Q1 2021 Verizon Communications Inc. Earnings Call
Our website growth rates discussing our presentation slides and during our formal.
Works on a year-over-year basis unless otherwise noted as sequential. Now. Let's take a look at Consolidated earnings for the first quarter in the first quarter. We reported earnings of $1.26 per share on a gaap basis reported first-quarter earnings include a pre-tax loss from a special item of approximately $223 related to the sale of certain Wireless life excluding the effects of this special item adjusted earnings-per-share was $1.31 in the first quarter on April 8th. We announced a recall process for approximately 2.5 jetpack units, which impacted some customers enrolled in our distance learning programs. The overall impact included within Consolidated operating income was approximately 160 million dollars during the quarter split between a hundred million dollars in the business segment and the remaining sixty million dollars in consumer the impact included within reported and adjusted earnings-per-share dead.
Was $0.03 in the first quarter with that now turn the call over to Hans to take us through a recap of the first quarter. Thanks Brady. And welcome to alter this first quarter earnings call Em. We marked more than one year since devastating effects or COVID-19 why we see significant progress in vaccination customer sentiment and Recovery our economy. There are still a lot to go before we're back to normal Verizon has responded during this period for all our stakeholders as well executed on a balance they call it driven off. And as I said during the worst period of the pandemic Verizon will come out stronger as a company when this is over during the last twelve months. We have progress all our position with customers and please and added great assets on already strong position. And today we stand stronger than ever to compete in the market and serve our customers.
Looking back on the quarter. We're Amplified and accelerator our strategy through our average hundred sixty megahertz Nationwide position in C band and as we laid out in our own know the combination of see band and our millimeter-wave places are in a unique position of strength to execute on all the opportunities by the whole five G mobility and 5G mobile Edge compute.
Purple. We're all are five factors of growth in play together with a network leadership and a strong Network as-a-service Foundation.
And the pro was made in in the quarter confirms that our strategy is working with growth in all our businesses for the first time since the launch of Verizon to the dog where growth in both EPs and cash flow with all this work by our grade team. We have a headstock in the post-cold War era with a clear and differentiate strategy diverse go-to-market modest Network leadership industry-leading partner ecosystem and strong brand all of which together provides a great platform and Foundation to achieve or growth targets for 2021 and Beyond let me talk about some of the highlights from the first quarter or network team continues to do great things by Leading the network performance in the market as well as deploying more assets than every before millimeter-wave see band 45 and fiber.
I have a lot of confidence.
But this team will accurate or network leadership or unique mix and match more the continues to deliver with migration to unlimited and unlimited premium a quarter as well as building on our exclusive offerings, like Disney plus and the most recent discovery plus that was launched earlier in the quarter and we're pleased with the Discovery Place with the current enrollment rates have seen so far or brand and responds with business framework teachers and Verizon continued to set standards in the industry Verizon recognized by fast company as a sixth most Innovative company in the corporate social responsibility earlier this quarter brand Finance recognized us as the most valuable time on Brown. We need we have ambitious goals such a commitment to be netsia in the carbon emission by 2035 or long-standing focus on diversity equities.
Conclusion is evidenced by the fact that we have hundred percent pay Equity by gender globally and by race ethnicity in the United States and earlier this week. We also Lone Star 2023 report. We continue the high level of deployment on millimeter-wave and fiber in the quarter and we're on the track to deliver on our operational targets for the year. We brought 5G service to several additional cities. We currently have 35 G home and 6750 Mobility City Life and more to come. We recently signed our first European private party deal with Associated British ports. We also expanded our age partner with AWS with private 5G and Edge Computing to our customers.
We continue the scalar network as-a-service capacity across new markets and verticals through a diverse set of Partnerships. We're partnered with leading Brands across verticals such as home de to innovate connected and autonomous driving Deloitte and sap to create the 5G and Edge Computing retail off the platform that will provide retailers with real-time operations data and Dreamscape and Arizona State University to build and commercialize am learning and training.
I don't even masturbate we shared with you or plans and commitments foresee band and Ultra wideband deployment which continues to progress well.
Our intent is to invest $10 billion of incremental c-band capex tax rate the integration on this capacity into our Network.
What reason to sign and SBA to access or see band deployment and look forward to providing further updates on the bill status throughout the year? We're all she ordered half of the total Network equipment needed from our 5G suppliers to support C band deployments in 2021. And the satellite operators are on track to Thursday the spectrum between third and fourth quarter of 2021 for the first tranche of spectrum in addition. We continue to expand our Ultra wideband coverage in q1. We deployed 3,600 new Ultra wideband sites. And today we have close to twenty one thousand sites on air and on track to reach its 30,000 by end of this year.
one fiber form
Eating backbone of our intelligent Edge Network and we continue to expand fiber deployment and to date we have deployed more than 42,000 route miles. We were also pleased with a low rates achieve long-term financing of this critical Strategic investment review the record investor demand as supportive or strategy and our financial discipline lastly wage were also very proud to offer prominent roles to nine diversity and inclusion Financial firms as part of the 25 billion US dollar financing deadline earlier or investments in our Network and customers or generating solid Revenue growth across all three of our operating groups or success in mix-and-match continue to drive. Take over unlimited plans and higher arpa supporting year-over-year growth or 2.4% in wireless service Revenue up from 2.2% in the fourth quarter log.
