What do you want to know:
Verizon expects to generate service and other revenue growth of at least 4% in 2024 and beyond and reduce capital intensity to less than 12% in 2024; and will now consider share buybacks when the company reaches a leverage ratio of 2.25x
Over 175 million people are expected to be covered by 5G Ultra Wideband by the end of 2022
Announces new +play offering, a direct-to-consumer platform with Netflix and other content partners
Develops private network solutions as a gateway to the Private Mobile Edge Compute
Plans to increase broadband penetration with fixed wireless subscriber growth
One-of-a-kind strategic partnership with Meta, a step towards understanding the fundamental requirements of metaverse applications
NEW YORK — Verizon Communications Inc. (NYSE, Nasdaq: VZ) today announced accelerated availability of its market-leading 5G Ultra Wideband network to an expected 175 million people by the end of 2022. This new accelerated schedule is made possible by the incredible deployment rate achieved by Verizon’s network engineering team.
At the company’s 2022 Investor Day, the management team outlined its vision and strategy, powered by its industry-leading 5G network and the source of the company’s growth over the next few years. As the world continues to transition to a more hybrid working environment and is increasingly mobile, the new currency will be super-fast, super-reliable connectivity, creating new markets and ushering in the 5G economy. The company’s Network-as-a-Service strategy was designed to drive the 5G economy through an ever-increasing volume of services and technologies that are enabled by 5G Ultra Wideband’s ability to connect to a large number of high-speed devices.
The company outlined several growth paths: 5G mobility, national broadband, mobile edge computing (MEC) and enterprise solutions, value market and network monetization, indicating that it will drive 4% growth in services and other revenues for the company in 2024 and beyond.
“Through our deliberate investment and divestment strategy, we have already significantly increased the size of our addressable market which, over the next 5 years, is expected to grow by an additional $120 billion. We have chosen a strategy where we are not only participating in a much larger market, but also one where we are in a leadership position in our growth paths,” said Hans Vestberg, chairman and CEO of Verizon. “Verizon’s transformative technology and network-as-a-service platform is what enables the 5G economy and makes us the partner of choice for leading customers and application providers. Our high-capacity, low-latency network delivers a superior and unparalleled experience that will allow all of our stakeholders to live, work and play in new and amazing ways for years to come.
Vestberg went on to say, “Verizon’s networks fuel a future-proof strategy based on strong trends in mobility, broadband and cloud. We envisioned a world of hyper-connectivity and massive capacity, knowing it would inspire innovation and new use cases. We see immense momentum today and what excites us the most is that we know our network will support use cases that have not even been imagined yet.
Optimizing the Metaverse with Verizon’s 5G Network
Over the next decade, the metaverse will enable immersive, interconnected, and interoperable digital spaces to help people connect in ways not yet possible. These metaverse experiences will be delivered to all screens, at home, at work and on the go, and customers will want to experience these experiences on the industry-leading 5G network. That’s why Verizon unveiled a first-of-its-kind strategic partnership with Meta that aims to couple Verizon’s 5G Ultra Wideband network and edge computing capabilities with Meta’s technologies to understand the fundamental requirements of metaverse applications. The collaboration will explore how Verizon’s mobile edge compute infrastructure can deliver XR-intensive cloud rendering and low-latency streaming, which are critical capabilities needed for metaverse applications.
The Metaverse is the next evolution of online social technology, enabling immersive, interconnected, and interoperable digital spaces over the next decade that represent the evolution of the Internet from its current existence. Innovations that enable the next generation of fixed and mobile connectivity are essential elements in making the metaverse a reality.
Verizon and Meta are also exploring a range of metaverse opportunities ranging from the future of hybrid work/collaboration to metaverse-related consumer experiences.
Introducing +play, a new ultra-innovative content hub exclusive to Verizon customers, coming later this year
Verizon announced +play (plus play), exclusive to Verizon customers. This unique, direct-to-consumer platform allows users to discover, purchase and manage some of their favorite subscriptions across Entertainment, Audio, Games, Fitness, Lifestyle and more – ALL in one place. +play builds on the content Verizon already offers through leading providers including Disney+, Hulu, ESPN+, discovery+ and AMC+, all of which are featured in the new service, and introduces new partners including Netflix, Peloton, Live Nation’s Veeps, WW International, Inc., A+E Networks, The Athletic, Calm, Duolingo and TelevisaUnivision’s Vix+, among others.
Limited trials of +play will begin at the end of this month with a commercial launch expected later this year. Verizon expects the product to generate significant new revenue from subscription purchases, increase customer loyalty and improve its market-leading retention rates.
Develops private network solutions as a gateway to ultra-private mobile edge computing
With traditional wireless technology solutions, businesses often find themselves with gaps in coverage, fractured security, and inconsistent quality of service that lead to costly downtime and reduced productivity. To solve this problem for its customers, Verizon Business announced a new competitively priced turnkey private network solution with Celona that will accelerate the use of private 5G to support a new generation of business initiatives. Together, Verizon and Celona will deliver a solution with a common relationship, contract, support center and implementation team.
The solution will benefit small, medium and large enterprises looking to rapidly deploy a private network based on a cloud-based architecture, using plug-and-play ingredients, self-organizing wireless organization and AI for IT. application intelligence.
The offering will also help companies bring private 5G applications to market faster, streamline costs and mitigate operational challenges.
This solution simplifies the customer experience and gives customers the ability to scale their connectivity efficiently, and will also reduce the cost barrier for developers, opening up new avenues for them to test innovative and transformative applications.
Verizon’s On Site LTE and 5G solution provides customers with a private and secure on-premises cellular wireless network on which to run critical business applications and operations. Verizon customers can now use a Celona LAN to deploy the private kernel on-premises or in any private or public cloud.
Ultra C-Band Acceleration Drives Further National Broadband Subscriber Growth
Verizon’s C-band coverage expansion provides additional growth opportunities in nationwide broadband with more than 150,000 net additions expected for fixed wireless access alone in Q1 2022.
As the company continues to expand its 5G network over the next few years, it plans to:
Significantly expands its household and business fixed wireless coverage, disrupting an existing market and capturing share; becoming its second largest contributor to revenue growth.
Cover 50 million homes and 14 million businesses, and have 4-5 million total fixed wireless subscribers by the end of 2025.
Accelerating revenue and cash flow growth
Through accelerated C-band deployment, new products, services and partnerships described above, Verizon expects to generate service and other revenue growth of approximately 3% in 2022, excluding the net impact of the sale of Verizon Media and of business ownership. from TracFone; at least three percent in 2023; and four percent in 2024 and beyond. Coupled with an expected reduction in capital intensity to less than 12% in 2024 following the conclusion of the initial C-Band construction, the company expects faster free cash flow growth and reduced the resulting leverage effect.
CFO Matt Ellis said Verizon will consider share buybacks when the company reaches a net unsecured debt to adjusted EBITDA ratio of 2.25x, slightly above its long-term target range of 1.75x-2. .0x.
“Our capital allocation priorities are unchanged: investment in the business, commitment to the dividend, a strong balance sheet and share buybacks, in that order,” Ellis said. “Our diverse growth opportunities, combined with our unrivaled assets and proven track record of execution, position us well for the future. Our expected strong cash flow provides an additional option, and we look forward to continuing to provide this to all of our stakeholders. »