Verizon Communications Inc.

Good morning and welcome to the Verizon Third 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 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 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. 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 third quarter. In the third quarter, we reported earnings of $1.17 per share on a gap basis. Reported third quarter earnings include a pre-tax loss from special items of approximately $881 million. This includes a net pre-tax charge of approximately $645 million, primarily related to a mark-to-market adjustment for our pension liabilities and the impacts of amortization of intangible assets related to track phone and other acquisitions of $236 million. Excluding the effects of these special items, adjusted earnings per share was $1.32 in the third quarter. 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 good morning, everyone, and thank you for joining us. Last quarter, we told you we would take actions. Today, I'm here to share the results those actions have delivered. We ended the third quarter with wireless service revenue growth up 10% year-over-year and 2% sequentially. And adjusted EBITDA grew sequentially by almost 3% to $12.2 billion. We had total phone gross ads of nearly 2.6 million and about 5% year-over-year increase. This includes an increase in consumer of 1.3%, a significant improvement from minus 11% in the second quarter. These results are early indicators that the actions we're taking across our businesses to build momentum are gaining traction. Of course, we are not done yet. I continue to work with my team to take actions to grow revenue and to take costs out of our business to unlock the full potential of Verizon. I am glad to see sequential improvements based on our efforts, but there is more to do. Based on our momentum and plans, our financial guidance for 2022 remains unchanged. Throughout the call, you'll hear the actions we took and the impact they've had on our business to position Verizon for growth. Our pricing actions in the second quarter in both our consumer and business groups helped increase our wireless service revenue. Postpaid phone net ads came in 8,000 for the quarter with a loss from consumer offset by gains in Verizon business. Matt will share more details with you later in the call. Let me turn to some of our group results. In consumer, we have started to gain traction with customers reacting positively to our new offerings and as a result, increased store traffic. Our welcome plan improved customers' pricing perception and contributed to consumer phone gross ads being up year over year. With the launch of the iPhone 14, we delivered the first of its kind Apple One Unlimited bundle. Verizon customers now have access to Apple's services all under one subscription. Apple remains a unique and trusted partner of Verizon because they recognize our network quality and high value of customers. In the value segment, we launched Total by Verizon, redefining no-contract wireless service, a key step in our continued integration of Tracfone. And just this week, we introduced a prepaid wireless home internet service on our Straight Talk brand. We continue to expand our offerings in the value segment, and customers are taking notice. This helped us to generate positive prepaid net ads for the quarter, our first positive quarter since Q2 2021. For postpaid, we're focused on attracting and retaining high-quality consumers in a disciplined and measured approach. As we see areas of opportunity, we will address them in a surgical manner, just like we have done with some of our recent actions. There is more progress to make. Our premium strategy is working. We ended the third quarter with 53% of our customers having a 5G phone and 81% of our base is on unlimited plans. With a 42% uptake on premium unlimited, there's a great opportunity for step-ups. And we see that demand with approximately 60% of our new customers choosing premium unlimited right from the start. It is clear we have a high-quality customer base, so we will continue to focus on retention and winning these customers. Moving to Verizon Business, we see a continued very good momentum in both fixed-wire access and mobility, and I'm encouraged also by the large 5G infrastructure deals we made in the quarter. These include digital transformation projects with Astellas Pharmaceuticals, Fujifilm, and our continued work with the Department of Defense. And this is just a start. We recently announced an important agreement with the U.S. Department of State to modernize its communications infrastructure across embassies and other locations around the world. I'm proud that we're part of a choice for these global enterprises and public sector clients. In broadband, our fixed wireless access and fire service continue to see strong demand. Total broadband net deaths were 377,000, a sequential growth of over 40%. All of these services are built to deliver on top of our world-class network. We have a premium network and experience that our customers value and that demands premium pricing. Our network is the core of our value proposition. America relies on us and we deliver. This was evident before, during and in the aftermath of Hurricane Ian. Our team did what we always do. We ran through the crisis. quickly restoring our network as needed and using our technology solutions to protect impacted areas. Bottom line, our network infrastructure was resilient and our people delivered in the way that you have come to expect from us. Our mission has always been to build and operate the best, most reliable, highest performing network. Our use of advanced technologies, our spectrum portfolio, and our expansive owned fiber footprint are critical to achieving that goal. Where we deploy our C-band, we see direct correlation to customer growth on both mobility and fixed-wise access. We are currently covering over 160 million POPs with C-band and on track to deliver 200 million within the first quarter of 2023. C-band usage is up 170% quarter over quarter, and fixed wireless access now covers more than 40 million households. Right now, more than 48% of our sales sites are connected by Verizon's own fiber. We're expecting to be about 50% by year end, with the majority of our 5G sites already on our own fiber. This not only improves network performance, but also improves our owners' economics. At the same time, we're making efforts to take costs out of our business. We're constantly thinking about how we run our enterprise every day to enhance our performance while delivering on our strategy. In this spirit, we have designed a company-wide cost savings program that we expect will save between 2 to 3 billion dollars annually by 2025. A first step in these efforts is the creation of a global service organization under the leadership of Craig Silliman. This is one part of our larger program to leverage cross-functional opportunities across the business. Over the past two years, under unprecedented circumstances, we have learned a lot about how we deliver our services to customers. Verizon Global Services will help unlock significant efficiencies and reduce costs across the business. Keeping in line with our company values and strategy, we continue to practice financial discipline even in a competitive market and deliver solid financial performance quarter over quarter. Verizon is in a strong position, no matter economical environment, with our high-quality customer base, diversified go-to-market options, including our value offering. The benefits from strengthening our organization through our cost savings program and the best network that just keeps getting better. I will now hand it over to Matt to go deeper into our results.