Verizon at Connectivity Conference: Strategic Growth Amid Challenges

On Wednesday, 26 March 2025, Verizon Communications Inc. (NYSE: VZ) participated in the NewStreet Research and BCG Future of Connectivity Leaders Conference 2025. The company outlined its strategic initiatives amidst competitive pressures, focusing on subscriber growth and broadband expansion while acknowledging challenges from aggressive competitor promotions.

Key Takeaways

• Verizon aims to expand its broadband reach to 35-40 million households post-Frontier acquisition.
• The company expects 8 to 8.5 million net adds in 2025, a slight decrease from previous years.
• MyPlan has been transformative, with over half the customer base already on it.
• Verizon plans to leverage direct-to-device satellite connectivity through a partnership with AST.
• The company projects EBITDA growth between 2% and 3.5% for the year.

Financial Results

• Verizon expects a 5-10% decrease in net adds for 2025, projecting 8 to 8.5 million.
• Price increases in 2024 and 2025 are anticipated to generate over $1 billion in additional revenue.
• Wireless service revenue grew by 3.2% last year, with a target of 2% to 2.8% growth this year.
• 15% of wireless revenue comes from non-connectivity services, which are growing at a double-digit rate.
• The prepaid business is expected to return to revenue growth in the second half of the year.

Operational Updates

• Verizon is focused on reducing churn through enhanced customer experience and mass personalization.
• The MyPlan offering has been well-received, with 7 million perks sold by October last year.
• Fixed wireless access covers 60 million households, with plans to expand to 90 million.
• The acquisition of Frontier will enable Verizon to invest in 1 million new fiber households annually.

Future Outlook

• Verizon aims to achieve positive phone net adds similar to last year.
• Post-Frontier acquisition, the company plans to reach 35 to 40 million fiber households.
• Verizon is set to launch direct-to-device services with AST, initially focusing on emergency SMS.

Q&A Highlights

• Verizon noted increased competition in Q1 with aggressive buyout promotions.
• The company does not see immigration trends impacting the postpaid segment significantly.
• Verizon will continue investing in fiber deployment, targeting 1 million new fiber households each year.

In conclusion, Verizon’s strategic initiatives at the Connectivity Conference highlight its focus on growth and innovation. For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - NewStreet Research and BCG Future of Connectivity Leaders Conference 2025:

Max, Managing Director and Partner, BCG: me extend a very warm welcome to all of you on behalf of BCG and our good friends and partners, New Street Research, to our latest installment of our Connectivity Conference. I’m Max. I’m a Managing Director and Partner. I lead our European telco work as well as our Global Center for Telco Networks together with Michael. And then we have Bora here who leads a lot of our infrastructure work in North America.

For us, it’s a very exciting day actually and a very exciting conference. We I think it can honestly be said we have a stellar lineup of speaker and panelists, the best we’ve had since we started this conference quite a few years ago. And also excitingly, we’re doing this this time live on both sides of the Atlantic. So we’re in New York today, and then we’re continuing the conversation tomorrow morning at 8AM sharp in London. You’re actually all registered for that automatically for the live stream.

So set your alarm for 3AM, and we’ll see you there. And that gives you a bit of time to prepare for the 4AM local time start. So it’s a very exciting time in the industry. I think it’s a great time to be having this this conference. Mobile World Congress is just a few weeks past.

I think what I took away from it, and I can’t quite prove this, but I think it’ll hold up to scrutiny is every single booth presenter exhibitor promised AI inside as the game changer for their proposition. We wanna talk about that today. You know? How much of that is promised land? How much of that is actually achievable?

How much of that is already being done? And the other thing that I think became very clear at Mobile World Congress is the competitive dynamics are shifting, right, across operators, hyperscalers and hundreds and hundreds of specialist tech players all going after value streams that are starting to increasingly converge. So we wanted to have we want to have that as sort of the umbrella theme for our discussion today. And more specifically, there’s really five topics we want to touch upon over the course of the day with our various speakers and panels. Fixed wireless convergence, is there more to come?

What are the challenges? What are the opportunities? How do things like fixed wireless access play into that? That’s going to be a big one for today. Network monetization, What are we seeing in terms of offerings, in terms of propositions, in terms of solutions that are potentially enabling operators and infrastructure players to actually monetize and recoup some of that investment that’s gone into the infrastructure?

