Matthew D. Ellis
Executive Vice President and Chief Financial Officer at Verizon Communications
Thank you, Hans and good morning everyone. As Hans said, this was a challenging quarter and our results did not meet the expectations we have set for ourselves. We have implemented multiple actions to better position Verizon for the future. At the same time, we expect the market environment to continue to be very competitive for the remainder of 2022.
Before discussing our expectations for the remainder of the year, let's walk through results from the second quarter, beginning with an overview of our postpaid mobility results on Slide 7. Our runway for mobility growth is predicated on driving our customer base into higher value data plans and we continue to make good progress in the second quarter.
Premium penetration within our consumer base increased to 39% at quarter end and 57% of new accounts in the quarter selected Premium Unlimited and step-ups within our existing base remained healthy. This activity helped drive a 2.4% year-over-year increase in consumer postpaid ARPA.
Our recent administrative fee increase and economic adjustment charge began to show up on customers' bills in the last few days of the second quarter and we expect close to a full quarter's benefit to revenue and ARPA trends in the third quarter, while our metered price changes will be phased in throughout the third quarter, which will provide an additional uplift.
We reported postpaid phone net adds of 12,000 in the second quarter as strong business results more than offset softer consumer performance. Business delivered 227,000 postpaid phone net adds in the quarter. We continue to see strong demand across all lines of the business group, as phone gross adds were up nearly 30% from the same period a year ago and we expect this strong performance to continue.
On the consumer side, postpaid phone net losses were 215,000 in the quarter and stemmed from two main drivers. First, churn increased by 10 basis points compared to the same period last year. Higher involuntary churn contributed roughly half of the increase due to the expiration of state consumer protection policies and less stimulus funding. This was coupled with an 11% decline in phone gross adds from the prior year, driven by the competitive offerings in the marketplace.
As Hans indicated, we recently introduced a Welcome plan in order to drive demand for more price-conscious consumers, particularly as they make spending adjustments due to the effects of higher inflation. This new plan is well positioned to attract new customers, especially for those who bring their own device. It is our most basic Unlimited offering with no device promotions or many of the other features available in Mix & Match Unlimited to plans.
We reserve our most generous acquisition and retention offers for consumers willing to select our Premium Unlimited plans and we believe that opportunities exist to better serve these high-value customers. Upgrade activity remained elevated throughout the quarter, reflecting loyalty within our core customer base, while also serving to drive greater premium adoption. As a result, total postpaid phone activations across consumer and business were up 8% from the same period last year.
Let's now discuss broadband performance on Slide 8. During the second quarter, we continued to scale and grow our nationwide broadband opportunity with additional expansion of fixed wireless households and businesses covered. In addition, we expanded Fios availability to add additional 150,000 homes during the quarter and are on track to achieve our target of 550,000 incremental homes open for sale in 2022.
Total broadband net adds were 268,000 in the quarter, an increase of 39,000 sequentially in what is traditionally a seasonally softer quarter. Fixed wireless momentum accelerated as we added 256,000 subscribers in the quarter, up from 194,000 in 1Q. Fixed wireless net adds have increased every month throughout 2022 and we expect to continue that trend in the third quarter.
We also added 36,000 Fios Internet net adds during the second quarter. While Fios Internet churn remains well below pre-pandemic levels, we are seeing softer gross adds due to lower-than-expected switching activity from moves and fewer new home purchases. We recently introduced Fios Mix & Match 3.0 that aligns our Fios and fixed wireless pricing and better positions us to grow joint account penetration.
Now, let's talk about the value market on Slide 9. Our integration of TracFone is on track and the team remains focused on enhancing the customer value proposition and delivering cost synergies through migrating off-net customers onto the Verizon network. Our TracFone brands had net prepaid losses of 227,000 in the second quarter and total Verizon prepaid net losses were 229,000. These results exclude a base adjustment of 402,000 related to a competitor's 3G shutdown. Our prepaid volumes were impacted by aggressive postpaid promotions.
As we made progress on our TracFone integration initiatives, we will be better positioned to serve those customers wanting to migrate to postpaid offerings. Our business case had anticipated subscriber losses during the early phase of the integration period, which we expect to continue into the second half of the year. However, should customer preferences shift to the value market and make recessionary concerns we would expect to see some benefits. Prepaid ARPU was $31.26 in the quarter, up modestly on a sequential basis and we expect it to remain stable going forward.
Now, let's move to the consolidated financial results on Slide 10. On a consolidated basis, total revenue was relatively flat year-over-year, as wireless service revenue growth and higher wireless equipment revenue were offset primarily by wireline declines and the net impact of last year's M&A activity. Total wireless service revenue growth was 9.1%, primarily driven by our ownership of TracFone, further progress on our Premium Unlimited strategy and strong business volumes. Service and other revenue was down 3.9% for the quarter as the revenues lost from Verizon Media more than offset net incremental revenue from TracFone.
