Verizon at MoffettNathanson Conference: Strategic Consumer Focus

On Thursday, 15 May 2025, Verizon Communications Inc. (NYSE:VZ) participated in the MoffettNathanson 2025 Media, Internet & Communications Conference. The company discussed its consumer wireless business, financial performance, and strategic plans. Verizon is focusing on balancing price and volume growth, while addressing challenges such as higher churn in Q1. The company remains optimistic about normalizing churn and enhancing its value proposition.

Key Takeaways

• Verizon aims for an 80/20 balance favoring price over volume growth.
• The MyPlan and MyHome offerings have driven double-digit growth in gross adds.
• Verizon targets 8 to 9 million FWA subscribers by 2028.
• The Perks program aims to reach 15 million users by year-end, generating significant revenue.
• Verizon is improving fiber economics and expects 650,000 new fiber OFS this year.

Financial Results

• Q1 experienced higher churn due to earlier price increases, but churn is expected to stabilize in the second half of the year.
• Consumer wireless service revenue increased by 2.6% in Q1.
• The company is focusing on "earned price ups" through added features and higher-tier plans.
• Verizon’s Perks program is projected to create a 2 billion dollar run rate business with mid-30s margins.

Operational Updates

• MyPlan has been successful, with 40-50% of Verizon’s customer base adopting it.
• Verizon Value Guarantee has resulted in double-digit growth in gross adds during April and May.
• The postpaid market is expected to achieve 8 to 8.5 million net adds in 2025.
• Verizon is seeing improved fiber economics, with a 10% reduction in cost year over year.

Future Outlook

• Verizon plans to reach 8 to 9 million FWA subscribers by 2028.
• The company aims for 650,000 new fiber OFS in 2025, with a target of over 1 million annually post-Frontier acquisition.
• FWA market share is expected to double to 20% in the coming years.

Q&A Highlights

• Verizon discussed its MVNO partnerships with cable operators, emphasizing their complementary nature.
• The company addressed the potential end of price increases on older plans.
• Verizon analyzed the impact of tariffs on smartphone prices and promotions.
• The company also discussed immigration policies affecting labor costs and FWA growth.

For further details, readers are encouraged to refer to the full transcript below.

Full transcript - MoffettNathanson 2025 Media, Internet & Communications Conference:

Craig Moffett, Analyst, MoffettNathanson: Thank you for joining us for today’s session with Verizon and for the MoffettNathanson Annual TMT Conference. I’m really excited to have you back, Sam Path. We’ve got a short time, and I’m going to try to go as fast as I can to get through all these questions, but you’re just the person to talk to. I want to start, though, because it seems like every time you and I meet, it’s right after you’ve introduced a new revamp of the plans. Last time, it was my plan.

This time, it is your new five year price lock guarantee. Take me through what was the insight that led you to want to do the five year price lock and the changes you’ve made to my plan?

Sam Path, Verizon: Craig, good morning. Before I get started, I want to point everyone to the Safe Harbor statement. It’s on verizon.com, the Investor Relations section, so you can read it. So that’s what no. I timed my big launches around this conference.

I thought so. Yeah. Craig, and I I we don’t want to disappoint you, and there’s no exception to that. At the top of the house, we started this journey two maybe two and a half years ago where we started doing deep consumer research. And consumers came back with us and told us three, four things.

One is they really hate promo roll offs where they buy a certain price and the price goes up and after every couple of years, this completely destroys their confidence in the company. The second thing, they came back and said they never don’t like inclusions. You know, you pay for x, you get four things bundled into it. They’re like, I may not use that thing and it becomes they feel it’s extra to do that. So when you take all that research, we figured they want predictability, they wanted transparency, they wanted choice, they wanted control.

And every piece of research we do those are four points of feedback we get back every time. So because of that, we launched MyPlan and MyHome. MyPlan is doing exceedingly well. It’s one of the largest repricing in the history of telecom. Not of 4050% of our base is already on MyPlan, and it’s accretive to us even though we reduced the price premium significantly to do that.

Then we got good comfort with MyPlan and MyHome, and then we went back to customers. And one of the things they wanted, certainty of price. So we launched the Verizon Value Guarantee. And the Verizon Value Guarantee has two big components to it. The first component to it is a price lock on the network portion of the plan.

And the second one is a free phone. It’s a tiered plan. And what we found is customers are really resonating very well. In April, we had double digit growth in gross adds. I can say in May, we are continuing our double digit growth in gross adds because customers are really resonating with.

But it goes back to transparency and very clear communication on what they should expect.

