The conference call for Verizon's third quarter earnings begins with the operator introducing the participants and providing instructions for the call. Brady Connor, Senior Vice President of Investor Relations, welcomes everyone and introduces the speakers, Hans Vestberg (Chairman and CEO) and Tony Skiadas (CFO). The Safe Harbor statement is mentioned, along with the disclosure of non-GAAP financial measures. The third quarter results have been posted on the Investor Relations website and Hans Vestberg expresses his satisfaction with the company's strong growth and improving profitability, crediting their successful strategy.

In the third quarter, our company has seen growth in both the consumer and business groups, thanks to our segmented agile strategy. Our wireless service revenue has increased, leading to higher adjusted EBITDA and free cash flow. We have also taken steps to strengthen our financial position, including reducing net debt and increasing our dividend for the 17th consecutive year. Despite economic uncertainty, we are confident in our ability to meet our financial guidance and have even announced higher free cash flow guidance for 2023.

The company has seen growth in its key areas of mobility, broadband, and private networks due to its networks, scale, and technology advantages. Their approach of putting the customer first and offering options and flexibility has led to improved postpaid phone net adds. The launch of myPlan has also been successful, with the addition of a third tier and increased premium mix and ARPA growth. The company's targeted and segmented market approach has also been successful during the launch of the iPhone 15. They anticipate continued momentum and exceeding postpaid phone net adds from the previous year.

Verizon Business Group continues to see muted upgrade levels, but they are still finding new ways to add customers through innovation and partnerships. They are also seeing growth in their value business and are committed to investing in it. In terms of broadband, they have had strong growth with over 400,000 new subscribers for the fourth consecutive quarter. Fixed wireless access remains a key area of strength for Verizon, with a high net promoter score and strong demand.

The speaker is excited about the strong performance of Fios, with 72,000 Internet net adds and continued growth in private network solutions. They also discuss the benefits of early access to C-band spectrum, which has allowed for faster speeds and better customer experience. The network has received multiple awards for its quality and will continue to improve as C-band is deployed in more areas. The network is seen as a key differentiator for the company.

In the third quarter, the company has shown progress in their three priorities of growing wireless service revenue, driving EBITDA and free cash flow, and maintaining financial discipline. They have successfully executed their plan and are on track to meet their financial guidance for 2023. The company has seen improvement in key metrics and strong financials, with a decrease in postpaid phone net losses and stable postpaid churn despite implementing pricing actions. Their segmented approach and promotional strategy have resulted in strong postpaid phone gross adds and a high-quality business.

In the third quarter, Verizon experienced a 1.2% increase in consumer ARPA and a 4.5% increase year-over-year. The company also saw strong growth in their Verizon Business sector, with 151,000 phone net adds and 434,000 broadband net adds. The addition of C-band spectrum will help continue this momentum. Fios Internet net adds were 72,000, and prepaid net losses improved from the second quarter. Consolidated revenue for the quarter was $33.3 billion, down 2.6% from the previous year.

The decline in revenue can be attributed to lower wireless equipment sales and postpaid upgrades. However, total wireless service revenue increased due to targeted pricing actions and growth in fixed wireless access. Adjusted EBITDA and adjusted EPS also saw slight increases compared to the previous year. Operating expenses were down due to lower equipment costs and the company is on track to deliver savings through cost efficiency programs. Adjusted EPS was slightly impacted by a reduction in capitalized interest.

In the third quarter, the company had a cash flow from operating activities of $10.8 billion, bringing the year-to-date total to $28.8 billion. This is an improvement from the previous year due to working capital improvements and healthy customer payments. Capital expenditures for the quarter were $4.1 billion and are expected to be at the upper end of the guidance range for the year. Free cash flow for the quarter was $6.7 billion, leading to a year-to-date total of $14.6 billion, which is higher than the previous year. As a result, the company has raised its 2023 free cash flow guidance by $1 billion to more than $18 billion. This provides flexibility for the company's capital allocation priorities, including a successful debt tender and an increase in dividends. The company also paid approximately $3.7 billion in spectrum clearing costs using operating cash flow, with minimal remaining payments to be made in 2024.

In the third quarter, the company's net unsecured debt improved by $4.3 billion and was $7.1 billion lower compared to the same time last year. The company has $4.2 billion in cash and a net unsecured debt to consolidated adjusted EBITDA ratio of 2.6 times. The CEO is pleased with the company's operational and financial progress and is confident in their ability to finish the year strong and decrease debt in 2024. He also highlights the company's strong network and free cash flow generation, and their goals for the final quarter of 2023. He believes that their C-band spectrum will further strengthen their network and is excited about future opportunities.

The company's strong performance has positioned it well to meet its financial targets and enter 2024 with a solid team and strategy. The speaker hands the call over for questions and the first question is about free cash flow and potential M&A in the fiber and wireless space. The speaker emphasizes the company's focus on service revenue, EBITDA, and cash flow, and the success of their strategy in building fiber in the Fios footprint. They also mention having one fiber in all major markets.

The company's current strategy is focused on acquiring broadband subscribers with fixed lines access, and they do not currently see a need to add fiber to their network. The company has generated strong cash flow in the third quarter and has raised their free cash flow guidance for the year. They expect to maintain a strong EBITDA profile, keep CapEx at a business as usual level, and make improvements in working capital. However, they anticipate higher interest costs and potential tax pressure in the future.

Hans Vestberg and Tony talked about the company's focus on generating strong free cash flow and reducing debt in 2024. They also discussed the progress of fixed wireless access and the additional C-band they acquired, which will be used to expand their network in urban, suburban, and rural areas. The company has a target of 4-5 million subscribers by 2025 and is confident in meeting this goal.