We’ll be talking about Mobile Edge Cloud. We’ll be talking about IoT and and other solutions. Are they really scalable? Are they going to bring us the value that we need them to bring us to drive a sustainable sort of total shareholder return? We’re going to talk about Gen AI, of course.

Gen AI in the network space arguably would be a less mature space than, say, customer operations, but still we’re starting to see activity there. And how is that going to influence how we plan, how we build, and in particular, how we run our networks? We’re also going to talk about future proof network infrastructure. How will we get there? What does it mean actually?

And how do we manage legacy decommissioning, a highly complex topic, in parallel to that decommissioning DOCs, decommissioning copper and so on and so forth? And then finally, we’ll talk about cloud native networks. What does that mean for the operators? What sort of plays and solutions does that open up, and what is the role of the hyperscalers in helping, in supporting, and teaming with the operators. So those are the themes we want to focus on today.

I’ll hand over to Miki for a couple of further thoughts.

Miki: Thank you, Max. And also a very warm welcome from my side. I would like to double down on three trends and share a very short reflection on what we saw on one side in Barcelona at Mobile World Congress, but also what we see across and through the industry. And Max mentioned it, the topic, especially next gen connectivity, the topic of that AI moves from an overlay to an AI insight model so that we see more and more network elements get the ability to autonomously configure themselves that we have data line management in Andre. And what we see is and this is a great outlook that the topic of autonomous networks seem to slowly taking up speed again in that.

We have then the topic of building for tomorrow. So this is all about balancing hype and execution. I mean, one tagline out there is the topic of O RAN, where we see, okay, there was once a very bold promise. We see that some of the vendors, especially the alternative vendors, they went a bit more silent. But we see now that the traditional and incumbent vendors are really taking that up.

And there are various models in the market on how to push that through. So we expect there to be, first, a really large scale rollouts, which will also drive a bit innovation forward. And last but not least, a topic very close to my heart, a topic of cloud nativeness. We’ll talk a lot about this today as well, where we see, okay, slowly scaling up. Right, we still see core cloud networks is still at the beginning.

We see now more and more announcements where they go. That’s something we’ll talk a bit about today, where we see there are a couple of approaches. There is a full stack approach and there is more the function by function approach. We’ll discuss that also a bit today, where we see there is, I would say, a good momentum and I think a great push also from the hyperscales into market. So to summarize, it’s a great time to be in the market to discuss that.

It’s a bit of the mix between steady tech evolution. I would stay still cautious investments in newer technologies. And I think one topic, Max mentioned that as well is, of course, there’s always the lookout for what is the new and what are the new and more scalable business models for additional revenues. Let me hand over here to Borra to kick us off for today.

Bora, BCG: Yes, sounds good. Thanks again, everyone. On behalf of our European team and our North America team, we’re really excited for today. Echoing, it’s really one of our most fantastic lineups we’ve had across the board. So we’ll have marquee operators, obviously, kicking off today.

We’ve also got marquee investors, megafunds, along with the cloud community that will be in attendance today to drive kind of cross functional insights for all of you. We expect to make today very engaging. So hopefully, the discussion and the insights are novel to you and we’re really looking forward to today. So quick housekeeping, if you need anything, please feel free to come to the front desk, ask any questions. They’re here to help navigate the day.

We also have conference rooms on the floor should you need to take calls today as well. And so, yes, to get the day started, we’ll have Frank Boldman, Chief Revenue Officer of Verizon Consumer. We’ll get the live stream set up and we’ll get rocking today. So thanks so much.

Max, Managing Director and Partner, BCG: I think because of the live stream, in case you’re wondering, we are on the clock and we have to be on the dot. So I think there’s a two or three minute gap now until we get going. Don’t go get a coffee. Otherwise, we’ll run late. Just give us two minutes.

Frank Bobin, Chief Revenue Officer, Verizon Consumer: And and

Jonathan, New Street Research: You guys hear us? Yes. Do we have start at 08:30 exactly for the live stream? Great. So let’s get started guys.

I’m delighted to introduce our first speaker of the day, Frank Bobin. Frank is no stranger to the New Street BCG events. We love having him here. We’re very lucky to have him here today because he’s sitting sort of right at the center of the biggest controversy impacting the mobile sector in The U. S, which is what’s going on with mobile growth in the first quarter.