Craig Moffett, Analyst, MoffettNathanson: So there’s a that tees up a whole lot of the things we’re going to talk about this morning. I want to go into the narrative that is around your Consumer Wireless business in particular, and that’s your financial results have been strong, but unit growth metrics have been weaker. And that growth has been particularly the strong financial growth has been particularly because of the price ups and strong ARPU growth. That led to higher churn. So talk about the churn rate that you saw in Q1, how long that’s likely to last.

I think you’ve said that’s clearly identified with the cohorts that got the price ups, right? So how long is that

Sam Path, Verizon: going to play out? Look, our value proposition long term for service revenue growth is a very good balance between price and volume. And there will be changes within a quarter where we’ll have to make moves to that. But overall, we want a healthy balance of eighty-twenty between price and volume. Price includes, for me, price ups that we do, but also earn price ups, step ups, customer taking more product, basically driving more ARPA in the business, I include that as well.

In Q1, we saw a higher churn. Most of that churn was driven by price up cohorts, And you can identify them down to the cohorts that saw the price ups. And remember, we had a price up in December, price up in January. We’ve priced up some of our mobile insurance plans recently. So a combination of all of those three drives certain churn in the business.

We think by the second half of the year, we get back to a BAU environment on churn as we lap those results on the price ups to

Craig Moffett, Analyst, MoffettNathanson: do that. But gross add momentum is very strong for us. But it’s been interesting to see churn was up a little bit for everybody in Q1. That makes a bigger gross ad pool. People are fishing in that pool with more aggressive promotions.

So they’re effectively giving away more value on the one hand at the top of the funnel and then pricing up in the middle of the funnel, losing more people at the bottom of the funnel, is that a better equation for you and for the industry coming in? Or is this just a transition to something that is then back to more stability? Yes.

Sam Path, Verizon: I don’t know what the industry is going to do, but I can tell you what how we think think about it. For us, there are two ways to do price ups. One is you just price up the base and second is earn price ups more. I think we’re relying a lot more on earn price ups, expect we’ll talk about that in a little bit. The second is service pricing is pretty constant.

We’ve not taken down our overall RAC rate of service pricing. That continues to remain the same. There is a little bit of higher intensity on promotional activity. In Q1, we saw typically, we pull back holiday promotions in January. Our competitors did not pull back on that, and that led to a slightly higher competitive environment.

But overall, the industry is stable in the sense that service pricing as well

Craig Moffett, Analyst, MoffettNathanson: as rack rates haven’t moved. And the promotional amortization, which is obviously a headwind to the ARPU growth, it still leaves you room for I know you guys prefer to think about ARPU instead of ARPU, but ARPU growth still has a reasonable growth trajectory even with the additional promotional amortization?

Sam Path, Verizon: Look, we think so because customers are stepping up. One of the interesting things about the Verizon value guarantee is we are seeing a better premium mix than before. Two things, we are seeing a better premium mix, customers are taking more perks in the sense we were able to say that we’re going get to 15,000,000 perks by the end of this year. It originally said 14,000,000, so you see there’s a growth in that. So we feel comfortable that program amortization will abate.

Some of it is math, it will work its way through, But we feel pretty confident in our long term ability to drive ARPU. And any expectation of

Craig Moffett, Analyst, MoffettNathanson: a higher upgrade rate? There was some pull forward, I guess. You were obviously offering very attractive plans at around the same time that the tariffs hit, and that led to some people pulling forward their iPhone purchases to avoid tariffs. Has that run did you see that? And has that run its course?

Sam Path, Verizon: Yes. So if you think about upgrades for the whole year of 2025, we think mid single digit growth in volume year over year over the whole year. Q1 was soft for us, and some of it goes back to how financially disciplined we are. We didn’t see volume in the market. We didn’t go after the volume.

We’re very financially disciplined. You saw that in Q1. As we come into Q2, there was little Verizon value guarantee did pull forward some updates because there’s pent up demand in our base because for the first time, base and new got the same offer, so we saw some of our base upgrading there. But some of it is we can’t predict because a lot of it depends on what hardware form factor changes happens in the third quarter and fourth quarter of this year. We’re not privy to that.

So we do think for the whole year upgrades will be up mid single digit. There will be volatility quarter over quarter because you play when there is volume in the market and there’s no volume in the market, you pull back. But I think mid single digit growth for the year is where we are holding.

Craig Moffett, Analyst, MoffettNathanson: And has that pull forward effect from tariffs already petered out and back to normal?

Sam Path, Verizon: We saw very little because a lot of our upgrade rate was driven by our value guarantee because based on new products, there was some tariff pull, but it was so small, we couldn’t isolate it in the overall upgrade number. Interesting. Okay. So now we talked about churn.