Ronan and a team closed out to one with strong momentum and I'm excited to see there to to Performance. Now that almost all of our stores have reopened month in addition. We see solid growth in FiOS and with fiber's internet reporting the best first-quarter net in six years additionally Verizon Media Group continues to contribute meaningful growth, including the second consecutive quarter of double-digit growth year-over-year on the top line with that. Let me ask Matt took some deeper inside to the financial of the first quarter. Thank you and good morning. Everyone has mentioned in his prepared remarks. The first quarter has been a truly exciting and transformative. For our company. I am pleased to report there were off to an excellent start for the year based on how strong operational and financial performance. We have seen continued strength in our core business with traction across all five of birth.
Driving higher revenues and increased demand for our products and services with the Positive momentum exiting the first quarter and the ongoing recovery of business activity. We are highly confident that our actions in the marketplace all delivers strong results throughout the year in the first quarter Consolidated operating Revenue was thirty two point nine billion dollars up year-over-year by 4.0% high-quality sustainable wireless service Revenue growth or recovery and wireless equipment revenues strong fires momentum and excellent digital advertising Trends resulted in Revenue growth across consumer business and media, total wireless service revenues were up 2.4% year-over-year and acceleration from the 2.2% year-over-year growth that wage in the fourth quarter additional details on total Wireless performance are provided in the financial and operating information and the supplemental earnings release schedules on our website total.
Up 2.5%
Driven by the strong Broadband volumes in recent quarters our portfolio of mobility and Broadband products and services continues to lead the industry delivering value to our customers month and we are well-positioned to maintain and expand our leadership position as we enter new markets and broaden our offerings and network capabilities. I'm extremely proud of the team's execution of our business Excellence program over the past three years at the end of the first quarter, we achieved our cumulative cash savings goal of ten billion dollars well ahead of our year end 2021 that we will realize additional benefits moving forward from the ways. We've improved our operating systems and procedures as we've said previously we will create additional savings opportunities took a continuous basis be on this program the strong Revenue performance across our three business segments of the quarter combined with our best-in-class cost structure and discipline focus on the business office.
Delivered adjusted ebitda of 12.2 billion dollars which represents growth of 2.0% over the prior-year the jetpack recall had a fifty basis points impact to adjust volume during the quarter Brady highlighted the adjusted EPS for the first quarter at $1.31 the growth of 4.0% reflects the strength in our Core Business Office and sets the stage Verizon to fully capitalize on the opportunities in the marketplace or giving us excellent momentum relative to our full-year adjusted EPS guidance. Now this review our operating segments results starting with consumer on slide seven this quarter we continue to see excitement around our unlimited offerings 5G capabilities mix and match value proposition and our best offer Broadband Services. All of this is part of our customer differentiation strategy, which drives deeper and broader relationships with our customers starting with wireless. We had total postpaid active birth.
Of 6.4 million for the quarter up approximately 14% compared to the same period last year made up of approximately 2.3 million gross ads and 4.1 million upgrades first quarter seasonality drove phone net losses of 225,000 which included the last major cohort of disconnects or approximately 90,000 phones related to our keep America Club program early in the quarter Wireless installed sales were again tempered by our COVID-19 safety protocols as we saw elevated levels of store closures and limited foot traffic home getting in March the improved COVID-19 environment allowed for almost all of our stores to be open not surprisingly. We saw our best volume of the quarter in March producing positive phony ads in the month, but strong combined with our new Innovative promotional offers positions us well for the second quarter, we continue to be pleased with the quality of the additions. We are attracting similar to last quarter. Yep.
ninety percent of new accounts came in
On an unlimited plan over fifty percent of these accounts opted for premium unlimited service at quarter-end over 65% of our base was on an unlimited plan with more than 23% wage is taking a Premium plan. We have plenty of room to continue to expand these penetration rates and believe that they will grow alongside our 5G adoption rates, which currently resides at 14% home consumer postpaid Phone Base 5G adoption and the customer differentiation associated with our premium and unlimited plans will further benefit our retention efforts which remains in q1 with phone shown of 77% for the quarter. We continue to take a balanced and cost-effective approach to customer retention with strong scores Edge Network performance and strong value proposition lead into our excellent levels of customer retention turn into files. We posted our third consecutive quarter of strong grown.
And high take rates for our best-in-class Broadband products with consumer fires Internet ads of 98,000 well ahead of the first quarter 2020 performance of $59,000 total FiOS Internet ads of 102000 was the best first-quarter performance in six years this reflects both the quality of the product as well as the positive sentiment around mix and match home pricing structure which provides our customers with unmatched Simplicity and optionality. Now, let's move to slide 8 to discuss the consumer financial performance the higher phone in the quarter with a major driver of the 4.7% increase in operating revenues to twenty two point eight billion dollars the continued adoption of our unlimited and premium unlimited plans change throughout the 1.5% increase in consumer wireless service revenue for the quarter of 13.7 billion dollars. This growth comes even as travelpass and our international roaming revenues Romania.
And subdued levels strong internet volumes drove the 2.2% increase in consumer fires Revenue to two point nine billion dollars while we continue to experience Revenue pressure associated with Samsung video Trends our Broadband subscriber growth combined with a shift up in speed. Here's more than offset that pressure and will continue to drive solid Revenue performance for us consumer segment grew 2.8% to 10.4 billion dollars. The ebitda margin was 45.5% in the quarter down 90 basis points in the prior-year due to higher volumes, which drove incorrect equipment revenues and Associated costs as well as the jetpack recall which had approximately 30 basis points of impact on ebitda margin for the quarter. Now, let's move to our business segments on slides out business team continues to lead the industry towards Next Generation be to be applications Hans reference some of their accomplishments from the prior 90 days including announcements on Mac and private club.
