Verizon at Bernstein Conference: Strategic Growth Insights

On Thursday, 29 May 2025, Verizon Communications Inc. (NYSE:VZ) presented a robust strategic overview at the Bernstein 41st Annual Strategic Decisions Conference 2025. The discussion, led by Sam Path, CEO of Verizon’s Consumer Group, highlighted the company’s ambitious growth strategies and technological advancements, while also addressing challenges such as increased churn rates due to recent price adjustments.

Key Takeaways

• Verizon aims to be the leading converged player in the U.S., focusing on broadband and mobility.
• The company plans to expand fiber coverage to 40 million homes and targets 8 to 9 million FWA subscribers.
• AI is a pivotal element in Verizon’s strategy, enhancing customer care and operational efficiency.
• Verizon expects postpaid churn to stabilize in the second half of the year.
• The prepaid segment is a significant growth area, with Verizon gaining market share.

Financial Results

• Verizon anticipates improved year-on-year performance in postpaid phone consumer net additions.
• The prepaid segment shows promising growth, with Verizon gaining market share over the last three quarters.
• The company has a $2 billion run rate business from Perks, achieving mid-30s direct margins.
• Approximately 15% of Verizon’s service revenue is derived from adjacent products.
• FWA pricing averages between $40 and $45, with a postpaid ARPU of $62 and prepaid ARPU in the mid $30s.
• Over $1 billion in wireless service revenue was secured early in the year through price increases.

Operational Updates

• Verizon’s fiber build costs have decreased by 10% year-over-year due to automation and optimized routing.
• Fios churn remained below 1% in Q1, demonstrating customer retention success.
• A significant portion of FWA customers, 75-80%, also use Verizon’s mobility services.
• Currently, 16% of Verizon’s customer base is converged, with plans to double this within three years.
• AI or generative AI is utilized daily by over 44,000 agents to enhance service delivery.

Future Outlook

• Verizon is committed to becoming the top converged player in America, with a strong focus on FWA and fiber expansion.
• The company plans to capitalize on segmentation, particularly in the prepaid market.
• AI will continue to play a crucial role in improving customer care and reducing costs.
• Verizon aims to increase ARPA by enhancing sales to existing households.
• Postpaid churn is expected to return to a "Business As Usual" state in the latter half of the year.

Q&A Highlights

• Verizon projects double-digit growth in gross additions on the postpaid phone side, continuing into the second half of the year.
• The company is confident in its fiber expansion plan, targeting 40 million homes post-Frontier acquisition.
• Verizon is focused on building a sustainable long-term business in FWA, with clear goals for subscriber growth.
• The bundling strategy is proving effective, with an increasing percentage of fiber and FWA customers also opting for Verizon’s mobility services.
• AI is being leveraged to reduce costs in fiber buildout and streamline customer care processes.

For a comprehensive understanding, please refer to the full transcript below.

Full transcript - Bernstein 41st Annual Strategic Decisions Conference 2025:

Laurent Yoon, US media and telecom analyst, Bernstein: Okay. Let’s get this started. I am Laurent Yoon.

I am US media and telecom analyst at Bernstein. It is my great privilege to host this fireside chat with Sam Path, executive vice president and CEO of Verizon’s Consumer Group. Thank you for being here today. Very good morning to you. Alright.

So we’ll get this started. But before we get into the specifics of Verizon, I would like to set the scene. So we’ve seen in recent maybe quarters, the their indicators suggesting that the the competitive intensity is heating up. The gross adds, it’s up, perhaps some indicators on equipment revenues, the churn, and etcetera. Could you share with us from your perspective, what are you seeing in the market?

And how do you expect this to kind of play out for the rest of the year in in in the foreseeable future?

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: Hello, Ron. Thanks for having me. But before I get started, let me point all investors to our safe harbor statement. It’s on the verizon.com/investorrelations site. We’ll we’ll talk about something that’s a little forward looking, so it’s good for everyone to refer to the safe harbor.

Now that I have that out of the way, let’s jump into the competitive landscape. 2Q is quite similar in competitive intensity to q one. Q ’1, we saw a slightly elevated competitive environment. Typically, in January, once we are done with the holiday promotions, we pulled back. We pulled back, but our competitors did not pull back.

They doubled down on their promotions and basically carried it through the whole of first quarter. We are seeing similar trends with a slightly higher competitive environment. But if you look at the arc of the industry, there are always quarters that tend to be more competitive than the other. We pulse in promotions. We pulse out promotions, so this is no different than that.

What we are seeing is the switcher pool has gone up. You know, port ins have gone up. Port outs have also gone up, but the switcher pool has gone up. We are seeing really good gross add momentum in our business. You know, last time at the earnings, we said we are seeing double digit gross add growth on the postpaid phone side.

We continue to see double digit postpaid growth on the phone side. I think what we are finding is our value prop is resonating really well. But, you know, it’s a competitive environment, and we get our fair share of gross adds every single day, and we work very hard on that.

Laurent Yoon, US media and telecom analyst, Bernstein: Got it. Thank thank you for that. And I’m going to like to go back to some of the comments you made around the gross ads, the competitive intensity, and the and the actions that you’ve taken when we get to some of the specifics of Verizon. Another general context I would like to set here is the current market structure. Right?

