Speaker 1: Bloomberg Audio Studios, podcasts, radio news, and.
Speaker 2: We welcome now our Bloomberg television audience and radio listeners.
Speaker 2: Verizon stock rising after beating revenue estimates and raising its
Speaker 2: profit outlook. Joining us now, Verizon CEO Hans Wesberg. Question
Speaker 2: about your revenue guidance here and the beat that you
Speaker 2: have posted so far. How much of a role did
Speaker 2: the recent price increases play in the quarter's performance.
Speaker 3: Now, if you look at the quarter and actually the
Speaker 3: last four quarters or strategy is working, we have a
Speaker 3: lot of vectors of growth all the way from our
Speaker 3: broadband fixed wires, access, our step ups, pre paid is growing,
Speaker 3: and then we have our adjacent services with perks and
Speaker 3: all of that, so all of them are actually contributing.
Speaker 3: And then the lost I would say three for quarters
Speaker 3: have also been very good and discipline our cost levels,
Speaker 3: so we get the leverage or ABITA was twelve point
Speaker 3: eight billion dollars a growth of force, so we're raised
Speaker 3: the guidance both for ABITA EPs and free cash flow,
Speaker 3: all of them sort of coming from the generation of
Speaker 3: good financials, but it's based on the customer offerings we
Speaker 3: have built over the last year. There is really resonating
Speaker 3: with the market, either on broadband or wireless, and for
Speaker 3: all customers. Were serving all customers the United States, all
Speaker 3: the way from the governmental or federal customers to large
Speaker 3: enterprise SMBs and consumers. So that's what you see right now,
Speaker 3: resonating with the financials. But ultimately it's about having the
Speaker 3: right offerings for our customers.
Speaker 4: Let's talk about those cost levers a little bit more
Speaker 4: when it comes to wireless, because okay, you had a
Speaker 4: net loss of fifty one thousand monthly wireless phone subscribers
Speaker 4: in the periods Endless had been expecting again actually of
Speaker 4: about twelve thousand. At the same time you did have
Speaker 4: those wireless price increases go through. How many more times
Speaker 4: can you pull that lever and continue to raise prices.
Speaker 3: I think we had a price increase on consumer post
Speaker 3: paid in the first quarter that there has been lingering
Speaker 3: to the second quarter. I never disclosed my commercial strategies
Speaker 3: going forward, but I actually I think we'll have a
Speaker 3: good value. We have good proposition that we have an
Speaker 3: enormous good value on the consumer side, but it cannot
Speaker 3: forget our business side where enterprise and SMBs. So continue
Speaker 3: the growth for us both in wires and broadband. Overall
Speaker 3: in the quarter, we had more than three hundred thousand
Speaker 3: new customers coming in at the same time as we
Speaker 3: gaining efficiency.
Speaker 2: So what does this mean for the progress and the
Speaker 2: path to restoring growth and phone subscribers.
Speaker 3: So if you look at the quarter again, we had
Speaker 3: three hundred thousand new customers coming in on wireless and broadband.
Speaker 3: We're building the network once, that is strategy and then
Speaker 3: getting as many profitable connection on top of it. So
Speaker 3: this quarter was three hundred thousand again, So that's why
Speaker 3: we're growing our business at the moment. And we had
Speaker 3: the first half YEARA or service revenue which we are
Speaker 3: measured on is growing two point four percent. The overall
Speaker 3: revenue was growing five percent this quarter way over thirty
Speaker 3: four billion, was driven by a lot of upgrades on phones.
Speaker 3: So we have growth in our business right now and
Speaker 3: we're getting leverage on that because we're four percent growth
Speaker 3: on the bit that we have six percent growth on EPs,
Speaker 3: so clearly that is falling through and inefficiency work. So
Speaker 3: we are very focused on the growth. We have many
Speaker 3: vectors of growth, but also we are very financial disciplined
Speaker 3: how we spend that money to grow that customer base.
Speaker 4: Curious to talk a little bit here about what you're
Speaker 4: seeing in the big beautiful bill, because you cited favorable
Speaker 4: tax reform as one of the things to be optimistic about.
Speaker 4: So walk us through specifically what benefits you see there
Speaker 4: from tax reform and how that translates into the next quarter,
Speaker 4: into the year ahead for example.
Speaker 3: Yeah, So when it comes to the bill that was passed,
Speaker 3: I mean there was one piece that is very important
Speaker 3: for our eyes and that's of course the depreciation we
Speaker 3: can directly on our capital investment that have this year
Speaker 3: an impact of one and a half billion, two billion
Speaker 3: dollars on a free cash flow. So it's significant together
Speaker 3: with our operation or cash from operation that is improving.
Speaker 3: That's why we increase our guidance with the almost two
Speaker 3: billion in the quarter compared to the financial guidance wells
Speaker 3: from the beginning of the year. So that's one piece
Speaker 3: of the bill. Now, the piece of the bill is
Speaker 3: of course that the government wants to watch an out spectrum. Again,
Speaker 3: varision is in a great positional spectrum today, but you know,
Speaker 3: over the time as we as a country want to
Speaker 3: be the most digitalized country in the world, where a
Speaker 3: spectrum needs to come out for six G and other
Speaker 3: technologies going forward, so we encourage we're very encouraged to
Speaker 3: see that as well. It's going to take time before
Speaker 3: that spectrum comes out for auction, but it's good that
Speaker 3: the government are thinking long term in this area.
Speaker 2: And tax impacts in particular. You know, your earnings are
Speaker 2: perhaps the more obvious first set of glaring results that
Speaker 2: show you a benefit immediately. But is this kind of
Speaker 2: a one time benefit or do you see some sort
Speaker 2: of ripple effect that comes out of that big beautiful
Speaker 2: bill for you and maybe even the rest of corporate America.
Speaker 4: Frankly, so, the.
Speaker 3: Tax benefit has not impacted our financials yet. That's going
Speaker 3: to be in the second half and then going into
Speaker 3: next year because it's a perpetual sort of benefit to have,
Speaker 3: so that will continue. So but I think for us,
Speaker 3: we are very disciplined with our capital. We already increased
Speaker 3: our capital for twenty twenty five compared to twenty twenty four.
Speaker 3: Now we have our frontier acquisition pending. We're waiting for
Speaker 3: the lost approvers here. When that comes in, of course,
Speaker 3: we're going to make an holistic view how we're going
Speaker 3: to do capital allocation. Going forward, but always we put
Speaker 3: first priority in the business. Number Two, we have increased
Speaker 3: our dividend eighteen consecutive years, and we're going to put
Speaker 3: our board in a position to do that, and then
Speaker 3: we paint our debt to get our leverage rate too,
Speaker 3: and after that, including Frontier, we're also going to come
Speaker 3: to buybacks. We're going to package that in the next
Speaker 3: couple of months and talk to the market how we
Speaker 3: see about the capital location and the benefits of incorporating
Speaker 3: Frontier when that's approved.
Speaker 4: Well, Hans, keep in touch as you make progress. They're
Speaker 4: a great to get some time with you on what
Speaker 4: I know is a busy morning. That is Hans Vestberg
Speaker 4: of Verizon