Anthony Skiadas
Executive Vice President and Chief Financial Officer at Verizon Communications
Thanks, Hans, and good morning. Executing on our plan, we finished the year strong and delivered on our financial guidance. We exited the year with good momentum and remain committed to our three priorities of growing wireless service revenue, adjusted EBITDA and free cash flow. In 2023, we set out to improve our operational performance, while sustaining financial discipline. Our fourth quarter and full year results confirm that our strategy is working and that we can deliver strong financials and improved key operating metrics.
Consumer postpaid phone net adds totaled 318,000 for the quarter, a substantial improvement of 369,000 sequentially and 277,000 compared to the prior year. Our consumer postpaid phone churn of 0.88% represents a stable result even after we implemented over $1 billion of annualized pricing actions in 2023. While we do not provide specific guidance on volumes, we wanted to share a couple of items as we look into 2024.
In the first quarter, we are taking additional targeted pricing actions that we expect will result in incremental pressure on consumer postpaid phone churn in the period. However, we expect to deliver positive consumer postpaid phone net adds in full year 2024 as we execute on our strategy of growing our subscriber base, while being financially disciplined.
Postpaid phone gross adds in the quarter were up nearly 17% year-over-year. This represents our best quarterly consumer gross add performance in four years. Our attractive myPlan offers, combined with our segmented approach to the market, regional sales structure and disciplined promotional strategy continued to deliver strong results. Additionally, postpaid upgrades remain lower as compared to the prior year.
The consumer postpaid upgrade rate was 4.4% in the fourth quarter, down 120 basis points year-over-year, as a result of approximately 19% fewer upgrades. As Hans said, we continue to see better performance in markets where we have deployed C-Band. In our first 76 C-Band markets, fourth quarter consumer postpaid phone gross add growth was 8 percentage points better than a non C-Band markets. Additionally, consumer postpaid phone churn in C-Band markets was 4 basis points better than a non C-Band markets. The strong momentum in the quarter, combined with the continued deployment of our C-Band network positions us well in 2024. The quality of the business, we are writing in consumer remains high as my plan continues to drive premium plan adoption. The premium take rate in C-Band markets for the quarter was more than 10 percentage points higher than a non C-Band market.
Consumer ARPA of $134.10 represents an increase of 4.7% year-over-year. This was driven by new customer additions, premium plan adoption and fixed wireless subscriber growth. We expect continued and healthy organic ARPA growth in 2024. Our prepaid results remain challenged in the fourth quarter. This is in part to seasonally weaker national retail sales volumes, which is the primary sales channel for our Tracfone brand. We also continue to see pricing pressures from low-end postpaid offerings. Prepaid net losses for the quarter were 289,000.
During the quarter, we saw continued strong growth within the Visible and Total by Verizon brands, which we will continue to scale. The team is also focused on our partnerships to improve the performance of the straight talk brand. We believe we're taking the right steps to better position our offerings in the market and expect to see some stabilization in 2024.
Verizon Business delivered another strong quarter with 131,000 phone net adds, which as Hans mentioned, is our 10th consecutive quarter above 125,000. The Business Markets Group had its best phone net add performance in the last two years, demonstrating how our value proposition is resonating with small and medium businesses. Similar to consumer, we are taking pricing actions in the first quarter in business that could result in elevated phone churn in the period. However, we are confident that we will continue to deliver strong business volumes in 2024.
Moving on to broadband, we delivered 413,000 net additions in the quarter, continuing the pace of over 400,000 broadband net adds for the fifth consecutive quarter. We see strong demand for both our fiber and fixed wireless offerings and we continue to see positive responses from customers regarding the quality and reliability of our services. In fixed wireless, we delivered 375,000 net adds for the quarter, growing the base to over 3 million subscribers.
We launched C-Band in early 2022 and our fixed wireless success in the last two years reflects the strong demand for high quality broadband and the strength and reliability of our product. Notably, in the fourth quarter, over 80% of our consumer fixed wireless gross adds came from C-Band markets. The growth trajectory for fixed wireless continues to be robust and we are ahead of schedule to achieve our 4 million to 5 million subscriber goal by year end 2025.
Fios internet net adds were 55,000, down 4,000 year-over-year. We are pleased with the success of Fios with strong gross adds and retention, reflecting the quality and overall value of the product. We expect broadband subscriber momentum to extend into 2024 as we continue deployment of our C-Band spectrum, further expand our Fios footprint and bring new products and offers to the market.
Let's now look at our financials. Consolidated revenue for the fourth quarter was $35.1 billion, down 0.3% year-over-year. This change can be attributed to the wireless equipment revenue, which was approximately 2% lower than the prior year, as total postpaid upgrades declined by approximately 18%. Total wireless service revenue was $19.4 billion, up 3.2% year-over-year. Strong revenue benefited from targeted pricing actions, more customers selecting premium unlimited plans and growth in fixed wireless access. This was partially offset by pressure from prepaid, which reduced total wireless service revenue growth by approximately 70 basis points year-over-year, as well as promo amortization.