So if you look at the past decade, let’s say, around, let’s say, 2010 to 2022, cable companies have done really well over the past recent years driven by the FWA and fiber and owner’s economics and in wireless. Telcos are doing really, really well as as well as of course, you are as well. And given obviously, this is to drive convergence. We see bundling rates going up, and every company is now talking about that trend. Where do you see industry heading?

Right? Where do you see like, if we roll the table, let’s say, about three to five years, where do you see the industry, especially given some of the consolidation that we’re seeing in the market today? Like, everyone is going you’re going through an acquisition of Frontier, AT and T with Lumen’s fiber business, and you got you got T Mobile and, you know, Charter and Cox. Like, there’s a lot of it’s a very active market right now. Where do you see the market that’s in three to five years time frame?

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: I think the big piece for us is, you know, we have two engines of growth in our business, the broadband business and the mobility business. And longer term, we want to be number one in both the businesses. On the mobility side, we are number one today across most segments, but overall, as a category, we we have the largest network and large number of subscribers. In broadband, we have a very clear path to get there over a period of time too. So the market structure as we see it is we want to be the number one converged player in America today.

And for that, you need a couple of things. The first is you need owner’s economics on both the mobility side and the broadband side. The second thing is you need two good products. You know, in our case, we have mobility, which is the best network. It’s the fastest five g, the most reliable five g.

And historically, we’ve had significant head start on just better network quality. You You know, we had a little bit of a price premium problem a couple of years ago. We’ve lowered our price premium. We are between 1015% price premium. That is sustainable.

It’s a great mobility product. And on the broadband side, we have a clear path to getting to hundred million homes covered with either FWA or fiber. And what’s important is on fiber, we’ll get up to 40,000,000 homes, and then the rest will be covered by FWA. The combination of those two is very, very strong for us. So that’s how we see our play playing out over the next couple of years.

Folks who have a good mobility product, a really good broadband product, owner’s economics, converged price that is clear, transparent, and gives customers control will win, and we think we’re really well set up for that.

Laurent Yoon, US media and telecom analyst, Bernstein: Alright. So speaking of so the order of the agenda was actually I was thinking we go into wireless. But I think given the comments on on broadband, let’s go go there. I would like to start first with the commentaries on fiber. You mentioned 40,000,000.

You one of your peers mentioned recently or talked about getting to 60,000,000, and the executive was on TV saying we got to 70,000,000, and there are a lot of big numbers out there today. With your acquisition of of Frontier and also you’re actively building your Fios network as well, do you think the current plan to expand your ex fiber footprint in the coming years, do you feel that’s sufficient, or do we do we should we expect there’s more coming beyond that?

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: I think the most important thing is fiber is a superior product. You know, if you see, there are three things about fiber that make it a superior product. I think the first one is just the product’s better. It’s got symmetrical speeds, it can go up significantly multi gig speed. Second is pricing.

We don’t have promotions that’s roll off. It starts at a certain price and it goes up two or three times over the next couple of years. We don’t have that. And last is reliability and customer service. We’ve invested a lot in that and hence we have really strong NPS.

I would say our Fios product is number one in NPS in the category for a very long time. And we’ve been building fiber for the last, well, 20 this is our 20 birthday. They’re an adult. They can drive. So it’s a very competitive, well laid out product for us.

So given that we will continue to build out fiber, you know, we’ve committed to a million plus new offered for sale post the Frontier acquisition. Frontier was a great asset for us to buy. It is a pure play player, largely fiberized, incredibly strong operating team. And then also if you look at their q one results, they were extremely strong for us. So we know fiber very well.

We’re continuing to deploy it every single time. The second is we’ve actually seen a 10% lower cost year on year on a fiber build cost. And that’s a little contrary to what the others have seen. And lot of that has to do with how we are taking labor out of the process in in automating things. The biggest piece is labor.

It’s splicing of fiber, so we use more preconnectorized routes, preconnectorized segments that take cost out. Second is we’re using AI to optimize routes. And third is just incredible product project management in rolling out fiber more broadly. So right now, we have a clean line of sight to 40 up to 40,000,000 homes of of fiber. Frontier will help.

We’ll close on that in 01/2026. And post that, we’ll build at a million plus. So we feel quite comfortable where we are because we also have FWA. And FWA is an incredibly good product. It’s got very high NPS.

Even though it’s a young product, it’s got NPS in the mid-30s. Customers really like it, and it’s hugely accretive to us on margin.

Laurent Yoon, US media and telecom analyst, Bernstein: So speaking of FWA, you guided to, is it eight to 9,000,000 subscribers in the coming years? You clearly you’re clearly on a trajectory to get there perhaps more. And putting aside spectrum for a moment, which we’ll we’ll get to, is there any indicators that you’re looking for that would give you some confidence around perhaps increasing that number? Because I think some of the investors are wondering, besides the potential spectrum constraints in the coming years, is it your trajectory suggesting that you could potentially surpass that? Or what is there any indicators, or are you pretty set on

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: the eight to 9,000,000 subscribers? You know, our initial tranche was four to 5,000,000 subscribers. We got there a year earlier. Our next tranche is between eight and nine million. And what we want to do is build a sustained long term business in FWA.

So I think the pace is super important to us because at the current pace we are doing, we can take customers, we can set them up well, lower churn, add on more services, and just build a compelling long term business. So that’s the goal we are in. The second important piece for us is the how well the product is doing in the market. You know, it it’s got a very strong NPS in the mid thirties, and it’s actually an incredibly good product. You know, if you look at our FICO score of customers who take, FWA, we tend it’s north of 700.

