1 00:00:02,400 --> 00:00:06,880 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,240 --> 00:00:11,119 Speaker 2: Verizon agreeing to buy rival telecom operator Frontier Communications FRO 3 00:00:11,119 --> 00:00:13,520 Speaker 2: about nine point six billion dollars in cash, giving an 4 00:00:13,600 --> 00:00:16,439 Speaker 2: enterprise value of twenty billion dollars. This is the New 5 00:00:16,520 --> 00:00:19,800 Speaker 2: York Phone Johant looks to expand its high speed internet business. 6 00:00:20,200 --> 00:00:24,200 Speaker 2: Let's bring in Verizon CEO hands Verspeg. We welcome you, sir, 7 00:00:24,360 --> 00:00:27,080 Speaker 2: and look, it wasn't long ago that you actually owned 8 00:00:27,080 --> 00:00:30,920 Speaker 2: some of these assets. Why go back into wyline? Why 9 00:00:30,960 --> 00:00:32,680 Speaker 2: are we seeing this convergence again? 10 00:00:33,640 --> 00:00:35,960 Speaker 3: Thank you for having me. First of all, I think 11 00:00:35,960 --> 00:00:39,839 Speaker 3: this is very straight into our core strategy. We are 12 00:00:39,960 --> 00:00:43,640 Speaker 3: sort of in mobility and broadband serve basically all types 13 00:00:43,680 --> 00:00:48,199 Speaker 3: of customers in the market CONSUMERSMBS, large entervice and governments. 14 00:00:48,800 --> 00:00:51,880 Speaker 3: This is just extending the offerings and optionality for the 15 00:00:51,920 --> 00:00:56,480 Speaker 3: customers well have. So this is a really good decision 16 00:00:56,600 --> 00:00:59,560 Speaker 3: by us to do with an economical right. And on 17 00:00:59,600 --> 00:01:02,720 Speaker 3: top of that, as you mentioned, yes we own these 18 00:01:02,760 --> 00:01:05,959 Speaker 3: assets before, but they weren't totally different type of assets. 19 00:01:06,400 --> 00:01:10,640 Speaker 3: There was basically a copper based business. Nowadays Frontier is 20 00:01:11,720 --> 00:01:14,600 Speaker 3: more than fifty percent of the revenue is fiber and 21 00:01:15,280 --> 00:01:17,640 Speaker 3: way more than fifty percent of the DTA is coming 22 00:01:17,680 --> 00:01:21,840 Speaker 3: from fiber, so a large transformation have been done and 23 00:01:22,080 --> 00:01:23,720 Speaker 3: it fits in straight to our strategy. 24 00:01:23,760 --> 00:01:27,240 Speaker 1: Over Isison Hans, good morning. It's ed in San Francisco. 25 00:01:27,760 --> 00:01:30,840 Speaker 1: Frontiers trading at thirty five dollars a sherish below the 26 00:01:30,880 --> 00:01:33,319 Speaker 1: thirty eight dollars fifty cents per share offer. What does 27 00:01:33,319 --> 00:01:36,920 Speaker 1: that tell you about the market's reaction to the offer 28 00:01:37,240 --> 00:01:38,680 Speaker 1: and what you think might happen next. 29 00:01:40,280 --> 00:01:42,440 Speaker 3: I don't tell me so much is so early in 30 00:01:42,560 --> 00:01:45,280 Speaker 3: it's it two hours of trading. I think first of all, 31 00:01:45,319 --> 00:01:50,280 Speaker 3: we feel really good about this deal from also from 32 00:01:50,400 --> 00:01:53,600 Speaker 3: closing it and seeing that this is a possible transaction 33 00:01:53,880 --> 00:01:57,120 Speaker 3: from many angles, because given that we believe it's going 34 00:01:57,160 --> 00:02:00,920 Speaker 3: to take eighteen months and all the regulator bodies, of 35 00:02:00,920 --> 00:02:04,000 Speaker 3: course will be a thorough job. But this is improvements 36 00:02:04,000 --> 00:02:06,200 Speaker 3: for customers. Were going to get more choice, and not 37 00:02:06,280 --> 00:02:09,400 Speaker 3: only that, we can only bring our mobility broadband to 38 00:02:09,440 --> 00:02:11,800 Speaker 3: these customers. At the same time, we also have the 39 00:02:11,840 --> 00:02:14,960 Speaker 3: offerings that we have on our broadband today, which is 40 00:02:15,080 --> 00:02:19,679 Speaker 3: everything from streaming services, other services that we have on insurance, etc. 41 00:02:20,040 --> 00:02:22,600 Speaker 3: So we're going to bring a lot on new opportunities 42 00:02:22,639 --> 00:02:26,880 Speaker 3: for the custom base or frontier. So I'm really positive 43 00:02:26,880 --> 00:02:27,720 Speaker 3: on this acquisition. 