Verizon Communications Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Network Outage: Acknowledged the earlier network outage, committed to improving service quality and meeting customer expectations.
• Transformation: Right-sizing the organization by removing underperformance, reducing layers, and cutting resources; aiming for $5 billion in OpEx savings in 2026. Focus on a customer-obsessed culture and AI deployment for operations and customer experience.
• Frontier Acquisition: Completed acquisition, now has over 30 million fiber passings, expects over $1 billion in run rate operating cost synergies by 2028.
• MVNO Relationship: Renewed partnership with Comcast and Charter, an accretive deal.
• New Value Proposition: In development, with positive feedback, guidance incorporates its impact.
• Financial Results: Delivered on 2025 financial guidance, with adjusted EBITDA $50 billion, adjusted EPS $4.71, and free cash flow $20.1 billion.

Segment Performance

• Wireless: Full year 2025 wireless service revenue grew 2%. Fourth quarter postpaid phone net adds were 616,000 (best net add quarter in 6 years), with consumer postpaid phone net adds at 551,000. Core prepaid had 109,000 net adds in Q4, sixth consecutive quarter of positive growth. Visible and total wireless brands performed strongly.
• Broadband: Fourth quarter broadband net adds were 372,000 (highest of the year). Fixed wireless access net adds 319,000, Fios Internet 67,000 net adds. Frontier added 125,000 fiber net additions in Q4, with 1.3 million new fiber passings in 2025, bringing its footprint to over 9 million fiber passings. Combined mobility and broadband net adds for 2025 were almost 1.9 million, resulting in over 16.3 million connections.

Guidance

• 2026 Outlook: Target 750,000 to 1 million postpaid phone net adds. Expect 2% to 3% mobility and broadband service revenue growth (approx $93 billion). Adjusted EPS range $4.90 to $4.95 (4% to 5% growth). CapEx $16 billion to $16.5 billion. Free cash flow $21.5 billion or more (7%+ growth). Dividend increased by $0.07, Board authorized $25 billion share repurchases over 3 years.
• Frontier Inclusion: Guidance includes Frontier from January 20, 2026.

Risks

• Network Performance: Previous outage highlights risk of not meeting customer expectations.
• Market Competition: Intense competition could impact subscriber growth and revenue.
• Integration Challenges: Challenges in integrating Frontier and realizing synergies as expected.

Question and Answer

Q: Strong outlook for postpaid phones in 2026, investments needed?

A: Dan Schulman said no need for excessive promotions, focus on reducing churn, improving customer experience, leveraging convergence.

Q: Customer lifetime values, CapEx efficiencies?

A: Dan talked about reducing churn, improving customer experience, Tony Skiadas discussed CapEx focus on mobility and broadband, reducing noncore investments.

Q: Service revenue growth, broadband volumes?

A: Tony Skiadas mentioned flat wireless service revenue due to lapsing price increases, promo amortization, but growth from postpaid adds, FWA, perks. Dan added on broadband volumes from fiber and FWA.

Q: Value injection, post-2026 cost savings?

A: Dan discussed three waves of efficiency, focusing on simplicity, reducing complexity, automation. Tony mentioned ongoing cost work beyond 2026.