Verizon at Citi Conference: Strategic Growth Focus

On Thursday, 04 September 2025, Verizon Communications Inc. (NYSE:VZ) presented at Citi’s 2025 Global Technology, Media and Telecommunications Conference. The discussion, led by CFO Tony Sciatus, highlighted Verizon’s strategic focus on expanding wireless and broadband services amidst a competitive market. While the company reported positive revenue growth and raised financial guidance, it also acknowledged challenges such as elevated churn rates.

Key Takeaways

• Verizon raised its guidance for adjusted EBITDA, EPS, and free cash flow.
• The company is prioritizing growth in wireless and broadband services through innovative offerings like MyPlan and AI Connect.
• Verizon reduced its debt by $7 billion in the past year and is nearing its long-term leverage target.
• The Frontier acquisition is on track, with expected synergies of at least $500 million by the third year.
• Despite a competitive environment, Verizon remains focused on disciplined growth and operational efficiency.

Financial Results

• Verizon reported a $1 billion increase in service revenue, up 2.4% in the first half of the year.
• Guidance for free cash flow is set between $19.5 billion to $20.5 billion for the full year.
• The company anticipates cash tax savings from tax reform of $1.5 billion to $2 billion in 2025.
• Debt reduction of $7 billion has brought Verizon closer to its leverage target of 2 to 2.25 times.

Operational Updates

• Verizon is focusing on operational performance and cost efficiency, with a continued rollout of C-band technology.
• The MyPlan ecosystem, with its perks and services, is a significant growth driver, contributing to a $2 billion annualized run rate.
• AI Connect initiatives are leveraging existing infrastructure to enhance service offerings.

Future Outlook

• Verizon sees growth opportunities in perks, convergence, and AI Connect.
• Capital expenditures are projected at $17.5 billion to $18.5 billion, primarily for C-band deployment.
• The company plans to optimize its asset portfolio, potentially increasing dividends and considering share buybacks once leverage targets are met.

Q&A Highlights

• Verizon has pulled back on consumer postpaid phone aspirations, focusing instead on wireless service revenue and free cash flow.
• Pricing actions were implemented at the start of the year and continued in the third quarter.
• The company has made significant progress in cost transformation, reflected in positive EBITDA results.

For a more detailed analysis, refer to the full transcript below.

Full transcript - Citi’s 2025 Global Technology, Media and Telecommunications Conference:

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: Clients only. Welcome back to Citi’s twenty twenty five global TMT conference. For those of you I haven’t met, I’m Mike Rollins. I cover communication services and infrastructure for Citi. Disclosures are available at the back of the room.

And if you don’t have access or would like another copy, please email me at michael.rollins@Citi.com. With the housekeeping details out of the way, we’re pleased to welcome Tony Sciatus, chief financial officer of Verizon. Tony, thank you so much for joining us today.

Tony Sciatus, Chief Financial Officer, Verizon: Thanks, Mike, and, good morning. Before we get started, I need to draw your attention to Verizon’s safe harbor statement and our SEC filings, which can be found on our Investor Relations website. And, my comments may include forward looking statements that, are subject to risks and uncertainties. So with that out of the way, we can get going. Thanks for having us.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: Excellent. Yeah. Thanks for being here. So, you know, maybe if you could set the stage for us in terms of, you know, what you’ve been working on, and what are your current priorities at Verizon?

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So at the top of the house, the team is very focused and aligned on driving wireless service revenue, adjusted EBITDA, and free cash flow. And, within that framework, growing both mobility and broadband, and extending our leadership there. And and if I break it down into the operational component components from a revenue standpoint, you know, revenue growth when you think about on the consumer side, MyPlan, MyHome, on the business side, MyBiz. So we have a great value proposition for for customers.

And then continued, work on cost efficiency to make the business, more efficient in serving, our customers. So that’s extremely important to us. And then on the network side, continuing, the work that Joe and the team are doing on rolling out C band, and, we’re making great progress there. And then from a broadband perspective, growing both FWA and Fios, it’s really both, and expanding our broadband portfolio. And then, obviously, we have Frontier coming into the fold, as well.

And then from a from my perspective, I have three priorities. First one is supporting the leaders in the business and ensuring we have laser focused on operational performance and execution day in and day out. Second for me is executing on our financial guidance for the year. And we raised our guidance, this year for adjusted EBITDA, EPS, and free cash flow. So that’s something we’re very happy with the progress we’ve made.