In the paragraph, Tony Skiadas and Simon Flannery discuss Verizon's pricing actions and their impact on service revenue. Skiadas mentions the success of the legacy mix and match in September, which will result in a $100 million benefit in the fourth quarter. He also highlights the growth in mobility and fixed wireless access, which has led to 384,000 net adds and 2.7 million subscribers. Flannery asks about the decreasing rate of upgrades, which Hans Vestberg attributes to temporary factors and expects to continue for the next few quarters. There is also a question about the impact of C-band on the business, to which Vestberg does not provide an update.

In the paragraph, Hans Vestberg discusses the upgrade rate and segmented approach on the consumer side, which has resulted in lower upgrade rates but increased gross adds. He also mentions the success of their model in terms of both customer satisfaction and bottom-line results. He then moves on to discussing the positive impact of C-band deployment on churn and step ups, as well as the increase in fixed wireless access. When asked about service revenue growth and ARPU drivers for next year, Vestberg does not provide specific numbers but mentions that postpaid phone ARPU is an important component and that they are optimistic about the future.

Hans Vestberg discusses the success of Verizon's wireless and business offerings. He mentions the changes made by the consumer group and Samper, such as decentralization and sales incentives, which have helped improve their proposition. He also mentions the addition of new value-added services for customers. Tony Skiadas adds that the pricing actions taken this year will have a positive impact on service revenue in the fourth quarter and next year.

Verizon is expecting an increase in volume in the consumer business and is focused on improving it. Fixed wireless access is also growing, with 384,000 net adds. The company is seeing a 70% premium mix with myPlan and the headwinds from promo amortization are starting to ease. Prepaid is still a headwind as they work to improve the business. Verizon plans to achieve its cost-cutting targets through 2025 and is on track to deliver $2 million to $3 million. The integration of TracFone is ongoing and Verizon is considering migrating some prepaid customers to their postpaid base.

The company is seeing significant progress in their managed services, customer care, and IT departments, with a focus on efficiency and cost savings. They are confident in meeting their goal of $2-3 billion in EBITDA savings by 2023, with $200-300 million expected this year. The team is also being disciplined in business wireline by avoiding low-margin deals. The value segment, specifically prepaid and TracFone, is expected to improve in the second half of 2023. The company's strategy is to build a strong network and capture a larger market share in the wireless industry.

The speaker is asked about the sustainability of fixed wireless served by macro sites and if their assumptions have changed regarding usage and the number of customers they can load onto the network. They are also asked about developments in millimeter wave technology and how they see it evolving in the next few years.

Hans Vestberg discusses the improved technology and capacity of fixed wireless access, and the vital role of millimeter wave in high density areas. He also mentions the potential for using millimeter wave in MDUs and the positive customer response to fixed wireless access.

In this paragraph, Hans Vestberg discusses the success of a new product and the company's plans to push it with their team. The next question is then answered by Tony, who talks about the use of fixed wireless access in both consumer and business segments and how it can help reduce costs. They also mention the growth of fixed wireless access customers in the current quarter.

Hans Vestberg discusses Verizon's success in three areas: mobility, broadband, and private networks. He explains that the company is seeing success in private networks, with proof-of-concept projects transitioning to commercial deals. He also mentions that the company has a strong pipeline and is starting to see larger deals, such as one with a logistics company. Tony Skiadas adds that the company has seen success in postpaid phone subscriber net adds in the business sector, and this growth is expected to continue.

Verizon is ramping up their logistics center to serve multiple customers. They have reduced lead times and have a strong ecosystem of products to offer. They expect to see significant revenues in 2025. Verizon is focused on using their spectrum to run private networks for different industries. The company's strong network reliability and performance is an important factor in attracting enterprise and small business customers. The team is pleased with the strong results and phone net adds, which validate the trust businesses have in the Verizon network even during uncertain times.

Tony, during a conference call, stated that they are seeing some pressure in certain sectors but are remaining disciplined and not chasing unprofitable deals. He also mentioned that FWA volumes are strong and they have had a significant number of net adds in the third quarter and year-to-date. Hans Vestberg, CEO, stated that he is happy with the choices he made in the leadership team and they are executing well. Craig Moffett asked about the contribution of wholesale wireless revenue from the cable industry.

Analysts asked about the benefits of the MB&O agreements with cable companies and potential risks to the revenue stream. Sprint representatives declined to discuss specific economics but stated that they are happy with the agreements and that they are profitable and growing. In terms of fixed wireless business, they have a goal of reaching 400,000 customers per quarter, as it aligns with their operational capabilities.

Hans Vestberg discusses how the company has decentralized its go-to-market strategy and is working with local communities and governments to capture demand for fixed-wireless access. He also mentions that the company is not holding back investments in order to roll out C-band quickly and improve KPIs. He also addresses media reports of hiring in the wireline side and mentions the company's focus on organic growth in fiber-to-the-home builds.

The speaker discusses the potential for growth and increased revenue in the telecommunications industry due to recent investments. They mention the importance of pricing and segmentation in order to monetize these investments.

The company is focused on providing the best offers for customers while also increasing profits. They have made price adjustments with new values for customers and are now focusing on increasing quantities. They are also growing their broadband business and cutting costs. They aim to get their EBITDA back to pre-auction levels and have a goal of achieving a net debt to EBITDA ratio of 2.25. Once they reach this goal, they will consider implementing a buyback program.

During the call, Tony reported that the team had reduced debt by 2.6 billion this quarter, and they plan to continue this trend with their cash flow. Hans also addressed the ongoing crisis in Israel and Palestine, expressing their stance against terrorism and announcing a $2 million donation to relief efforts. He also mentioned that Verizon is waiving international long distance charges for calls and text to the region. The call ended with a reminder to come together as a society and focus on what connects us.

This summary was generated with AI and may contain some inaccuracies.