WEBVTT - Verizon CEO Hans Vestberg Talks Profit Outlook

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, and.

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<v Speaker 2>We welcome now our Bloomberg television audience and radio listeners.

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<v Speaker 2>Verizon stock rising after beating revenue estimates and raising its

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<v Speaker 2>profit outlook. Joining us now, Verizon CEO Hans Wesberg. Question

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<v Speaker 2>about your revenue guidance here and the beat that you

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<v Speaker 2>have posted so far. How much of a role did

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<v Speaker 2>the recent price increases play in the quarter's performance.

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<v Speaker 3>Now, if you look at the quarter and actually the

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<v Speaker 3>last four quarters or strategy is working, we have a

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<v Speaker 3>lot of vectors of growth all the way from our

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<v Speaker 3>broadband fixed wires, access, our step ups, pre paid is growing,

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<v Speaker 3>and then we have our adjacent services with perks and

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<v Speaker 3>all of that, so all of them are actually contributing.

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<v Speaker 3>And then the lost I would say three for quarters

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<v Speaker 3>have also been very good and discipline our cost levels,

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<v Speaker 3>so we get the leverage or ABITA was twelve point

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<v Speaker 3>eight billion dollars a growth of force, so we're raised

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<v Speaker 3>the guidance both for ABITA EPs and free cash flow,

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<v Speaker 3>all of them sort of coming from the generation of

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<v Speaker 3>good financials, but it's based on the customer offerings we

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<v Speaker 3>have built over the last year. There is really resonating

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<v Speaker 3>with the market, either on broadband or wireless, and for

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<v Speaker 3>all customers. Were serving all customers the United States, all

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<v Speaker 3>the way from the governmental or federal customers to large

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<v Speaker 3>enterprise SMBs and consumers. So that's what you see right now,

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<v Speaker 3>resonating with the financials. But ultimately it's about having the

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<v Speaker 3>right offerings for our customers.

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<v Speaker 4>Let's talk about those cost levers a little bit more

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<v Speaker 4>when it comes to wireless, because okay, you had a

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<v Speaker 4>net loss of fifty one thousand monthly wireless phone subscribers

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<v Speaker 4>in the periods Endless had been expecting again actually of

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<v Speaker 4>about twelve thousand. At the same time you did have

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<v Speaker 4>those wireless price increases go through. How many more times

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<v Speaker 4>can you pull that lever and continue to raise prices.

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<v Speaker 3>I think we had a price increase on consumer post

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<v Speaker 3>paid in the first quarter that there has been lingering

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<v Speaker 3>to the second quarter. I never disclosed my commercial strategies

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<v Speaker 3>going forward, but I actually I think we'll have a

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<v Speaker 3>good value. We have good proposition that we have an

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<v Speaker 3>enormous good value on the consumer side, but it cannot

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<v Speaker 3>forget our business side where enterprise and SMBs. So continue

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<v Speaker 3>the growth for us both in wires and broadband. Overall

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<v Speaker 3>in the quarter, we had more than three hundred thousand

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<v Speaker 3>new customers coming in at the same time as we

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<v Speaker 3>gaining efficiency.

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<v Speaker 2>So what does this mean for the progress and the

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<v Speaker 2>path to restoring growth and phone subscribers.

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<v Speaker 3>So if you look at the quarter again, we had

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<v Speaker 3>three hundred thousand new customers coming in on wireless and broadband.

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<v Speaker 3>We're building the network once, that is strategy and then

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<v Speaker 3>getting as many profitable connection on top of it. So

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<v Speaker 3>this quarter was three hundred thousand again, So that's why

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<v Speaker 3>we're growing our business at the moment. And we had

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<v Speaker 3>the first half YEARA or service revenue which we are

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<v Speaker 3>measured on is growing two point four percent. The overall

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<v Speaker 3>revenue was growing five percent this quarter way over thirty

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<v Speaker 3>four billion, was driven by a lot of upgrades on phones.

