Verizon Communications Inc at Morgan Stanley European Technology, Media & Telecoms Conference Transcript

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

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : So you recently held an analyst event in New York. Also, you combined it with the Q3 earnings and a broadband update. So, if you can just start with the results and the kind of the key priorities, and then we'll get into the broadband side of it.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great, and just to level-set us, remind us of the key financial metrics that you and the management team are compensated on.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. So that brings us to the next part of the Investor Day. You said at new -- as you said, you hit your FWA target early. You land and expand and also expanding your Fios. So for those who weren't at the event or listened to it, just help us summarize the key projections and the key strategy on around broadband.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. And just to tie it off, you had a modest CapEx hike for 2024.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Of the population? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 7:05AM, VZ.N - Verizon Communications Inc at Morgan Stanley European Technology, Media & Telecoms Conference

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Planned sites.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. Can we just unpack the fiber number a little bit? So 30 million by 2028. Where are you, Verizon, standalone today? And then Frontier? And then how much of that is sort of the merger and how much is the growth?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Okay. And of the 18 million, how much of your footprint is built out now at that 18 million?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. So there was an election in the US.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : A little while ago. Just help us broadly think about what the various moving parts are for Verizon.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. And we certainly get questions around what it means for the BEAD Program. Update us on your -- any thoughts you have there about the program and --

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Okay. So coming back to bonus depreciation, we thought we almost had it extended in the year, but it was not to be. Assuming that I think our tax team is thinking there's a broad tax package in the first half of next year, just help us understand what's been going on with your cash flows and how we think about the impact for 100% expensing going forward.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And I guess you can't really -- with the guidance, you just got to deal with whatever the legislation is with that.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. So we talked a lot about convergence here yesterday. And you made a big announcement with the Frontier acquisition. So perhaps for those who aren't as familiar with the Verizon story, just help us with the rationale for doing the Verizon deal and where it stands in terms of approvals and so forth.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. And you talked about some synergy opportunities certainly on the cost side, but also the potential to sell more wireless into the Frontier base. So can you just summarize that?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : No revenue synergies, but you do see the ability to --

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Historically, Verizon, and partly for legal reasons with Vodafone, had to have a very much a separate wireless and fiber business, but now you're starting to bundle those together, fixed wireless as well. How has your thinking evolved on convergence and we're going to get to European-style levels of convergence.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. And you mentioned owner's economics. You've shied away from some of the joint venture approaches to broadband. What's the philosophy there?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Okay, got it. Great. And just a quick macro question, I mean, it seems like your churn, as you mentioned, is well controlled. Anything that you're seeing on macro or is it sort of steady for you guys?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. If we drill into mobility a little bit more, we probably had this discussion last year, but where all these customers coming from? I think we added, between you and the cable guys, over 2 million postpaid phone again in Q3. I think people had assumed it would slow some, but how sustainable is this? What are you seeing driving that?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : That's in consumer?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : You mentioned Sampath. I guess he took over consumer about 18 months ago, something like that. We've seen improving gross add trends. But on the net add side, there's still a gap to the other two. You're still losing accounts. So help us understand what are the levers you can still pull to hold your share, take some share in markets where you're under index, et cetera.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And on the myPlan, it sounds like in your plan or perks per customer, there's still some room to ramp that up.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And do you think that's a churn reducer as well?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. There's been a lot of articles written about an iPhone super cycle. It didn't seem like the industry slowed in Q3. How do you assess the kind of the next phone upgrade cycle? Because the people are holding on to their phones a lot longer.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And so far in the holiday season, we've got Black Friday coming up. Any change in the competitive environment, promotional activity that you're seeing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 7:05AM, VZ.N - Verizon Communications Inc at Morgan Stanley European Technology, Media & Telecoms Conference

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. I think one of the things that's distinguished the US wireless industry recently has been pricing power and the ability for you and others to finally get some ability to maybe keep up with inflation. But it's -- I think for investors, it seems like a lot of one-off moves. There's this move on insurance. There's this move on older plans. How do we get comfortable that this is repeatable and this is -- you go back in the day and the cable companies would raise broadband prices every year and TV prices. What's the kind of philosophy going forward?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And I think one of the things that you've said is that the customers seem to accept some of these moves. You've been looking for that churn impact and it's manageable?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : How are things going on prepaid? There's been a lot of noise around ACP and so forth. But it sounds like underneath it all, things are getting better.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And where are you on your ability to harvest prepaid for helping the postpaid growth?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. We touched on a couple of the elements, but perhaps, just frame for us the various puts and takes on wireless service revenue. You talked about the outset that you're coming in with strong performance versus your guidance for this year. You're in that high 2s, 3% level. How do we think about '25?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Okay, great. Just wrapping up on the kind of the wireless growth drivers the -- before we turn to FWA, the broader 5G monetization, mobile edge compute, it sounds like you're kind of -- but coming back to that story now, you've got -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 7:05AM, VZ.N - Verizon Communications Inc at Morgan Stanley European Technology, Media & Telecoms Conference

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. So on fixed wireless, you've already talked about hitting our goals and now doubling those goals again. How -- as CFO, how do you think about this as a product, thinking about return on invested capital and network utilization? There's a lot out of your competitors out there who say that it's not going to hunt long term and the capacity congestion is going to catch up with it. But so far, so good?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : We're in Europe now where fixed wireless has much less trajectory. Perhaps just share, why has it done so well? Why are the NPS scores so high? Because it's not a gig service and it's --

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : So you mentioned a couple of times the MDU solution. Can you just sort of summarize where we are, what to look for here now?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : So you basically have an antenna on the roof?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. So you have a deal with AST SpaceMobile. You also announced an interim deal with Skylo on the whole satellite-direct-to-device. So what do you see the role of that? And we do get questions about the potential risk from the likes of Starlink cannibalizing wireless or even fiber. And so, what are your thoughts on that?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And in terms of are you seeing any competition from satellite broadband?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Okay, great. So on the fiber side of things, as you said, you've been at this for 20 years now. So including building some of those Frontier plans, where are -- where is the business model on fiber today? You obviously got comfortable with expanding your footprint here. How are you thinking in terms of ARPUs and penetration? And obviously, you take share even in a world where fixed wireless is taking.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And what was it gave you the comfort to go from for 400, 500 a year to 650? You've been at that lower pace for a while.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. Perhaps we can turn to costs for a minute. We had a lot of discussion yesterday here about leveraging AI for cost efficiency. So could you just give us an overall kind of summary of what the efforts you have underway. You just had a separation. And then where do you see AI helping you?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. And how about AI as a demand driver? We've seen hyperscalers buying more fiber.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. The CapEx, as you said, I think it goes up 4% or something at the midpoint of the range next year. If we're going to stay in this business-as-usual range, how should we characterize the '25 spend versus your --?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And if you do get bonus depreciation passed, maybe remind us last time, what's your calculus for what you do with the free cash flow?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And presumably, it's not -- you can't turn your CapEx engine on the dime?

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : And maybe just one final one, Tony, on the deleveraging, you've made good progress. You took on a lot to do the C-band auction the spectrum and CapEx. Now, you're coming back down. You recently tweaked your leverage target. So where are we today? And remind us when we can start to think about some buybacks.

Question: Simon Flannery - Morgan Stanley & Co. LLC - Analyst : Great. Tony, thank you so much for joining us.