Craig Moffett, Analyst, MoffettNathanson: The other part of the gross add pool besides everyone’s churn is industry growth. And so one of things I always look forward to is when we get on the stage thinking about the industry growth equation. Take me through that. What’s happening with industry growth rate? And again, as you know, I tend to think about the world in prepaid and postpaid together.

So let’s think about first before we tease those apart, let’s first think about the overall growth rate of people using phones.

Sam Path, Verizon: I think the most important thing is there is still growth in the category for us. It is so essential for consumers today every single day. People rely on their phones. It’s a very resilient category broadly to begin with. You see the market for postpaid, we think between 8,000,008,500,000 for 2025.

It used to be 9,000,000, nine point two million last year. It’s come down to 8,000,000, eight point five million. But the vast majority, north of 50% of that is pre to post. Now let’s break up $8 to $8,500,000 into business and consumer.

Craig Moffett, Analyst, MoffettNathanson: And let me just clarify for a second. When you say pre to post, you include the cable operators’ gains as part of the pre to post part of the market?

Sam Path, Verizon: That’s part of they take part in the postpaid business. So some of their volumes do come from pre to post where I suspect But that’s

Craig Moffett, Analyst, MoffettNathanson: I mean, that’s when you take half of it half of that $8,000,000 to 8,500,000.0 is pre to post, you’re putting all of cable in that. Not all of cable. Oh, not all of cable. Okay. Sorry.

I just want to make sure I understand. Yes.

Sam Path, Verizon: And you break 8,500,000.0, 1 point 5 million is B2B. That leaves us with 7,000,000 off on the consumer side. Of that, a little more than half of that is what I call pre to post migration. Customers who had a prepaid plan now want to go for a postpaid plan. So that leaves us with around 3,500,000 of pure growth, which is kind of 1% of the overall population growth, which aligns with overall demographics as well that we see.

But there is a shift from pre to post. I do think the pre to post migration will slow down over a period of time, partly because carriers have done that for a long time. The pool is shrinking. And second is if there is some softness in the economy, that cohort tends to get impacted more than the other cohorts that tends to have credit issues. That’s why we don’t play in the free to post very aggressively.

Craig Moffett, Analyst, MoffettNathanson: Yes. I want to come back to that in a second, but I just want to add the top line. Is immigration having any impact on the size of the market? Not so much in the pre to post, but just overall, if there’s less immigration, there’s lower population growth. Is that showing up in the numbers yet?

I think it shows up in two places. And both those places variety Because by the way, absent immigration, population growth in The U. S. Is below zero.

Sam Path, Verizon: I think there are two places where that shows up, new to America customers. The first is on the lower end of prepaid. We don’t have a very strong we have a presence but not a very strong presence in that. And the second is presupposed where we don’t have a very strong presence there as well. So there could be some contraction as immigration works, but we haven’t seen it.

In fact, we’ve had the best prepaid results in the last three quarters despite how immigration looks. And the prepaid strength, I want

Craig Moffett, Analyst, MoffettNathanson: to go back to that for a second. You were saying before you don’t play a lot in the pre to post migration anyway. So but the I think it’s fair to say that the prepaid category overall did better in the first quarter for the whole industry and the postpaid category did worse. Is that because fewer people are leaving prepaid for postpaid? Or is it because prepaid is actually organically growing?

Sam Path, Verizon: I think it’s two things. One is prepaid is growing as well. The value props have become really stronger, mostly because of all our brands, we’ve refreshed the value prop and that’s had a huge impact on the industry. Second is pre to post is slowing down, you saw that. So on the postpaid side, you saw 10% to 15% lower net adds in Q1, but you saw the prepaid market grow.

So the overall market kind of is still in line with what we expected at the beginning of the year.

Craig Moffett, Analyst, MoffettNathanson: And are you seeing you haven’t specifically tried to induce people to migrate, but are you seeing changes in the kinds of offers that are out there from your competitors that are trying to get prepaid subscribers into postpaid, lowering credit standards, things like that, that are that you would typically see in order to move that cohort into the postpaid category?

Sam Path, Verizon: Look, we see that in the market. A lot of our competitors, if a customer has paid his or her bill for x months, they automatically get qualified for a postpaid plan without their credit check. We don’t play in that space. For us on postpaid, you need to have a credit check. Our average FICO score on the phone is north of seven twenty, so it’s a very robust score.

You need to have a Social Security number. So it’s a very tight set of requirements before we give someone a postpaid plan. So it’s not a space we play in, but we do see our competitors play in this space. We do get our fair share of folks moving from other people’s prepaid onto our plans, but we still go through our credit check and the same standard that we have for everyone.

