Verizon Communications Inc.

Good morning and welcome to the Verizon second quarter 2022 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 Connor, Senior Vice President, Investor Relations.

Thanks, Brad. Good morning, and welcome to our second quarter earnings conference call. This is Brady Connor, 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 $1.24 per share on a GAAP basis. Reported second quarter earnings include a pre-tax loss from special items of approximately $435 million, including a net pre-tax charge of approximately $198 million related to a mark-to-market adjustment for our pension liabilities. In addition, the impact of amortization of intangible assets related to TracFone and other acquisitions was $237 million, excluding the effects of these special items Adjusted earnings per share was $1.31 in the second quarter. With that, I'll now turn the call over to Hans to take us through a recap of the second quarter.

Good morning, everyone, and thank you for joining us today. Our second quarter was not a good barometer for where Verizon has been or where it's going. While we are not satisfied with our performance, we know what the issues are, and we are already executing to reaccelerate in the second half of the year. As I said in our first quarter earnings call and reiterated things, we're seeing weaker consumer wireless volumes. The inflationary environment is clearly impacting consumer behavior, and we also saw intensified competition for consumer attention. The result was a significant impact on our gross ads. Based on our performance this quarter and analysis of the landscape, we're updating our financial guidance by lowering our expectation for service and other revenue, adjusted EBITDA, and adjusted earnings per share. Matt will provide more detail in a few minutes. As you know, we have already responded. Last week, we launched our welcome unlimited plan for consumer wireless that will meet the needs of budget conscious consumers without providing device subsidies. In addition to these new plans, we took pricing actions in both of our business units to mitigate inflationary pressures. In consumer, we also adjusted prices for some legacy meter plans, increasing revenue per plan while motivating step-ups to our unlimited offerings. All of these actions position us for improved performance in the second half of 2022 and into 2023. More than ever, our leadership team is focused on executing our strategy through operational and customer-focused solutions. While I'm confident that we have the right strategy in place, we will continue to refine our approach as the consumer market evolves. Looking further into our business, we continue to see momentum that gives us confidence in our ability to improve performance over the long term. In our consumer group, we have consistently pursued a disciplined strategy of offering high-quality services at the competitive prices. the economic pressures that our customers are facing and are carefully bringing new offers to meet their needs. I'm personally working with the consumer group to define our disciplined approach to the market while also looking closely at how we operate and do business. This is reflected in the plans and promotions we introduced in May, June and July. Mix and match continues to drive premium plan adoption, with 78% of a consumer base on unlimited plans and 39% on premium unlimited. We have seen healthy step-tops for five consecutive quarters, which continues to drive ARPA growth, and there is room for more. While consumer budgets are becoming strained, we continue to find ways of delivering new valuable services while recognizing that the enhanced subsidies we're seeing in our industry are not sustainable long-term. Our new Welcome Unlimited plan is a great example of this. We have tailored offers for the full range of consumer segments from premium to value across postpaid and prepaid to meet all consumer needs in these challenging market conditions. In the prepaid value segment, our integration track is on schedule and provides us with another suite of offerings to bring consumers onto our network. Our fixed wireless access solution continues to bring us new connections. Across consumer and business, we increased fixed wireless net ads by 32% over the first quarter, driven by a 50% increase from our consumer group. In our business group, we again delivered excellent wireless volumes with 430,000 net ads, including 227,000 postpaid phone net ads in the quarter. This marks our third consecutive quarter exceeding 200,000 wireless phone net ads. In the global enterprise market, businesses, government agencies, and other institutions continue to recognize the power of Verizon's network and the importance of digitalization. This week, we announced an over $400 million project with FBI to help the Bureau meet its global bandwidth demands We will provide direct access to our development team and will advise on system enhancements like cloud computing, video and imaging transmission, and data applications. We also offer private 5G solutions to optimize complex organizations. We recently partnered with Virginia International Terminals to build a private 5G network across its Seaports campus. This network is scalable to replace Wi-Fi with more secure connectivity. We're seeing new opportunities and increased demand for these network solutions from enterprises and other organizations. Verizon is uniquely positioned to take advantage of the moment and provide the highest quality private networks to these customers. Private networks are the gateway to mobile edge compute. which can deliver game-changing customer outcomes, including revenue growth, new customer experience, and cost savings. During the second quarter, we expanded our MEC ecosystem by bringing AWS wavelength zones to Nashville and Tampa, and now reached 19 metro areas. This means that 75% of the U.S. population is now within 150 miles of Verizon's 5G edge. In partnership with Truist, we supported the launch of the 10,000-square-foot Innovation and Technology Center in Charlotte, North Carolina. As a founding member of the Innovators in Residence program, we will help create a global hub for the development of 5G and MEC application in the financial service segment. This trend will continue to create growth opportunities for us across a range of industries as we market 5G private networks and in mobile edge compute. The momentum in Verizon business is a fitting send-off for Group CEO Tammy Irvine, who is ending her amazing 35-year career at Verizon. We promoted SAMPATH as Verizon's business CEO on July 1st. SAMPATH brings over two decades of experience in digital networks, critical infrastructure protection, and a deep understanding on how networks play a role in enterprise growth and global security. He has been part of the Verizon team for more than eight years, and I know that he is the right leader to take Verizon business forward. The power of our networks gives us the flexibility to meet the needs of our customers across consumer and business. The continued and speedy expansion of our network and capabilities creates agility and optionality within our larger strategy. We ended the quarter with 135 million pops covered CBAN and remain on track to reach at least 175 million POPs by the end of their year. With the early clearance that we announced in March, we're expanding service into an additional 30 markets and have started deploying 100 megahertz of CBAN spectrum in many markets across the U.S., almost doubling the spectrum available for 5G. We're seeing the phenomenal performance we expected. Network usage is growing quickly, with C-band usage up 233% since the end of the first quarter and millimeter wave traffic up 49% year-to-date. Where C-band is deployed, it accounts for more than a third of our wireless traffic on average. Consumers are also equipped with the devices that need to use 5G. Currently, 47% of our consumer base has a 5G phone, and we expect that number to reach nearly 60% by year-end. Our already best wireless network continues to earn recognition for its performance and dependability. This month, J.D. Power gave us the highest number of awards for network quality for the 29th time in a row. And Root Metrics recognized us for having the best overall network performance in the country for the 18th time in nine years. Turning to the second half of the year, we will continue to listen to our customers and give them reasons to sign up, stay, and upgrade with us. This month, we also added on top of our yearly business transformation, a multi-year program to enhance our efficiency measures and actually the cost benefits delivered. This will ensure that our balance sheet remains strong for the market ahead. We run Verizon with the goal of growing our business and controlling costs. We will never shy away from investing a portion of our cost savings in our growth initiatives. We're confident. in our ability to deliver both efficiency and growth while creating long-term value for our shareholders. Before I turn it over to Matt to give you more details on our results and our outlook for the second half of the year, I want to mention that we reached a tentative deal with our unions to extend our collective bargaining agreement. This extension will provide us with labor stability to focus on our customers and opportunities to grow our business over the next four years. By that, I hand it over to Matt.