G in addition we launch
Frontline branding for advanced Network and Technology we deliver for First Responders be in the wireless market share leader for Public Safety and in all of our other customer puts us in an ideal position with our customers to be there digital transformation partner of choice Business Wireless Trendz continued their strong momentum in the first quarter of 2021 postpaid add-ons with two million were total net adds of 156000 including 47,000 phones. Remember the q1 of last year benefited from the COVID-19 related block purchases from not much of the variance for the year-over-year change engrossing that adds public sector demand remains strong, even as distance learning programs settle into a more normal pattern of buying activity small and medium business Trends improved sequentially as the team continues to make progress in supporting local businesses as a position for an improving environment as more stores reopened in early March or own. No.
Consumer volume see a lift SMB volumes benefited as well and encouraging sign for the rebound. Our Enterprise team continues to assist our customers in their digital transformation and unlock the potential segment postpaid food chain was 1.01% in the quarter and Improvement of one basis point over the prior-year as strong performance reflects the strength and reliability that Network combined with the full Suite of services and solutions that we provide there's now moved to slide 10 to review the business financial performance the high demand for our services and our brand reputation connectivity have translated into healthy Revenue growth with Verizon business group operating revenues for the business segment was seven point eight billion dollars up 1.3% year-over-year off the highest rates of growth since the creation of the business segment in the Verizon 2.0 structure this growth highlights the success of our business transformation process as strong wireless service growth wage.
6.2% offset secular pressure and Wireline business segment ebitda margin was 24.6% in the quarter down approximately 100 basis points year-over-year the Jack recall mentioned earlier had a more pronounced impact on the business segment reducing ibadah margins by about 130 basis points. Now, let's move on to slide 11 to discuss Verizon media driven by a customer engagement without Brands and demand for our advertising platforms. Total revenue for the quarter is 1.9 billion dollars off approximately 10.4% from a year ago the second consecutive quarter of double-digit year-over-year growth growth in the quarter was fueled by strong advertising Trends growing 26% off including 45% growth in DSP revenues revenue from are owned and operated Brands grew 13% compared to the same period last year
We saw continued High consumer engagement with strength in sports and finance as daily active users grew 22% and 8% respectively from the prior-year that's now moved to our cash flow Reserve 12 cash flow from operating activities for the quarter totaled nine point seven billion dollars up approximately zero point nine billion dollars from the prior-year during bio continued operational discipline wage benefits from our liability management activities, which lowered borrowing rates from last year Capital spending for the first quarter totaled 4.5 billion dollars as we continue to support traffic growth on a 4G LTE network what expanding the reaching capacity of our 5 G Ultra wideband Network. This includes approximately forty million dollars for C band related items as a month free cash flow for the quarter was five point two billion dollars up 46% year-over-year. We met payments of $45 billion dollars in the first quarter to the FCC foresee band Spectrum wanted Dead.
somebody completed auction 107
To finance this purchase. We raised over $31 billion dollars in March in addition to the twelve billion dollars raised in queue for the weighted average maturity of the band borrowings was sixteen years and we achieved a very attractive average cost of funding of 2.5% benefiting from record order books for our offerings. We are delighted that the credit rating agencies consider the Spectrum asset purchases as strategic and critical to our business operations and held their rating levels unchanged the success in the capital markets as a result of our disciplined Capital allocation policy coupled with our consistent track record of delivering on our commitments made to our investors. We exited the court with net unsecured debt of 137.4 billion dollars an hour unsecured debt to adjusted ebitda ratio for his approximately 2.9 times based on our current cash-flow assumptions. We expect how net leverage ratio to be approximately 2.8 Times, by the way.
We will evaluate the level of our cash balance based on the recovery in the economy and developments with the pandemic. Now, let's review our annual guidance Targets on slide thirteen as Hancock mentioned in his opening remarks. We're on track to achieve our guidance for the year, which remains unchanged reaffirming our comments from the investor day last month. We expect know materially impact to our adjusted earnings-per-share guidelines for mausi Band program for this year. We do expect cpan related Capital spending to be between 2 to 3 billion dollars for twenty Twenty-One, and we will provide updates on the quarterly earnings calls off with that. I will now turn the call back over to Hans to discuss our expectations for the remainder of 20 21. Thank you mapped. Let me sum this up in a couple of easy buckets. First of all dead horse tractor is unchanged.
Our focus is clear.
We go on that accurate or multi-purpose Network strategy including the city band that were required.
We're going to focus on amplifying accelerated the five vectors of growth.
And we going to see with that that we're going to deliver on our 2021 commitments both operationally and financially.
And I said earlier. I feel really good about our position and the team that I have that they will deliver on that with that. I handed over to Brady.
Thanks hon, Brad. We're ready to take questions.
Thank you. We will now begin the question-and-answer session. If you would like to ask a question about a choir to introduce your question to withdraw your request, please press start to one moment, please for our first question.
Your first question comes from John hodulik of UBS, sir. You may go ahead.