Craig Moffett, Analyst, MoffettNathanson: You and I have talked in the past. You and I both have some history of dealing with lower end customers and dealing with recessions. Is it your guess that if we go into a recession that the prepaid category there’s not that many executives left in the industry who’ve actually lived through a real recession that where the Fed didn’t step in and just sort of flood the market with liquidity. But prepaid presumably will have to suck up a lot of the growth from people that no longer qualify for postpaid, right?

Sam Path, Verizon: Yes. Think you’re the first one to say that I’m old by positioning it that way, so thank you for saying that. But look, if there is softness in the economy, there will be pressure on the postpaid, especially for carriers and cohorts that have lower credit score. On the lower end of the credit score, they will have a lot of pressure. So you’ll see that, we’ve seen that in the past pretty consecutively when that happens, a little recession, there’s softness in the space, the postpaid the lower end of the postpaid does.

But for us, what we’re also finding is the higher end of prepaid and the lower end of postpaid kind of looks similar. In fact, I would say the margin profile may be even higher on the prepaid side given that it’s got a lower cost of acquisition. And for Verizon, our biggest strategy is growth via segmentation. So we have eight brands that cut across our overall portfolio. And every single price point, every single segment, we want to have the number one brand and number one share position in that.

So we are really resilient and we are ready for any type of economy. If the economy does really well on the postpaid side, we are really set up with a strong value prop. If there’s some softness in prepaid, we’ve had three quarters of market share gain in the prepaid space, multiple brands, really strong distribution. So we just paid to our strength, is growth by segmentation.

Craig Moffett, Analyst, MoffettNathanson: Since you opened the door to it, what is your base case assumption for you said if the economy does really well or if it doesn’t? What’s the going in assumption?

Sam Path, Verizon: Right now, we are not seeing any pressure from our cohorts. From our lens, whether it’s delinquencies, people paying the bills on time, people taking smaller packages, we are not seeing anything there. All it has is just gone back to pre COVID levels of bad debt and delinquency, which is kind of normal BAU thing. We’re not seeing anything special or above that. The second is our category is also a very resilient category.

Given how important the phone and Internet and home connectivity is to people’s lives, it’s kind of moved up in the hierarchy of payments pretty substantially. So a) we are not seeing any changes and two, we are a really resilient category.

Craig Moffett, Analyst, MoffettNathanson: And outside of consumer, are you seeing anything in small medium business in terms of the growth or creation of small businesses or the resilience of small businesses?

Sam Path, Verizon: We still see similar trends that we see in consumer and the small business space as well. Good small business creation, people paying their bills on time, people paying larger packages. But more importantly, we are seeing customers put their telecommunication Internet needs higher up in the hierarchy. That’s super important for the industry. It shows how resilient the category we are, irrespective of what type of economy we see.

Craig Moffett, Analyst, MoffettNathanson: So I want to go back to the topic that we talked about before with the price ups that you’ve taken. Is the price lock promise a signal that you’re going to now pivot away from price is it price ups that you’ve taken on old plans and move to more of a unit growth strategy? So it’s another way of saying, is that the end of the price ups? Or is it that you’ll move the price ups to other parts of the mix that aren’t covered by the guarantee?

Sam Path, Verizon: When you run a large subscription business, we are the world’s largest subscription business per se, you always have to have a good balance of price and unit growth. We think eightytwenty is the right mix given the majority of the market and where we are. 80% of our growth will come from some form of price and 20% will come from some form of unit growth. Let’s take those two separately. On price, it’s a combination of two things.

The first is just a raw price up. If something costs x, it now costs x plus y. The second is earned price ups. This is things like step ups, adding more features and functionality, stepping up customers into higher plans. In our case, taking more perks.

Craig Moffett, Analyst, MoffettNathanson: And the perks that are part of the My Plan.

Sam Path, Verizon: Exactly, taking perks. So we still have a lot of runway on price, if you will, to take care. The first one for us is Perks. We’re going to have, at the end of this year, million Perks. You can do the math.

It’s almost a $2,000,000,000 run rate business that didn’t exist two years ago with mid-30s margins. So it’s a very healthy margin profile that we have. The second is our premium mix. Our premium mix continues to grow really well for us. And then on the unit side, we are seeing growth in prepaid, postpaid and broadband, FWA.

So all those help with unit growth as well. So combination of this leaves us with a lot of levers to drive wireless service revenue growth. All we’ve taken off the table is for 50% of our base, which is roughly what my plan is on, we won’t change the network portion of their price. But all other levers are on the table and we feel very comfortable, which is why we had contemplated this in our 2025 guidance when we did the value guarantee.

