Verizon strike had significant impact on installations in Q2, cratering wireline business

The seven-week strike that ended in late May had a crippling impact on Verizon's (NYSE: VZ) wireline installation operation, resulting in the company losing 41,000 FiOS pay-TV customers and 13,000 FiOS high-speed internet users, Verizon revealed Tuesday.

"When we settled with the representative employees, there was a large backlog of installations," said Verizon CFO Fran Shammo during this morning's earnings call with investors. "As we sit here today, it's back to normal. But during the strike, we didn't do any advertising. It takes 30-60 days to ramp that up. We feel like we'll be back in stride by the fourth quarter."

The declines contrasted a gain of 26,000 FiOS video users in the second quarter of 2015, along with an addition at that time of 72,000 FiOS broadband subs. 

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Verizon's wireline business ended the quarter with an operating loss of $463 million.

Describing the seven-week strike as causing a "complete shutdown in new installations," MoffettNathanson analyst Craig Moffett said it's unclear as to whether Verizon can really "catch up" on the missed installs. 

"Even accounting for the work stoppage," he added. "The transition from growth to contraction at FiOS is shocking. A little over a year ago, Verizon's FiOS video business was growing subscribers at a double-digit rate. Today, their FiOS subscriber base is just 1.6 percent larger than it was a year ago."

For more:
- read the earnings release

Also read: Tracking pay-TV earnings in Q2 2016

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