So we’re going to delve into that. But we love having Frank at these events because he’s the Chief Revenue Officer for the Consumer Business at Verizon now, but he’s been the Chief Strategy Officer. He’s been a CTO. He’s held roles at Verizon for a number of years, but also in Europe at operators and equipment manufacturers. And so he has really unparalleled insights into the sector and he can speak about those insights in an unusually eloquent way for a telecom executive.

Frank, thanks for being here. So to kick things off, I’d love to get your perspectives on what’s going on with mobile growth in the first quarter. It looks like all three of the big carriers have had a difficult January, which suggests to us that the market overall might be growing at a slower rate than expected. I think you’ve characterized the weaker than expected trends in Verizon in the first quarter as more of a competition than a market issue. I’d love to sort of kick off there.

Frank Bobin, Chief Revenue Officer, Verizon Consumer: First of all, good morning, Jonathan. Good to be back here. Before we get started, I’ll ask you in the room and on the webcast to refer to our investor website for Safe Harbor. So having said that, first, let’s put the growth of the consumer postpaid market in perspective. Over the last four years, the industry, consumer and B2B, has added about 9,000,000 net adds per year, 80% consumer, 20% B2B.

For 2025, we expect that number to go slightly down to the tune of 5% or 10%, so 8% to 8,500,000.0 net adds. That still makes for a very healthy industry growth. So now if I zoom on Q1, which is your question, what’s unusual in Q1, I think there are two factors, one external for us and one Verizon specific. The external factor is it has been an unusual quarter from a competitive intensity standpoint. And I don’t think it started at the January or because of a weak January.

What we observe is at the very January, when we dropped out of our holiday promotions like we do every year, for the first time, certainly since I’ve been with Verizon, our competitors didn’t follow. So they’ve been more aggressive since the very beginning of the quarter. And we’ve seen that throughout the quarter with buyout promotions that have been particularly aggressive. So that’s the external factor. And so we’ve seen a lot of switching activity as a result.

The internal factor is we’ve done our price ups in January. Our price ups combined with those we did in the latter half of twenty twenty four, this year are going to generate net of any churn and incremental revenue of more than $1,000,000,000 So I’ll do that trade off any day, but it created elevated churn for us in Q1. So that’s how I would characterize the Q1.

Jonathan, New Street Research: But Frank, don’t you think the unusually tough promotions from T Mobile and AT and T are response to a tough market environment that they’re fighting harder to get their what they’re looking to get out of a shrinking pool?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: I cannot speak on their behalf. As far as we are concerned, Q1 is always a slower market seasonally for us. And we adjust our promotions to the demand. So typically, January, February, less demand, March more demand. So you see us changing our promotional portfolio.

We haven’t seen a significant change year on year from a Verizon standpoint. I cannot speak from them.

Jonathan, New Street Research: Got it. I’m sort of wondering whether that’s the driver just because I felt like in 2024, we had a fairly rational competitive environment. This market is always competitive, but it seemed like the three national carriers were behaving in a sort of a competitive fashion that would lead to good returns for the industry. ARPU is growing, margins expanding. And it seems like there’s been a bit of a shift in competitive intensity at the beginning of the year.

Frank Bobin, Chief Revenue Officer, Verizon Consumer: Look, last year, we returned to phone net adds positive. We grew wireless service revenue at 3.2%. This year, our goal is a repeat. So we want full net adds to be better year on year and we’ve guided for wireless service revenue growth 2% to 2.8%. So we’re going to continue with the same formula for this year.

Jonathan, New Street Research: Yes. And the wireless revenue growth is very much in your control because you’ve got a lot of influence through what you do with pricing in ARPU. On the subscriber front though, given that we’re starting off with net adds for the first quarter that are likely worse than last year, what gives you confidence that net adds for the full year are going to be better? What’s going to change in the over the course of the next three quarters?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: So the number one driver is going to be churn reduction for us. We’ve been investing in improving our customer experience. We’ve been investing in our capability to drive mass personalization in the treatment of our base with next best offer, next best service to improve retention. We’ve got also an increase in our joint customer base, maybe we’ll come back to that. Customers who have mobile and broadband with us are churning less.

And we see also customers taking more services from us churning less. And lastly, as we continue to expand our C band coverage, we see less churn where we offer a C band experience. So that’s the churn reduction driver. The other driver is continuing our gross add momentum. So we’ve had two consecutive years of phone gross add growth year on year, ’twenty three and ’twenty four.

