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Verizon’s Hans Vestberg provided an update on the company’s strategy at a J.P. Morgan conference today
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It’s making progress in postpaid wireless, which will serve as a playbook for the prepaid business
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AI is already well understood by Verizon’s executive team, and they’re implementing new generative AI solutions in customer care
If Verizon’s postpaid wireless turnaround is in the first or second inning, its progress in turning around the prepaid group is akin to the team just entering the field.
That’s according to Verizon Chairman and CEO Hans Vestberg, who was quizzed about the company’s progress at the J.P. Morgan Global Technology, Media and Communications Conference 2024 in Boston today.
It’s no secret that Verizon has been underperforming in postpaid wireless and hemorrhaging prepaid customers. Postpaid net adds cratered in 2022 and prepaid losses have been occurring ever since Verizon jumped into the prepaid space in a big way with the acquisition of TracFone in 2021.
Vestberg is the first to admit Verizon did not perform well in wireless postpaid in 2022. He said, “We had the wrong offerings. We did a lot of changing in ’22,” when Vestberg took over the consumer division after the ouster of Manon Brouillette.
Ultimately, the transition led to a better place because “I knew what type of person I wanted to get in there,” and he was happy that Sowmyanarayan Sampath was up for the job.
Vestberg’s entire executive team is new, and he said he feels they’re in a “way better position” than when he started his current position six or seven years ago.
Some of the changes Verizon made in postpaid include the introduction last year of MyPlan, which offers $10 perks like Apple TV+ and Disney. “That was the beginning of a new platform we have,” he said, adding that Verizon also changed incentives for sales reps and introduced more localized marketing.
A lot of those changes were done at the end of last year, and they’ve seen sequential improvement in the wireless consumer postpaid business since then.
That said, January was “really slow” for the industry, then it picked up in February and March. Both wireless consumer and business momentum continued into April, he said.
Part of the overall slowdown has to do with fewer device upgrades because people are carrying their phones for longer – for three or four years – and don’t feel compelled to upgrade every year or two. In addition, the switching pool is lower. Part of that has to do with immigration, as fewer people are entering the market looking for new service options.
New moves in prepaid
Two of Verizon’s prepaid brands – Visible and Total by Verizon – are performing according to plan, whereas the others are not. Visible is the all-digital brand while Total by Verizon is the high end of prepaid; Total by Verizon is on somewhat of a tear, opening around 900 stores in about one and a half years.
With the TracFone acquisition, “we knew we would lose an amount of customers because they were running on other carriers’ networks,” he said. As soon as that played out, “I think we are positioning ourselves way better."
Verizon is now using the same playbook on prepaid that they used for postpaid: new management, new plans and new incentives. “We are just at the beginning of that,” he said.
“If we were in the second inning on postpaid wireless, we’re probably just going into the first inning” on prepaid, he said. “We are definitely not in the playoffs in hockey.”
ACP going away
ACP is important for the U.S. economy, and it’s essential for low-income families to have broadband/wireless, he said.
Verizon served about 1.1 million ACP customers, and it doesn’t expect any impact on its bottom line as ACP disappears. However, given that ACP served about 23 million total customers in the U.S., that spells opportunity for Verizon’s Fios, fixed wireless access and prepaid offerings.
“We’re going to continue to see that we do right for our low-income families with offerings that we have, but we’re going to see how it pans out over the next six months,” he said.
Mobile Edge Compute & AI
Amidst a sea of “AI everywhere,” he set the record straight: “My team is almost getting upset when I start talking about AI because they’ve been onto AI for 10 years,” which means what they’re doing right now is just a natural progression, he said.
AI combined with Mobile Edge Compute (MEC) is a “great opportunity for us,” he said, and Verizon is in conversations with “many of the most advanced companies” on that score.
On the generative AI side, Verizon this quarter launched four products that are in use – including faster recognition of calls that come into customer service so that they immediately know whether it’s a billing, technology or other issue, thereby lowering the amount of time customers need to spend on the phone with customer care.
C-band plays on
Verizon spent $53 billion on C-band spectrum, and it’s still rolling it out. So far, it’s probably using only on average 80 MHz of the 160 MHz at its disposal, mostly in big cities and now moving to suburban and more rural areas.
Where Verizon has deployed C-band, it sees lower churn, more pick-up on premium plans and the ability to sell FWA.
“There’s a lot left on that tank,” he said, referring to the C-band deployment.