Sunday, January 8, 2006

Verizon Sees CAPEX Peak in 2006 for Wireline Spending

Verizon has already reached a market penetration of 20% for FiOS TV in its first market of Keller, Texas, since the service was launched in late September 2005.

Speaking at a Citigroup conference in Phoenix, Verizon Chairman and CEO Ivan Seidenberg said that costs to pass a home or business continued to decline in 2005. He noted that he expects 2006 to be the peak year for total wireline capital spending, as the company's capital expenditure mix continues to shift from legacy technologies to fiber and IP.

To date, Verizon has passed 3 million homes or businesses in 16 states with its fiber deployment. The company previously announced that it would pass an additional 3 million in 2006, and the total of 6 million premises passed equates to approximately 20% of the homes and businesses in Verizon's landline service territory. Seidenberg said he anticipates deployment rates at 2006 levels in the future. Verizon's goal, previously announced, is to pass approximately 60% of the homes and businesses in its landline service territory with fiber.

Regarding the company's recently completed merger with MCI, Inc., Seidenberg said costs savings targets will be ahead of previous expectations.

Verizon now estimates that the transaction will yield a net present value of $8.0 billion in incremental revenues and operational savings, including investments in network and systems to achieve these savings -- an increase of $1.0 billion from the $7.0 billion announced in February 2005.

The costs to achieve these synergies are now estimated to be approximately $1.0 billion in expense and from $1.6 billion to $1.9 billion in capital through the end of 2008. Previous estimates were expenses of approximately $1.0 billion to $1.5 billion and capital of $2.0 billion.

An archived webcast of the presentation is available on the company's investor relations website.

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