Verizon Communications Inc. (VZ) 2024 Q2 Earnings Call Summary
July 22, 2024 
Verizon Communications Inc. (VZ)
| Market Cap | 0.38T |
|---|---|
| Beta | |
| P/E | 43.94571752178209 |
| EPS | 20.282294846095283 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
- Wireless Service Revenue Growth: Verizon reported a 3.5% year-over-year increase in wireless service revenue.
- Adjusted EBITDA Rise: The company saw a 2.8% rise in adjusted EBITDA.
- Free Cash Flow Increase: Free cash flow increased by 3% compared to last year.
- Strong Operational Performance: Notable performance across mobility, broadband, and network, with consumer postpaid phone gross adds up 12% year-over-year.
- Broadband Net Adds: Verizon added 391,000 broadband net adds in the second quarter, with more than 11.5 million broadband subscribers by the end of the quarter.
Pessimistic Highlights
- Prepaid Net Losses: Overall prepaid net losses were 624,000, including 410,000 losses related to the ACP shutdown.
- Wireless Equipment Revenue Decline: Declines in wireless equipment revenue due to total upgrades being down nearly 13% year-over-year.
Company Outlook
- Positive Outlook for 2024: Verizon remains on track to meet its 2024 financial guidance, with strong execution and operating momentum translating into results. The company expects to deliver positive consumer postpaid phone net adds without the contribution from its second number offering and sees a stronger performance in prepaid in the second half of 2024.
Q & A Highlights
Q: Impact of ACP on broadband and lingering impact in the second half? (John Hodulik, UBS)
A: Some impact on prepaid and Fios due to ACP, with minimal impact on postpaid. Majority of ACP disconnects are now behind, and the margin impact was insignificant. (Tony Skiadas)
Q: Potential beyond the 4 million to 5 million fixed wireless access subscribers? (Simon Flannery, Morgan Stanley)
A: Verizon has good momentum with fixed wireless access and is expanding C-band to suburban and rural areas. The company will provide more clarity on opportunities beyond the 4 million to 5 million target once reached. (Hans Vestberg)
Q: Health of the broadband market and network capacity for fixed wireless subscribers? (Jim Schneider, Goldman Sachs)
A: Broadband market is healthy with strong demand for Verizon's offerings. The company has significant network capacity to support fixed wireless access growth. (Hans Vestberg)
Q: Expectations for consumer postpaid phone net adds and impact of voluntary separation program on margins? (Sebastiano Petti, J.P. Morgan)
A: Verizon expects positive phone net adds in consumer for the year without the second number contribution. The voluntary separation program is expected to manifest savings towards the end of 2024 and into 2025. (Tony Skiadas)
Q: Back book vs. front book pricing in wireless postpaid and potential for annual pricing actions? (Michael Rollins, Citi)
A: Verizon evaluates pricing opportunities to align with the value proposition for customers and has taken pricing actions that provide a good tailwind to service revenue. (Tony Skiadas)
Q: Importance of vertical solutions for customers and expansion of fiber-to-the-home assets? (Frank Louthan, Raymond James)
A: Verizon is well-positioned for fixed-mobile convergence and sees opportunities with its current assets, including Fios and fixed wireless access. (Hans Vestberg)
Q: Free cash flow growth expectations and enterprise adoption of 5G and AI? (Bryan Kraft, Deutsche Bank)
A: Verizon anticipates strong cash flow in the second half of the year to support debt reduction. The company sees growing enterprise adoption of 5G and AI, with private networks as a precursor to broader AI and mobile edge compute applications. (Hans Vestberg, Tony Skiadas)