Verizon CTO: We won’t accelerate network capex due to new corporate tax rate

Verizon Hans Vestberg (Verizon)
Hans Vestberg is Verizon's CTO. (Verizon)

Verizon’s CTO said the company doesn’t plan to accelerate spending on its network due to new legislation that lowers corporate tax rates.

“You probably don’t want to have big spikes in the capital allocation because then in the end it drives inefficiencies. We want to be consistent,” said Hans Vestberg, Verizon’s new CTO, during an investor event today. “From an execution point of view you want to be consistent.”

Added Vestberg: “It’s not helpful to go up and down in capital allocation because it ramps up and down resources—money wasted … But we are always debating. And we should debate in a leadership team the size of Verizon.”

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Vestberg’s comments are noteworthy in light of announcements that AT&T and Comcast made immediately following the passage of the new tax legislation. Both companies said they would offer their employees year-end bonuses due to the bill, and that they would also boost their network spending.

Specifically, AT&T said it will spend an additional $1 billion on network upgrades in 2018. According to the Washington Post, AT&T is expected to spend around $22 billion on network upgrades in 2017; adding $1 billion would represent a modest increase of 4.5%.

Verizon, and the rest of the nation’s wireless operators, is scheduled to report its fourth-quarter results later this month. Vestberg joined Verizon roughly eight months ago following his ouster as CEO of Swedish equipment company Ericsson.

In his comments today, Vestberg also addressed the additional traffic flowing over Verizon’s network after the carrier introduced unlimited data plans in early 2017.

“Of course the growth in the network went up,” he said. “Of course the network grew in certain areas. But more important, the distribution on the growth went a bit different than normally. Normally, peak hours are between 4 and 5 in the afternoons, and suddenly with the unlimited it moved around to different places, locations and different times. So we were not only able to handle those higher loads in that moment, in the peak, but it was also that we were able to make better use of the network. ”

He added that the “engineering team of Verizon did a very good job.”

Those comments are noteworthy considering T-Mobile claimed that Verizon's network slowed 14% after launch of unlimited data—an allegation Verizon has denied.

Finally, Vestberg also commented on Verizon’s overall spectrum position.

“I think we’re sitting on a good position,” he said, noting the carrier would look to technologies like carrier aggregation to use its existing spectrum holdings to keep pace with customer demand.

Interestingly, Vestberg also said Verizon would look to shared spectrum in the 3.5 GHz CBRS band for additional spectrum. “We’re going to use that as well,” he said. “I think that combination puts us on a good position to handle our traffic.”