Verizon Communications Inc at Citi Global TMT Conference Transcript

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

Question: Michael Rollins - Citi - Analyst : So the news of the day is Verizon's announced the acquisition of Frontier. So maybe the first question, I'd like to ask for both of your perspectives on is can you share with us the broader vision that Verizon is using to engage with the acquisition and think about how the assets for Verizon are going to continue to evolve over time as well as the operating strategy?

Question: Michael Rollins - Citi - Analyst : So thinking about the strategy then. So 30 million fiber homes, where does Verizon see the need for that fiber passings number to go over a 5, 10-year period? And are there other opportunities either within this transaction or with other things that Verizon can do to continue to expand upon the opportunity?

Question: Michael Rollins - Citi - Analyst : Frontier has been talking about in the past, they divided their market expansions in waves. So they had this like Wave 3 opportunities they've been contemplating, which they said was on top of the 10 million target, at least another 1 million to 2 million. As part of this, is there a contemplation to accelerate and engage, for example, with that Wave 3 opportunity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 1:10PM, VZ.N - Verizon Communications Inc at Citi Global TMT Conference

Question: Michael Rollins - Citi - Analyst : There's a debate on fixed wireless that it's only using up excess capacity. And over time, as the mobile business grows, it continues to eat into that. So fixed wireless is more of a temporal opportunity and fiber is the long-term opportunity. How do you react? And what's Verizon's perspective on that, especially in terms of the durability of your fixed wireless?

Question: Michael Rollins - Citi - Analyst : On the operating side, you mentioned a 50% reduction in mobile churn and 40% reduction in fiber churn. Churn rates for the industry are already, at least for mobile, postpaid phones are fairly low. So can you unpack a little bit more about what you're seeing in terms of that stickiness of customer? And does this implicitly mean there's an almost doubling lifetime value for a customer on these models?

Question: Michael Rollins - Citi - Analyst : In terms of integration, so the $500 million of cost savings opportunity, can you unpack that a little bit more in terms of the timing and drivers? And as you divested a lot of what's in Frontier in the past, how would you rate the difficulty or complexity of this upcoming integration process?

Question: Michael Rollins - Citi - Analyst : And you mentioned the difference in convergence maybe between here and Europe. When you look at convergence and the benefits you've had from bundling in and the overlap, how much of the benefit that you see in the churn, in the market share for mobile penetration? How much of that's been intentional where Verizon has actually driven the outcome from a marketing perspective versus complementary where, just because Verizon has the brand, for example, in the Northeast and you had the Fios in the Northeast, that it just created the advantage that you see? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 1:10PM, VZ.N - Verizon Communications Inc at Citi Global TMT Conference

Question: Michael Rollins - Citi - Analyst : And how do you contemplate, we talked about the benefits of churn and share, but the dilution and risk to ARPU, whether it's on a relationship basis or on a service basis?

Question: Michael Rollins - Citi - Analyst : Another question on the business segment. So this has been an area that Frontier has been trying to lean more into. It's been a focus for Verizon. And I know you had prior responsibilities for the business segment. Where does the business side of the equation fit into the opportunity set for this transaction?

Question: Michael Rollins - Citi - Analyst : And so can you just remind us more broadly, Verizon over many years is a combination of several companies and assets and networks. Where is Verizon today on the journey of being fully integrated, simplified and efficient?

Question: Michael Rollins - Citi - Analyst : One other question that's come up about the transaction is we're being asked by our clients, why now? And if you could take us into maybe a little bit of a glimpse into those boardroom discussions, and as Verizon is weighing the opportunity for the transaction versus other things you could REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 1:10PM, VZ.N - Verizon Communications Inc at Citi Global TMT Conference do with your capital, homegrown fiber builds, edge out, just repurchasing stock at some point, deleveraging, what got Verizon over the top that this was the right time and right opportunity?

Question: Michael Rollins - Citi - Analyst : And coming back to the fixed wireless discussion. So you mentioned, I think in an earlier forum that you're up 60 million homes passed on FWA. Is that the right number?

Question: Michael Rollins - Citi - Analyst : When you -- when Verizon originally established 3 million to 4 million subscriber goal, can you share what the original coverage target was? And you mentioned you're going to give an update on whether the 3 million to 4 million might go in the next couple of quarters. But maybe you can just give us a sense maybe ahead of that where the footprint is going to go. So you're 60 million today, where do we see that going over the next few years?

Question: Michael Rollins - Citi - Analyst : So if it were linear 60%, 60 million, you get towards 100%, 100 million, you said it's not linear.

Question: Michael Rollins - Citi - Analyst : Sampath, maybe pivoting over to the consumer side of the mobile business. So the goal for this year was to get back to positive annual postpaid

Question: Michael Rollins - Citi - Analyst : And you broke down that 80% for us. And I think that of -- one of the questions that comes up is that 80-20 mix is a bit different than that longer-term industry experience. Do you think the industry is just in a different position today, where as an industry, companies, including Verizon, are just better able to monetize the growing consumption and utility that these connections offer customers?

Question: Michael Rollins - Citi - Analyst : And you mentioned the gross adds that were growing first half of the year, the churn opportunity. So as you look at that 20% of volume, you look to get it positive this year and sustain that 20% contribution. How should investors think about the gross add component versus that churn component?

Question: Michael Rollins - Citi - Analyst : Upgrades is a big question that's been coming up. And Verizon, there's actually a second part to the question, I think, following our churn discussions. The first part is how do you see the upgrade environment? Do you think that we're getting into a super cycle, whether it's this year or next year?

Question: Michael Rollins - Citi - Analyst : You touched on what the second part was the push side. Because whether it is to get churn down or, Joe, from your perspective, whether you wanted to get more customers on 5G and the most modern phones, sometimes there's an incentive for carriers to push on this. So you had that early push a few years ago when 5G was first introduced. Is there any perspective to share on the beyond what you just shared, the interest to push at some point?

Question: Michael Rollins - Citi - Analyst : So it sounds like you have an optimism that some of the B2B, IoT, the MEC that was part of the 5G opportunity is still in front of Verizon in the industry?

Question: Michael Rollins - Citi - Analyst : So I'll try to squeeze in two more questions. So one is a broader question for a lot of the companies here this week is Gen AI. And do you view that for Verizon as a larger revenue opportunity or a larger opportunity to reduce costs and which is going to create the most value for Verizon?

Question: Michael Rollins - Citi - Analyst : Great. And just maybe to wrap up with a big picture question. So Sampath, since you run the consumer group, can you share, based on all the effort of you and the team in all of Verizon, is the consumer group in a position where you can deliver sustainable annual service revenue growth? And then with that, have some operating leverage and actually then grow that EBITDA for the segment even faster than the service revenue?

Question: Michael Rollins - Citi - Analyst : Well, thank you for sharing your time with us, especially on such a busy day for Verizon. Thank you.