Craig Moffett, Analyst, MoffettNathanson: Do you expect over time? My plan is going to get to be close to 100% of the base, I would think. I mean you’re sort of you’re almost intentionally pricing people out of the old plans into My plan, Right?

Sam Path, Verizon: Yes. Because my one, customers love MyPlan because it lets them get these perks that you can’t get anywhere else. It also is a very transparent thing. You don’t get bundles. You don’t get inclusions.

Customers like that every single time. The second thing we see is once someone when there’s a migration from legacy to MyPlans, we see an accretion in ARPU because they end up taking a bulk or two that ends up adding to their ARPU. And then further, over a period of time, they take more services and more adjacency services. So in our vision is we move more and more customers to my plan because they’re happier customers when they get there.

Craig Moffett, Analyst, MoffettNathanson: And has the churn that you saw in response to the price ups on the old plans, has that been in line with your expectations? And does it tell you anything about the elasticity of or at least the cross elasticity, you’re willing to switch carriers over price that you didn’t already know?

Sam Path, Verizon: We are seeing in Q1, we saw a higher elasticity than we had forecasted. And I can be comfortable saying that a lot of it was limited to those cohorts because those are the cohorts where we saw higher churn. So definitely, we saw more elasticity slightly outside our planning horizon when it comes to that. But look, we’ve done so many price ups over such a long period of time. We are quite comfortable with how we manage price ups.

But we did see a higher churn than we had anticipated. That’s why over a period of time, we see that abate in the second half of the year, we

Craig Moffett, Analyst, MoffettNathanson: should get back to BAU. And I just want to close the book on the promotions issue. You saw consumer wireless service revenue growth of 2.6% in the first quarter. That’s toward the high end of your guidance for the full year of two to 2.8. And you also said that guidance for 2025 would have been almost double absent promotion and amortization.

How confident are you or should we be that 2025 is the peak year for promo amortization? Why doesn’t it just keep rising?

Sam Path, Verizon: Some of it has to do with the way the math works because most of our customers are coming off. We move from two year to three year. That anniversary happens this year for the vast majority of them. So this is kind of peak amortization year for us because we have multiple cohorts that are coming in and very few coming out. We’ll see that lapping its results next year when it starts coming down.

And look, we’ve always been a very financially disciplined operator. When there’s no volume in the market, we won’t take that volume. So if you feel quite comfortable that pro monetization should peak in 2025 and you should start seeing it stabilize and come down over the next couple of years.

Craig Moffett, Analyst, MoffettNathanson: And Hans said on the call that if the price of the iPhone or Galaxy’s two, I guess, rises because of tariffs that the customer would pay that and that you wouldn’t. I think all your peers said the same thing. But how is that a decision you get to make in advance versus what the consumer demands and what the marketplace sort of expects when the time comes, right? I mean if there’s a promo promos have been rising even without that. Why wouldn’t promos rise to absorb that if it has if they come?

Sam Path, Verizon: I think it’s a little premature to talk about tariffs on smartphones. We’ve been through a bit, and we haven’t seen tariffs on smartphones work the way people thought it would. So we’ll have to wait and see what’s the real tariff on smartphones. The second is that we’ve said on stage that we’re not going to carry the burden of the tariffs into our consumer plan. So we’ll have to wait and watch.

But at the end the day, we are very financially disciplined operators. We’re not going to chase volume where it doesn’t make sense.

Craig Moffett, Analyst, MoffettNathanson: Let’s talk about the MVNO relationship with the cable operators specifically. Hans talked about the importance of leveraging the network, which says all traffic is good traffic, right? You cited the fact that when you lose a retail customer to cable, you only lose the spread versus wholesale. And then when you gain a customer somewhere else, you get the wholesale revenue when it comes from someone else, you also get the wholesale revenue. I think we all understand that, but there is still this broad perception that but the MVNO relationship is damaging to you and to the industry.

It sort of enables a powerful competitor. Is that wrong? How should we be thinking about the cable operators? Are they competitors? Or are they customers?

And which one is really the win that you think of first? Look, first, we are

Sam Path, Verizon: a very important strategic partner of ours. We work very hard. We will continue to work very hard to ensure that we are their first choice and their only choice for mobile connectivity. So it’s a very deep strategic relationship that we have with our cable partners to do that. The second thing for us is it is truly complementary to us because they go after certain segments, they have certain distribution, they play in segments of the market we may not have a presence in.