Consolidated adjusted EBITDA in the quarter was $11.7 billion, a decrease of 0.6% compared to the prior year. Higher wireless service revenue and the benefits of lower upgrades were more than offset by higher marketing and bad debt expense and ongoing declines in business wireline revenue. Adjusted EBITDA margin of 33.2% was relatively flat year-over-year.
In 2023, we implemented transformations within our consumer customer care group as well as business managed services. We are pleased with what we have achieved this year and our cost saving measures are meeting our expectations. We expect further progress on our cost efficiency program in 2024. Adjusted EPS was $1.08 in the quarter, resulting in full-year adjusted EPS of $4.71.
Turning to our cash flow summary. Cash flow from operating activities for the fourth quarter was $8.7 billion, bringing the total for 2023 to $37.5 billion. This marks a year-over-year improvement of over $300 million, primarily due to working capital improvements. Capex for the quarter came in at $4.6 billion compared to $7.3 billion in the prior year. The full-year capex totaled $18.8 billion, which represents a more than $4 billion reduction in capital spending from 2022 as we come down from our peak C-Band spending level. Free cash flow for the fourth quarter was $4.1 billion, bringing our year-to-date total to $18.7 billion, a $4.7 billion increase over the prior year, driven by operational improvements and the lower capex spending that we previously noted. We are pleased to have delivered on our guidance of more than $18 billion of free cash flow for the full-year, which reflects a balanced and strategic approach to delivering profitable growth.
Net unsecured debt at the end of the quarter was $126.4 billion, a $1.6 billion improvement year-over-year. Net unsecured debt increased sequentially, primarily due to settling the $3.7 billion in incentive payments to satellite operators for our remaining C-Band spectrum. Our net unsecured debt to consolidated adjusted EBITDA ratio was 2.6 times as of the end of the fourth quarter, in line with the prior two quarters. We expect deleveraging of the balance sheet to accelerate in 2024 as capex comes down to BAU levels and we continue to generate strong cash flow. Additionally, we continue to benefit from our approach to managing long-term debt and have only $3.6 billion of unsecured debt maturing in 2024. Overall, I'm pleased with our momentum exiting the year and our performance in 2023, delivering an improved operational profile, while also meeting our financial guidance.
Now, I want to take a few moments to look ahead and walk-through our 2024 guidance. Our 2024 guidance demonstrates our expectations for accelerating wireless service revenue growth. As a reminder, the reported 2023 wireless service revenue growth of 3.2% included approximately 190 basis points of benefit from a reallocation of other revenues. Excluding this reallocation, the 2023 wireless service revenue growth was 1.3%.
For 2024, we expect total wireless service revenue to grow between 2% and 3.5%. This will be driven by anticipated positive postpaid phone net additions of both consumer and business, continued fixed wireless access subscriber growth, further adoption of premium unlimited plans, growth in products and services and pricing action benefits, we expect consolidated adjusted EBITDA to grow by 1% to 3% versus the prior year. This outlook reflects expected higher wireless service revenue and the impact of our cost transformation initiatives, partially offset by continued pressure in business wireline revenues and increased wireless network operating expenses.
Full-year adjusted earnings per share is expected to be $4.50 to $4.70. As noted, we expect adjusted EBITDA to grow in 2024, offset by certain below-the-line impacts. Specifically, higher interest expense is expected to impact adjusted EPS by $0.16 to $0.19, over 75% of which is driven by the continued reduction in capitalized interest related to the C-Band licenses being placed into service. In addition, EPS is expected to be impacted by approximately $0.07 to $0.09 of higher pension and OPEB expense, primarily due to the expiration of certain credits. This impact will flow through the other income and expense line on our income statements. We expect depreciation and amortization to be relatively flat in 2024 compared to 2023. Our adjusted effective income tax rate is expected to be in the range of 22.5% to 24% based on current legislation.
As discussed in prior quarter's, capital spending for the full-year is expected to be between $17 billion and $17.5 billion, down from $18.8 billion in 2023. While we're not providing guidance on 2024 free cash flow, we wanted to provide some additional color to aid with your analysis. Tailwinds to free cash flow will come from our adjusted EBITDA growth outlook as well as the expected $1.5 billion reduction in capex in 2024 based on the midpoint of our guided capex range. Offsets will be higher interest expense and higher cash taxes. As a reminder, the majority of the higher interest expense relates to reductions in capitalized interest. Such interest was recognized in cash flow from investing prior to placing the C-Band spectrum into service. The higher cash taxes are primarily related to the continued phase-out of bonus depreciation in 2024 based on current legislation. Overall, we expect a strong free cash flow profile that will support our capital allocation priorities and position us for meaningful unsecured debt reduction in 2024, which we expect to come in the latter half of the year.
With that, I will now turn the call back over to Hans for his closing thoughts.