And then third, generating strong cash flows, and executing on our capital allocation priorities. So the first half results were strong and set us up well to deliver, for the year.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: Great. So if we take a step back, one question, that we’re asked about, is the opportunity for Verizon to sustain annual financial growth, you know, including on the revenue side. And realize this is not the forum where you’re gonna, you know, wanna give maybe explicit guidance. Right. But, what is the market underappreciating about your financial model?

And how you view the opportunity to sustain that multiyear annual growth?

Tony Sciatus, Chief Financial Officer, Verizon: Yes. We’ve had good revenue growth in the first half of the year. We had $1,000,000,000 of service revenue growth, up 2.4%. So we’re making good progress there. In terms of your question on underappreciated areas, there’s a few.

I I would start with, the con the value construct we have with with MyPlan and and the perks of the adjacent services. And, if I if I zoom in on perks, perks are a great business for us. They give great value to customers and, also provide good revenue, good margins for us. If you think about, you know, a streaming bundle or a hotspot, those give customers, exclusive savings, which is great for them, and and also great for us. So we have, we said we’re going to have about 15,000,000, perks in the portfolio.

It brings about a $2,000,000,000 annualized run rate with it, and it’s growing. And we have about 58% of the base on, on my plan right now. So there’s a lot of opportunity to continue to penetrate the base with Perks. So we see that as a great opportunity. Second for us is around convergence, and we think convergence is really good.

It provides a significant, you know, increase in customer lifetime value, which is great. And we have great platforms with My Home and My Plan, you know, to, to provide great optionality, for customers, and we can do it with owner’s economics. And the third area, is emerging right now, is the work that we’re doing, which we call AI Connect. And I think you’ve heard Kyle talk about reimagining the the wireline assets to deliver AI workloads at scale. And if you think about, you know, the the dark fiber, the lit fiber, the power space and cooling, that we have already in our portfolio, we have the central offices to deliver, AI at scale.

This is an emerging opportunity for us. We see a lot of demand and interest right now, which is really great. These are going be custom deals, so they’ll take time to mature. But this is something that we see a lot of promise, for the long term. So these are the three areas that I think are underappreciated, I think, are good opportunities and prospects for growth for us.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: Great. Maybe just staying with the strategic side of the conversation before digging deeper into the operations. On the subject of spectrum, what’s your appetite to invest in additional spectrum? And of course, related to this, if you could share some perspectives on whether or not Verizon has taken a look at EchoStar’s spectrum position recently, and if it has bands that would benefit Verizon and your customers.

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So we we we like the assets that we have. When you think about the, the networks that we have, the fiber network, the wireless radio access network, and our spectrum position. And and as you know, we bought C band a few years ago, and, we think it’s a great asset, and we continue to deploy C band. We’re about, we said 80% to 90% of our sites will be C band enabled this year, and and that’s moving along, on track.

And we have the assets we need to execute on our strategy. To your question on spectrum, spectrum is the life lifeblood of the wireless industry, so, we all know that. And it’s fair to assume that, you know, we look at everything. And if there’s opportunities for for value creation, at the right price, and it makes sense for us, we’ll do that. As you saw last year, we we did the transaction with Frontier.

We And think that’s a great asset, and we look forward to bringing that into the portfolio. And as we said at dinner last night, we haven’t been shy about the spectrum over the years. So we’ll continue to be opportunistic.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: You referenced earlier the 2.4% growth, which I think is for wireless service revenue. And so what are the underlying drivers that you’re capturing for wireless service revenue growth? And how are you set up for the back half of the year relative to the guide of 2% to 2.8%?

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So the first half of the year, we’re very pleased with the progress on service revenue. We had 2.4% growth in the first half of the year, so a billion dollars of wireless service revenue growth. And the drivers, that we saw in the first half of the year will also carry, into the second half of the year. And if I can drill down on that, there’s quite a few of them.

The first one is around pricing. We took pricing actions, earlier in the year and more recently in the third quarter. That provides a tailwind to service revenue. I mentioned, perks and adjacent services on MyPlan. That provides a great tailwind, to service revenue, as well.

And we’re continuing to see strong premium mix, customers taking premium plans on MyPlan. And then when you think about, fixed wireless access, fixed wireless access continues to grow. Did We over $700,000,000 in revenue in the second quarter, and, you know, we’re taking healthy share there. And then, prepaid. Prepaid, we’ve had four straight quarters of volume growth, And now we’re finally reaching an inflection point on revenue where it’s been a drag of prior years.

