Verizon CFO Highlights Fiber Flexibility And IoT Success During Q4 2016 Earnings Call

Verizon spent 2016 spinning off parts of its wireline business across three states, but the carrier is still focused on its remaining fiber footprint, wireless and next-generation services, according to Matt Ellis, Verizon's executive vice president and CFO.

While Verizon shed its fiber-based fiber assets in California, Florida, and Texas last year, the carrier is still pursuing fiber-based services, as evidenced by its acquisition of XO Communications for its fiber footprint. The XO purchase is expected to close during the first quarter. The deal will build out Verizon's fiber footprint in 45 of the top 50 U.S. markets, the company said.

[Related: Partners Applaud Verizon's $3.6B Data Center Sale To Channel-Friendly Equinix]

What is clear is that Verizon is looking for high-growth regions for its residential Fios services, while it chases bigger enterprise deals via the XO acquisition. "Fiber is going to be a critical asset for us as it replaces the core copper network … We certainly look at where it makes sense for us to own the fiber, and if there are ways to partner, we do that as well. It's on a case-by-case basis," Ellis said during the carrier's earnings conference call this morning.

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At the end of 2016, Verizon had 5.7 million Fios internet connections and 4.7 million Fios video connections. The company added a net of 68,000 Fios internet connections and 21,000 Fios video connections during the fourth quarter.

Verizon's overall Q4 2016 financials may have fallen short of expectations, but its its internet of things (IoT) segment didn't disappoint, increasing 21 percent year-over-year.

The Basking Ridge, N.J.-based carrier declined to comment on consolidation speculation during its earnings call, including reports alleging that Verizon is considering a cable company purchase.

"We will continue to look for opportunities to expand and grow the business … We will be disciplined in any investment activities and we evaluate all options, whether its build, buy, or partner," said Verizon's Ellis, who took on the CFO position following the retirement of Verizon's former CFO Fran Shammo at the end of 2016.

Verizon posted Q4 2016 consolidated earnings per share of $1.10 on revenue of $32.34 billion for the quarter, which ended December. 31, 2016. Verizon's revenues were down 5 percent; A year ago the company reported earnings per share of $1.32 and revenues of $34.25 billion.

The telecom carrier's full-year 2016 revenues were $125.98 billion, a 4.3 percent decline from 2015's full-year revenues of $131.62 billion.

The carrier's global enterprise wireline revenues sank 4.5 percent to $2.87 billion this quarter, from $3.01 billion in Q4 2015.

Verizon's quarterly operating revenues in wireless fell about 1.5 percent to $23.37 billion, from $23.73 billion during the year-ago quarter.

Verizon's IoT-related revenues, led by its telematics segment, saw a 21 percent bump to $243 million in the fourth quarter when compared to fourth quarter 2015. The carrier expects to sustain this growth trend within the IoT space, Ellis said.

Regarding its pending $4.8 billion deal for Internet giant Yahoo, Verizon said that it continues to work with Yahoo to assess the impact of the two large-scale data breaches that were discovered last summer. The hacks – which affected more than 1 billion users -- has sparked speculation that Verizon could walk away or use the hacks as leverage to bargain down the price tag.

According to a report from The Wall Street Journal one day ahead of Verizon's Q4 2016 earnings call, the Securities and Exchange Commission has kicked off an investigation to determine if Yahoo could have reported its data breaches sooner.

Yahoo said that it is still going ahead with its planned sale of its internet properties to Verizon during its Q4 2016 earnings call on Monday, but that the deal won’t close until at least April.

Verizon expects to close its data center sale to Equinix following in the second quarter of 2017.