Great. Thanks morning guys. Can we get your thoughts on the competitive landscape down and maybe whether the new pricing from Comcast or any other competitive develop sort of affects your life of the return to growth in terms of post-paid phone that adds here in in the second quarter from you from the the the last slide there. It looks like that, you know, you expect some nice acceleration. Then secondly, uh, you know, there's potentially on just a massive amount of federal stimulus money flowing into Broadband infrastructure deployment over the next year or two. I realize we're very early in the process and often aren't laid out yet. But do you do you think Verizon is in a position to capture some of those funds as you sort of, you know can continue your heavy spending on Ultra wideband deployment next. Thank you. John Nash is situated as you have seen yourself. It is compared to the market and it's been for quite a while but with our model, I I can see that we are actually winning in any case because we're dead.
having all our businesses
Under and the unique Bond the inspection on the consumer side with the mix and match the value proposition and you saw in the court we continue to do that and but also as Matt mentioned it was a little bit light in the beginning of the quarter, of course our stores that are close to that Etc. And then we saw a very good sort of strength in our Port ratios and and or growth in in the end of the quarter because we both open. So we we look forward to to the second quarter and and the second part of the year and that's Ronan said when we had invested a we believe we're going to have a good second part of the Year take is really close to us and what we have seen so far where we feel good about it. So again, we have an overall strategy in order to address the market for consumer that is really worth with this step up the migrations and and all of that. So in general we feel good about it. The team is doing well. You saw we came out with a new promo as well, and we've always had a dog.
Financial discipline we do this because we know we can actually capture Market at the good high-quality customers on the infrastructure. I mean as I said, this is in the planning stages, so it's hard to say if this is true or not. So but on the other hand, I think that what we are telling the administration, of course that accessibility for the building and usability the three buckets to address the digital divide and when it comes to accessibility, we have to recognize and and you know, I worked in hundred eighty countries with with networks that the Network's during the COVID-19 anyw they were really working. Well, they were basically no major issues at all. They could deliver even though traffic moved around. So I think that what we are advocating for we want that a private sector continue to invest in a network and and leading that short and then having government work more with the affordability of it. So we have plans that means all needs for all different birth.
Customer segments in the market. So that's what we're advocating for that the same as advocating for as well. We don't think that any price regulation would be it would be counterproductive to the market. So in general the again, it's very early on I mean it's a plan that has not been approved and submitted but at least we're advocating together with brt and with ourselves what we think about the right math anymore comments on the competitive landscape. I think you touched on the key points on the you know, the only other thing I'd add is you you mentioned the strong momentum coming out to March into the quarter you add Thursday with the with the promotion that we put in place at the start of the month. We think is an Innovative promotion. That's addressing a customer pain point that nobody else has addressed in the past month was seeing good traction on that in the early days of that. So, you know certainly feel good about the momentum heading into the quarter on the volume side when you add that in with the with the financial performer.
We saw in the first quarter was set up nicely for 2 Q in the rest of the year.
Yeah. Thanks John Brad for the next question. Thank you. The next question comes from Simon Flannery of Morgan Stanley, right? Thank you very much. Good morning. You woke other strong quarter with FiOS Internet perhaps you could just give us a little bit of insight into the sustainability of that. Obviously 2020 was a great year in terms of broke on demand, but you seem to be sustained that in this year is this share is this, uh, incremental marketing opportunities and what's happening with the speed up tearing there and maybe related to that on 5G home. You've had a number of adjustments here recently. I know we're headed to 15 million households. But what's the latest on the ground today? And what should we expect through the year? Thanks. Thank you Simon. Yes, we had the we had the choice good FiOS quarter again them and overall. I think the the Broadband is in demand and our high-quality FiOS, of course a great opportunity prospects Panthers.
we I think personally that
Continue the demand for Broadband will continue. We are you starting a total revolution of using technology, which is scalable and sustainable in the post are of the COVID-19. So I and we have a great position and that will also is going to help me tremendously when we come with five your home on millimeter-wave and see but not all that because we know how to deal with home broadband and that is an advantage we have to any others that is trying to do fixed wireless access and we've been on to it for a long time and as soon as well, I mean now we're up to over thirty markets with 5G home. I mean, I did some twenty very sick. So so we are we are we on fire on this right now. We have very big belief in our home and then later in the year when see band comes we're going to add even more coverage and only embedded in her work with the ecosystem from the from the beginning and how we have developed our own hours on how to do a self-install how to Thursday.
Do all the sort of grids when it comes to millimeter wave and having a great opportunity to see their customer gets fantastic service. So all in all this money full package that we are bringing to the market in order to have a full-scale Broadband for the country. And I think it's absolutely right moment, but don't forget on the business side as well. Now, it's called 5G internet on the business side. We are using the same mythology. We are doing the scaling on the same platforms and we address another Market with it. It goes off all the time. We're having network service and we scale it with different customers and that scale will help us with growth. But it also means that with the platform thinking we have that will fall go down for 9, and if you see in this quarter, all three units are growing and we're bringing it all the bottom line and we still have more to do and but we know how to do it and we have the model.