We’re going to see that now turn to positive revenue growth. So all of those factors are driving the revenue growth, and then we’ll see what happens with volumes as well. And then, well, partially offsetting that is a promo amortization, as you know. And, we said in, for 2025 that that promo amortization, the headwind would peak. So it is peaking as planned right now.

But when you step back from that and you look at the revenue growth without the promo amortization, the customer economics are actually very healthy, and that’s what we look at in terms of revenue generated. So

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: when we think about just the growth drivers, one of the notable updates on 2Q was Verizon pulled back from the aspiration to do better on consumer postpaid phones this year over last year. What’s happening within the competitive landscape? And maybe you can give us an update in terms of what you’re seeing in the third quarter with respect to the environment.

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So it’s a competitive market, so that’s nothing new for us. The first half of the year was very competitive. We have a great value proposition with MyPlan and the the best value guarantee that we launched in April, and and our offers are are hunting right now. We’ve said we’re measured on wireless service revenue, adjusted EBITDA, and free cash flow, not net adds.

So we think it’s very important. We think volumes are important, for the business, and we’ll drive volume growth where it makes sense and in line with, our financial guidance. And and those are the guardrails we have. So it’s not gonna be net ads for the sake of net ads. And, we don’t think that that’s the right answer, and that we’re gonna be very disciplined in our approach.

We have a flexible investment envelope that, you know, between Kyle, Sampass, Hans and I, we can work through that. And, we can pulse in and pulse out where it makes sense, and you’ve seen us do that, to your question, on the third quarter. But we’re going to do that in support of our financial guidance and be disciplined in our approach, and we’ll find the right we’ll pick our spots.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: Can you give us an update on churn and what you’re seeing there? There were some comments this week from Verizon about churn. Maybe just help frame what you’re seeing.

Tony Sciatus, Chief Financial Officer, Verizon: Sure. Churn is core to what we do and churn improvement is core to what we do day in and day out. We saw elevated churn in the first half of the year, both from a competitive environment and also from the pricing actions we took earlier in the year. And, you know, the goal is to continue to reduce churn. We still have more work to do.

Churn is still elevated, so we still have work to do in the back half of the year. We have a lot of tools to get there, and the focus is to do it in in a disciplined way. And what I mean by that is we have our best value guarantee, for example, that’s one way, to to lower churn. Another way is, you know, around convergence. Where we see convergence, we see lower churn.

Where we have a converged bundle, you know, customer has, is is stickier. Where we have C band deployed, we see lower churn. So and then the work that Sampath and the team are doing on on customer experience and the enhancements with AI, will also improve churn over time as well. So there’s a lot of tools, to get there. We still have more work to do, and that’s the focus of the team.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: So if if churn is maybe up this quarter and the switcher pool is larger, Is there a way to think about that in terms of does that mean that gross adds are better? So just from a net growth perspective, you’re kinda where you wanted to be, or, you know, is there just kind of this, you know, maybe deliberate shift on customer economics that you’re taking? You know, maybe you could just help unpack a little of that for us.

Tony Sciatus, Chief Financial Officer, Verizon: Sure. We have we have a great, value proposition with the best value guarantee that we launched in April. So it comes with a three year price block free phone guarantee and and and base and new treated the same. So and that offers hunting well. And in the second quarter, we saw really strong gross ad production.

We saw 19% gross ad growth. We’re continuing to see good gross ad growth in the third quarter. We’ll see where we end up at the end of the quarter. The execution in our stores continues to be very strong as well. So the team is doing a great job.

We’ll have to see in terms of what happens in the competitive environment and with the device refresh cycle coming up here in the next couple of weeks, we’ll see what happens with all that. But as I said before, we’re going to stay focused on our three measures, service revenue, EBITDA, free cash flow, and be disciplined in our approach to growth.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: And maybe just thinking about ARPU performance. I mean, mentioned the perks and some of the things, pricing actions that are helping ARPUs, but you also have these price locks now. Yep. How does that feed into the ability for Verizon to use price or ARPU mix as a lever to grow service revenue in the future?

