5G on C-Band Deployment Going Well, Says Verizon CEO
Verizon’s stock closed Friday at $51.91, down 5.64%, after management lowered guidance slightly for full-year 2022 as the company released Q1 results. CEO Hans Vestberg said the company’s 5G build is going well, as is its deployment using C-band spectrum. Verizon predicted adjusted earnings will be at the low end of prior guidance of 2% to 3% growth, and revenue will grow at the lower end of its 9% to 10% forecast.
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“We continue to deploy C-band rapidly … which combined with our continued millimeter-wave rollout further establishes and strengthens our network,” Vestberg said. Some 14% of traffic in urban areas was on the 5G Ultra network at the end of the quarter, he said. Verizon had a 35% increase in millimeter-wave traffic between Q4 and Q1, and C-band traffic grew 155% from the end of February to the end of March, he said: “Where C-band is deployed, 30% of our wireless traffic uses that spectrum.”
5G device penetration is growing much more quickly than with 4G, Vestberg said. “We expect it will reach 60% of our wireless consumers by the end of 2023, up from 40%” at the end of Q1, he said. Vestberg said supply chain issues are challenging but haven’t slowed deployment. “We remain diligent in managing a complex global supply chain and count on our expertise to help us to deal with the unexpected,” he said.
The company reported a net loss of 36,000 postpaid phones last quarter, compared with AT&T’s 691,000 net adds reported Thursday (see 2204210061), and lost 80,000 Tracfone subscribers, the first full quarter the low-cost provider was under its umbrella. The losses were offset by 256,000 business postpaid phone net adds. Verizon reported 229,000 total broadband net additions, “the best quarter in over a decade,” driven by 194,000 fixed-wireless adds. Net income was $4.7 billion, down 12.4% from last year, and revenue was $33.6 billion, up 2.1%.
The wireless market in the U.S. is competitive, Vestberg said. “Competition is higher as we’ve seen now for a while, because we’re coming into the second phase of the 5G era,” he said: “We’re doing well. We’re doing upgrades and step-ups all the time.”
Vestberg said Verizon hasn’t felt a big effect from inflation. “We don’t know how this will impact us,” he said: “We’re going to see what’s going to happen, but clearly we are in a moment in the economy where we really don’t know how deep it’s going to impact.”
Bank of America’s David Barden presaged the Verizon drop, during an analyst call early Friday. “We’re celebrating how many 5G phones we have and how much C band we’re deploying,” he said: “But it’s not obvious that’s translating into something tangible that investors can celebrate in terms of financial reward.”
“Pity the lot of Verizon, elder statesman of the wireless industry,” MoffettNathanson’s Craig Moffett told investors. "AT&T is growing subscribers. T-Mobile is growing everything. Cable is taking share (even if Verizon does get a consolation prize in their wholesale revenues)," he said: “Today’s results illustrate the dilemma. Their post-paid phone subscriber growth metrics remain weak; they are losing subscribers. Their new Tracfone pre-paid business is also losing subscribers, and doing so rapidly.”