So it’s an incredibly good piece, very strong NPS, and they’re also increasing ARPU year on year as we come in. So I think FWA together with fiber makes for a really compelling long term value proposition on the converged space. When we put fiber together, we see 40% to 50% reduction in churn both on the mobility side and the fiber side. On FWA, we are starting to see good churn benefits as well. So it’s a strong product.

We have a clear line of sight to eight to 9,000,000. We are focused on accreting both p, which is price, as well as quantity to get there. So we are very comfortable with our eight to 9,000,000 target that we have.

Laurent Yoon, US media and telecom analyst, Bernstein: When you say 40 to 50, do did you mean percent or basis point reduction? Percent. Percent reduction in turn for both products. That’s amazing. Can could you add some color on the differences between, let’s say, an FWA plus a wireless bundle versus wireless and a fiber bundle in terms of, let’s say, you know, churn profiles and, also customer profile?

Are they any different? Is it meaningfully different? Some

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: of it is segmentation of the market, and this puts us in a very strong competitive position with cable. Because on one side, we have FWA, which is gives really good value for money. You know, it tends to be priced between average between 40 and $45, incredibly good speed, very convenient, high NPS, great customer service. And look, as I said, the FICO score who takes the FWA product is not of 700. So it’s it’s a premium product to do that with a very strong NPS.

And we are starting to see good churn benefits when you merge it with with mobility. Almost 75, 80 percent of our customers on FWA also have mobility with us, with a slightly different mix of customers. And look. The majority of our customers on FWA actually come from cable because they like a, they like the price point, but they also like the convenience of it. Fiber on the other side is very high reliability, performance, and very low churn.

In fact, in q one, our churn was less than 1%. It was in on Fios churn, which is one of our best quarters we’ve ever seen on churn. So it’s incredibly good product. So we are segmenting the market really well on FWA and fiber, and it makes it very difficult for cable to compete. Because if they have to compete with FWA, they have to lower price by $30.

If they have to compete with fiber, they have to invest in upgrading their plant and customer service and reliability, which is tough. So we are having a clear run. We are basically taking share every single quarter on broadband. Over a period of time, you know, we are committed to three fifty to 400,000 broadband customers every single quarter. You’ll see that trajectory.

We see a long runway for that, but we are taking share every single quarter on broadband. I think that’s

Laurent Yoon, US media and telecom analyst, Bernstein: the most important thing for us right now. One clarification I would like to ask is when you say lower than 1% churn for broadband for the Fios customers, are you talking about the blended, or are you talking about the cohort of customers who are bundled with wireless? No. The blended. Blended.

Wow. That’s a pretty good number. Okay.

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: It’s a better product. I mean, it goes back to that. It’s a significantly better product. And over the years, we’ve taken our dispatch rates down very low as well. And people more and more people want symmetrical speeds, you know, where they want uplink and downlink same.

Because a lot of time people work from home. My kids game a lot. I suspect that requires symmetrical speed as well.

Laurent Yoon, US media and telecom analyst, Bernstein: Got it. Okay. That’s thank you for that additional color. Let’s turn to I’d like to come back to broadband and the convergence point. We’d like to turn the discussion to wireless for a moment.

And rather than starting the discussion on postpaid, I would like to start with prepaid. We’ve noticed that you are you’ve made a lot of progress, especially we saw the numbers in the last quarter. It’s a really good quarter for prepay. We also noticed realized that you’re spending a lot more time talking about prepay. There’s a good traction.

It doesn’t really come up a lot in our conversations with clients because it’s typically viewed as lower value, right, typically viewed as a pull for postpaid conversion. Right? Apparently, this is a growth area for you. Could you, help us understand why should investors care more about your prepaid business?

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: You know, as the market gets more and more saturated, if you look at pure volume growth in the market, it’s only 1% when you take pre and postpaid together. And the growth for us is gonna come through growth via segmentation, which is why we have, you know, eight brands that we spread across our portfolio, and every brand has a place. You know, the value prop is different, the pricing is different, the distribution channel is different, classic segmentation. So it’s growth via segmentation, which is why the prepaid space for us is super important. Over the last three quarters, we’ve taken share every single quarter on the prepaid market.

And let’s first talk about how we have gone about doing that. The first is I bought the same execution focus that we got on postpaid a couple of years ago into the prepaid space. We took one of our best leaders, Nancy Clark, and put her on the prepaid side to run the prepaid business. So very good sales execution. The second is we’ve gone and, I would say, tweaked value prop on every brand to make it a category killer.

You saw that on Total Wireless. You saw that on Visible. You’ve seen that on Straight Talk as well. We had done extremely well to change value prop to make it extremely successful. The third thing is distribution.

We we have we have a very enviable position on distribution. You know, we have the largest share at Walmart. We have Straight Talk, which is a brand exclusive to Walmart. And, you know, 20,000,000 people walk into Walmart every single, week. We are in a very good position there.

And two is we’re also scaling our own distribution. Every single day, we are adding three new exclusive total wireless doors as we go along. So this week, we’ll add 15 new doors as we scale the total wireless. So all of those factors put together are working really well for us. And I’ll talk a little bit about our segmentation.

You know, let’s take Visible. It’s doing very well. It’s a digital only brand, low churn, reasonably good ARPU, very high customer satisfaction. NPS is not of 60 on that brand that does very well. But it’s all online.