Tony Sciatus, Chief Financial Officer, Verizon: A few thoughts there. So we launched as I said, we launched the best value guarantee back in back in April, and so it comes with a three year price lock and the free phone guarantee. And, you know, we think that offer is actually hunting, very well for customers, gives customers a lot of optionality on my plan, which is great to see. There’s a lot of ways to grow revenue beyond pricing, as I mentioned earlier, you know, whether it’s volumes, whether it’s perks or adjacent services, premium mix, FWA, etcetera. So there’s a lot of ways, to get there.

In terms of your question around pricing, I can only talk about pricing actions we have taken. I can’t talk about anything we might do, in the future. We did take some pricing actions at the beginning of the year, the first quarter, and also more recently, and and those will provide a tailwind to revenue. And as we evaluate pricing opportunities, we always evaluate those opportunities with the value proposition for the customer in mind. And we have a great value prop with the best value guarantee on my plan.

So and we think that’s the right construct for us.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: And then you mentioned upgrades, and we’re approaching the seasonal refresh opportunity. So what have you been learning about the customer interest to upgrade during this cycle? And what do you expect to come out of the competitive landscape as we’re going into this?

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So we’ve had probably up until April, we had about eight straight quarters of declines in upgrades year over year for for many, many quarters. So customers were hanging on to their phones for for, you know, over forty months. So when we launched the best value guarantee in April, obviously, that that changed the dynamic because now, we offer a free phone upgrade, and that’s tiered by revenue. So if you have an Ultimate plan, you get one device.

If you’re on a Welcome plan, you get a different device, but you still get a device. So, so we saw the upgrade rate tick up in the second quarter. We still remain financially disciplined. We had good EBITDA growth, in the quarter and the first half of the year as well. As I think about it, we said, you know, mid single digits in terms of upgrade rates for the full year.

We’re running above that right now. We’ll have to see what the device refresh cycle, what happens in the back half of the year. And that the reason for that is our offers are hunting well right now, and their offers are resonating in the market. So, but we’ll see how the, you know, we’ll see some of the device refreshes next week. We’ll see what happens, with the reaction to that and the take rate around that.

But as always, we’ll be very disciplined in our approach in terms of, upgrades and retention.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: And maybe just taking a step back. So if the promotional environment is a little bit more costly right now, and there’s more device sales with your upgrade comments. What does that mean for margins and profitability for the back half of the year for Verizon?

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So upgrades you can ask the question, do upgrades, you know, hit hit the margin straight up? And the question is it depends. And some of it is an investment, you know, retention. So we look at it that way.

The other thing that upgrades can do is drive traffic into the stores and, you know, have a customer look at, taking either perks or Converge bundles. So so there’s a lot of ways, where where we can make an investment in the business. We did see upgrades tick up significantly in the second quarter when we launched the best value guarantee. We expected that, and we expect it to shift the dynamic because we had so many years declines in upgrade rates. So, and like I said, we have a great value proposition, and it’s actually resonating right now.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: So no change in your perspective?

Tony Sciatus, Chief Financial Officer, Verizon: No change in our perspective. And as always, we’ll be ready to go, in the fourth quarter as we always are.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: And then when you think about the cost structure, what are the opportunities to extract more efficiencies, whether it’s through AI, copper decommissioning? You maybe walk us through the opportunities to really improve the efficiency and margin profile over time.

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So we’ve made a lot of progress on cost transformation in the first half of the year, and that’s reflected in the EBITDA results. We had 4.1% EBITDA growth, 1,000,000,000 of EBITDA growth, so making good progress on cost transformation. A lot of work’s been done by Sam Path and the team on customer care, including enhancements with AI that’s driving, some of that. We’re also seeing, good work on the business side with our managed services portfolio and the work that Kyle and the team were doing.

We’re seeing savings from from that as well. And then you mentioned, on the network side, taking legacy elements out of the network. And we have obviously more work to do there, but we’re making good progress. And then some of the other areas like IT and real estate, and then we also did a voluntary separation program towards the end of last year. And starting in the second quarter, we started seeing a full run rate benefit of that as well.

We’re operating with lower headcount. So, we continue to focus on making the business more efficient, and that’s reflected in the results, and that’s something that’s an ongoing process for us and in our DNA. Maybe and sorry, just coming back to the upgrade subject again.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: What are your thoughts that, you know, maybe first half pulled forward volume? And so even though you’re running ahead of the upgrades right now, that you might have pulled some of this forward, and and so this upgrade cycle might not be as robust as, you know, maybe it would be seasonally.

