On its second quarter 2023 earnings call today, everyone was curious to hear what Verizon would say about the lead-sheathed cables in its network. Unfortunately, Verizon executives said very little and stuck to their talking point, which was that they are using scientific methods to assess the situation.
The company had said before earnings that its copper network is comprised of less than 540,000 miles of cable, roughly half of which is aerial, and lead-sheathed cable makes up a small percentage of its copper network.
RELATED: Verizon CFO: ‘Far too soon’ to gauge lead remediation cost
Today, Verizon CFO Tony Skiadas said because the lead cables are old and industry records are incomplete, the company is working to review the historical records. He attempted to spin the issue as favorably as possible for Verizon. “When not disturbed, the likelihood of exposure to lead from lead-sheathed cables is low,” said Skiadas. “Because the lead-sheathed cable was used as a feeder and distribution cable and does not run into individual homes or apartments it is generally in locations that minimize the potential for public contact. We are working with a third party expert to conduct our own testing at our sites that were identified by the media.”
He said those test results won’t come back for several weeks.
Many analysts tried to get further detail, but company executives said it is "far too soon" to make any projection about health risks or the financial impact to Verizon.
Verizon’s 2Q numbers
Verizon reported net income of $4.8 billion for its second quarter 2023, a decrease of 10.3% from the second quarter 2022, with earnings per share of $1.10, compared with $1.24 in the second-quarter 2022.
However, the company saw a slight uptick in adjusted EBITDA (an indicator of profitability) of $12.0 billion, up 0.8% year over year. And Wall Street seemed happy with this. The company’s stock ticked up slightly after today’s call.
Total wireless service revenue was $19.1 billion, a 3.8% increase year over year. The increase was driven primarily by raising prices in recent quarters, and a growing contribution from fixed wireless offerings.
Subscribers
Verizon has been struggling with postpaid phone net additions over the last few quarters. Today, it reported postpaid phone net additions of 8,000, comprised of 144,000 net adds from its Business group and 136,000 net losses from its Consumer group.
But at least the company was in the black in terms of postpaid phone net additions. In the previous quarter, it lost 127,000 postpaid phones.
It did worse in prepaid, reporting net losses of 304,000. But New Street Research analyst Jonathan Chaplin said this was “better than feared.”
Verizon gained 384,000 fixed wireless access (FWA) net adds in the quarter: 251,000 from Consumer and 133,000 from Business. It now has nearly 2.3 million customers on its FWA product
Just yesterday, Bloomberg reported that Verizon is raising the price of its FWA product — Verizon 5G Home Internet — from $25 per month to $35 per month, for those on autopay. The price increase will go into effect later this summer.
MyPlan
Verizon CEO Hans Vestberg repeatedly touted the Consumer group’s new myPlan strategy during today’s earnings call.
Verizon introduced myPlan in May. The new offer allows the customer to pick their network solution – basic or advanced – and then add perks on top of that for a charge of $10/perk. Welcome Unlimited is $65/month for a single line. Unlimited Plus is $80 for one line. The add-on perks range from Disney+ and Apple TV to international roaming. There are currently nine perks from which to choose.
Today, Vestberg said he has confidence in the Consumer group’s ability to manage myPlan “given how much we invested in the research on the consumer side.”
In terms of the weak postpaid phone net adds this quarter, Vestberg said, “We want our fair share on the net adds, but ultimately we measure ourself on service revenue growth.”
C-band and fixed wireless access
Verizon has been deploying its first tranche of C-band spectrum. And the company sees a close connection between C-band and its FWA product.
Vestberg said the company has deployed C-band spectrum in about 70 of the partial economic areas (PEAs) out of an ultimate 402 PEAs. When the next tranche of C-band spectrum is available later this year, Verizon will quickly move to deploy that.
“The first 70ish C-band PEAs are mainly in urban areas,” said Vestberg. “That’s where we have that good traction on fixed wireless access. The next step is going to be much more suburban and rural. That’s great opportunity because there’s usually less different options for customers in those areas.”
The company continues to guide for 4-5 million FWA customers by 2025.
Private wireless
Vestberg was also bullish on the Business group’s success with private wireless. He said, “We have found out that private 5G networks is something really valuable for enterprise. The main reason is the capacity on it, the speed and security.”
He said enterprise customers typically try private wireless as a Wi-Fi replacement, going from unlicensed to licensed spectrum. “Usually, we start with one factory, and as you see that it’s working there, they do it in all the factories. We have a growing list of new customers coming in.”