You can’t pick it up in a store at all. Then you have Straight Talk, which is rural, suburban, family oriented Walmart customers who go there. Then you have Total Wireless, which is urban center corridor folks who want family plans, who want good budget, good price. And then we have some really low end plans like Crackphone and SafeLink that offer as well. So deep segmentation, execution focus, but we think this is an opportunity for long term growth.

We’ve always stayed a little silent or soft on pre to post migration because our credit standards are so high. On the postpaid side, our average phone customer has a FICO score of seven twenty. So we have a really high credit standard that we have. So we’ve not played in the pre to post migration. We feel it leads to long term bad debt issues, and the credit profile is not great.

But we want to serve those customers and prepaid really well. Last is about profitability. The prepaid is a very profitable business for us. In fact, the mid end to high end of prepaid is actually more profitable than the low end or as profitable as the low end of postpaid for us. So it’s a very profitable customer.

And end of the day, it’s just choice. You know, some want to pay in advance, some want to pay a month in arrears, we are very comfortable with that. But in terms of profitability, a prepaid customer is very strongly positive because cost of acquisition is lower, the subsidies we give upfront is lower, churn is a little higher. So when you net it out, it’s a very profitable customer that in some cases is as profitable as a lower end postpaid customer.

Laurent Yoon, US media and telecom analyst, Bernstein: I’d like to push you on that point. If if we’re to get a blended view, if you could describe what the blended profitability is for prepaid, how would it compare to, let’s say, postpaid overall or at least the lower end of the postpaid?

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: I think if you think about prepaid, our ARPUs are in the mid thirties. So you have a mid thirties ARPU, extremely strong EBITDA, but low cost of acquisition. If you look at the postpaid, our ARPU is $62, very strong, very strong, EBITDA margins, but slightly higher cost of acquisition. So it’s a very different starting point. But if you take the low end of postpaid for us, which is our welcome plan, and you take the high end of prepaid, you know, which is either a straight talk customer or total customer, there’s not much difference between the profitability of those two.

Laurent Yoon, US media and telecom analyst, Bernstein: Thank you for that color. Let’s switch to postpaid. The the prior quarter, there were the losses were higher than expected, but you’d you’d gave us some color on, the last month as you were exiting q one. I think you mentioned mid single digit growth in gross ads, and you also talked about in April, double digit growth in gross ads. What can you share with us what are you seeing in the rest of the

Do we are you expecting or are you seeing the same kind of trajectory that you saw in the early part of Q2? And I’ll just ask this question now. So what do you what do you expect in

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: the second half of the year given your reiteration of the guidance for the year on postpaid net adds? Yeah. Look, we’ll reiterate what we said in the earnings call. We expect postpaid phone consumer net adds to be better year on year. And it’s a long term journey that we are.

Step one for us was to get to positive to get to zero net adds. Second was get to positive net adds and now grow on that base. So we we are very comfortable with that with with that statement there. As we are at the May, we continue to see double digit gross add growth in our business. And a lot of that has to go back with the strong value prop that we have.

You know, we launched the Verizon best value guarantee early in April, and that has resonated really well with customers. You know, it’s a three year price lock on all our plans, on the network portion of it. You know, it’s a free phone, and then we included satellite with our core plans as well. I think customers today are looking for value for money. They’re looking for reliability, but they’re also looking for transparency and full control.

Our value prop gives them that every single time. So what we are seeing is good, strong gross add momentum. On churn, look, Q1, we saw higher than expected churn. Lot of that can go back to higher elasticity than what we have seen in past cohorts because of our price ups. We did two price ups in December and January back to back, and we saw slightly higher elasticity and more churn from those price ups that we see.

But it was the right thing to do. We locked in more than $1,000,000,000 plus of wireless service revenue early in the year, which was the right plan for us going forward. On churn, we see we’re going to start seeing that get back to a BAU posture second half of the year. We got a little more work to do on churn, and I’m sure we’ll talk about that. But we expect to get back to a BAU posture in the second half.

But on gross add, we are seeing really good momentum, double digit growth right now.

Laurent Yoon, US media and telecom analyst, Bernstein: One more follow-up on the gross adds. What gives you confidence that the current trend will continue in the second half? The reason for my asking this question is if I were to have the conversation with your peers, I think they may also talk about their growth in the second half as well. What gives you confidence that the current momentum will continue to the second half of the year?

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: No. Moment momentum is a combination of few things. First is value proposition. Our value prop is the clearest it’s ever been. You when we go and talk to customers, they’re very clear.

They say we want flexibility, we want transparency, and we want full control over what we buy and not buy. They don’t like inclusions, they like clean bundles, and they they want to pay for what they actually use. Our My Home and My Plan structure gives them exactly that piece. So value prop is doing well. The second is sales.

Over the last two, three years, we’ve done a lot of work in reinvigorating our sales overall sales engine, if you will. The first thing started off with going to a market structure. The second thing was sales incentives. Third is lot more local marketing than we’ve done before. Those are doing really well, and I see continued progress on that.

We’re seeing good productivity in our stores as well. You know, we track productivity every month and we’re seeing good strong productivity from our fields to do that. The third is brand. You know, Leslie relaunched our brand and that’s gone very well. It’s given us more traction in social.

