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Verizon Braces For Potential Second-Quarter Earnings Impact As Strike Stalls New Customer Growth

Verizon's CEO has warned that second-quarter sales and net new customer adds could take a hit because of the ongoing strike involving some 40,000 unionized workers.

Echoing his sentiment during the telecom giant's first-quarter 2016 earnings call, Verizon CEO Lowell McAdam on Tuesday said that the carrier's second-quarter financial results due out in July could take a hit because of the ongoing strike.

Some 40,000 unionized employees walked off the job April 13 and haven't returned after contract negotiation attempts have proved unsuccessful so far. As such, the carrier has had to delay new service installations, McAdam said during this week's J.P Morgan Technology, Media and Telecom conference in Boston.

Verizon CFO Fran Shammo also confirmed last week that there would be a "significant decline" in net new customers ordering Fios services in the second quarter because the carrier has been making repairs and ongoing maintenance a priority for existing customers during the strike.

[Related: Partners Say Verizon Strike Is Impacting Business ]

"The more turmoil that's out there for Verizon, the less likely they are to gain new customers," said one executive with a Verizon partner who asked not to be named.

The partner exec said that the partner's customers have not been directly impacted from an installation perspective over the past month and a half, but many of the company's Verizon customers have since been moved onto Frontier Communications. Verizon sold off its wireline assets in California, Florida and Texas, and the takeover began April 1.

Where the solution provider is seeing impact, however, is within its other telecommunications partners -- local exchange carriers (LECs) -- that rely on the Verizon network to deliver local services.

"We've had a relatively slow response on some customer sites that are using a LEC that is on the Verizon footprint when it comes to service restoration," the exec said. "Less feet on the street means less response time for outages."

When reached for comment regarding how the strike is impacting partners at this time, a Verizon spokesperson said that the carrier continues to be committed to serving both its customers and partners.

"[Customers and partners] have been our priority since the strike began and continue to be," Verizon told CRN.

Verizon and the two striking unions -- the Communications Workers of America and the International Brotherhood of Electrical Workers -- are said to be negotiating once again this week. According to the Department of Labor, neither Verizon nor the unions will be publicly commenting during the talks.

Shammo said that Verizon's full-year earnings could also be impacted because of the strike, which is now in its sixth week.

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