44 00:02:28,480 --> 00:02:30,360 Speaker 2: Can you tell us a little bit about the future 45 00:02:30,400 --> 00:02:33,200 Speaker 2: as well. The short term is the convergence trade is 46 00:02:33,720 --> 00:02:37,799 Speaker 2: wireless wireline content, but then there's AI. Then we're talking 47 00:02:37,840 --> 00:02:39,919 Speaker 2: about the Internet of Things as we've been talking about 48 00:02:39,919 --> 00:02:42,040 Speaker 2: for years. Hands where does that come into play. 49 00:02:42,919 --> 00:02:45,519 Speaker 3: It come definitely to play in these assets, and as said, 50 00:02:45,840 --> 00:02:48,400 Speaker 3: we expect this to take in a take eighteen months. 51 00:02:48,400 --> 00:02:52,240 Speaker 3: We're already right now have a sort of AI prepared 52 00:02:52,280 --> 00:02:55,040 Speaker 3: network with a lot of compute and storage at the 53 00:02:55,160 --> 00:02:58,880 Speaker 3: edge of the network. We decided already some six years 54 00:02:58,880 --> 00:03:02,320 Speaker 3: ago to fiber all our transport show. We are really 55 00:03:02,320 --> 00:03:04,960 Speaker 3: prepared of it. The frontier acid is just coming in. 56 00:03:04,960 --> 00:03:07,440 Speaker 3: There's an extension of that and we can meet even 57 00:03:07,560 --> 00:03:12,160 Speaker 3: more customers to have a processing storage at the edge 58 00:03:12,160 --> 00:03:16,880 Speaker 3: of the network with the fiberized transport show. This is 59 00:03:16,960 --> 00:03:20,600 Speaker 3: really also another advantage we're getting with even more assets 60 00:03:20,639 --> 00:03:23,760 Speaker 3: in the ground, and of course serving consumers with home 61 00:03:23,800 --> 00:03:27,200 Speaker 3: broadband together with our mobile and home offering is of 62 00:03:27,200 --> 00:03:30,720 Speaker 3: course a strength in the overall acquisition where we're doing. 63 00:03:31,320 --> 00:03:33,480 Speaker 1: Hans, We have a question from an audience member on 64 00:03:33,520 --> 00:03:37,960 Speaker 1: Bloomberg Technology, who notes the twenty fifteen sale of wireline assets. 65 00:03:38,240 --> 00:03:40,080 Speaker 1: But I think the question that he and many others 66 00:03:40,120 --> 00:03:43,280 Speaker 1: have is what's changed around the economics in this deal. 67 00:03:43,320 --> 00:03:46,360 Speaker 1: You said, the economics work, but give me specifics and 68 00:03:46,400 --> 00:03:49,360 Speaker 1: what's different, particularly for fiber in twenty twenty four. 69 00:03:50,360 --> 00:03:53,280 Speaker 3: So if you look at a deal right now at closing, 70 00:03:53,520 --> 00:03:56,520 Speaker 3: we believe that's going to be a creative of growth, 71 00:03:57,240 --> 00:04:02,360 Speaker 3: revenue growth anibita on day one, so that's really good economics. 72 00:04:02,680 --> 00:04:04,560 Speaker 3: And then it's going to take some twelve months and 73 00:04:04,640 --> 00:04:06,880 Speaker 3: EPs and cash flow will be a creative as well. 74 00:04:06,920 --> 00:04:08,680 Speaker 3: And the reason it takes twelve months is there are 75 00:04:08,720 --> 00:04:12,280 Speaker 3: some integration costs coming up in the beginning. So definitely 76 00:04:12,400 --> 00:04:16,799 Speaker 3: a very economic sound business for us. But I said 77 00:04:17,640 --> 00:04:20,839 Speaker 3: the assets we sold previously was, of course in a 78 00:04:20,880 --> 00:04:24,960 Speaker 3: totally different standard. The Frontier team has put in billions 79 00:04:24,960 --> 00:04:28,080 Speaker 3: and billions of dollars to fiberrize the network to be 80 00:04:28,160 --> 00:04:31,000 Speaker 3: the next generation, and many of the metrics that they have, 81 00:04:31,120 --> 00:04:35,560 Speaker 3: you know, Sharen, penetration, et cetera, are fairly similar to FiOS, 82 00:04:35,640 --> 00:04:38,360 Speaker 3: and FIUs is of course the best fiber network in 83 00:04:38,400 --> 00:04:41,440 Speaker 3: the States. So there's a lot of similarities on that 84 00:04:41,520 --> 00:04:43,200 Speaker 3: and that we can offer to our customers. 