We are getting picked up in social a lot more, and we are part of everyday life. You know, at the end of the day, we empower how people work, live, and play. So I think we’re doing extremely well on that as well. So a combination of all of those three things gives us comfort that we can continue the momentum. The last is, look, we are a very financially disciplined operator.

We have promotions. Our promotions are unique. We’ll continue to have unique promotions. Every year, we come up with a few interesting things. Second half of year is no different than that.

We’ll have some pretty unique things as well. So a combination of that gives me comfort that we will have gross add momentum in our business going forward. And a combination of that and churn coming back to a slightly more BAU posture, the combination gives me comfort that we’ll be better year on year as well.

Laurent Yoon, US media and telecom analyst, Bernstein: Got it. So assuming the gross adds, obviously, you’re working on the drivers to continue to ride the current momentum that you have. I think what we also noticed in the marketplace today is, as we talked about in the opening, the intensified competition, and perhaps many of the well, maybe all cost players are going after different all maybe all segments of the market. And I’m wondering for Verizon, in particular, given your, you know, high quality consumer base, if you’re going after all segments, does it also imply that potentially there could be some pressure on your ARPU growth as you go after the lower end of the segment that you typically have not really focused on in the past?

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: You know, we don’t play in very aggressively in the pre to post migration space. That’s what the lower end of the postpaid is, and it’s partly because we want to serve them really well in prepaid. We have great distribution, great brand, great value prop, we wanna serve them there. So we typically don’t play in this space. What we are finding is we are writing really good quality business.

Our premium mix is headed in the right direction. Customers are taking more perks. So for us, we are writing good business. People view us as a premium player. They view us as a better player.

And we think a business for a combination of ARPU and ARPA. ARPA is super important for us because, look, we have between pre, postpaid, and broadband, a billing relationship with almost every second household in America. And our ability to succeed is gonna be how we sell more to those existing households that we have. So ARPA is a very important criteria for us. It’s an important metric we internally work on.

Of course, connectivity products are key, but the huge stack of adjacent products that we have you know, we probably have 15% of our revenue comes from adjacent products more than anyone else in the industry, and it’s incredibly profitable for us. So ARPA growth is long term the right metric for us, and we’ll continue to see good traction on that.

Laurent Yoon, US media and telecom analyst, Bernstein: Okay. I would like to talk about the ARPA and the adjacent adjacencies. But before we get there, I’d like to touch on churn one more time and then move over to the other topics. So on churn, you mentioned, due to the recent price hikes and competitive environment, the churn was elevated, more than expected in q one. What are what are the drivers?

Or could you add some color on the drivers of lowering churn the second half of the year, and what are your expectations in terms of if you could share some of the metrics, on those drivers. Yeah.

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: Look. I think the first thing, longer term, when you want to take churn down, it starts with very strong value proposition. You know, if customers in the base feel very comfortable, they tend to leave less. So if you look at a Verizon value guarantee, one of the big core components of that was similar offers for base and new. Historically, we’ve never done that.

Finally, we are in a posture to do base and new, especially in terms of phone promotion, phone subsidies. That’s a huge driver of churn. It’s gonna take a while to work its way through the base, but customers feel comfortable that anytime they’re out of contract, they’ll get the same deal as a new customer to do that. So I think that’s the first element. The second element of churn reduction is cross sell.

As we discussed earlier, when you combine fiber with mobility, you see a 50% reduction in churn. So we gotta combine more wireless and broadband customers. So it’s cross sell, but also in adjacent services as well. You know, customers who tend to take more perks, tend to look below with us. People who take our credit card tend to have lower churn.

People who take a high yield savings account starting to see lower churn as well. So second is more cross sell opportunities that we have. The third big element for us is MyAccess. You know, MyAccess is a very cool loyalty program, but it’s not an earn and burn program. It’s a program that gives customers really cool deals on day to day things that they want.

For example, we had a deal with Topgolf, you know, where I give them 25% off. And we have other deals that could second is once in a lifetime events, you know, whether it’s presale tickets to Beyonce, whether she was at MetLife Stadium last night, presale tickets to Beyonce, access to NFL games, NBA games, and that builds really long term value. We had the Verizon FanFest, you know, late last year where we had more north of hundred thousand customers, you know, sign up to come and party with us for the Super Bowl, north of hundred thousand tickets for Beyonce presale as well. So these are pretty meaningful numbers. And then we’re doing a lot of work leveraging AI to make it right.

In the unlikely event we don’t take care of our customers, right, the first time, how quickly can we recover in the situation? So we’re deploying AI both in our contact centers and in our sales to proactively find trouble and fix it early in the space. And the last is we have a very strong react what we call reactive program, you know, high risk customers, high risk cohorts. We go and inoculate them. So managing churn is a combination of all of these different metrics.

We do see that by the second half of the year, we should get back to BAU. But longer term, Laurent, I don’t think there’s anything structurally that prevents Verizon from getting back to its churn leadership that we’ve historically had. With a strong broadband convergence and just getting really good on execution, there’s nothing that prevents us from getting back to number one in churn. It’s gonna take a while to get there, but I’m very confident that the work we are doing and the levers we are deployed gets us in a very good position there.

Laurent Yoon, US media and telecom analyst, Bernstein: Thank you for that color. I would like to double click on the adjacencies and the perks that you’ve mentioned. Your your adjacencies and perks, your insurance products, you have, like, Netflix and Max and other subscriptions that are available, discounts to special events, and etcetera. What kind of can you can you share with us some additional color details on what kind of financial impact does it does it drive? And if you could ask also add more color on the profitability.