We intend to continue this year and that’s on the back of a successful value proposition, MyPlan, that is resonating with customers. With MyPlan, we’ve reduced the price premium versus our two main competitors and we offer something that is really unique with the perks that they cannot get anywhere else and we offer those perks at the entry level as well. So if you are a customer seeking an entry price plan in postpaid wireless at Verizon, you can still get significant savings on streaming offers. So for instance, if you take the top five most popular streaming services, you’re going to save $20 per month. So if you look at it from a household spend standpoint, it makes our entry price point very competitive.

Jonathan, New Street Research: By the way, you should know that MyPlan has been pretty transformative to Verizon’s operating trends in 2024. And it was Frank’s invention. He’s behind the MyPlan initiative as well as all of the partnerships that Verizon signed up over the course of the last four or five years that feed into MyPlan.

Frank Bobin, Chief Revenue Officer, Verizon Consumer: Thank you, Gerard. It takes a village. We have a large team at Verizon. But you’re right. It has been the most successful price plan we’ve launched in a number of years.

I give you a couple of proof points. We have already more than half of our customer base is on MyPlan. That’s the fastest migration I’ve ever seen. And we sold last year, we said by October, we had already sold 7,000,000 perks at $10 on average per perk. By the end of this year, we are confident we’ll exceed $14,000,000 So it’s becoming a business in itself and it generates good margins as well.

Jonathan, New Street Research: So Frank, going back to the two drivers of improving subscriber trends over the course of the next three quarters, the churn reduction you’ve spoken to on gross adds improving year over year, will they improve in the first quarter?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: No. We said first quarter was soft for us.

Jonathan, New Street Research: On gross adds.

Frank Bobin, Chief Revenue Officer, Verizon Consumer: On gross adds.

Jonathan, New Street Research: Yes. And so what drives the acceleration in gross adds for the rest of the year?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: So it’s not unusual for us to start with a slow Q1 on gross adds. As I said, my plan is resonating. My plan is a platform and it allows us, unlike our competitors, every quarter to innovate with the perks we offer. We just recently, we introduced YouTube Premium as a perk. We just introduced Google One as a perk as well, first service with a subscription for Gemini, for AI that is resonating well.

So stay tuned. You’re going to see in the coming months more innovation, more innovation coming on my plan.

Jonathan, New Street Research: So touch on the trade offs between driving that recovering growth in subscriber trends and EBITDA. You’ve guided to, I think, 3% EBITDA growth for the year as well. Is that at risk as you sort of reinvest in lower churn and higher gross adds?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: So we’ve guided to 2% to 3.5%. So 3% is slightly above the midpoint. But yes, so we want to have first balanced revenue growth between the P and the Q. So it’s important for us to return to phone gross at positive year on year. And that will be on the back of the churn reduction and continuing momentum with my plan on gross adds.

And then there is the P. So on the P, you have several components. We have the price ups we did at the beginning of the year. We have the premium mix in our base, 45% of the base is on a premium plan. But we have a super premium plan, which is ultimate, our best offer and we see migration from premium to super premium as well.

So excuse me for my coughing. We have still a lot of runway on stepping up the base from entry to premium, from premium to super premium. So that’s one lever. Second lever, it’s the perks, as we’ve just discussed, and other adjacencies. One best kept secret is if you look at our wireless service revenue, 15 percent is coming from non connectivity services and that’s growing double digit.

So that’s the perks and other adjacencies we offer to our customers. Third, we continue and sell other connected devices to our customers, watches, tablet and lastly, cross selling broadband. So all of those things are going to contribute to the top line growth and the prepaid business in the second half of the year will return to revenue accretion as well. Last year, it was a drag of 80 basis points. So that’s on the top line.

On the bottom line, we continue and have a disciplined approach to promotion and optimizing the yield on acquisition and retention, even if it’s a more competitive environment. And we are continuously focused on taking costs out of the business from network to G and A.

Jonathan, New Street Research: So I want to come back to ARPA growth in a second. But before I do, just going back to the 8,000,000 to 8,500,000 subscriber adds that you expect for the industry this year. We learned at the end of last year that immigration was driving almost all of the population growth in The U. S. And that immigration had been running at like three times the normal rate.