So net net, it’s actually a game for us because it’s complementary to our overall distribution. The third is based on third party results. We see that we tend to lose significantly less than our fair share to them, which means that the complementary strategy I spoke about is working really well. And last is on the retail side, we compete with them. We feel And let me just go back to

Craig Moffett, Analyst, MoffettNathanson: that for a When you lose less than your fair share to them, is that because, as you said, they’re primarily taking from the prepaid market? Or is it just it’s a more value oriented customer, so it’s more likely to be a T Mobile customer? What’s behind you losing less share to cable than your peers do?

Sam Path, Verizon: I think it’s a combination. They have a much more value orientation. Second is they are able to bundle in places where I don’t have fiber or FWA. That’s another opportunity. And then they have little more pre to post migration, which they are able to play in very effectively.

So those are certain segments where they tend to do very well and hence it’s complementary for us. On the retail side, we compete very effectively with them. The first is they have a very different network philosophy than they do. For us, unlimited data on the best C band network, ultra wideband network is super important. We don’t want to offload people to WiFi, CBRS because we just don’t think it’s a great experience.

Even if you go to any large stadium at the peak, the Verizon network will always hold and we want to offload people even to our own WiFi in many cases to do that. We have a slightly different orientation to that. We compete with that quite effectively on the retail space. But let me leave this topic saying they’re a very important strategic partner of ours. We like their business, and it goes back to our thesis of network as a platform.

The more profitable connections you put on the platform, the better it is. And every single month, their revenue to us is accretive on revenue and accretive on EBITDA. So it makes for a really strong business case for us, and we’ll continue to work hard to win their business every day.

Craig Moffett, Analyst, MoffettNathanson: So the theme is you mentioned convergence a second ago, and the theme of the track this morning is convergence. For a long time, everybody sort of dismissed convergence as irrelevant, at least in The United States. But now it’s all anybody talks about. How has your own view of the value of convergence changed? You don’t lead your presentations with here’s our uplift in wireless in places where we have fiber, but you’ve said that you’re seeing it.

Talk about that a little bit and how it shapes your thinking about the converged offer.

Sam Path, Verizon: Look, me leave this topic by me saying we see an uplift in wireless when we have fiber. So look, we have very strong performance on convergence. 16% of our base is converged. Over the next couple of years, we see that number doubling. So really strong value that we see.

At the end of the day, our convergence relies on two fundamental pieces. One is a very strong broadband value proposition. We’re going to get to 35,000,000 to 40,000,000 revival homes in the country over a period of time, post Frontier coming and closing, that will be one. And second is with FWA, a path to getting to 100,000,000 homes covered in America. There is no other carrier who can comfortably say that they can cover up to 100,000,000 homes of broadband over a period of time.

So that’s our first piece. And we’ve segmented broadband really well between SWA and fiber, and we see strong performance in that. The second is on the mobility side. When we bundle them, we tend to see between 4050% reduction in churn on the fiber side, but also on the mobility side. We are seeing very strong results.

Second is where we have fiber, we tend to see between 405 basis points higher wireless share in that space. So all the metrics that are important for convergence is going in the right direction for us, and

Craig Moffett, Analyst, MoffettNathanson: we are leaning in really strong in that space every single day. What’s the difference in the places where you do have fiber and the places where your converged offer is FWA instead?

Sam Path, Verizon: Look, FWA is a more broadly spread thing. Our typical share is around 10% of the homes that we offer, whereas on the fiber side, it tends to be well north of 40% as we work through penetration. So it’s a little different product, but we do see some churn benefit from FWA as well.

Craig Moffett, Analyst, MoffettNathanson: Because, I mean, the obvious pushback is, but you’re even with Frontier, your wired footprint is still relatively small relative to a national wireless footprint. If the world moves in the direction of convergence strongly, and there’s you in what will be about 18% of the country, I guess, with Frontier having a fiber offer, And AT and T would at that point have 20 something percent. T Mobile would still be in the mid single digits. Does is that a better future for you or than a world where people choose wireless as a standalone product?

Sam Path, Verizon: Look, I think convergence is good for us. We are leaning in hard. I mean, think about it, we have 40,000,000 homes of fiber, and fiber is such a strong product. I mean in Q1, we had our lowest churn in Fios, if you exclude the COVID years in our history. And we’ve been in the fiber business for north of twenty years, unlike others who are learning this business new.

So extremely strong churn. We’ll get to 40,000,000 homes of fiber right now in our current plan. The second is FWA. I mean we’ll have when you compare fiber with our FWA offering, we’ll have 100,000,000 homes of broadband. That is very large portion of the country that will be converged within our bandwidth.

So we feel very good about convergence. But there’s an important point of the Verizon model of convergence is something I wanna talk about. The Verizon model of convergence is it’s demand led. It is demand led. Customers want it.