So it’s not just, you know, adding to ARPA, but what does

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: it do to your profits? Let let’s talk about how we structure our adjacent businesses. The first piece for us is perks. You know, perks tend to be priced between 10 and $15. These are exclusive deals to Verizon.

They offer huge customer savings, and customers love them. You know, you can imagine, every day I have people trying to get on the Verizon Perk program, different partners that we have. We’re quite selective. We choose them very carefully. The latest partner we had was Google Gemini.

The first carrier in the world to add Gemini. It’s a great product, by the way, to our Perks system. If you look at Perks, we’re gonna have 15,000,000 Perks by the end of this year. You know, when you take that, that’s almost a $2,000,000,000 run rate business that we’ve developed basically in the last eighteen months on that. So really strong growth and value prop for that.

The margins on that tend to be in the mid thirties. So it’s an extremely profitable product for us, and we see that growing long time. I still think there’s huge upside for our own perks because two thirds of our customers still don’t take perks from us. So there’s a lot of headroom, there’s a lot of runway to grow that number as well. But it’s a $2,000,000,000 run rate business at the end of this year that we are very comfortable about.

We have our mobile insurance product that does very well. We have strong attach rates, the highest in the industry. The NPS for that product is not of 70. You know, in the unlikely event customers do lose their phone, break their phone, we’re able to turn that around really well. So our adjacent business is a integral part of our overall value prop.

It gets involved in ARPA, and we are spending a lot of time building really good value propositions for our team. It’s not a side project. It’s not a side thing, but it’s core to our value prop longer term as we do that. We think over a period of time, we’ll continue to expand on the mid thirties margin. And it’s, as I said, almost 15% of our overall service revenue.

So it’s a pretty big business base for us right now.

Laurent Yoon, US media and telecom analyst, Bernstein: That seems that that is a pretty significant chunk of your business. $2,000,000,000 run rate, mid 30% margin. When you say mid 30% margin, I’d to clarify. Do is that a direct margin, or are you also considering the benefits of the perks, let’s say, a churn benefit? That’s a direct margin you’re

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: That’s a direct margin. If you if you’ve taken the churn benefits, it’d be significantly higher than that. But mid thirties is a really good starting point for us. But what’s important is we have zero capital intensity in that business. So we are using third parties, but we’re using best in class third parties.

I mean, we have an exclusive deal with Disney. You can’t beat Disney and their franchise that they have there. We have Netflix and Max at $10 that we we we offer, and now recently, Gemini as well. So I I think mid thirties margin, large scale, many customers want to work with us because they see benefit in the terms of quick distribution. They see lowering of churn as well.

So it’s kind of a win win for us, win for us, win for our customers, and win for our partners as well. So you’ll continue to see good innovation on that pace down the line. Got it.

Laurent Yoon, US media and telecom analyst, Bernstein: Thank you. Thank you for that. That that’s pretty good margin, much higher than we had anticipated. Thank you for the color. I would like to go back to convergence.

Obviously, that’s a very important topic. Your peer, as mentioned, talked about how the bundle rate so AT and T in particular has mentioned that the bundle rate, say, over 40%, roughly 40% of their broadband base or fiber base has taken wireless. You I think in prior earnings call, you’ve also mentioned that you’re you’re seeing positive results, and I think there’s an expectation in the industry that that trend is going to continue. If we roll this tape, let’s say, a few years down the line, three, five years down the line, do you expect sort of the current trend that we’re seeing at around 40, maybe 50% of the market, you know, bundling products, or do you expect this to be higher? And the second question I’d like to just ask now is, what is the driver of that bundle?

Right? So other than the price benefits, the price value proposition for the consumer, why should a consumer get a broadband and wireless and perf and other things, from one place? Why not mix and match for the best deal that they could potentially get?

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: Let me start with your first quest question. You know, we see mid forties, 45 percentage of our fiber base takes mobility from us, and we see that growing every single quarter as we do that. The second is on FWA. Seventy five to 80% of our FWA base takes mobility from us. It’s a more natural bundling since it’s a wireless product to do that.

So overall, you see 16% of our base is converged, if you will. I see that number doubling over the next three years. So that’s you’re not gonna see European levels of convergence. In Europe, what we saw was very supply led because the local loop unbundling that that was offered up there as well as wholesale arrangements, everyone had access to both mobilities product as well as a broadband product. In The US, that’s not the case.

Second is US is a very demand led bundling convergence strategy. The Verizon model of convergence is demand led. In other words, customers want it, we give it to them. It has to be revenue and margin accretive to us, which we see that along the way. We give very little discount if you see in the scheme of things to drive that bundle, and we are seeing really good results.

Lot has to do with how well we create the right product framework for us. So for example, if you take mobility and broadband, like, Fios from us, You we give you a perk free, and then we give you a discount of $15 on one of the products. So it’s a very compelling value prop for us longer term. But I don’t see our overall converge base at European levels. But I do see us from 16%.

I do expect it to double over the next three years there. So that gives you a sense for how far we think convergence will go. Because at the end of the day, it’s a demand led convergence, not a supply led convergence that we see. Why do customers take it? One is convenience.

Convenience is a really big factor. Look up. Price discounts are not significant. They’re still single digit percentages in the overall thing, but customers love the convenience of it. But at the end of the day, two things are important to make convergence work.