Tony Sciatus, Chief Financial Officer, Verizon: Yeah. It’s a good question. You know, we when we did the best value guarantee, we knew we would shift the, you know, the the upgrades and pull them forward. The question is, you know, now with the refresh cycle, are people waiting or not? Hard hard to say.

We’ll know that probably in the next few weeks as this all starts to shake out. But as I said before, we’ll be disciplined in our approach. It’s possible that some of that got pulled forward, but we’ll have to see how it plays out in the back half of the year. And and as I said before, we’re, know, as always, we’ll be ready to go when when these things launch.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: And when you look at the math of best value, is it driving up the percentage of subs that are on what I’ll call, like, an active, like, EIP program, even if it’s being subsidized, but they’re kind of in that category such that there’s an opportunity to just from that, to significantly improve churn because just more people are on, you know, fresher device plans. Yeah.

Tony Sciatus, Chief Financial Officer, Verizon: I think as we get folks onto MyPlan, MyPlan has a great construct when you think about the you know, you pick your network and and you can pick your perks and adjacent services. And if you want a a Netflix Max or you want a hotspot, you know, we we have all of those things and or adjacent services like insurance, you know, Hansen Insurance. So we have great optionality, and that makes it stickier for customers. And, you know, we have as I said earlier, we have about 58% of the base on MyPlan. So we’re making good progress there.

Obviously, more work to do to get, more folks on MyPlan, and we do see better ARPAs on MyPlan. So, that’s the focus of the team.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: And maybe circling back to FWA, you referenced some of the opportunities earlier. Can you give us an update on how expansion is progressing and the opportunity to improve the quarterly cadence of net adds for that?

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So with FWA, the goal for us is to build a long term sustainable business with plenty of runway, and and and that’s what we’re doing with FWA. And as evidenced over the last few weeks, it’s it’s clear that the industry has adopted and embraced FWA, which is which is great to see, and it kind of validates the the thinking on on FWA. And it’s it’s a great product. We have, over 5,000,000 subscribers, in our base right now, 5,100,000, and well on our way to our eight to 9,000,000 subscriber target, by 2028.

And we put on about 600,000 FWA net adds in the first half of the year, and we’re taking meaningful share, which is great to see. In terms of how we think deployment of the network, you know, the primary use case for C band is mobility, and a secondary use case is the optionality for FWA. And we continue to roll C band out. We said 80 to 90% of planned sites, and and Joe and the team are on track with that. And as we roll out C band, that will continue to provide optionality for FWA.

The cadence will be a little bit different as we now roll out into Tier two and Tier three markets, think suburban markets, rural markets. Obviously, the density is a little bit different there. So obviously, that’ll impact the pace of growth, but we’re not stopping. We’re going to continue to press ahead. We let customers really like the product, the NPS.

You’ve heard this from Sandpath many times, the NPS is really high, And, it’s a it’s a great product, so we’re very happy about the progress there.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: Are you seeing any incremental opportunities to invest in that product to drive additional revenue versus the fallow capacity model?

Tony Sciatus, Chief Financial Officer, Verizon: So as we look at, FWA, as I said, the use case first case is always mobility and that and then, and then FWA. There’s always opportunities to go back and look at a use case, for FWA. And the question is, what is the return on that investment? If the return on investment makes sense, there’s, you know, once we get through, the the build and and achieve the build, there’s always a chance and opportunity to come back around and look at those use cases. It’ll be, you know, whether the return makes sense for us, but we always have an option to do that.

And if and if we do that, that means we’re being extremely successful. So but we always have the optionality to do that, but there’s no success based capital right now for for FWA. And the MDU opportunity? Yeah. Sure.

So one of the things we we wanted to do this year was roll out an MDU solution, which is bringing millimeter wave to an MDU and then running that through the coax in in an MDU. And, we started launching that product. As as with any new technology, we’re going through the growing pains of that right now. We think it’s going to be a great product. The goal is to have gigabit speeds, for us, and we’re working through some of that right now to ensure the customer experience is what our customers expect from us in terms of network performance.

So the team is working through that, and that’ll scale over time. So as we work through the growing pains, I expect that to be a contributor to open up more prems for sale in FWA. And maybe switching gears to fiber. Can you give

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: us an update on the Frontier process close and the financial opportunities that brings to your shareholders?

