Bloomberg News

Verizon CFO Says Storm, Strike Cost as Much as $250 Million

September 14, 2011

(Updates share price in final paragraph.)

Sept. 14 (Bloomberg) -- Verizon Communications Inc., the second-largest U.S. phone company, said storms including Hurricane Irene that followed a strike by some employees have cost it as much as $250 million this quarter.

“The catastrophic event has really taken an impact,” said Verizon Chief Financial Officer Fran Shammo today at a Bank of America Corp. conference in Beverly Hills, California, referring to the storm that followed an August strike by workers. “Putting that all together, where we stand today we are two to three weeks from getting the repair and maintenance flows back to normal.”

About 45,000 of the New York-based company’s employees went on strike between Aug. 7 and Aug. 22. Days after they returned, a backlog in cable installations and repairs was magnified by Hurricane Irene and Tropical Storm Lee. The employees were working overtime with three times the normal repair load, Shammo said. The company is still managing a backlog of about 90 days for installations.

Verizon continues to negotiate with the employees who are represented by the Communications Workers of America and International Brotherhood of Electrical Workers unions.

AT&T, T-Mobile

Shammo also said the government’s move to block the $39 billion bid by AT&T Inc., the biggest U.S. phone carrier and second-largest wireless operator, for Deutsche Telekom AG’s T- Mobile USA shows the difficulty for companies in acquiring spectrum, and a need for reform. The proposed deal would allow AT&T to surpass Verizon Wireless as the No. 1 U.S. mobile operator.

“If you’re not going to allow a carrier who needs spectrum to acquire that spectrum that is an industry issue,” he said “That really applies to all of us.”

Verizon is set to run out of spectrum -- the government- licensed radio frequencies used in wireless communications -- in 2015, and is “always looking” for a way to acquire more, he said.

The company rose 10 cents to $35.60 at 4:02 p.m. in New York Stock Exchange composite trading. The shares are little changed this year.

--Editors: Niamh Ring, James Callan

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Ville Heiskanen at vheiskanen@bloomberg.net


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