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CFO Fran Shammo says U.S. telco will report net customer loss at fixed-line division.
Verizon CFO Fran Shammo this week revealed that the recent strike will shave $0.05-$0.07 off the U.S. telco’s second-quarter earnings per share.
The operator posted EPS of $1.04 in the second quarter of last year and $1.06 in the most recent quarter.
"It was a six-week long strike," he said at Tuesday’s Bank of America Merrill Lynch Media, Communications and Entertainment Conference.
During this time, Verizon had to pay overtime to managers and bring in external contractors to cover for the striking staff, he explained during a fireside chat, which was transcribed by Seeking Alpha.
These extra staff worked on maintenance and repair jobs, rather than new line installations, where the cost of sending a technician to carry out the work is covered by the connection fee charged to the new customer.
"If you are only working on repair and maintenance jobs and not doing installation, then you have a shift between capital to expense. So some of the pressure that we are seeing in the P&L is that shift," Shammo said.
It also means that Verizon’s wireline business will report a net customer loss for the second quarter.
"We spent most of our time on repairs and maintenance. So the actual net adds of wireline will be negative for the quarter," Shammo said.
He said approximately 46,000 wireline workers went out on strike in mid-April, more than the 40,000 claimed by the two unions representing them, the Communication Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW).
The strike ended last week after the two sides agreed on a new four-year contract offering pay increases and promises about employee benefits and working conditions.
Shammo said the contract is due to be ratified on 17 June.