And it seems clear that it’s going to come down starting this year over the course of the next four years. How does that impact mobile subscriber growth for the industry? And given that sort

Miki: of

Jonathan, New Street Research: backdrop, give us some more insights into your confidence in eight and eight to eight and a half?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: Percent? We see very limited impact from any change in immigration on the postpaid side. There is a little bit of immigration influx on the postpaid side, your H1B visa holder, etcetera. We don’t see that changing meaningfully. On the prepaid side, there might be some impact at the low end of prepaid.

Having said that, we saw immigration decelerating in the second half of last year and we still had a very strong Q4 in our prepaid business. And we don’t see that happening in Q1 on prepaid from a Verizon standpoint.

Jonathan, New Street Research: And on prepaid, you’re going back to growth this year. Does that mean subscriber growth

Frank Bobin, Chief Revenue Officer, Verizon Consumer: specifically? Yes. Subsribe sorry, subscriber growth for the year and revenue growth for the second half of the year.

Jonathan, New Street Research: Got it. And subscriber growth with or without Safelink?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: Without Safelink. Safelink continues to be focused on low income families that can qualify for the Lifeline program.

Jonathan, New Street Research: And Safelink, does it start to stabilize this year now that ACP is behind us?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: Yes. So most of the losses on Safelink last year were ACP driven. So this year SafeLink is primarily focused on the Lifeline program. Yes. And so much smaller volumes than in the previous years.

Jonathan, New Street Research: Got it. And so moving to ARPU or ARPA, it’s clearly a critical driver of revenue and EBITDA growth for Verizon. Is there it’s been growing at what I think of a sort of an above inflation rate. Is there a limit to where ARPA can or ARPU can go in the context of sort of household spending or some other metric?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: So first, what we see is an inverse correlation between ARPA and share. So the more customers are spending with us, the more loyal they are and the less they share, which is maybe counterintuitive. But if you have multiple phone lines with us, tablets, watches, broadband, other services, you tend to churn less or our credit card or soon our high yield savings account. We see the customers churning less if they have more products with us. The second point which indicate that there isn’t a ceiling as one might think is we sell adjacencies that customers are paying for to third parties in other sectors.

And we offer a saving to customer. Streaming services is a very good example. Customers on average in The U. S. Have five streaming services.

If they buy them from Verizon, they’re going to save on the expenditure of the household. So I see a lot of potential in those adjacent services. They are growing at double digit rate. It’s already 15% of the mix. So that will continue.

And obviously, the broadband penetration in our mobile base is going to continue as well. Today, we have only 16% of our mobile accounts that have broadband with us, FWFIOs. That number will grow significantly in the coming years.

Jonathan, New Street Research: Got it. So the growth that comes from adding additional services to existing accounts, I totally get it. I guess it would be a mistake to look at sort of telecom revenues as a percentage of household disposable income. We’ve got to look at the full bundle of what household spend in content and broadband because you’re providing savings there. But what about the sort of the relationship between wireless pricing and churn?

I think the sort of key source of differentiation for Verizon has been network reliability.

Frank Bobin, Chief Revenue Officer, Verizon Consumer: Your

Jonathan, New Street Research: pricing is above where T Mobile’s is, just on the sort of the mobile piece of the product. Is your network better enough to support that pricing gap? And can the gap continue to expand? You need them to grow pricing in order for you to grow pricing?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: So first, the network is better. We cover 500,000 more square miles in The U. S. We have not completed the deployment of our C band spectrum. So yes, we’ll continue and have that network advantage.

But as I said earlier, we’ve reduced the price premium with introduction of MyPlan. That got unnoticed. But what we did with MyPlan, we got rid of inclusions. Customers do not want to pay for things they don’t need. And so what we did, we separated connectivity from any other inclusions.

So now with my plan, you have a simple choice for your connectivity, good, better, best from a pure network experience standpoint. And then whatever the option you choose, you have perks on which you can save. So that new structure, it’s accretive from an ARPA standpoint as we discussed, but it also reduced the price premium,

Jonathan, New Street Research: which is

Frank Bobin, Chief Revenue Officer, Verizon Consumer: now below 10%. So I think it’s absolutely sustainable.

Jonathan, New Street Research: Got it. Frank, I think you’ve lost your earpiece. We should put it on for the guys that are on the webcast. So shifting gears a little bit to C band and what that enables in terms of fixed wireless access, which is an important revenue driver for you as well. Can you give us a sense of how many households can get fixed wireless access over C band today and how quickly that’s changing?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: Yes. So today, we cover 60,000,000 households and business locations with fixed wireless access. We’ve indicated at our broadband Investor Day that that will get to 90,000,000 in the coming years. And we have very strong momentum on broadband. We offer as you know both fiber in the Fios footprint and FWA elsewhere.