We make it convenient for them, but it is accretive to revenue and EBITDA Because we don’t believe in giving one product away free to sell the other. There are easier ways to lose money, and that’s definitely not the game we want to So we feel very good about the Verizon model of convergence, and that’s what gives us comfort when we, you know, made a bid for Frontier and won it is because we’ll be very good with it, and we will drive accretive EBITDA and revenue at the same time even in a converged world.

Craig Moffett, Analyst, MoffettNathanson: Let’s just dig into fixed wireless for a second. You set a target of 8 to $9,000,000 by 2028. T Mobile set a target of $12,000,000 by 2028. Why the difference? Is that a function of addressable market size?

Or is it a function of penetration assumption? I think it’s how conservative we are. We said we’ll get to 4,000,000

Sam Path, Verizon: to 5,000,000. We got to 4,000,000 to 5,000,000 subscriber target a year before we had planned. Our next target is 8,000,000 to 9,000,000. We are on our way. We are doing really well.

We put 339,000 broadband net adds in Q1. You’ll see that pace growing over the next couple of quarters, 350,000 to 400,000 is our range for broadband. But what’s interesting is we are taking share every single quarter in broadband. And I see that trend continuing for a very long time between fiber and FWA. So our FWA aspirations are to get to eight to nine.

We are well along our way. We will never jeopardize our mobility network. That’s the important part for us. And the second piece is we have not allocated any incremental capital for our FWA product. It is purely using silo capacity or excess capacity that we have in the network there.

So we feel good about eight to nine. We are right now focused on driving more ARPU, driving more step ups and then getting churn closer to our Fios churn over a period of time. We want to build a long term sustainable business in FWA.

Craig Moffett, Analyst, MoffettNathanson: T Mobile has said they have a waiting list of 1,000,000 customers for FWA. On the one hand, that speaks to robust demand for the product, but it also presumably says they’ve got capacity constraints or else they wouldn’t have a waitlist. Do you have a waitlist? We have

Sam Path, Verizon: a waitlist, but I’d rather talk about Axon subscribers than waitlist, and we’ve done extremely well in this space. Look, we have strong demand for our products. There are certain markets where once we open up capacity, within weeks the capacity is sold out in those markets. So very strong demand for the product, good NPS. It’s one of the highest NPS products we have in our portfolio and we see that continuing growing over a period of time.

But demand has been extremely strong for us.

Craig Moffett, Analyst, MoffettNathanson: Where are you seeing the growth? When you as you start to release the final C band markets, does the subscriber growth from FWA come in more rural areas? Or is it is the propagation characteristics of C band sort of inherently make it more attractive for suburban and even urban?

Sam Path, Verizon: Look, over the last couple of years, we’ve done really well in Tier one markets because that’s where C band has rolled out more broadly. We’ve done very well. Joe has said he’s going to get to almost 90% of the macro C band enabled by the end of this year, which means we’re going to open up Tier two, Tier three markets. We are already seeing that right now. Tier two, Tier three markets take a little longer in penetration just because you get fewer POPs covered as a function of time.

So over a period of time, it will catch up very well. So we think over the next set of quarters, Tier two, Tier three markets will do very well, but we still have a lot of headroom in Tier one markets. In big large Tier one markets, we have headroom. And it goes back to our Tier one market strategy as well. With FWA, with fiber and our Frontier coming in, we’re going to start picking up mobility share in Tier one markets.

In Q1 and Q4 last year, in some of our really large Tier one markets, we gained share. So it’s super important for us longer term that we continue to gain share in Tier one markets. In mobility, you mean? In mobility. And it’s largely on the back of FWA and fiber penetration.

But FWA opportunity is in Tier two, Tier three market. The network is very resilient and it works very well. Also competition is lower in these Tier two, Tier three markets. And also cable has priced out.

Craig Moffett, Analyst, MoffettNathanson: And capacity constraints presumably are much less of a concern.

Sam Path, Verizon: And cable has also because there’s been no competition in these markets. So cable has priced up ten, twelve, 14x annual price increases in these markets. So the price is really high. NPS is really low for the incumbent there. So when we come in with a very strong value prop price in the mid-40s with NPS in the 35, they’re like, where do I sign?

Craig Moffett, Analyst, MoffettNathanson: And so bottom line, what’s the market share? If you think again about it sort of an industry picture, what’s the market share that FWA in aggregate, so you and T Mobile and even AT and T combined, let’s leave the wisps out of it, but what how much of the market is ultimately going to be long term an FWA segment?

Sam Path, Verizon: Right now, around 10% of the overall market tends to be in the FWA space. I think you’d see that doubling over the next period of Really? Yes. So I think 20% of our overall market could be an FWA.