Thanks a lot. Yeah, great. Thanks Simon for the next question. Thank you. The next question comes from Feldman. Coleman fax line is open. I think shaking the question. So earlier this week you announced that you had had officially commenced the deployment of your seed and licenses and that you would expect hundred million Pops to be covered by at least sixty megahertz as we get into a March of next year. You'll equally important to creating that coverage as making sure your customer base is able to use that capacity which is going to require a fairly significant handset upgrade cycle. You noted that you had just put a new promo into the market this quarter. How are you thinking about stimulating device upgrades over the course of the year, you know what's embedded in your ear guidance in terms of maybe doing more of this month? And then just as a follow-up question you would know that you do expect that the phase one Spectrum will be cleared by three to four q, but it seems like you don't expect to be fully utilizing it until March. So there's a bit of a gap. I'm just wondering if dead
there's anything you can do to close out or that's just
The supply chain can deliver right now. Thanks. Yeah, when it comes to a first of all I can only say that we are onto a force force start on the band. I mean it's only some six weeks off since we can start to talk to our employees we could talk to reporters. We can talk to the satellite companies or suppliers and it's a scene. I mean we have already ordered her for the equipment. We have made agreements Tower codes. We have we have the we have talked to the satellite companies that has reaffirmed that they believe that they can clear this transfer the Spectrum in third quarter and fourth quarter a.m. And we actually made a press release yesterday that when our starting deploying see band as well and that's 6 weeks. So we are we're we're the technology team was on fire to make this happen and ask them when we had this or investor day. We said that we worked with the dates we got from the FCC because we hadn't talked to anybody right now. This is the best day to have and and of course we're pushing as much as Thursday.
To see that we get this up for our customers as soon as possible in order to get the a great experience and and then blowing that over to the to the phone question. I think that Thursday we have seen a great topic on 5G phones and on unlimited premium and it's not said in the quarter over 20% of the unlimited new customers to Gunther's premium that tells you that the local value in it and a lot of five unit and with a new problem that not talked about we believe that is going to also Drive 5G. So we believe that what we have in the market right now. We should continue to grow the 5G base and I said this is going faster than what we saw in for G. So we will continue to to monitor of course, but we see a good take on it.
I know we can also add that when it comes to the iPad that have been used recent loans. It's also another additional millimeter-wave and and how that comes into the house to the whole ecosystem. So again, I we feel good about the uptake and we feel good about the line of products we have and we have the promo supporting it. So that's going to also I go well together with the the c-band deployment coming later this year.
Great. Thank you. Yeah, great. Thanks Brett Bradley for the next question. Next question comes from Philip Cusick is open.
Hey guys, thanks. I wonder if we can dig into the Enterprise and small business results. SMB was up here two year, which is great to see and I'm curious what you see in bookings versus growing Revenue this quarter Banks. Hey, Phil, thank you. Yeah, we we one of the hardest-hit businesses during the COVID-19 has been small and medium businesses. And for the simple reason that they are most vulnerable of these type of things and economic recession and we we had enormously strong Wireless business with smbs coming to the COVID-19 that actually came down quite quite a lot. We have seen over the years that we slowly or are coming back on that and in these Court, we actually had a very small town in SMB. So as they call me recover we think are positioning is really good on the wireless side, but also with the five the internet meaning fixed wireless access, I think we have a game
Keep combination to support our customers with that on top of some value-added services on top of that. I know that.
How many team is working with these every day? I don't think we're overrated smbs are coming back immediately. But clearly we see some signs of improvement in in the base on the enterprise South on the large Enterprise side. I think we have The Tale of Two Cities here again, and you have certain large Enterprises that are really impacted by the COVID-19 in recession. They are not holding holding back on investment. Then you have certain that has been fortunate in this tough time strikes to grow better and having a lot of demand so they are investing and that is giving the black right now and and of course in Enterprise business, we have the wire line for the secular decline in in in in the Wireline, which will not go away but the wireless business is coming in or mobile Edgecomb this happening and you saw how many announcement we did in the first quarter we start to see exactly what we have predicted that this year is the year or building the funnel and making these customer commercial
and and Tommy on the team are working together with Kyle or CTO every day to see that the customers are really seeing the benefit of
Is there any impact here from the the one fiber initiative is that helping at all on the Enterprise recipe side or is it too early for that? I think on the on the Enterprise side, of course, we have some opportunities with the fiber. But remember our priorities was clear. It's getting fiber to our forty and a 5G Network that that's really where we get them most bang for the buck. And then we we do is transfer and the price went down on the small and medium that's going to take some time. That's where it said before but now when we have the the 5G internet, we we actually have fixed by Sexes. We have a really good product for small and my name is so some possibilities and Enterprise but they are also still to come as we said it's more focused on building. The network with fiber is so we can see that our customer guest experience that they need to have when it comes to our exceptional great fight with millimeter-wave and see about
But still just the following that I mean it is part of his hands mentioned previously about building the network once and then monetizing it different ways just as we talk about with them monetizing it in different ways with the fiber. We have the same opportunity to so once you you know, your lighting up those sell sites when you go pass and Enterprise building the opportunity to go in their life and and have more customers or Enterprise customers on that rather than paying a third party access absolutely as an opportunity for us to create incremental return on that page again, another example of multi-use network.
Thanks, Phil. Yeah. Hey Brad, we're ready for the next question. Thank you. The next question comes from David Barden of Bank of America.
Hey guys. Thanks for taking the questions. I guess the first one on the files Revenue we saw pretty strong pick up. I know that you know kind of a year-over-year basis. There's been a mix shift and off, you know an uptake on on the higher-speed Broadband services, but sequentially was a big number of wondering if you guys did something on price off on the Broadband or even on the video that would have contributed to that move. And then the second question, I guess that you guys through it enough a lot of numbers out on media, you know, 26% off the gross 13% owned the property growth 10.4% total revenue growth. Could you kind of break that down what the moving parts are kind of dragging down some of those bigger jobs are my popping numbers and kind of is this kind of a 1-year level set over a depressed twenty-twenty and we're going to return to some kind of more quote unquote normal Revenue growth pattern in in 2022.