First is you’ve got to have a best in class mobility product and a best in class broadband product. If you don’t have that, you’re gonna have to give more and more discounts to make up for the fact that one of your products is not great. In us, we have the best mobility product for a very long time. And now with FWA and fiber, we have, in both those categories, number one NPS products there. So two very good products put together with convenience and a little bit of a price break makes it very attractive for customers, but it has to be a world class product.

You cannot sell non world class products as a bundle without giving discounts.

Laurent Yoon, US media and telecom analyst, Bernstein: Thank you for that. Okay. So I’d like to ask another question related to convergence. You are so you have the ONO assets, the best in class products on both fixed and and wireless. If you look at your competitors in the cable side, they have the broadband product.

They don’t have the wireless owners owners economics. You’re enabling it. I understand that there’s the renewal terms with the cable companies are ongoing at the moment. If we and obviously, they have really good traction. They’ve had really good traction.

It’s an important business relationship that you have as with them as well. If we roll this tape again a few years down the line and assuming there’s a renewal in in place starting, you know, whenever the next cycle starts, what does that relationship look like? Right? Assuming they’re gonna continue to grow at some rate, what does that relationship look like, let’s say, in three, five years? Yeah.

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: I’m not gonna comment on commercial discussions between us and the cable. But what I’ll talk about is they are a very important strategic partner to us. I work very hard every single day to ensure that we are their first choice and their only choice as a wireless partner. So it’s an important strategic relationship for us. Second, it goes back to a fundamental strategy, which is you build a network once, you load as many customers as you can on it, and they do that.

The third is it is revenue and margin accretive to us. Because based on third party data, we’ve seen that we lose significantly less than our fair share to cable. So the arbitrage that we make between a retail loss and a wholesale gain is accretive to us both on the revenue side and on the EBITDA side. So it’s a very good relationship for them, and it gives them optionality. It puts a world class product in their hands to create a bundle for them longer term to do that.

But what we do see on the retail side, we compete fiercely. They have a slightly different network philosophy than we do. For me, I want all our customers to be on the ultra wideband network. I’d never want them to offload to WiFi. I just want a great network experience for them.

They take a different approach. They want to do Wi Fi bundling. They want to do CBRS offload. We don’t think those things work very well. Customers like to get a good product there.

The second thing for us is, you know, they are actually complementary to us in segments that we don’t technically do well in longer term. Pre to post migration, they’re very strong in that. Also, places where we don’t have a broadband product, they can bundle it, and it becomes incremental distribution to us. So it’s a strategic relationship. It creates more routes to market for us.

It it’s a complementary to our overall segmentation play, but we compete fiercely in the retail space, and our network philosophy is different than theirs.

Laurent Yoon, US media and telecom analyst, Bernstein: Are you concerned at all about their pace of growth?

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: It’s good margin and revenue for us. It’s as I said, it’s an accretive relationship on EBITDA, and it’s on revenue. And as I said, it’s a complementary relationship for them. So you want your partner to do well. This is no exception to the rule.

You want your partner to do well as well as as long as the underlying commercial structure is solid and accretive, which it is for us. We, you know, we want them to do well. But look, we compete fiercely in the retail space with them. We have a very different value prop. Our distribution is wider.

You know, we have 8,000 stores between our prepaid and postpaid side. We offer more promotions, more subsidies for our customers. We have significantly higher ARPU than them. So it’s a very different segment of the market we are selling into, but that makes it complementary to us, and hence, I’m really happy that they are doing well.

Laurent Yoon, US media and telecom analyst, Bernstein: Got it. We’ll move on to the next topic here. Earlier, you mentioned you’re leveraging AI in many different ways. You talked about this in prior talks as well, and you’re using AI to reduce costs in your fiber buildout. You also talked about AI in your customer care.

We do see the trends in all the companies adopting AI to improve customer care. Is that do you think that’s more of a a table stakes for everyone since everyone is doing it, or do you think that could become a differentiator for you?

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: You know, when new technologies come, it there’s a pendulum swing between its table stake and it’s the ultimate differentiator depending on what day you ask people. We think it’s a massive differentiator in the medium term to do that. We work very closely with, Google. We are one of the larger customers. We co develop a lot of our products together.

We’re one of the first probably the first big customer to take the conversational AI product longer term. So we think it’s a source of differentiation of us in the customer care space to do that. I have a goal that I want to be the world’s best AI applied company, work with partners, take technology, embed it deep in our business. But let’s talk about the customer care piece. Lot of the work we’ve done to space has been around cognitive offload.

Our frontline teams carry a lot of data in the head. What type of price plans, how to get things done, different data points, how to troubleshoot. Our first goal has been to take that cognitive workload off them. We have something called a personal research assistant, which may take the whole knowledge base of Verizon, put it in a generative AI framework where they can very quickly intuitively using voice or text, query that and get results back. We are seeing huge improvements in average handle time as well as resolution and customer satisfaction because of that.

I think that’s one. But everywhere along the customer care journey, we’ve introduced AI. It starts with routing. Every time for example, when you call, since I I hope you’re a Verizon customer, if you call into Verizon, we route your call differently. We know who you are.

We know where you’re calling from. Most likely, we even know why you’re calling. So we write you to the right agent who’s most likely to solve your problem. The second thing we do is as soon as you call in, based on your tone, based on the language, we pop up offers in real time for the agents to take care of that. And they get a single dashboard that we’ve collected your full profile in a single place using agentic AI.