Craig Moffett, Analyst, MoffettNathanson: For the fiber markets, so you’ve guided to an incremental 650,000 homes this year. That’s obviously a big step up from the 400,000 you’ve been or the 500,000 that you have kept that in the $464,000,000 I think in 2024. You talked about the acceleration and how attractive the returns has been. Is the acceleration though a function of once you get Frontier, it just sort of opens all these attractive markets that have really been underbuilt, if you will?

Sam Path, Verizon: Yes. Look, we this year, we are planning to get to 650,000 new OFS. And that’s before Frontier? Before Frontier, pre Frontier. We are slightly ahead of schedule as we do that.

What we are finding is fiber economics is getting even better. We’ve been in this business twenty years and we are seeing better economics than we saw. Year over year, are seeing a 10% reduction in cost of prem passed, which is really helpful. And a lot of that goes to some of the technology work using AI for route optimization and things like that that are helping us do that. The second is penetration is faster.

Our year one penetration, almost every cohort, new cohort we add tends to have faster year one penetration than the year cohort. You would not expect that if the product is so mature in twenty years’ end. So we continue to see that. And third is we also are getting good mobility benefits. So the business case for fiber is really, really strong.

Without convergence, it’s very strong and now with convergence, really stronger. So that gives us real comfort that we’ll continue to expand. Hans has said post Frontier, we’ll get to 1,000,000 plus and that’s the plan that we are working on.

Craig Moffett, Analyst, MoffettNathanson: The Fiber Broadband Association in a study with Cartesian found price inflation in lots of parts of the fiber value chain. Talk about that. Are you seeing cost inflation either in labor cost or in equipment cost? What are the cost per mile before it’s cost per home pass? Just what does the cost per mile look like?

Sam Path, Verizon: Look, we are not seeing any overall cost increases. Our actual cost went down by 10% year on year. And a lot of that’s due to technology. 50% of the cost of fiber is labor. So the more you can do presplice, pre plug and play type components, it lowers the overall cost.

So snappable and things Snappable and that’s a huge portion. Second is how you do route planning. Third is how you manage your vendors, what type of SLAs you send. And also given our size and scale, we tend to get really good rates and long term deals with partners to do that. The fourth is a lot of our build in our footprint is done by our own teams, our own internal teams that have been with us for a very long time and know how to do this well.

So our cost is not going up and tariffs has had very little impact. Almost 100% of our fiber is built and manufactured in The U. S, rest of it is labor that’s in The U. S. So a very, very negligible small part is exposed to tariffs.

And do you think

Craig Moffett, Analyst, MoffettNathanson: immigration policies will affect the labor costs?

Sam Path, Verizon: We don’t see so because the vast majority of our construction is done by our own teams who are Verizon badge employees. So we don’t see that supply constraint that some of our partners see.

Craig Moffett, Analyst, MoffettNathanson: We’re coming to the end of the time. So I want to just end with a question that I always think is the most important for you guys, and that’s just what’s the consumer value proposition for Verizon today? It used to be so simple. It used to be best network, can you hear me now, was so deeply embedded. What is it today?

Is it still the same, or has it shifted a little bit?

Sam Path, Verizon: Our value prop is there are two big pillars of our value prop. The first one is the best network. We have the largest network on five gs. We have the most reliable network. We have the fastest network at home and on the go.

And in a country as large as America, as geographically dispersed as America, there will always be a better operator than someone else. Historically, Verizon has always been the better operator, our engineering standards, way we do. And now with all the extra spectrum that we have in C band, it gives us even more headroom to create a lead from a competitor in network operations. Second is satellite messaging. We’ve included satellite messaging in all our plans.

It further goes back to reinforce that network is a true differentiator for us and we want to lead in that. The second big piece is value. We want to give customers more value. My Home, My Plan was the first start of that clear transfer

Craig Moffett, Analyst, MoffettNathanson: But value is not price.

Sam Path, Verizon: Value is not price. It’s not the lowest price, but it’s the most value and we are very confident we do that. Transferred pricing, clear pricing, flexible pricing with My Home and My Plan with perks and savings they can’t get anywhere else. And now with the value guarantee where we comfortably save in price lock your network portion of your plan and we’ll give you savings you can’t get anywhere else. So value and network continues to be our best calling card on value proposition.

And if you see us, we are playing on two secular trends, mobility and broadband. We have two engines of growth. On both those engines, are doing extremely well.

Craig Moffett, Analyst, MoffettNathanson: That’s a great place to end it. I always look forward to these, and I’m looking forward to

Sam Path, Verizon: next year already. Thank you.

Craig Moffett, Analyst, MoffettNathanson: All right. Thank you. Good to see you guys.

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