisition related intangible assets. For 2021, Such intangible amortization negatively impacted adjusted earnings per share by approximately 11 cents. And for 2022, we anticipate the impact to be approximately 17 cents to 19 cents. Finally, we will be hosting our annual Investor Day event on March 3rd in New York City, where our leadership team will provide further details on our company's exciting plans for this year and beyond. With that, I'll now turn the call over to Hans to take us through a recap of 2021.

Thank you, Brady, and happy new year to all of you. This past week has been one of the best since I joined Verizon. On January 19th, we successfully launched 5G ultra-wideband on C-band, which will enable more Americans than ever before to experience the transformative speed, reliability, and power of our multipurpose network on the go, in their home, or for their businesses. Our work throughout 2021 brought us to this moment and I will spend this call discussing how we got here and how our accomplishment will accelerate our growth. I want to thank our incredible V Team for all your hard work and dedication throughout 2021 and for delivering for our customers and our communities. We have never executed so well on so many strategic and operational objectives as we did in 2021. This was a catalyst year for Verizon. And I'm very proud of our work. We have a clear and disciplined strategy based on our multipurpose network that creates economies of scale and new business models in an era where broadband is essential to our customers and society. Our results clearly confirm that our strategy is working and that 2021 was a transformative year for Verizon. And it clearly sets us up for a high impact year in 2022. We have now assembled the industry's most comprehensive portfolio of high-quality assets, leveraging our best-in-class technology to extend our network leadership to address more opportunities than anyone else in the market. We are widely being recognized for both what we have accomplished and for the 28th time in a row JD Power ranked Verizon first for network quality. This is our 175th JD Power Network Quality Award in 18 years. At the same time, we continue to support our four stakeholders, shareholders, customers, employees, and society as a responsible business. Verizon leads the industry in sustainability. We are ranked ahead of our peers both by the Drucker Institute and just 100, and we are confident that our multi-stakeholder strategy will lead to long-term shareholder value. We have a team and expertise to lead the country into a vibrant mobile computing future. Verizon has the best engineers in the world, and they have built the world's foremost reliable and scalable network. This asset is the foundation and the catalyst for our accelerating growth. So we begin 2022 with a strong portfolio of assets. We're executing our 5G strategy, making great progress on our five vectors of growth and delivering a premier customer experience. This significant momentum sets us up for 2022 and beyond. Let me give an update on the financial operations metrics. During 2021's first quarter, we set clear targets. As we close out 2021 and enter in 2022, I'm proud to report that we delivered on all of them, plus some. And our achievements will only catalyze even greater value creation in 2022. On our January 19 CBEN deployment, we covered more than 90 million POPs and millions of homes in more than 1,700 cities. well ahead of plan of making excellent use of the incremental capital spend to augment and accelerate our business opportunities. Today, we cover more than 95 million POPs as the team is progressing. We also brought more than 15,000 additional 5G ultra-wideband small cells in service, exceeding our annual goal and nearly doubling our total 5G millimeter wave presence, increasing our fiber footprint to create a state-of-the-art multi-purpose network. At our investor day last year, we said we would have 5 to 10% traffic in urban areas covered by millimeter wave. Today, we're almost at 10%. It's exceeding our expectation. This confirms our millimeter wave strategy. All this set stage for last week's Verizon Ultra Wideband launch. We're excited and pleased with what we have seen so far, from customer reception to network performance. We have grown our network significantly. We finished 2021 with over 20 million households covered for our fixed wireless access solutions. And CBAN adds millions more homes. For business, our initial CBAN expansion will cover more than 1.7 million organizations with Verizon 5G business internet across 900 cities. We will reach new retail and business clients by offering a breadth of plan options that make our capabilities relevant to their lives. Our new Mix and Match 4.0 offerings allow customers to pick the 5G plan they want with options for savings on home internet. For businesses, we offer business unlimited offerings that bring choice and power to the professional market. In addition to our network achievements, we closed on two large strategic transactions in 2021. We sold Verizon Media Group to Apollo Global Management for $5 billion in a transaction that closed in September, retaining minority ownership. And in November, we completed our strategic acquisition of Tracfone, positioning Verizon as the number one provider within the value segment. This opportunity enabled us to deepen our relationship with new customers while delivering more enhanced services. TrackOne is being rapidly integrated into our operation. The acquisition added 20 million customers to our prepaid model and cements Verizon as a leading prepaid vendor at Walmart and Best Buy, forming a strong foundation for retail efforts. We also continue to reach new customers through bundled internet, telephone, and television services. Fios internet ads in 2021 were our best since 2014, and we continue to expand availability of the best-in-class service. Importantly, we strengthen relationships with our customers, adding more connections, including more than half a million new wireless post-paid phone net ads, while maintaining and cultivating our loyal high-quality relationships. We provided additional value for our customers to our unique partnership strategy with the best brands that are meaningful to people, lives, and businesses. This includes content partnership with NFL, Disney, Apple, Discovery, and Niantic, to name a few. For businesses, we offer mobile edge compute capabilities, something we're first in the world with alongside industry leaders like AWS, Google, and Microsoft. Disruptions to consumer and industrial supply chains throughout 2021 and extending into this year have affected all industries and brought digital connectivity to the central focus in the lives of our stakeholders. That said, Verizon has executed effectively under these conditions as demonstrated by our successful network expansion and network service launches. Once again, our financial performance demonstrates that our strategy is working. Our focus on profitable volume continues to drive wireless service revenue growth of 4.7% in 2021. And in the fourth quarter, 74% of our customers subscribed to unlimited plans compared to 71% in Q3. Just over a third of our unlimited subscribers have unlimited premium. This leaves room for continued step-up expansions. Our multipurpose network and flexible plans will allow customers to upgrade handsets and devices. We saw quick adoption of 5G handsets throughout 2021 in anticipation of new services. One third of our customers' handsets are now 5G enabled compared to about 25% in the third quarter. We raised our earnings per share and wireless service revenue guidance during the year and deliver on both, including 10% EPS growth. We promised also $10 billion in cost savings, and we delivered ahead of schedule. However, we continuously strive to more efficiently manage our business. We generated strong cash flows to support our investments and financial commitments, and we delivered our 15th consecutive year of increased dividend payments while maintaining a healthy balance sheet. As for our focus on ESG, Citizen Verizon has also delivered on its promises. We took action towards meeting our 2025 goals, including spending to support technology education and adoption to bridge the digital divide, and contracting for significant renewable energy capacity, positioning the company to achieve over 50% renewable energy goal by 2025. Matt will elaborate on our performance and 2022 guidance in detail. But we will target organic service and other revenue of around 3%, as well as a beta growth of 2-3%. With the right assets in place and a sound strategy to reach consumers and businesses with 5G capabilities and mobile edge computing on our multi-purpose network, Verizon has unlimited potential. 2022 will demonstrate this. Now, I will turn the call over to Matt to walk you through our fourth quarter and full year performance in greater detail.