Last year on the consumer side, we added more than 1,000,000 households in terms of subscriber number. So we’ve got very strong momentum there. It’s continuing in Q1 on the consumer side.

Jonathan, New Street Research: So that’s really interesting. I thought that Hans said he expected fixed wireless access adds to slow a little bit in the first half of the year until your NDU product came into effect later in the year? You basically haven’t seen that slowdown in 1Q.

Frank Bobin, Chief Revenue Officer, Verizon Consumer: What we’ve said so I was commenting on consumer alone. And what we’ve guided is that consumer plus business, all technologies, every quarter will be between three fifty and four hundred. You might see variability. Q1 is always softer as well, But we expect on average for the year to stay in that range.

Jonathan, New Street Research: Got it. And give us a little bit more context on the MDU product. What’s the addressable market for that ultimately? And how quickly can you open up that addressable market?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: So we haven’t communicated an explicit addressable market, but things in millions of units. That will come later in the year. We are testing. We want to launch it when it’s absolutely right in terms of customer experience. And it’s another use case for millimeter wave spectrum because the technology leverages the millimeter wave spectrum from the rooftop of the donor site to the MDUs we want to serve.

Jonathan, New Street Research: So one of the most fascinating things that came out of the broadband update that you guys gave last year for me was that you’re starting to sell fixed wireless access markets where you also have fiber. Does that suggest that there’s that there’s market segmentation? There’s a portion of the market that is interested in the fixed wireless product and a separate portion of the market that’s interested in fiber?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: No. I think that’s very much how, as industry insiders, we look at it. But it’s not the way we market and it’s not the way consumers understand it. We made the change three or four years ago to market all of our broadband services under the Verizon brand and with the name which is Verizon Home Internet. So if you look at our advertising, it’s about Verizon Home Internet.

Then you go to our website, you qualify your address and depending on your address, you will have a fiber offering or an FWA offering. And the offer we’ve constructed is also similar to my plan. It’s called My Home. And same thing, good, better, best in terms of the network experience and then you pick your perks with a complete price transparency. And we see that resonating very well.

And customers tend to choose the premium plans, whether it’s on the fiber side or on the FWA side. And in both cases, we win against the cable companies. And I expect for the foreseeable future fiber and FWA to continue and take more than 100% of the net adds of the broadband industry. We’ve been taking share from the cable companies in the Fios footprint with fiber for the last number of years. And with FWA, more than half of our gross adds are coming from cable companies.

So it’s a two pronged approach that we’re going to continue and it’s working well.

Jonathan, New Street Research: And where are the other half of the fixed wireless access net adds coming from? Is that market expansion?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: You have a fraction coming from fiber. You have a fraction coming from DSL as well.

Jonathan, New Street Research: Yes. Got it. And so that is a really important insight. Although, technically, fixed wireless access is offered in markets where you’ve got fiber based on how you manage the sales channel. If fiber is available in that market, that’s what the customer

Frank Bobin, Chief Revenue Officer, Verizon Consumer: is going

Jonathan, New Street Research: to see. Yes. Got it. Okay. So give us some more insights into the strategic imperative behind the Frontier acquisition.

Was this driven by the fact that fiber is just a good asset that generates good returns? Is it that you get the bundling and market share benefits? Or is there a network driven imperative behind it?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: So first strategic objective is to grow our market share in the broadband market. We see an opportunity there. We already have two technologies, F. W. And fiber.

And we saw with Frontier the opportunity to accelerate our growth in terms of market share with fiber. So that’s the number one reason. It also allows us to do cross marketing between mobile and fiber in that footprint. And it allows us to generate significant cost synergies. We’ve indicated a run rate of 500,000,000 per year after three years.

And we’ve acquired the asset at a fair price that is accretive for our shareholders, if I believe your analysis. Nominal price.

Jonathan, New Street Research: Got it. The bit sort of drilling in a little bit deeper, the strategic imperative behind the benefits that you just listed, is it the case that you’re going to need a fiber broadband asset to compete effectively in mobile in the future?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: So with the acquisition of Frontier, we will be, by the end of twenty twenty six, close to 30,000,000. We said that post closing, we will invest in at least 1,000,000, so 1,000,000 plus new open for sale fiber households every year. And we’ve indicated our goal to be at 35,000,000 to 40,000,000 within a few years. If you combine that with the 90,000,000 footprint on FWA, we’ll be able to serve the vast majority of U. S.

