Verizon Communications working to improve debt-to-EBITDA ratio

By Jennifer Lanning Drey

Portland, Ore., April 27 - Verizon Communications Inc. expects its debt-to-EBITDA ratio to improve to around 1.3 times within the next three years as the company pays off debt related to its January acquisition of Alltel Corp., John Killian, chief financial officer of Verizon, said Monday during the company's first-quarter earnings conference call.

Verizon expects lower capital expenditures in the coming years to more than offset capital costs related to the integration of Alltel and fuel free cash flow growth in the future, Killian said.

First-quarter cash flow from operations was $6.4 billion, up 19% from the first quarter of 2008. The stronger cash flow coupled with lower capital spending produced free cash flow of $2.7 billion for the period, up $1.5 billion over the prior-year quarter.

"Cash generation looks to be very healthy, and our capital efficiency is certainly improving," Killian said.

The company projects its cash flow will allow it to fund its capital program, reduce debt and pay a competitive dividend, he said.

Killian also said Verizon has repaid a portion of the bridge loan used to fund the closing of the Alltel acquisition. The current balance is $5.9 billion, compared to $12.35 billion in January, he said.

Verizon's total operating revenues grew 11.6% to $26.6 billion, compared with the first quarter of 2008, as the company added revenues from Alltel. On a pro forma basis, revenue growth was 3.3%.

Verizon is a New York-based broadband and telecommunications company.

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