VERIZON COMMUNICATIONS INC Q3 FY2024 earnings call

• Hurricanes: Verizon worked to restore networks quickly for public safety and affected communities.
• Third quarter results: Strong wireless service revenue growth, record EBITDA, and robust cash flow. Postpaid, prepaid, and business wireless all showed positive net adds. Fixed wireless access was ahead of target, Fios recovered, and private networks/mobile edge compute had deals like FIFA and MSG.
• Strategy: Building foundation with fiber and intelligent edge network. Strategic moves include buying TracFone, C-Band, launching new products (myPlan, myHome). Refreshed brand, Frontier acquisition, tower transaction, and spectrum buy from US Cellular. AI opportunities in network-related areas.
• Broadband plans: Doubling fixed wireless access to 8-9 million by 2028, accelerating Fios build with Frontier acquisition, aiming to cover 100 million households with mobile and broadband.

Verizon's third quarter showed strong financials. Wireless service revenue grew 2.7%. EBITDA reached a record $12.5 billion, and cash flow was $6 billion. In wireless, postpaid had 239,000 net adds, prepaid saw a turnaround with 80,000 net adds, and business wireless had consistent net adds of 125,000 to 150,000 per quarter. Fixed wireless access subscribers hit 4-5 million, 15 months ahead of target. Broadband had 389,000 net adds, with Fios recovering from prior quarter challenges and fixed wireless access growing. Revenue contribution: Wireless service was a key driver, with EBITDA from various segments including wireless and broadband.

• 2024: On track for wireless service revenue and EBITDA at or above the midpoint of guidance.
• 2025 capital expenditures: Range $17.5 billion to $18.5 billion, including C-Band rollout, Fios expansion to 650,000 new open for sale, and broadband MDU solution.
• Long-term leverage target: Revised to 2.0 to 2.25 times net unsecured debt to adjusted EBITDA.
• Dividend: Committed to dividend, aiming for further increases.

• Natural disasters: Impact on network resilience and restoration efforts.
• Program amortization: Headwinds affecting financial performance.
• Competitive landscape: Challenges in executing growth strategies and maintaining market position.

Q: Thoughts on BEAD program and fiber vs fixed wireless access?

A: BEAD program will be pursued where beneficial. Fixed wireless access is secondary to mobility, with C-Band deployed for mobility first, creating optionality for customers.

Q: Fixed wireless access targets and service revenue growth?

A: Fixed wireless access target doubling to 8-9 million by 2028. Service revenue growth depends on P&Q, prepaid turnaround, and fixed wireless access growth, with 2025 guidance to be provided in January.

Q: Fiber expansion rate and churn?

A: Fiber expansion is ramping up, with focus on profitability, competitive environment, and capital allocation. Churn reduction expected through mobile plus home offerings, myPlan, and loyalty programs.

Q: AI and GenAI opportunities?

A: AI has employee experience, personalization, and revenue opportunities. GenAI in network assets is being explored, with hyperscaler orders and power/cooling assets in focus.