Yahoo Finance Verizon Communications Inc (VZ) Q1 2024 Earnings Call Transcript Highlights: Strong Wireless ...
Wireless Service Revenue Growth: Increased by 3.3%
Adjusted EBITDA: $12.1 billion, up 1.4% year-over-year
Free Cash Flow: $2.7 billion, up over 16% from Q1 2023
Postpaid Phone Net Adds: Improved year-over-year, strongest Q1 performance since 2018
Broadband Subscribers: Grew to over 11 million, an 18% increase from last year
Fixed Wireless Access Net Adds: 354,000 in Q1
Fios Internet Net Adds: 53,000
Consolidated Revenue: $33 billion, up 0.2% year-over-year
Adjusted EPS: $1.15, down 4.2% compared to the prior year
Release Date: April 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Hans, maybe we can talk about the consumer a little bit. It was good to see the churn number. Perhaps you could just talk a little bit about the impact of the pricing there. It seems like it had a drag on Business but less of a drag on Consumer. And just what are you seeing overall in the wireless market growth? It seems like the industry is continuing to grow. There's been some competitive moves by some of the cable companies recently. Maybe just comment on the overall environment out there and your ability to sustain this as well as the low upgrade rates. A: Thank you, Simon. Let me start with the Consumer business. That, I mean, as we saw in the quarter, it was a little bit slow in the beginning of the quarter, both for Consumer and for Business when it comes to wireless. But then, I think we clearly see that our products are resonating with the customers. And on the Consumer side, myPlan is really doing well. And as Tony said in the prepared remarks, I mean, the perks are coming up. Our premium is also increasing. So clearly, we see that.
Q: First, just a couple of quick follow-ups on Simon's question. Number one, the positive commentary you guys talked about with March. Does that suggest you guys could be positive in terms of Consumer phone adds in the second quarter? Number two, the price increase seemed to be digested pretty well, and you actually saw churn come down. Does that suggest you guys have more pricing power than you thought, and we could see not just for you but for the industry, and we could see more in the future? A: Thank you, John. On the first question there on Consumer net adds in the short term, I stay on my previous comment, consumer net adds should be positive in 2024. The team is, of course, doing quite good right now and actually 100,000 better in the first quarter here on net adds. So let them continue to execute. They have a great product that resonate with the market, and they will continue to execute well on that.
Q: Just curious if you could unpack a bit more of how you're thinking about the up-tiering opportunity within the postpaid phone base? And as you look at the perks, is there a way that we should think about the revenue contribution from perks and where that can go over time as an incremental way for Verizon to monetize the base? A: Thanks, Mike. Yes, this is a long-term strategy of us. First of all, we have a great base of customers. We want to give them the flexibility on the Consumer side. Then we add in the perks. Of course, all that plays into a value play for our customers even though we up-tier our customers, and that has gone very well. I mean we said in the prepared remarks that almost quarter of our customers have myPlan right now, and we are expecting it to go to almost or go to half of the base, which is we never had a product moving that fast because it resonates with the market.
Q: Hans, maybe one industry question for you. There's, obviously, a lot of assets up for sale, some smaller ones, some potentially bigger ones. There's also been talk about your potential interest in maybe partnering with ESPN in some form. Could you talk about how you see the industry structure evolving from here? Do you see this as some kind of equilibrium? Or is there any need for or an opportunity from your perspective in terms of balancing it as a base in a slightly different direction? A: Kannan, thank you for the question. First of all, I think I said it in the beginning of the year, we are getting into a new phase after heavy investment, a lot of changes in our asset structure. We're coming into a phase where we have all the assets we need, and we're executing on it. And you see the operational excellence coming out from it last 3 quarters.
Q: Let's talk about something a little longer term, which is spectrum and capacity. Your CapEx has been now trending down as you've largely gotten through the 5G build. I'm just wondering how we should think about your spectrum needs going forward and what your appetite would be for additional spectrum, if some were to come available from DISH Network or as you think about U.S. Cellular. And how you think about that in the context of the spectrum screens at the FCC, which don't really leave much room for incumbent players to add. Do you think that those are a real impediment? Or do you think that those would likely be adjusted when the time comes? A: Thank you, Craig. Great question. First of all, as we all know, right now, the FCC doesn't have any spectrum to auction, and they don't even have an approval to do it. So that sort of constrained it. Then it could, of course, be secondhand market spectrum. We feel good about we have only deployed a piece of our C-band so far. So we have quite a lot left. Many of the sites are 60 megahertz or maybe at best 80. We have 161 megahertz nationwide. So we have quite a lot left of spectrum. And remember, that was the decision I, together with the Board, took.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
