Verizon Communications Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John Hodulik - UBS Investment Bank - Analyst : Hey. Thanks and good morning guys. Two questions, if I could. Maybe first for Hans on the subject of tariffs. Any additional color you can give us on how tariffs on, I guess, first handsets and then telecom equipment could affect the business? On the handset side, you expect the promotions to scale with tariffs and what do you expect the impact to be on upgrades? And then on the equipment side, is tariffs on equipment coming into the US mean the budget stays the same and maybe you do less homes passed? Or just how that unfolds? And then secondly, for Sampath, thanks for all the color on the consumers and the strategy. And thanks for the color on the gross adds leaving the quarter. Can we talk a little bit about churn? I mean, is all the new plans and promotions and offers you have in place, does that help churn in the second quarter? Or do we have to wait until the second half of the year? And that comment on getting back to industry-leading churn, is that something you expect to achieve by the fourth quarter, by the end of this year, or just more color on how that plays out would be great? Thank you.

Question: Ben Swinburne - Morgan Stanley - Analyst : Thank you. Good morning. Maybe just to follow on the conversation with Sampath. Can you talk a little bit about the March and April gross adds improvement and how much that's been tied to specific promotions including the new 3-year price lock? And there was a lot of talk during the first quarter at various conferences about competitive intensity. I didn't really hear you guys talk about that as being something that's incrementally more concerning, et cetera. So maybe frame the gross adds commentary, if you can, and the new plans in the context of the competitive environment. And then maybe for Tony, 4% EBITDA growth for the quarter. Obviously, sets you guys up really nicely for the year. I think your business margins were the highest in, I think, since '21. Anything in the quarter around expenses that we should think about as non-recurring? Or any commentary on how you're feeling about the EBITDA guidance for the year? It seems like you could be trending maybe to the upper end of the range, but I'll let you talk to that, if you will. Thank you.

Question: Jim Schneider - Goldman Sachs Group, Inc. - Analyst : Good morning. Thanks for taking my question. Maybe first off, on the consumer side, maybe Sampath or Hans, you could talk to the broad behavior you're seeing from consumers from March into April. Are you seeing any kind of significant change in consumer behavior, trade downs, more reticence to upgrade phones? Or actually are you seeing potentially consumers react to the potential for tariffs and actually pulling forward some upgrades into the month of April. I mean, maybe how are you thinking about that, the impact of the sort of knock-on impact of tariffs on consumer behavior. Anything you're seeing in terms of the deterioration of consumer in terms of health, credit metrics or whatnot? And then maybe as a second question, can you maybe just sort of talk about following on the business EBITDA question. I mean, that really sticks out to me as the best growth you've seen in quite some time. Can you maybe talk about the cost metrics underlying that? Are those structural in nature due to the HCL arrangement? Or are there any onetime effects that we should think about? And do you think business EBITDA growth is sustainable from here? Thank you.

Question: Michael Rollins - Citigroup Inc. - Analyst : Thanks. Good morning. So as you're looking to still target better consumer phone net adds in '25 over '24, can you give us an update on how you're seeing postpaid phone industry growth and the volumes you're expecting for the year, and how important that is relative to your target for your own volume? And then within that, are you seeing any impacts from changes in immigration policy? And do you have a better sense of how to frame the potential sensitivities to the forward operating prospects? And then just one more, if I could. You mentioned some impact from the federal government on business postpaid phone net adds. I'm just curious if there's additional impacts that you could see as you move through this year, whether it's on the wireless side or on the business wireline side? Thanks.

Question: Peter Supino - Wolfe Research, LLC - Analyst : Hey. Good morning, everybody. Two, if I may. Marketing, in light of your churn experience over the last two years, does the market's ARPA expectations need to adapt to a less aggressive pricing growth trajectory? Are you feeling too much pressure from whatever the expectations are about pricing to serve all your needs? And then secondly, on FWA, I'm wondering when that multiyear expansion plan might begin to pressure either or both of CapEx or tower rental costs as some of your 5G sales become more utilized? Thank you.

