Verizon Flags Up To $800M BT Group JV Hit – Discloses More ‘Ongoing Transformation’ Charges

Earlier today, the company and BT Group formed a joint venture to capture opportunities from international enterprise customers.

• Verizon and BT are contributing $625 million each for the new joint venture.
• New CEO Dan Schulman implemented a workforce reduction of more than 13,000 in November last year and announced a second round of layoffs affecting hundreds last month.
• As part of its ongoing restructuring efforts, Verizon also expects to incur a workforce reduction charge of $350 million to $450 million in Q2.

Verizon (VZ) on Monday said it expects to record a $700 million to $800 million second-quarter loss tied to the formation of its new international joint venture with BT Group, while also warning investors of hundreds of millions of dollars in additional restructuring charges as CEO Dan Schulman presses ahead with a sweeping transformation of the U.S. telecom giant.

At the time of writing, Verizon shares were trading lower in premarket by under 1%.

The Verizon-BT Joint Venture

Verizon and BT joined hands to bring their international businesses together in a joint venture equally owned and controlled by them. Both companies are contributing $625 million to the new initiative, which will serve international enterprise customers and generate roughly $4 billion in annual revenue.

In a Securities and Exchange Commission filing, Verizon disclosed its loss expectation for the second quarter (Q2) related to its contribution to the venture, as certain equity interests in Verizon’s international wireline connectivity and managed network services business were classified as assets and liabilities held for sale.

Verizon Also Flags $750M In Additional Transformation Charges

In the same SEC filing, Verizon said that as part of its ongoing transformation efforts, it expects to incur a workforce reduction charge of $350 million to $450 million, and asset rationalization charges of $200 million to $300 million following the decision to cease use of certain real estate and network assets.

Since taking office in October last year, new CEO Dan Schulman has been advancing his mission to compete aggressively with rivals AT&T and T-Mobile U.S., which led to a workforce reduction of more than 13,000 one month into the job and a second round of layoffs affecting hundreds last month.

"Our current cost structure limits our ability to invest significantly in our customer value proposition," Schulman had said in an internal memo at that time. "We must simplify our operations to address the complexity and friction that slow us down and frustrate our customers."

What Retail Traders Think About VZ

On Stocktwits, retail sentiment about the stock turned ‘neutral’ from ‘bullish’ over the past 24 hours.

VZ stock has gained more than 14% so far this year and over 10% in the past 12 months.

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