Verizon Communications Inc. Q4 2024 Earnings Call Summary

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

Question: John Hodulik - UBS Investment Bank - Analyst : Okay, great. Thanks and good morning guys. Maybe first starting off with Kyle's commentary on AI Connect. Just any sense to -- in terms of the overall -- I know -- I realize it's early, we're getting these announcements seemingly like weekly now. But any sense in how big this opportunity could be both on the connectivity side or in terms of the space and power? Would be great. Just to frame it out for us. And then maybe more operationally, you guys showed some real momentum to end the year, both on the wireless side with gross adds up over 5%, and in the broadband side. A, could you talk a little bit about the drivers of that momentum? And have you seen that momentum continue as we started out 2025? Thanks.

Question: John Hodulik - UBS Investment Bank - Analyst : Thanks, guys.

Question: Michael Rollins - Citigroup Inc. - Analyst : Thanks and good morning. I'm Curious if you can provide a bit more context on the upgrade environment in terms of what you saw from customer behavior during the fourth quarter. And if you could share some additional context on the drivers behind your base case for upgrades that are embedded within the 2025 guidance. And then second, just in terms of financials, if you could just share some of the additional drivers that are contributing to the faster EBITDA growth guidance for '25, as well as if you could share some of the bridge items between EBITDA guidance and free cash flow guidance for '25, including things like tax and working capital.

Question: Michael Rollins - Citigroup Inc. - Analyst : Thanks.

Question: Sebastiano Petti - JPMorgan Chase & Co. - Analyst : Hi, thank you for taking the question. Just in regards -- just a quick housekeeping question, I guess, for Tony. The $2.9 billion of device protection and insurance in 2024, how should we think about the underlying growth rate within that revenue bucket that will be reclassified? Just trying to think about apples-to-apples service revenue guide. I mean how has that been trending, I guess, relative over the last several years and maybe expectations for contribution next year within the context of the overall service revenue guide? Another quick question, on fixed wireless. I think in the third quarter, Hans, we talked a little bit about perhaps the pace of FWA growth slowing a little bit, maybe because of greater contribution from suburban and rural as C-band is deployed in those markets. Strong fourth quarter number here. And also just kind of thinking about you will be standing up an MDU solution in 2025, which should aid the trajectory in the Tier 1 markets. So maybe any help in thinking about how you expect the MDU solution to scale or the contribution maybe within the, I would imagine, 76 C-band markets. And then one last question. As you think about, I think, Sampath, you've reiterated expectations for consumer phones to improve -- net adds to improve ex-second lines year-over-year. Great to hear. Anything -- lots of focus on immigration growth. Maybe if you can kind of touch upon if there's any slowdown or -- beyond the normalization that we've been seeing across the ecosystem. Is there any expectations for a pronounced slowdown in immigration growth in '25? Thank you.

Question: Sebastiano Petti - JPMorgan Chase & Co. - Analyst : Thank you.

Question: Jim Schneider - Goldman Sachs Group, Inc. - Analyst : Good morning. Thanks for taking my question. One on wireless and one on AI, if I may. On the wireless service revenue, I think, Tony, you've talked about the $2 billion step-up roughly for this year, but the growth rate essentially underlying roughly doubling when REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 1:30PM, VZ.N - Q4 2024 Verizon Communications Inc. Earnings Call accounting for the accounting change you're introducing. So does this sort of imply as we exit '25 and go into '26, that we're going to be able to kind of maintain that same level of pace in terms of absolute revenue dollar growth on service revenue? And then secondly, on the AI Connect, Kyle, thanks for the good detail. But can you maybe give us a sense of the $1 billion pipeline of sales? When do you think we're going to see material revenue on revenue being actually recognized in the P&L? And what's the split roughly between the connectivity business and data centers long term?

Question: Jim Schneider - Goldman Sachs Group, Inc. - Analyst : Great.

Question: Ben Swinburne - Morgan Stanley - Analyst : Thanks. Good morning. Wanted to ask you guys about ARPA growth and sort of the competitive environment. And then I'm going to come back to Kyle on the AI topic. You guys had 4% plus consumer ARPA growth in Q4 and talked about expecting healthy growth in '25. Can you just sort of talk a little bit about the competitive environment and sort of what gives you guys confidence in the ability to continue to take price selectively and some of the drivers around ARPA growth that you see ahead for the consumer business? And then, Kyle, you mentioned -- you were just mentioning dark fiber a bit. We have seen some of your competitors announced some pretty big investments in adding capacity. I'm just wondering if you could talk a little bit about how much of the AI opportunity is leveraging existing assets. And to the extent you guys are investing within your CapEx guidance into this business, would be interested in sort of where those investments are targeted? Thanks so much.

Question: Ben Swinburne - Morgan Stanley - Analyst : Thanks a lot, guys.

Question: David Barden - BofA Global Research - Analyst : Yeah, guys. Thanks so much for taking the questions. I guess first, more of a housekeeping item for you, Tony. Now that we've pulled fees out of other in 2023, now we're pulling insurance out of other in 2025. What is other? And is it now more of a pure-play representation of the monetization of your cable relationship perhaps? And then the second question is, obviously, in the new administration, I know you guys are well aware that everybody is now thinking about big deals. And one of the bigger deals people are talking about is could Comcast and Charter come together. And I guess the question is, what would that mean? As we think about that possibility, how should we think about what it would mean for Verizon in terms of are there change of controls? Would this larger entity have more bargaining power with you the next time we have a conversation about pricing? How would it all work? Thanks.

Question: David Barden - BofA Global Research - Analyst : Thanks, Hans. And if I could just do one more follow-up, Tony. Is there a specific increment in cash taxes that you've baked in that you can share with us for the cash flow number?

Question: David Barden - BofA Global Research - Analyst : Perfect, guys. Thanks so much.

Question: Sam McHugh - BNP Paribas Exane - Analyst : Thanks, guys. Two questions. On the wireless service revenue, you obviously have a few puts and takes with the promo and the price-ups. How should we think about the phasing of these headwinds and tailwinds through the course of 2025? Number one. And then secondly, on the business EBITDA, you mentioned some of the AI-related sales. Maybe you could elaborate on how material they are. Are we at a place now where we should be confident on this inflection point in business EBITDA and can that be enough to support this? Thanks very much.

Question: Sam McHugh - BNP Paribas Exane - Analyst : Awesome, Kyle. Thank you.

Question: Kannan Venkateshwar - Barclays Bank - Analyst : Thank you. It sounds like maybe on the consumer side, you mentioned a couple of drivers of growth, Tier 1 markets, for instance, the Latino segment and so on. And your lines have obviously grown on the postpaid side, but the account growth is still negative. So is there an opportunity to turn account growth positive with some of these newer segments that you're targeting? And is that something that we'll start to see over the course of the year? And then secondly, on immigration, I may have missed this as a response to the prior question, but is there a way for us to -- or understand how you guys are thinking about the impact on overall volumes for the industry as a whole over the course of this year or beyond? Thank you.

Question: Kannan Venkateshwar - Barclays Bank - Analyst : Thank you.