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So, the Frontier is moving along in terms of the regulatory process. It’s on track. We’ve secured approval in eight out of the 13 states where we need to get approval, along with the FCC and the DOJ. And, we’re going to work with the remaining states, that’s already in progress, to ensure, we can get the deal closed.

And what we said is first quarter by first quarter twenty twenty six, and and that’s on track. And we’re working through each state’s process to get that done. And we’re excited to bring Frontier into the fold. The work going on right now, there’s a lot of integration planning that we’re doing right now with Sandpath and the team and the Frontier team to ensure we can hit the ground running on day one and make sure we can serve our customers on day one. So that’s extremely important.

We talked about when we announced the deal last year, know, targets, and we said at least $500,000,000 of operating run rate synergy by the third year. So, you know, we do see a lot of opportunity in the Frontier footprint, both from a revenue standpoint and also from a, from a cost trans transformation standpoint as well when you think about, you know, the legacy network, you know, as they fiber put more fiber into the network. So there’s a lot of opportunity there. And what we’ve said, what Hans and I have said is that we get closer to closing the deal and get clarity around the closing time line. We’ll come back on, you know, what the build pace looks like in the combined footprint going forward, what the CapEx will look like, you know, synergies, you know, integration costs and capital allocation as well.

So we’ll come back on all of that real soon.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: And just to remind our group, that synergy number doesn’t include certain things like tax or interest or, you know, some of the other things that could be helpful?

Tony Sciatus, Chief Financial Officer, Verizon: Yeah. There’s, there’s no revenue synergies in there, and, there there’s an opportunity to go to go further, and that’s that’s the focus. And as I said, we’ll come back with a full view on that real soon. Stay tuned. And

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: and maybe then, you know, zooming out. You know, when I think about the larger strategic ambitions for Verizon over, you know, number of years, It feels like it’s been about being a leading provider across the whole US of mobile and broadband, and that brings us to the convergence conversation. And so as you look at what Frontier gives you, your FWA, your mobile business, how do you look at Verizon’s convergence opportunity and leveraging that to grow in the future?

Tony Sciatus, Chief Financial Officer, Verizon: Yeah. Sure. So in terms of convergence, in terms of broadband, we do both. We do fiber. We do FWA.

And we have a great mobility business. So when you put that together, we have great offerings for customers. About 18% of our customers have the converged bundle, which is great to see. And that’s moving up at a steady pace. But I think you’ve heard us say many times, our view of convergence is that it’s demand led, meaning it’s dictated by the customer.

And we have a great value proposition when you think about MyPlan and MyHome, they’re very similar constructs. You pick your network, you pick your perks. So it’s very similar and gives a lot of options for customers. We have the owners’ economics on the networks when you think about our wireless network and our fiber network, so we can we can handle this. And And we’ll be ready as it ticks up.

And questions have come up about how high the percentage can go. We think it can double over the next few years. But again, it will be dictated by the pace of the customer from the customer standpoint. Maybe shifting gears to capital allocation. Can you give

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: us an update on the leverage, where you are versus your target and what Frontier does in terms of influencing that?

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So we’re very pleased with the cash flow generation of the business. We had strong cash flows in the first half of the year. We raised our free cash flow guidance, for the full year to nineteen point five billion to $20,500,000,000 both on the strength of the operations of the business and also tax reform. And we said tax reform would provide 1,500,000,000.0 to $2,000,000,000, cash tax savings in 2025 and a significant benefit in 2026.

And the focus of the team has continued to be to delever the balance sheet. And we’ve taken about $7,000,000,000 off the debt stack in the last year, and we’re getting closer to our long term leverage target. Our unsecured metric right now is 2.3 times. So we’ve made a lot of progress, in delevering the balance sheet. And we said, you know, our target is two to two and a quarter.

So we’re making good progress. Frontier adds a quarter turn to that. So we have to work our way through that. But the focus for us is continuing to generate strong cash flows and continuing to pay down debt, and that’s what we’ve done.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: Maybe just switching gears again to Business Wireline. What are you seeing in that business? And is there light at the end of the conduit, so to speak, in terms of, you know, stabilizing this business on a revenue basis and a profitability basis? Yeah. When I look at

Tony Sciatus, Chief Financial Officer, Verizon: the business segment, you know, Kyle and the team have had three straight quarters of of EBITDA growth. And you mentioned the secular declines in in wireline, and that that’s probably not going to change. However, what we do see is, you know, Kyle and the team have grown both mobility and FWA quarter after quarter after quarter. And the revenue is skewing more wireless. So obviously, that’s better for for margins.

