Verizon Communications Inc. Q2 FY2025 earnings call

• Strong financial performance with market-leading wireless service revenue of $20.9B, up 2.2% y/y; adjusted EBITDA $12.8B, up 4.1% y/y. Free cash flow $5.2B for the quarter, year-to-date $8.8B. • C-band deployment ahead of schedule; fixed wireless access surpassed 5 million subscribers, on track for 8-9 million by 2028. • Won a landmark deal to deploy private fiber networks across Sam's Freeport. AI Connect sales funnel nearly doubled to $2B since launch. • J.D. Power recognized Verizon for best network quality; RootMetrics named it nation's best 5G network. • Pending Frontier acquisition progressing, on track for early 2026 close, with regulatory approvals from multiple agencies.

In the second quarter, Verizon's wireless service revenue was $20.9 billion, up 2.2% year over year. Adjusted EBITDA was $12.8 billion, up 4.1% year over year. Broadband had 293,000 net additions in the quarter. Fixed wireless access surpassed 5.1 million subscribers, with 278,000 net adds. Fios Internet had 32,000 net adds. Wireless service revenue contributed significantly to the overall revenue, with consumer ARPA up 2.3% year over year.

• Raised full-year adjusted EBITDA guidance to 2.5%-3.5% growth, an increase of approx. $125M at midpoint. • Adjusted EPS guidance raised to 1%-3% range. • Free cash flow guidance raised to $19.5B-$20.5B, driven by tax reform benefit and strong operational execution. • Wireless service revenue and CapEx guidance unchanged.

• Postpaid churn remained elevated due to pricing actions and federal government account pressure. • Competitive promotional activity in the industry. • Softer move environment in Fios footprint could impact broadband growth.

Q: Good morning. I wanted to ask about free cash flow, kind of capital allocation, and then also the outlook for consumer wireless.

A: Hans Vestberg and Tony Skiadas responded, discussing capital allocation priorities, including investing in the business, supporting dividend, paying down debt, and plans related to Frontier acquisition. On consumer wireless, emphasized financial discipline, net adds, and churn reduction efforts with AI-powered customer service and value propositions.

Q: It looks like you saw further deceleration in postpaid ARPU growth. Can you just talk a little bit about the drivers that are causing that deceleration?

A: Hans Vestberg and Tony Skiadas mentioned drivers like competitive environment, but also highlighted levers like broadband, value guarantees, and C-band deployment contributing to ARPU.

Q: Just a follow-up on Ben and John's theme there for a second. As we think about the consumer net ad results in the quarter, any way to unpack maybe free line contribution in Trecora?

A: Hans Vestberg stated three lines were insignificant, part of a short-term launch, and Tony Skiadas discussed prepaid segment progress and inflection point for service revenue growth.

Q: I was wondering if you may be broadly comment on the broadband market trends that you're seeing right now.

A: Hans Vestberg noted softer mover market, but expected better broadband performance in second half, with Fios consistent and fixed wireless access tied to C-band deployment.

Q: I want to ask about your wireless go-to-market strategy.

A: Hans Vestberg explained segmented growth strategy with multiple brands targeting different market segments, refining offerings to meet diverse consumer economic backgrounds.

Q: Can you talk to us about the pace of the fixed wireless deployment? Are you seeing that increase?

A: Hans Vestberg said fixed wireless deployment pace not changing, with C-band deployment on track to 80-90% by year-end.

Q: First one is just on the consumer phone gross adds. You guys said you're disciplined in not chasing volumes, but up nineteen percent I think that's a two q record. How sustainable is this level of gross ad going forward in the balance of the year?

A: Tony Skiadas mentioned strong sales execution, best value guarantee resonance, and focus on financial discipline in sustaining gross adds.

Q: I just had a question on beads. With the recent changes in the program, I was wondering how you're thinking about the opportunity to participate and, you know, maybe make some incremental investments into footprint expansion through that program.

A: Hans Vestberg said slight changes to BID program rules open opportunities, with process of rebidding and continuing to bid where good return is seen.

Q: Because the business revenues and margins are improved pretty substantially. Just any more color on what you're doing there?

A: Hans Vestberg and Tony Skiadas discussed various drivers like fiber expansion, AI Connect, prepaid growth, cost efficiencies in headcount and operations, and disciplined deal desk approach contributing to revenue and margin improvement.