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White House Offers a Hand to Verizon Communications Inc. (NYSE:VZ) and Strikers

Verizon Communications Inc. (NYSE:VZ) Strike 2016
Verizon Communications Inc.  took part in the MoffettNathanson Media & Communications Summit yesterday. The firm is facing a big drop in new clients due to the current strike. The Obama administration is likely to mediate the next round of talks.
Verizon Communications Inc. (NYSE:VZ) Strike 2016

Verizon Communications Inc. Errs About the Strike Impact

Verizon confirmed on Thursday that the ongoing labor strike has led to a big drop in the number of new customers. When the strike began last month, the firm did not think that it would have a big impact on its revenue and operations.

At the above-mentioned investor conference in New York (NY), Fran Shammo, the firm’s CFO, said that FiOS installations and orders have taken a big hit this quarter. In line with this, the firm is foreseeing a net loss of cable TV customers for the current period.

If we take a glimpse at the labor strike, on April 13, nearly 40,000 installers of telephone lines and FiOS services went on strike. As per the labor strikers, who are joined by the CWA and the IBEW, Verizon Communications Inc.  should not be thinking of cutting wages, benefits, and pensions. This belief is based on the fact that the firm makes a whopping $1.80 bn profit every month. Since then, there have been many exchanges of heated allegations between the group of employees and the firm. It even led up to an armed confrontation between the firm’s security personnel and striking US employees in the Philippines.

As of now, the firm is sticking to its stand. The firm has already hired 10,000 temporary employees, believing that the ongoing labor strike will not affect its operations. Meanwhile, the healthcare benefits of the workers on strike and their beneficiaries have already expired on April 30.

Fran said that for now, the management is focused on repairs and maintenance for current customers. FiOS installs require a lot of capital and labor. Activity in new installs has picked up only very recently, in about the last one and a half week. The strike is now 6 weeks old.

Fran also talked about the issue of churn. He added that in such times, if a customer opts for FiOS at an existing location, they will usually wait for the issue to settle down. They are not likely to switch. However, where the firm stands to lose is in case of the customer moving to another location. After moving, the customer desires to have service provided to him/her from day 1, and that may not be always possible. In that case, the customer would go for another service provider. This may likely leave him/her out of the firm’s prospects for about the next 2 years.

Strikers Take to the White House

Hundreds of striking employees marched on the White House earlier this week, together with many labor unions from Washington, DC. Lakeshia Jefferson, one of the firm’s strikers, said that there is a need for them (the govt.) to address this issue and let the whole world know.

Due to the growing communication gap and misunderstanding between the two parties, the administration of the US President Barack Obama has finally spoken up about the issue. The US government encouraged the two parties to opt for bargaining talks once again with the help of a federal mediator. The leadership at Verizon Communications Inc. has been called on Sunday to Washington for the talks. Fran refused to share further details about the same, citing a gag order. But he did say that this is a good sign of seeing some progress in this issue.

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