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Verizon upgraded its outlook for full-year revenue growth after reporting improving trends at its mobile business in Q2, according Telecompaper. The US operator now expects a low-to-mid single-digit percentage increase in revenues this year, driven by better-than-expected equipment sales, compared to a previous forecast for low single-digit growth. For the second quarter, revenues rose 5.4 percent to USD 32.2 billion, after 6.6 percent growth in Q1. On a comparable basis excluding the impact of Oath, divested businesses and the new revenue recognition standard, revenues rose 2.6 percent to USD 30.2 billion. Wireless revenues were up 5.5 percent to USD 22.4 billion, including a 0.8 percent increase in service revenue, while wireline revenues were down 3.4 percent to USD 7.5 billion.
 
Net profit fell 5.2 percent to USD 4.2 billion, and EPS dropped to USD 1.00 from USD 1.07, as a 13.5 percent rise in operating costs offset the tax cuts in the US. Verizon said it still achieved USD 500 million in cost savings as part of its plan to reduce costs by USD 10 billion over four years. The EBITDA margin dropped to 34.1 percent from 39.9 percent a year ago and was at 35.6 percent on an adjusted basis and excluding the new accounting rules. 
 
Adjusted EPS rose to USD 1.20 from USD 0.96 a year earlier, despite a number of one-time charges. The figure includes USD 658 million in pretax charges to write off the failed go90 mobile video platform, severance charges of USD 339 million, and acquisition and integration-related charges of USD 120 million, primarily for Oath, which together took 20 cents off EPS. 
CEO Lowell McAdam said the company remained well-positioned for the future, with H1 growth in service revenue, earnings and operating cash flow despite "a highly competitive marketplace". Verizon still expects low single-digit percentage growth in adjusted EPS in 2018, before the net impact of tax reform and the revenue recognition standard.
 
Capital spending for 2018 will be closer to the lower end of the earlier forecast range of USD 17.0-17.8 billion, including the commercial launch of 5G, after spending USD 7.8 billion in H1.
 
More postpaid phone customers
 
Verizon Wireless reported better customer numbers in Q1, with 531,000 retail postpaid net additions. That includes 199,000 new phone customers and 369,000 connected devices, offsetting tablet losses of 37,000. Postpaid smartphone net additions for the quarter were 398,000. After a loss of 236,000 prepaid users in Q2, the total retail base numbered 166.454 million at the end of June, up 1.7 percent from a year earlier. The operator improved the number of connections per account to 3.16, while average revenue per account was down slightly, by 0.2 percent year-on-year to USD 134.56. 
 
Despite a 17.4 percent rise in equipment sales and stronger customer growth in Q2, Verizon managed to limit the increase in wireless operating costs to 2.2 percent. As a result, operating profit rose 11.7 percent to USD 8.3 billion, and the segment EBITDA margin improved to 47.8 percent from 45.8 a year ago.
 
Wireline in the red
 
The wireline division did less well. Despite a 2.5 percent reduction in costs, the EBITDA margin fell half a percent point to 20.2 percent, and the division posted an operating loss of USD 19 million. The decline in revenues ranged from 1.6 percent in the consumer segment to 7.4 percent at Business Markets. 
 
Verizon said Fios revenues were still up 2 percent to USD 3 billion. It gained a net 43,000 Fios broadband customers in Q2, offset by a loss of 53,000 DSL customers. The operator also lost another 37,000 Fios video subscribers, blaming cord-cutting.