Verizon: $250 Million Hit From Storms and Strike

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Look in the bright side, Verizon: At least there haven’t been any locusts.

The twin blows of a two-week strike by 45,000 union workers and wrath of Hurricane Irene and Tropical Storm Lee — which dumped more than 20 inches of rain in parts of Verizon’s service areas — will cost the telco up to $250 million in the third quarter of 2011, CFO Fran Shammo said Wednesday at the Bank of America Merrill Lynch Media, Communications & Entertainment Conference in Beverly Hills, Calif.

On Monday, Verizon announced that during the strike, it suspended FiOS TV and Internet installations in the Mid-Atlantic and Northeast regions to focus on repairs and managing other operations, leaving it with a backlog of more than 100,000 orders (see Verizon: More Than 100,000 FiOS Orders Postponed During Strike).

It will take about 90 to 100 days to clear that backlog, according to Verizon — meaning FiOS is going to take a pretty big hit in Q3.

Verizon filed an 8-K following Shammo’s comments, noting that wireline EBITDA for the third quarter of 2011 will be $200 million to 250 million below Verizon’s prior expectations.

The workers represented by the Communications Workers of America and International Brotherhood of Electrical Workers returned to work the evening of Aug. 22, without a new contract (see Verizon Striking Workers To Return Without Contract).

Verizon and the unions continue to negotiate, but it could be a while before they reach a deal given that many of the heads of the CWA and IBEW locals in the nine-state region are up for re-election in the next few months, and don’t want to be seen as caving in to the telco’s demands.


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