They can see that and they can respond to that. Third is sentiment. You know, we pick a sentiment up in a call. If you don’t have the right sentiment, we bring in a supervisor to help, or we have different offers that work its way through the piece. The fourth is guided sales flow.

You know, as a rep walks through it based on real time interaction, the guided sales flow is very different. The guided troubleshooting sales flow is very different. Last is summarization. Customers love calls summarized. We like to keep summarized calls so the next agent can pick up where this agent left off, so we use AI for that.

So every single step in the care journey is AI influence and generative AI influence for us. Right now, we are taking cost out, but we are reinvesting that back in sales. You know, sales, customer experience, giving a better piece. Over a period of time, my CFO is gonna come to me and ask me to give those costs back. So when it’s there, we’ll be ready to do that.

But I do see twenty five and twenty six of massive scaling. More than 44,000 of our agents today use AI or generative AI every single day. So it’s probably one of the larger gen AI deployments in the world. I’m really happy with the pace that we have.

Laurent Yoon, US media and telecom analyst, Bernstein: Got it. Could you also share with us, some metrics? Maybe it’s too early to share, but are there any indicators that gives you confidence that, wow, this is working out really well? Like, what what are if you can’t share the specific metrics or the degree of impact, can you at least let us know, share with us what what are you looking into to to make sure that there is positive impact on revenue, there is positive impact on customer care costs.

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: Let’s start with customer care. The first thing we do is satisfaction of customers. At the end of the day, customers call us because somewhere along the journey, we’ve let them down. So how quickly can we recover from that situation is important. So customer satisfaction post call is the primary metric that we look for.

We want to be in the north of 80%, eighty, eighty five % north of that, and we are seeing that, and that’s a big metric that we track. Second is average handle time. You know, are the calls getting shorter? Are they getting more succinct? Are we getting work there?

The The third is cost per call as well. That’s another metric. But the fourth important metric that we started tracking is sales. Historically, our customer care channel has been a service mode. But when you solve a problem for a customer, they’re more likely to buy something from you as well.

In fact, what we find is customers we sell something to during a service call tends to have higher satisfaction than something when we haven’t sold to them because the experience was so good, they buy from it. So those are three or four metrics we track very closely, but I like the pace of AI deployment we have. You know, we have agentic AI. We have outbound AI. We’re bringing new technology to bear every single day.

I like the pace. ’25, ’20 ’6 is about massive scaling in that space. And then look. If we need to give back cost, we’ll do that. But right now, I’m reinvesting every dollar that I save there.

Laurent Yoon, US media and telecom analyst, Bernstein: Got it. Just two remaining topics. The second to last question is on satellite. So it has come up quite a bit. And if I if we go back to, let’s say, 2022, which which just a couple year few years ago, many companies, especially the competitors you’ve had, were quite dismissive of FWA and look where we are given the capabilities of that.

And, of course, the capabilities of satellite today, they’re no way close to FWA. There are limitations to it. But if we roll the tape again a few years later and where the capacity, latency, other technologies will become probably better than where they are, do you think that it will could potentially become a threat? Probably not the fiber, but for any other product other than fiber, do you see that as a potential threat

Sam Path, Executive Vice President and CEO of Verizon’s Consumer Group, Verizon: to the industry? Look. Our our competitors got it wrong on FWA. They keep getting it wrong on FWA. You know, they talk about it as a low end product.

They talk about and almost all of those characteristics are wrong about FWA. It’s a very high base, very high NPS. Let me shift to satellite. I see satellite in three different buckets. The first is satellite to device, which you can use on your cell phone, satellite to device for texting, for emergency, and then you have satellite to device for voice and low speed data.

And third IC is high speed broadband. So there are three different discrete use cases for satellite. The first one is satellite for device for texting emergency. That works very well today. At Verizon, people use it less than other carriers because we just have more areas covered than others.

I mean, between us and AT and T, there’s almost a half a million square miles of more coverage we have than and then, sorry, than T Mobile, and half a million more square miles than them. So they use it less, but when they use it, it works very well. It’s a good use case. We have three different solutions. You know, of course, we offer the Globestar Apple solution as well.

Have an AST solution, and then we have a Skylos solution. We have three different solutions, so there’s a lot of redundancy in our framework. It’ll work very well. We still have a couple of more quarters before voice and load speed data get set up. It’s gonna take a couple of quarters there.

My sense is in ’26, you’ll start seeing some early proof of that. But it’s gonna be low speed data and voice with some level of latency built in in into it. Then the third piece is high speed broadband. It’s it’s a high speed as well as consumes a lot of data. So there’s a little bit of a limitation on the scale of that product.

So I think satellite is three different things as opposed to one thing. I think the first two are very complementary to us. We will offer it. We work with three different partners to do that. High speed data, there is a use case for it.

It does work well in rural areas and in really far out suburban areas as well. But it’s got a limited TAM primarily because density is important to that.

Laurent Yoon, US media and telecom analyst, Bernstein: It seems like as the capabilities of satellite gets better over the years, it’s gonna be an ongoing topic we’ll probably, discuss for years to come. I would like to close off the session with a word association game. So, basically, the process is I will say a word, and please don’t think too much. Okay. And just kinda blurt out the first word that comes up in

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