Yeah.
If I start with the files for Revenue what you're really seeing here is the impact of what the team started in in the first quarter last year. We introduced mix and match into our FiOS offering it's been great consumer business. We introduced it into files and first quarter last year, obviously the initial benefit we were seeing their got interrupted as the pandemic got underway, but you sought we now have three quarters of very strong volumes starting in third quarter last year fourth quarter. And now again in the first quarter here our best first-quarter in total files for six years. And so what that means is that you got an internet base of customers in file since now more than 5% higher than it was a year ago. And so that's driving the revenue growth. Even if you have the secular pressures coming on the video side. It's really volume created as much as uh, step UPS or anything else. Although there are others see step-ups in there and opportunities to move customers to gigabit service and so on but the strong volumes based off the quality of service off.
Combined with bringing the mix and match their works very well for us in consumer Mobility now working well for us in files. And as you saw we brought the mix and match constructs into our SMB Wireless offerings as well. So very excited about what that's going to do on the media Revenue side as you say the the 10.4% up double-digits for the second consecutive quarter, you remember both fourth quarter and now first quarter aren't really lapping COVID-19 impacted quarters. So what you're seeing here is the benefit of the hard work the team's been doing over the last couple of years and that's really showing up on the advertising Trends as we talked about their offsetting that to your question. How do you get from those higher numbers down to the 10% you know things may continue to be a a headwind and will likely continue to be so but we're very encouraged by the by the the advertising and the Orlando and momentum that wage
Have and as you say now we you know, that that's not a 1-year thing as we go forward. It seems getting some good momentum David. Yeah. I just want to reiterate on the verge of that group again we go back to where we started distractedly 2018. We reset the the business plan and we started cut cost then we reshape all the products all the way from their opener owned and operated on all the brands. We we combine the ad platform. The work has been immense by the Verizon Media Group team. And now we we see sort of the fruits of that. I work with the growth in two consecutive quarters. Double digits. So I just want to shout out to the team that this was the plan we set and they are actually delivering on the plan. So I think we have a great time with these guys. They're they have a they have a clearly good product portfolio and you know, they get going to be important in the future. So by that, I think we're in a good position.
Yeah, thanks.
Right right for the next question.
Thank you. The next question comes from Michael Rollins of City you're line is open.
Thanks and good morning. I was curious if we could go back to one of the comments you made earlier about Verizon reaching the cumulative cost-cutting Target of ten billion. And if you could unpack that in terms of how much of that helped the ebitda versus the capex side of the investment process for Verizon and and maybe secondly em how how should investors think about, you know, the pace going forward of what incremental costs cutting can like for Verizon over the next three to five years. Thanks. Thanks Mike. And so like I I'm incredibly proud of the team's efforts over the past three-plus years now as we've really lent in on on identifying ways to continue to make up more efficient and maintain a position and having the the best cost structure in the industry which we things going to continue to be important going forward obviously in in terms of your first question its wage.
Split between both capex and p&l items behind the ten billion. It's it's it's roughly even between those two where you see that come from. So on the back side, that means we able to do more with deployments for the same amount of money. Then we would have done previously that's allowed us to do some of the things across the network as we continue to transform the network not just in deploying 5G, but all intelligent Edge Network transformation going on the one fiber. There's a a backbone in there as well. There's going to give us benefits for years to come as a result of some of the efficiencies and then on the page some of those have helped contribute to the bottom line, but some of them have also allowed us to reinvest in the business so that we can continue to be competitive in the marketplace continue to bring new promotions and so on to to our consumers and you see the value of us doing that and in terms of the pays going forward just cuz who we've birth
We we've hit the talk. It doesn't mean we slow down we will have you know, continuous Improvement going forward here the teams got good momentum. And the great news is we didn't close to the finish line that ran through the Finish Line. We accelerated through the tape. There's a lot more opportunities for us. Obviously the last year has identified even more items for us. So as we go forward, we will continue to increase the efficiency of the business both on the income statement and also from a capital side as well. So a lot more to come know I and I just want to agree with that. I think the structure is changing on platform thinking and using it making the network with a Verizon telling and network network some of those benefits. We haven't even seen yet with those investment or done. But also the news. You have any group where we have the tree strong running their businesses has also unveiled much more efficiencies than we have seen before and how they run it. So I agree with the math and Thursday.
It's part of our governance constantly to see that we find more efficiency because that means that we can be even stronger in the market and having the best cost structure for us is important. And is this at our life?
Expect to continue to give further updates on and you know compared it relative to what the initial ten billion goal was or now that you've achieved the goal progress just get wrapped into the totality of financial performance and outlooks for Verizon. Yeah, as we go forward here. I mean obviously over the past three or four years as we looked at the opportunity he's ahead of us. This was a major opportunity. So that's why we gave a very specific Target as I mentioned. We will continue to work with this it'll be obviously inherent in our targets. But as I think about the biggest opportunities ahead of us over the next three to four years there around growth everything we're doing was 5G and all the other parts of our business. So that's why the targets that we gave it the investor Thursday, we're all about growth whether that be how quickly we're going to deploy the the sea band that we we got a continuing to build that millimeter-wave the total addressable markets for Thursday.