Households with a Verizon home Internet product. So we are in a very good position. If there are additional opportunities, we’ll screen them and assess them.

Jonathan, New Street Research: Yes. But what I’m wondering is, so you’ll be able to offer a broadband product to most the vast majority of households in The U. S. With one of these products or the other. But I’m wondering if fiber in particular, gives you an advantage that fixed wireless doesn’t on the network side.

I’m sort of thinking forward to a future where we’ve burned through all of the spectrum below six gigahertz, and we need to densify networks significantly, like by orders of magnitude in order to meet demand. And that fiber at that point becomes a really critical strategic asset and the more you have the sort of the better your margins are?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: That’s a very long term issue you’re referring to. We’ve just indicated that we can double the capacity on the FWA side. So for 4,000,000 to 5,000,000 subscribers to 8,000,000, nine million subscribers. We’ve got the MDU solution that is coming soon as well. So I think for the foreseeable future, foreseeable meaning till the end of the decade, at least, we’re going to continue with that two pronged approach between fiber and FWA.

Obviously, where we have fiber, we don’t need to use any mobile capacity for FWA. So it will over time drive where we invest in the mobile network.

Jonathan, New Street Research: And in terms of that million a year that you mentioned that you’re going to deploy at after the close of the deal? Why isn’t that faster? When I look at your peers, they’re sort of deploying it two to three times that pace.

Frank Bobin, Chief Revenue Officer, Verizon Consumer: So we’ve said 1,000,000 plus. I will stick to that for now.

Jonathan, New Street Research: Got it. Would it make so the what the advantages that AT and T and T Mobile have sort of structured for themselves is they’re doing a lot of the investment off balance sheet through JVs, which allows them to continue buying back shares and accelerating dividends. Does that sort of a structure make sense for you, Frank?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: It really depends on the specific. So we assess all opportunities and all structures that are presented to us. The guiding principle is, does it make sense in terms of acceleration of our broadband penetration? Does it make sense operationally? And is there a path to long term owner economics, whatever the structure?

So if we fit, if we find an opportunity that fits those criteria, we might pursue it.

Jonathan, New Street Research: We saw a story on Bloomberg yesterday on AT and T potentially buying Lumen’s fiber assets. I presume if there’s a transaction that you guys would have looked at those assets, can you comment at all on why those were or weren’t attractive to you?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: So thanks for asking, but I cannot comment on any speculation.

Jonathan, New Street Research: Fair enough. We had to try. So can you give us a perspective on what you think the sort of the end state for the market looks like in terms of three national carriers? And how much fiber will be sitting underneath those three mobile assets in sort of five plus years from now?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: It’s difficult to speculate on that. What I think we can say with a degree of certainty is that fiber penetration will continue to grow substantially in the coming years, probably not as high as the cable penetration is today, but substantially higher. The bulk of it will be the top two players of today, so us and AT and T. What will happen beyond that is speculation. What also is important to note is that the cable companies play also in that convergence game, but it benefits us as their wholesale provider.

Jonathan, New Street Research: Yes. Frank, we’re out of time, but I do want to pick your brain very quickly on direct to device. Why is AST the right partner for you? How big is this sort of opportunity for Verizon? How do you think about the offers that T Mobile has put on the table for your customers in terms of like a $20 price point?

Frank Bobin, Chief Revenue Officer, Verizon Consumer: Maybe they have a stronger need for coverage. As I said, there is half a million of square miles they do not cover today. We believe that it’s important for customers to have absolute peace of mind in case they need emergency service. So emergency SMS everywhere in the country from a land mass standpoint. That’s critical and we’re offering it today with a global star on Apple and with Skylo on Android.

We’re going to have a richer solution, thanks to our partnership with AST leveraging our unused eight fifty megahertz spectrum coming towards the end of the year, beginning of next year with voice and some data services. We think that there is a niche of customer that is ready to pay for that service. The pricing I’ve seen in market seems a bit too rich to me.

Jonathan, New Street Research: Great. Frank, we really appreciate you being here today and sharing your insights with us. Thank you very much.

Frank Bobin, Chief Revenue Officer, Verizon Consumer: Thank you.

Jonathan, New Street Research: That’s great.

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