And it really starts with with the wireless revenue growth that’s driving some of this. And then you add in things like private networks, and we’re seeing good demand right now for private networks, and and in the future AI Connect. So the revenue profile is shifting. And then the team is doing a lot of work on cost transformation to improve the margin profile. Whether that’s getting customers off of legacy products and solutions, that’s extremely important.

The team did a lot of work on managed services and the delivery of managed services, and we’re seeing savings, right now. And the other thing we’re doing is being very disciplined at the deal desk and not writing low margin deals. So if it’s not good business, we’re not going to do it. So Kyle and the team are very focused on writing good business, and extremely important. And we’re operating with lower headcount.

So the team’s done a great job, and we’re positioned to have EBITDA growth this year, and that’s great to see.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: Zooming out on the wireless landscape again, I think the team this week referenced the possibility of industry growth postpaid phones slowing in future years. And can you frame what could drive that slowdown in industry growth? Actually, we’ve had, I feel like a few years now where we’ve expected a slowdown each year and

Tony Sciatus, Chief Financial Officer, Verizon: That doesn’t and it hasn’t happened significantly yet. But at the same time, if it does, you know, why and what’s Verizon’s sensitivity on the volume side to that possible slowdown? Look, I mean, the wireless business has been very resilient, and the demand and the the priority for connectivity continues to remain high. So that’s probably some of the resilience that you’re seeing. And obviously, you know, some of this is influenced by by immigration, by prepaid to postpaid migrations, you know, younger demographics in terms of kids getting phones and things like that.

So there there’s a there’s a few things influencing that. But even with the slowdown, you know, we’ve said longer term, our our view is more eighty twenty in terms of price volume, and, you know, we’re not there at this point. But, you know, obviously, we’ve been able to manage through it. And as I said, it’s a very resilient business, and the demand is still very high, and and, the customers are very resilient as well. And when you define the eightytwenty, just just to help our audience here, that’s not explicitly a postpaid phone formula.

Right?

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: That’s a formula for the whole business That’s

Tony Sciatus, Chief Financial Officer, Verizon: right. That’s right. That’s looking at perks, adjacent services. You’re looking at everything. You don’t have to be there’s we’re looking at all

So when we say that, we’re looking at the entirety of the portfolio.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: Can you give us an update on how you’re thinking about returning capital to shareholders? You have the dividend right now. What’s the outlook for return of capital?

Tony Sciatus, Chief Financial Officer, Verizon: Sure. So we have a very disciplined capital allocation framework that has four priorities. The first priority is investing in the business. And you see us doing that with our networks, year in and year out. This year, 17,500,000,000.0 to $18,500,000,000 in CapEx.

Majority of that will be spent on the network and a big focus on on deploying C band. So that’s always the first priority. Second priority for us is the dividend. We have a long track record and a proud track record of eighteen straight years of of dividend increases. And our goal is to put the board in a position to increase the dividend once again.

Third priority for us is a strong balance sheet. And as I said earlier, a lot of work being done to delever the balance sheet and get to our long term target, leverage target, and, we’re making great progress there. And then we said once we get to our long term leverage target of two to 2.5, we would consider share buybacks. We’re getting close. We’re not there yet, but, you know, as we get through the Frontier deal, there’s line of sight to that.

But we have work to do between now and then.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: And just, you know, thinking through what else you could do, you know, maybe in a strategic fashion, is there room to further optimize assets within Verizon? For example, you still have a video business. You might have some legacy real estate. What can you do to sort of accelerate the goal to more of your strategic focus in the future?

Tony Sciatus, Chief Financial Officer, Verizon: Yeah. Mike, we’ve done a lot of work in in in pruning the business over the years and and narrowing the focus, whether it was selling our our our media business or or other assets. And we’ll continue to look at optimizing the portfolio. That’s something we do all the time. And if there’s an opportunity for value creation, at the right price, at the right economics, we’ll do that.

And that’s something we’re always focused on. And if there’s a way to make the business more efficient, we’re going to continue to do that.

Mike Rollins, Communication Services and Infrastructure Coverage, Citi: Tony, thanks for joining us today.

Tony Sciatus, Chief Financial Officer, Verizon: Great. Thank you, Mike, for having us. Thank you. Thank you.

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