5G home for mac and then the revenue growth that we talked about over the next five years. So that's we will obviously continue to drive cost savings and efficiencies throughout the business office, but the biggest opportunities for us going forward here. When we look at everything in front of us is driving top-line growth, and we're very excited about pursuing those
Thank you. Yeah, great. Thanks Mike Brad. We're ready for the next question.
The next question is from Craig Moffett of Moffett Nathanson. Your line is open sir.
Hi, so Comcast significantly changed. It's it's pricing on your in the mvno to mm offer sort of family line family plan discounts. Can you just talk about the the renegotiation that you and the cable industry just had on the mvno Ang and what your view is of of the kind of the status of that relationship and and how you see it evolving going forward. Obviously. The new pricing is considerably more aggressive and and now sits on top of your pricing all the way down and family plans up to about four or five lines.
Hi, Greg, I can't go into details in the commercial agreements while but what I can say is that we we feel good about a network-as-a-service tragedy where we have our values our own now, so to a premium brand with Verizon, we have the Envy knows addressing a certain part and then we have the visible and all of that. That's the whole idea and and for us this is a creative. We have a good relationship with with our mvno partners. We see them as Enterprise customers, but we also see that this is a creative. Because we have all these I mean nobody in the market has the same opportunity that we have to play all the way from our premium Verizon, which you heard Metheny talk about how we migrated that we're doing it in a great job rolling tape. And then we also have the envelope Partners bringing customers and and revenue and the best return-on-investment and ultimately we start building new markets with visible and and later on this year. We TracFone and then we have an unparalleled position wage.
For anyone else in the market to be growing.
So I I feel good about it. I feel good about the relationship with them, you know, we treat them as in Port and Enterprise customers and we will continue to do so.
Yeah, I would agree with everything in my concept and the idea of bundle pricing for customers. I think we when we introduced share everything plans back in 2012. We so often it's something we've been doing for a long time. It makes a lot of sense and we as handset. We're glad to have the traffic on our Network and it's just gives us another opportunity to wage monetize the network and multiple different ways.
And if I could just ask one follow-up. Do you have any update on the timing of the TracFone transaction transaction and as and and the progress through regulatory in Washington, I think what everything we said from the beginning is holding through the processes is continuing as expected. And as I said, these are second half of all twenty one event when I'm going to be approved. So it it's a progression as expected. We don't believe it's going to be earlier. We think it's going to be somewhere in the in the third quarter which we said also when we announced this month, we would give an update when we know more about this couple of different events still there. So, but again, it's progressing as we expect it from beginning.
All right. Thank you. Yeah, great. Thanks Craig Bradley for the next question.
Thank you. The next question comes from Tim Herron of Oppenheimer. Your line is open sir. Two questions one has phone subsidies for all do you think this becomes a permanent in the industry again? And then secondly the business I think Communications networking probably transform more in the last year than the last decade with a lot more collaboration and conferencing and obviously you acquire black is a year ago. Can you talk about how well integrated that is for the rest of your communication strategies go-to-market strategy and maybe are you creating more you cast products or other, you know bundles Thursday when services to go after the business Market? Thank you. Thank you on the 1st, You'll see in our strategy how we address the market them and I cannot comment or competition is do we feel good about our positioning with the problems? We're coming out right now and it it's actually resonate with our with our customers the migration path we have in all of that. So I don't think that you're going to see from us birth.
Anything like that. So on the blue jeans and collaboration tools. We are integrating that every day here in New settings with new partners all the time because that's a great asset and and and we were scaling it right now as we acquired it. So that feels really good and we still have the old 5G year and the mobile age computer. Which going to need video conferencing a Tetra or communication services. So there's a lot more to be done there and we build that into that event Solutions where Tammy and her team are continuously working with our customers that go to my great right now and we have a great offerings in the market. So we feel good about that to be part of that transformation in the market which is upsetting some of the while and secular decline as well. So overall, I feel that we're we're good position and and a good work not anything more on that nothing like the team's done a great job over the past twelve months. Remember we pack
We close this transaction during the pandemic so the ability to integrate and so and we've done it all virtually and remotely and so a lot of good work going on. And as you said the opportunity for us to
World in the offerings that we have with our Enterprise customers and some good traction there. So I think they're they've done everything we expect you to do at this point. Thank you. Yeah. Great. Thanks Tim Bradbury for the next question.
The next question comes from Frank Lawson of Raymond James your line is open.
Great. Thank you. Can you walk us through a plans for the balance sheet and then in in particular would you consider monetizing any assets like Verizon media and so forth to to deliver Thursday, we should think about the timing for for delivering if that's changed at all since since the analyst day. Thanks. Thank you Frank or no Capital allocation priorities are the same as I said before number one. We met in in our business and I think we've been very clear what we're investing right now and the capex an increase incremental capex for the sea band then secondly, I have clearly outlined. We're going to put our board in the position to continue to grow the dividend map and I feel really confident about that. And then thirdly it's to the West we did after their Vodafone acquisition to come down again to pre-order from we call that free COVID-19 or priests even right now because we want to change here or a little bit fascist so that we're trying to Thursday.
