Verizon Wireless 2013 Annual Report Download - page 4

business and government customers. These services now account
for nearly 60 percent of enterprise revenues.
The loyalty of Verizon’s customer base gives us a resilient and
stable business model in a highly competitive marketplace.
Verizon Wireless has the lowest customer churn of all major
providers; FiOS was the only provider in the east region to receive
J.D. Power awards for customer satisfaction with television, phone
and Internet in 2013; Frost & Sullivan recognized the quality
of our enterprise managed security services; and for the third year
in a row, Fortune magazine has ranked Verizon No. 1 in the
telecommunications sector of the publication’s list of the World’s
Most Admired Companies.
We’re also delivering value to customers and investors by
streamlining our operations, simplifying our processes and
listening to our customers. The Verizon Lean Six Sigma process
improvement model has put new tools in our toolbox for fixing
inefficient systems, yielding billions in operating and capital
efficiencies in 2013. Our enterprise business made excellent
progress in integrating its systems and implementing a rapid
delivery model to lower costs and improve service. We also took
steps to reinvent the retail environment in our Verizon Wireless
stores by opening the first Destination Store at the Mall of
America in Minneapolis, featuring lifestyle zones that reflect the
breadth of ways in which customers are incorporating wireless
products into their daily lives.
This disciplined focus on customer service, growth and
profitability resulted in strong financial performance in 2013. We
generated $120.6 billion in operating revenues, up 4.1 percent
from 2012, with growth coming from all our strategic areas
of wireless, FiOS and strategic enterprise services. Adjusted
operating income (non-GAAP) grew more than 21 percent
compared with 2012. We generated $38.8 billion in cash flow from
operating activities, up 23.3 percent year over year, and posted
our highest full-year adjusted consolidated EBITDA margin in
eight years.
On an adjusted basis (non-GAAP), earnings per share were $2.84,
up 26.8 percent from 2012. Reported earnings per share were
$4.00 for 2013, compared with 31 cents per share in 2012. For
shareowners, this translated to a total annual return of 18.6
percent, including our seventh consecutive dividend increase.
To sum up, we ended 2013 stronger and more competitive than
ever, with great momentum in our growth businesses. Our job in
2014 and beyond is to take full advantage of these opportunities.
TAKING MOBILE TO THE NEXT LEVEL
We took the first step down that road early in 2014 by completing
our acquisition of Vodafone’s share of Verizon Wireless. We have
operated Verizon Wireless in partnership with Vodafone Group Plc
since 2000. Over that time, we’ve built it into the largest and most
profitable company in the U.S. wireless industry. By owning 100
in our enterprise networks in Europe and the U.S., and we have
successfully trialed 200 gigabit speeds on our long-haul route
between New York City and Boston. In our all-fiber residential
network, which now passes 18.6 million households, our faster
FiOS Quantum service has proven to be a real growth driver, with
more than 1 million customers signing up for its broadband speeds
of up to 500 megabits per second. In addition, we accelerated our
transition to a more efficient technology platform by converting
330,000 copper lines to fiber. Our commitment to network quality
earned us numerous third-party accolades in 2013, including J.D.
Power’s top rating for wireless quality.
These networks are a powerful distribution platform for the
innovative products and services that are fueling our growth. We
ended the year with 102.8 million wireless connections, 6.1 million
FiOS Internet subscribers and 5.3 million FiOS Video subscribers.
Wireless service revenues grew by 8.3 percent in 2013. We
continue to introduce a steady stream of smartphones and tablets
by a range of leading manufacturers, including a new family of
Motorola DROIDs, the iPhone 5C and 5S, the first-ever Windows
tablet and a 4G LTE version of Amazon’s Kindle. About 70 percent
of our postpaid customers now have smartphones, helping
us reach the strongest wireless EBITDA service margins in our
history. (EBITDA means “earnings before interest, taxes,
depreciation and amortization.”)
Total FiOS revenues were up 14.7 percent for the year. Consumer
wireline revenues grew at a very healthy 4.9 percent a year, largely
driven by FiOS. On the enterprise side, sales of strategic services
such as security, cloud and telematics increased by 4.6 percent
despite a challenging macroeconomic environment faced by our
The Verizon Innovative Learning Schools program provides
grants to train teachers on the most effective way to use
technology in the classroom to engage students. For more
information on Verizon’s commitment to K-12 education,
visit responsibility.verizon.com
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