85 00:04:43,760 --> 00:04:46,359 Speaker 2: And some anas were a little bit surprised by the 86 00:04:46,400 --> 00:04:48,520 Speaker 2: timing and the fact that you're going all in on 87 00:04:48,560 --> 00:04:51,839 Speaker 2: convergence now a bold step. Some call it because of 88 00:04:51,880 --> 00:04:55,279 Speaker 2: your leverage and your commitment to reducing reducing your debt. 89 00:04:55,760 --> 00:04:59,000 Speaker 2: Why do this now? Are you worried about leverage? 90 00:04:59,320 --> 00:04:59,360 Speaker 1: No? 91 00:04:59,520 --> 00:05:01,840 Speaker 3: I think for we have a very strong balance sheet 92 00:05:01,880 --> 00:05:05,160 Speaker 3: and as we said this morning, at closing, this will 93 00:05:05,160 --> 00:05:08,680 Speaker 3: be maybe zero point two zero point three notch on 94 00:05:08,720 --> 00:05:11,720 Speaker 3: our leverage, which is very very low. We still are 95 00:05:11,800 --> 00:05:15,359 Speaker 3: committed to our capital location. Number one invest in the 96 00:05:15,400 --> 00:05:18,440 Speaker 3: business and that's what we're doing today. Number two committed 97 00:05:18,440 --> 00:05:20,720 Speaker 3: to the dividend, and you might have seen yesterday we 98 00:05:21,000 --> 00:05:24,680 Speaker 3: came out with our dividend which was for the eighteenth 99 00:05:24,800 --> 00:05:28,200 Speaker 3: consecutive year we increased our dividend. And then is to 100 00:05:28,240 --> 00:05:31,000 Speaker 3: pay down our debt. We are have been paying down 101 00:05:31,040 --> 00:05:33,320 Speaker 3: our debts since we bought a C band. We still 102 00:05:33,320 --> 00:05:35,640 Speaker 3: have some eighteen months here that we're going to continue 103 00:05:35,680 --> 00:05:37,359 Speaker 3: to pay down the debt, so we're going to be 104 00:05:37,360 --> 00:05:41,279 Speaker 3: in a really good position balance wise when the deals 105 00:05:41,640 --> 00:05:42,760 Speaker 3: Comeing to fruition. 106 00:05:43,600 --> 00:05:46,279 Speaker 1: Hans, what opportunity is there for you in data center 107 00:05:46,360 --> 00:05:49,320 Speaker 1: interconnects DCI in the context of AI. Look at what 108 00:05:49,400 --> 00:05:51,839 Speaker 1: like Lumen's done with Microsoft, for example. 109 00:05:52,800 --> 00:05:55,360 Speaker 3: I think that the difference here is that we have 110 00:05:55,480 --> 00:05:58,280 Speaker 3: so many assets in the ground when it comes to 111 00:05:58,400 --> 00:06:02,120 Speaker 3: fiber and central office. Many of these central offices of 112 00:06:02,160 --> 00:06:06,240 Speaker 3: course have compute, storage power, et cetera. And many of 113 00:06:06,240 --> 00:06:09,200 Speaker 3: the AI solutions when there is a real product, they 114 00:06:09,279 --> 00:06:13,840 Speaker 3: actually need to be way closer to the users, the corporations, 115 00:06:14,360 --> 00:06:17,480 Speaker 3: et cetera. And that means that because the transport costs 116 00:06:17,560 --> 00:06:20,080 Speaker 3: and many other things, it will be hosted at the 117 00:06:20,160 --> 00:06:22,760 Speaker 3: edge of the network. That's how we build the Verizon 118 00:06:22,839 --> 00:06:26,080 Speaker 3: Intelligence Edge Network in twenty eighteen when we started with 119 00:06:26,120 --> 00:06:29,000 Speaker 3: the Journey, which we now is just adding frontier to it. 120 00:06:29,080 --> 00:06:31,520 Speaker 3: So I see a great opportunity for us on the 121 00:06:31,560 --> 00:06:35,520 Speaker 3: B to B side with this footprint to serve customers 122 00:06:36,120 --> 00:06:39,760 Speaker 3: that want to host AI at close to them, a secure, 123 00:06:40,120 --> 00:06:41,880 Speaker 3: lower transport costs, and et cetera. 