So do not then we see a great moment for that and we have we have basically a plan for that TV and how we going to generate growth and cash-flow over the years. And as Matt's outline when we spoke about these last time four to five years is what we believe is going to take us to get there. So that's what we have in play right now and no other things are included or no other new updates neither. So we are used in a quarter where the generated very good cash, which means that the first first quarter is in there for us to start doing our work to get back to the Sea band sort of took metrics.
Yeah, thank you for holding on that. The The Leverage is you know changed since the invested a good first quarter results as you think about the revenue targets we've given for the 5 years certainly on track. They're the only other balance sheet update our give you is just on the the cash balance. We've always had that elevated levels since the start of the pandemic given the progress we've seen in the since the start of the first quarter in terms of the vaccination rates in this country and and then also the stimulus getting past we didn't know if that was going to happen or not. And now having your auction behind us. We do think that there's the opportunity for us to start moving cash to what was closer to something a pre pandemic level. So now that we've got all those things done and we get into the office will start work on that.
All right. Great. Thank you very much. Yeah, great. Thanks Frank operator for the next question.
The next question comes from Colby synesael of Colin has opened great. Thank you. Maybe just a follow-up on that, you know free cash flow is pretty strong in the corridor 5.2 billion months. It seems like there was some benefit on the working capital side. Just curious if you talk about how you see that progressing for the remainder of the Year might be applied in terms of free cash flow for the year based on your target 2.8 turns of Leverage by year and twenty Twenty-One. And then secondly, I'm not sure if you'll be able to give it but I'm curious you can give us any color in terms of subscriber numbers for the fixed Wireless products wage at this point and also just from a housekeeping perspective. What line items are you actually including Subs if it's anywhere at all, and then also what where is the rep for that being shown? Thank you. Yeah. Thanks Colby. So looks absolutely happy with the free cash flow performance in the first quarter obviously working capital was part of the benefits.
in there and
And as we look at that, there's a couple of things going in different directions as we saw the increase in in equipment volumes. We saw the device payables the receivables related to that wage increase as you would expect that was a benefit on cash flow last year. We said that would be a ahead when this year. Hope to be ahead when this year absolutely saw that offset in that a little bit was the Volvo that we saw in March helped inventory levels, but also we saw really good customer payments in the month of March to as those stimulus payments. It's so as I think about cash flow for the rest of the year, I would expect the the device receivables to continue to be a little bit of a headwind as those returned to a more normal level after after the lower volumes last year and then moved to see if we don't have cash tax payments in first quarter those come through the final three courses of the year. And as we mentioned we had a couple of faithful items in there last year so still feel good. Obviously about where cash flow is dead.
No updates on our our year-end leverage Target at this point, but really nice to have a a strong first-quarter in the in the bank in terms of the figs wireless access as long as those expand will start to disclose them in terms of where the revenue shows up. You're seeing that show up in service Revenue as as as as files brought it does today. So that's where the that's where the revenue will show up in the income statement. So it's actually in the FiOS segment opposed to in the files Revenue Shorkey service Revenue. So I'm saying fixed wireless access will also show up as service revenue and then when the wireless side, it'll be on the wireless. Service Revenue, correct?
Okay, thank.
Yeah, great. Thanks Colby where we've got time for one more question.
Your last question comes from an inventor of Barclays your line is open. Thank you. I guess on the margin front when you look at the the consumer segments you have a tail wind from a FiOS margins at that revenue stabilizes or you know, potentially starts flatlining do the Broadway mix chips away from video and then as volumes pick up and you focus a bit more on volumes over the course of this year. There's a Tailwind Having side. There's a head went from that. So if you could just talk about the percentage when it comes to margins over the course of the year in the consumer business that would be useful and then secondly when you think about the bank stimulus that was passed in December, it looks like some of that money can flow to wireless consumers the subsidy the three billion dollars subsidy for Broadband. I get some of that could flow to wireless khong
Maurice as well. Are you guys starting to see some of that impact? You know, how big of a deal when do you expect?
Like to be in the second quarter. Yeah. Thanks going on. So on the consumer margins, I think we've historically produced very good margins across the business there and how to expect to continue going forward as you identify. There is always a number of puts and takes out there as we move forward and certainly files is performing very well in this contributed to that. But as you also write the appointed out equipment volumes were up significantly year-over-year and obviously that increases the denominator the the the denominator in the margin calculation Without Really increasing the the numerators. So you got a number of different puts and takes you'll have, you know, the ongoing impacts of building out our Network in there as well. But we feel very very good about their the margins that will have for the the rest of the year within consumer very much in line with what you would expect dead.
And certainly, you know, the seasonality showing up in the fourth quarter with the seasonal volumes that you would expect to see over the course of the holiday. So, you know, it's certainly to to to continue to be on track to give the two meets the the EPS guidance we have for the air consumer margins need to be a a strong contributor to do that and I expect them will be in terms of strong benefits as I think I mentioned in the the comment about working capital. We're seeing very good payment patterns from consumers at this point. And that's where I think we'll see the vast majority of any benefit show up, So, you know, those those payments were very strong in the first quarter and I suspect the stimulus bills had something to do with that but it means that our consumers are in very good shape as wage compared to where they otherwise might have been given the impacts of the pandemic going into the second quarter and we feel good about the outlook for the rest of the year ahead of us.
Yeah, great day skate on everybody were we're done for the day. Thank you very much for the for the participation and we'll we'll see you soon.
Ladies and gentlemen, this does conclude the conference call for today. Thank you for your participation and for using Verizon conference Services. You may now disconnect.