Verizon Communications ((VZ)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Verizon Communications’ recent earnings call conveyed a sentiment of cautious optimism, underscored by strong financial performance and subscriber growth. The company has made strategic advancements, particularly in the AI domain, despite facing challenges such as promo amortization and pressures on wireline revenues. Looking towards 2025, Verizon maintains a positive outlook.
Strong Financial Performance
Verizon showcased its financial prowess by exceeding its own guidance, with a 3.1% increase in wireless service revenue and a 2.1% growth in adjusted EBITDA. These figures not only surpassed the midpoint of their guided ranges but also reflect Verizon’s robust financial health and operational efficiency.
Subscriber Growth
The company experienced significant subscriber growth, adding nearly 2.5 million postpaid mobility and broadband subscribers in 2024. This includes approximately 900,000 postpaid phone net additions and a positive turnaround in prepaid net adds, indicating a strong market position and customer retention strategy.
Broadband Market Share Increase
Verizon reported a notable increase in broadband subscribers, adding nearly 1.6 million, with fixed wireless access playing a crucial role. This contributed to a growing market share in 2024, showcasing the company’s competitive edge in the broadband sector.
AI Strategy and Verizon AI Connect
Verizon launched Verizon AI Connect, a strategic initiative leveraging existing assets to meet the growing demand for AI applications. With a potential total addressable market of $40 billion, this move positions Verizon as a key player in the AI landscape.
Debt Reduction and Dividend Increase
Continuing its trend of financial discipline, Verizon reduced its debt, closing the year with a net unsecured debt to adjusted EBITDA ratio of 2.3x. Additionally, the company increased its dividend for the 18th consecutive year, reinforcing its commitment to returning value to shareholders.
Promo Amortization Headwinds
Promo amortization headwinds are expected to peak in 2025, affecting growth rates. However, Verizon maintains that the underlying customer economics remain healthy, suggesting these challenges are manageable in the long term.
Pressure in Business Wireline Revenues
Verizon continues to face challenges in business wireline revenues, which partially offset growth in other areas. This persistent pressure highlights the need for strategic adjustments in this segment.
Higher Tax Burden
The company is dealing with a higher tax burden due to bonus depreciation, which impacts free cash flow. Despite this, Verizon remains focused on optimizing its financial structure to support ongoing growth.
Forward-Looking Guidance
Looking ahead to 2025, Verizon projects wireless service revenue growth between 2% and 2.8%, driven by strong postpaid consumer phone net additions and fixed wireless access. Adjusted EBITDA is expected to grow by 2% to 3.5%, despite pressures in business wireline revenues. The company anticipates flat to slightly increasing adjusted earnings per share, with capital spending forecasted between $17.5 billion and $18.5 billion. Free cash flow is projected to range from $17.5 billion to $18.5 billion, excluding the Frontier acquisition impact. Verizon’s strategic focus on AI, through initiatives like Verizon AI Connect, is expected to drive future growth.
In conclusion, Verizon’s earnings call highlighted a cautiously optimistic outlook, bolstered by strong financial results and strategic initiatives in AI. Despite facing certain challenges, the company appears well-positioned for continued growth and market leadership in 2025.