124 00:06:42,839 --> 00:06:45,640 Speaker 2: You're just announcing one deal, and you know we always 125 00:06:45,680 --> 00:06:48,680 Speaker 2: love to push forward. Hands are you going to continue 126 00:06:48,680 --> 00:06:50,920 Speaker 2: to be acquisitive when it comes to convergence. 127 00:06:52,000 --> 00:06:54,359 Speaker 3: I think, first of all, we are really happy with 128 00:06:54,400 --> 00:06:57,360 Speaker 3: assets we have and now we're adding Frontier. I don't 129 00:06:57,360 --> 00:06:59,000 Speaker 3: think we need much more. We're going to be the 130 00:06:59,040 --> 00:07:02,119 Speaker 3: biggest and wireless we're going to be clearly the ones 131 00:07:02,160 --> 00:07:05,200 Speaker 3: having the largest broadband offering with fixed fires access and 132 00:07:05,279 --> 00:07:08,760 Speaker 3: fiber in the market, we have the largest distribution and 133 00:07:08,800 --> 00:07:10,760 Speaker 3: the customers, so we're going to be in a really 134 00:07:10,800 --> 00:07:13,720 Speaker 3: good position to see that we execute for our customers 135 00:07:13,760 --> 00:07:16,880 Speaker 3: but also for our shareholders. So I'm really happy with 136 00:07:16,960 --> 00:07:19,480 Speaker 3: assets we're going to have and we have today. When 137 00:07:19,520 --> 00:07:22,440 Speaker 3: it comes to convergence, I think what is important in 138 00:07:22,520 --> 00:07:26,400 Speaker 3: convergence we will have the scale of economy for both. 139 00:07:26,640 --> 00:07:29,920 Speaker 3: We will have the ownerships for the wireless network and 140 00:07:30,000 --> 00:07:32,880 Speaker 3: the fiber networks and fixed fires access. If customers want 141 00:07:32,920 --> 00:07:35,280 Speaker 3: to make the convergence, we will have the economics for 142 00:07:35,360 --> 00:07:37,640 Speaker 3: doing it. I don't believe it's going to be sort 143 00:07:37,680 --> 00:07:40,960 Speaker 3: of you you discount one product for customer taking both. 144 00:07:41,200 --> 00:07:44,000 Speaker 3: That's not really there's two great products. And we all 145 00:07:44,040 --> 00:07:47,920 Speaker 3: know mobility in broadband is a centure for day society. 146 00:07:47,920 --> 00:07:51,520 Speaker 3: I mean everyone needs it. Division corporation, a private person 147 00:07:52,280 --> 00:07:55,200 Speaker 3: or a corporation. You need these services that are even 148 00:07:55,320 --> 00:07:58,440 Speaker 3: more important today than we're five years ago and Veriecon 149 00:07:58,520 --> 00:08:01,440 Speaker 3: is number one and basically every segment of that and 150 00:08:01,480 --> 00:08:03,760 Speaker 3: this is just fortifying it. So, yeah, we're going to 151 00:08:03,760 --> 00:08:07,280 Speaker 3: see convergence, but it's not like we're going to discount products. 152 00:08:07,320 --> 00:08:09,360 Speaker 3: There are great two products that we're going to offer 153 00:08:09,400 --> 00:08:12,560 Speaker 3: our customers if they want to join. We have improvements 154 00:08:12,600 --> 00:08:15,760 Speaker 3: on Scheren of course, if customers both have mobility and 155 00:08:15,760 --> 00:08:18,080 Speaker 3: broadband with us, and so we're going to see how 156 00:08:18,120 --> 00:08:20,480 Speaker 3: that places out in the market, but clearly we're going 157 00:08:20,480 --> 00:08:22,960 Speaker 3: to be the best position in the market when it 158 00:08:23,000 --> 00:08:23,880 Speaker 3: comes to convergence. 159 00:08:24,800 --> 00:08:27,560 Speaker 1: Verizon CEO Hans Vesperg, thank you very much.