Question: Peter Supino - Wolfe Research, LLC - Analyst : Hans, if I could just briefly follow up before we get to pricing. The purpose of my question was a bit more focused on your multiyear guidance as opposed to your 2025 execution. As I think we can all agree that in certain locations, you're going to experience more highly utilized cells over time as you achieve your success in FWA. And I'm wondering what year should we expect to see some pressure on CapEx as a result of that given the desire to achieve a lot of FWA growth?

Question: Sebastiano Petti - JPMorgan Chase & Co. - Analyst : Hi. Thank you for getting me back in the queue. Just one quick question just on EBITDA in the first quarter here and how we should be thinking about that. Obviously, EBITDA, there is SG&A side in consumer was -- I wouldn't necessarily say depressed, but was there any perhaps savings or a pullback in spend related to SG&A that will resurface or be a bit more aggressive in 2Q and beyond as we think about the price guarantee and getting some, I guess, advertising and sales and marketing push behind that? So that's a quick just housekeeping question. And then as you're thinking about the company's broader multiyear convergence strategy, obviously, there is some fiber available in the market as well as others looking for potential partners. But if you step back, how do you think about perhaps -- or does it make sense to either partner with additional fiber providers to accelerate the fiber-to-the-home or your fiber locations push? Or does it perhaps make sense to accelerate your fiber footprint build engine somewhat at the expense of leverage and free cash flow in the interim ahead of the Frontier deal close? Thank you.

Question: Craig Moffett - MoffettNathanson - Analyst : Hi. Good morning. You just talked about what my previous question was going to be about convergence. So let me shift a little bit to -- there's a lot of talk and expectation about a renegotiation of your MVNO agreement with the cable operators. Can you just talk about that a little bit as to how the relationship with the cable operators as customers has been evolving. And what you expect to happen with the renegotiation this year? Do you -- maybe just conceptually, do you think of the cable operators as part of your convergence solution in the sense that they are offering Verizon wireless service themselves? Or do you think of them as a convergence competitor?

Question: Kannan Venkateshwar - Barclays Bank - Analyst : Thank you. So starting with fiber once again. Just for the framework that we're using the 35 million to 40 million number in terms of the goal post, what did that mean is the right number? Why not better ineffective or whatever month we get state may take? And secondly, there's some spectrum bands that may come up for auction this year and maybe over the next couple of years as well. So would it take to get an update in terms of your spectrum position and how you guys are thinking about some of the bands coming up in this year and beyond? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 22, 2025 / 12:30PM, VZ.N - Q1 2025 Verizon Communications Inc Earnings Call

Question: Sam McHugh - BNP Paribas Exane - Analyst : Thanks, guys. Just two quick ones. On the tariffs, you sounded pretty relaxed. And so, I was just wondering why you added the caveat for the guidance. Where could we see an impact from tariffs potentially part one? And the second question on broadband? Obviously, there's a lot of talk about kind of market weakness in wireless. What are you seeing in broadband? Do you think there's -- are you seeing higher churn? Is that why subs are a bit weaker? Or is it more of a gross add and market growth issue? Thanks.

Question: Bryan Kraft - Deutsche Bank - Analyst : Good morning. Thank you. I had two, if I could. First is a follow-up question on the March and April gross adds strength. I think early in 1Q, industry volumes were pretty soft. So just wondering if part of the March and April strength has been from a pickup in those industry volumes or if it's more market share take driven by your new offers? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 22, 2025 / 12:30PM, VZ.N - Q1 2025 Verizon Communications Inc Earnings Call And then second question I had relates to your MDU solution for fixed wireless. I was wondering if you could talk about the breadth of that launch, maybe comment on what some of the markets are that you've launched in, how available the product is in those markets? Any comment on homes available? And then also, how is the product performing? What kinds of speeds and reliability you're seeing? And then lastly, can you talk about what's involved in expanding that services availability from here? What are the sort of gating factors to doing that? Thank you.