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<v Speaker 3>So we have growth in our business right now and

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<v Speaker 3>we're getting leverage on that because we're four percent growth

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<v Speaker 3>on the bit that we have six percent growth on EPs,

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<v Speaker 3>so clearly that is falling through and inefficiency work. So

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<v Speaker 3>we are very focused on the growth. We have many

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<v Speaker 3>vectors of growth, but also we are very financial disciplined

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<v Speaker 3>how we spend that money to grow that customer base.

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<v Speaker 4>Curious to talk a little bit here about what you're

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<v Speaker 4>seeing in the big beautiful bill, because you cited favorable

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<v Speaker 4>tax reform as one of the things to be optimistic about.

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<v Speaker 4>So walk us through specifically what benefits you see there

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<v Speaker 4>from tax reform and how that translates into the next quarter,

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<v Speaker 4>into the year ahead for example.

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<v Speaker 3>Yeah, So when it comes to the bill that was passed,

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<v Speaker 3>I mean there was one piece that is very important

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<v Speaker 3>for our eyes and that's of course the depreciation we

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<v Speaker 3>can directly on our capital investment that have this year

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<v Speaker 3>an impact of one and a half billion, two billion

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<v Speaker 3>dollars on a free cash flow. So it's significant together

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<v Speaker 3>with our operation or cash from operation that is improving.

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<v Speaker 3>That's why we increase our guidance with the almost two

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<v Speaker 3>billion in the quarter compared to the financial guidance wells

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<v Speaker 3>from the beginning of the year. So that's one piece

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<v Speaker 3>of the bill. Now, the piece of the bill is

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<v Speaker 3>of course that the government wants to watch an out spectrum. Again,

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<v Speaker 3>varision is in a great positional spectrum today, but you know,

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<v Speaker 3>over the time as we as a country want to

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<v Speaker 3>be the most digitalized country in the world, where a

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<v Speaker 3>spectrum needs to come out for six G and other

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<v Speaker 3>technologies going forward, so we encourage we're very encouraged to

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<v Speaker 3>see that as well. It's going to take time before

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<v Speaker 3>that spectrum comes out for auction, but it's good that

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<v Speaker 3>the government are thinking long term in this area.

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<v Speaker 2>And tax impacts in particular. You know, your earnings are

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<v Speaker 2>perhaps the more obvious first set of glaring results that

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<v Speaker 2>show you a benefit immediately. But is this kind of

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<v Speaker 2>a one time benefit or do you see some sort

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<v Speaker 2>of ripple effect that comes out of that big beautiful

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<v Speaker 2>bill for you and maybe even the rest of corporate America.

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<v Speaker 4>Frankly, so, the.

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<v Speaker 3>Tax benefit has not impacted our financials yet. That's going

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<v Speaker 3>to be in the second half and then going into

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<v Speaker 3>next year because it's a perpetual sort of benefit to have,

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<v Speaker 3>so that will continue. So but I think for us,

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<v Speaker 3>we are very disciplined with our capital. We already increased

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<v Speaker 3>our capital for twenty twenty five compared to twenty twenty four.

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<v Speaker 3>Now we have our frontier acquisition pending. We're waiting for

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<v Speaker 3>the lost approvers here. When that comes in, of course,

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<v Speaker 3>we're going to make an holistic view how we're going

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<v Speaker 3>to do capital allocation. Going forward, but always we put

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<v Speaker 3>first priority in the business. Number Two, we have increased

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<v Speaker 3>our dividend eighteen consecutive years, and we're going to put

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<v Speaker 3>our board in a position to do that, and then

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<v Speaker 3>we paint our debt to get our leverage rate too,

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<v Speaker 3>and after that, including Frontier, we're also going to come

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<v Speaker 3>to buybacks. We're going to package that in the next

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<v Speaker 3>couple of months and talk to the market how we

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<v Speaker 3>see about the capital location and the benefits of incorporating

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<v Speaker 3>Frontier when that's approved.

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<v Speaker 4>Well, Hans, keep in touch as you make progress. They're

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<v Speaker 4>a great to get some time with you on what

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<v Speaker 4>I know is a busy morning. That is Hans Vestberg

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<v Speaker 4>of Verizon