Adjusted EBITDA was $11.9 billion for the quarter, down 2.6% year-over-year due to the divestiture of Verizon Media, higher device subsidies and promotional spending associated with the increased wireless activations, wireline revenue declines and inflationary cost pressures.
Regarding inflation, we are seeing the pressures within our cost structure, most notably on labor costs, utilities and transportation and logistics expenses. We expect these pressures to accelerate in the second half of the year and have an impact on profitability and earnings. As Brady and Hans highlighted, adjusted EPS for the second quarter was $1.31, down 5.8% from the prior year. This primarily reflects the impact of our adjusted EBITDA results and higher D&A related to our C-Band rollout.
Now, let's take a look at our second quarter consumer financial results. Total consumer revenue for the quarter grew 9.1% year-over-year, driven by the inclusion of TracFone, higher equipment revenue, and core wireless service revenue growth. Wireless service revenue was up 10.5% year-over-year, also driven by the inclusion of TracFone and postpaid ARPU growth. Total Fios revenue was flat versus the same period a year ago, as internet growth was offset by video and voice declines. Consumer EBITDA was $10.4 billion, down 0.3% compared to the same period last year. Our higher contribution from TracFone was more than offset primarily by higher promotional activity. Consumer EBITDA margin was 40.5% in the quarter.
Now, let's take a close look at the business financial results on Slide 12. The Business segment's wireless results remained strong in 2Q, while wireline service declines continued amid a softening economy and ongoing secular headwinds. Wireless service revenue growth of 3.0% was up from 2.1% last quarter. Small and medium business continued its strong momentum, accelerating growth for the second consecutive quarter, while Global Enterprise had its best performance since the first quarter of 2020.
Business wireline declines were elevated this quarter, in part due to foreign currency and federal USF, which together impacted growth by more than 300 basis points year-over-year. The secular process from technology migration continued to weigh on legacy voice and data services. And we expect this trend to continue. Business EBITDA was $1.7 billion for the quarter, down 6.5% from the prior year. In addition to wireline revenue declines, we experienced elevated device subsidies related to the 15% year-over-year increase in wireless activations in the quarter. EBITDA margin was 22.9% in the second quarter.
Moving on to Slide 13 on the cash flow summary, cash flow from operating activities for the first half of 2022 totaled $17.7 billion compared with $20.4 billion in the prior year period. The reduction was primarily due to working capital impacts from higher device activations and increased inventory levels as part of our supply chain management in the current environment.
Capital spending for the first half of the year totaled $10.5 billion, an increase of $1.8 billion compared to last year, driven by C-Band spending of $2.8 billion. The net result of cash flow from operations and capital spending is free cash flow of $7.2 billion for the first half of the year. We exited the quarter with $130.6 billion of net unsecured debt, a sequential improvement of $5 billion, resulting in a net unsecured debt to adjusted EBITDA ratio of 2.7 times. In a period of rising interest rates, our balance sheet is in a strong position, with less than $2 billion of unsecured bonds maturing in the next 18 months.
Lastly, let's move to an update on guidance for the remainder of the year. Based on our current expectations, we are updating our guidance for the year. We now expect wireless service revenue growth to be in the range of 8.5% to 9.5%, down from the prior 9% to 10% range. The pricing actions already implemented are expected to contribute approximately $1 billion in the second half of 2022. However, this benefit is expected to be offset by the accounting impact of promotional activity and the impact of lower net adds.
As a result of the reduction in wireless service revenue expectations and anticipated ongoing wireline pressures, we now expect service and other revenue growth to be in the range of minus 1% to flat. We are lowering our adjusted EBITDA growth expectations for the full year to a range of minus 1.5% to flat versus our prior range of 2% to 3%. This revised outlook accounts for higher levels of activations driven by our promotional activity, inflation-driven costs that we discussed previously, the reduction in wireless service revenue and business wireline revenue headwinds.
Our guidance assumes Consumer EBITDA margin in 3Q to be similar to margins seen in the first half, with typical seasonality in 4Q. Business EBITDA margins in the second half of 2022 are expected to be in line with those reported in the first half of the year. Finally, we are lowering our full year adjusted EPS guidance to a range of $5.10 to $5.25 versus the prior $5.40 to $5.55 range. This fee reflects the reduction in adjusted EBITDA as well as incremental cash interest expense versus our expectations at the beginning of the year of about $300 million for the full year compared with the $150 million to $200 million we estimated last quarter, due to updated market expectations for additional Fed fund rate increases.
For capex, we are reiterating prior guidance of $16.5 billion to $17.5 billion for business-as-usual capital and $5 billion to $6 billion of C-Band-related spending. In closing, we are confident in our strategy and believe that our assets position us well to generate long-term shareholder value.
I will now turn the call back to Hans for concluding comments before we open up to questions. Thank you.