Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Verizon Communications Inc (VZ, Financial) reported its highest ever adjusted EBITDA of $12.6 billion, growing 4% year-over-year.
- Wireless service revenue increased by 2.7%, reaching the high end of the company's guided range.
- The company achieved a significant improvement in free cash flow, up over $900 million from the previous year.
- Verizon's prepaid net adds of 137,000 were the best since the TracFone acquisition, indicating strong performance in this segment.
- RootMetrics recognized Verizon as the best, fastest, and most reliable 5G network in the US, highlighting the company's network leadership.
Negative Points
- Verizon experienced elevated churn in postpaid phone net adds due to recent price increases and pressure from federal government accounts.
- The company reported consumer postpaid phone net losses of 356,000, reflecting the impact of recent pricing actions.
- There is uncertainty regarding the potential effects of tariffs on handsets and telecom equipment, which could impact consumer pricing and upgrades.
- Verizon's fixed wireless access product, while leading broadband growth, faces challenges in ramping up multi-dwelling unit solutions.
- The company noted that churn is expected to improve only by the second half of the year, indicating ongoing challenges in customer retention.
Q & A Highlights
Q: How might tariffs on handsets and telecom equipment affect Verizon's business, and what is the expected impact on upgrades and homes passed?
A: Hans Vestberg, CEO, explained that tariffs are a moving target, but a small portion of their capital expenditures is exposed to tariffs. Verizon is working with suppliers to mitigate impacts, similar to their approach during COVID-19. On handsets, if tariffs increase significantly, Verizon does not plan to absorb these costs, which may affect consumers. The impact on upgrades is uncertain, but Verizon remains financially disciplined in its promotions.
Q: Can you discuss the impact of new plans and promotions on churn and whether Verizon expects to achieve industry-leading churn rates?
A: Sowmyanarayan Sampath, CEO of Verizon Consumer Group, noted that recent price increases led to higher churn, but this is seen as transitory. The Verizon value guarantee, C-Band expansion, convergence strategy, and improved customer experience are expected to reduce churn, with a return to business-as-usual levels anticipated by the second half of the year.
Q: How has the competitive environment affected Verizon's gross adds, and what is the outlook for EBITDA growth?
A: Hans Vestberg, CEO, stated that the competitive market is consistent, and Verizon's propositions resonate well with customers. Sampath added that March and April showed strong gross add growth due to the Verizon value guarantee. Anthony Skiadas, CFO, highlighted that Verizon is confident in its EBITDA guidance, driven by strong service revenue growth and cost transformation efforts.
Q: What consumer behavior trends have been observed, and how might tariffs influence consumer actions?
A: Hans Vestberg, CEO, reported no major shifts in consumer behavior, with stable payment trends. Sampath noted that while Q1 upgrades were soft, Verizon expects mid single-digit growth for the year. The Verizon value guarantee is driving some pent-up demand, but tariffs have not significantly influenced consumer actions yet.
Q: How is Verizon's fixed wireless access (FWA) strategy progressing, and what are the expectations for future growth?
A: Hans Vestberg, CEO, explained that FWA is performing well, with ongoing C-band deployment and MDU solutions expanding availability. The multiyear plan to reach 8-9 million FWA subscribers by 2028 is on track, with no expected pressure on CapEx. Sampath added that FWA and Fios are driving strong broadband growth, with improved churn and ARPU.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
