00:00 Speaker a
Okay, Yahoo Finance continues to report on the Communist Party of Goldman Sachs held in San Francisco. Special guest on my set is Hans Vestberg, chairman and CEO of Verizon. Hans, it's been a while.
00:10 Hans Bestberg
It's been a while.
00:11 Speaker a
Welcome to Yahoo Finance Sir.
00:12 Hans Bestberg
Thank you very much. It's great to be on Yahoo Finance as always.
00:15 Speaker a
Yes, no, I'm happy to meet you. So much is happening in the telecom industry this year. There's an acquisition and there's a price lock. Well, the competition is very fierce in terms of price. What is your message to investors here at a meeting like this?
00:27 Hans Bestberg
I think the main message for us is that Verizon is always pride in having the best network. We continue to have the best network. But more importantly, of course, we are building so many new growth vectors that we have never had before. That means getting the fibers that are in the final process to get approval in the first quarter of next year. Well, there is a perks system that we have for the consumer. Fixed growing wireless access. Well, we have the whole idea of reconsidering upfront payments. So, we were growing well, with seven different growth vectors we had never had before, closing the second quarter. Well, EBITDA was growing by over 4%. So I think our investors have begun to see that we have built a very resilient growth engine and topped with all the AI opportunities we have for our customers, such as AI Connect and all the fiber we have. So I think that's the main message, and of course we are very
01:36 Hans Bestberg
Our capital allocation and careful. On Friday, we announced our 19th year, which increased dividends to shareholders. Of course, it is important for us, and for us, that we remain that financial discipline and see shareholders coming back.
01:50 Speaker a
So I think so
01:51 Speaker a
That's the frontier, right?
01:52 Hans Bestberg
Yeah, it's a frontier deal that we have all federal improvements. There is a specific state. Several states remain. Well, I think of a few things. First of all, this was Verizon's previous footprint, which makes it easy to integrate because it has a cost synergy. Acquisitions are not easy, but this is probably on the easier side. Secondly, we have a revenue synergy as we suddenly converge that you have both mobility and broadband together. Um, and finally, of course, we go into fiber and have more options for our customers. When this is approved, it will have fibers in 31 states. So you need to update investors on how much they are trying to build, what the synergy is what makes the financial trajectory. So I'm going to do that as soon as I get more visibility into frontier closures. But um, we're excited and the good news is that the frontier has been really well since we announced this a year ago. That's a great admiration for the entire frontier team and how well they've competed.
02:59 Speaker a
How big do you think Verizon can get fiber?
03:02 Hans Bestberg
I think it's a bit early to say it. We initially said 30-40 million homes.
03:07 Hans Bestberg
Let's see where we go. And II wants to finish this, so can you be consistent with how much money you are going to spend? Which markets can you deal with? What does that do to my income? What capital allocation priorities do you need? I want to take a full picture of that. And we're planning on updating investors later this year as II is about to do the closure as soon as it has more visibility.
03:28 Speaker a
Well, I've heard you mentioned convergence, and I've heard all year round in the telecom industry, the convergence war. What is it?
03:34 Hans Bestberg
I don't know that it's war, but I think what we haven't seen before seems like customers prefer to have both mobility and broadband services from the same supplier. And of course, we both have broadband networks and wireless networks, which means we have an economics for the owner. So we see some of it. Therefore, convergence is increasing. But if you think about my offering, I fixed wireless access, which is basically 5G broadband. Typically these customers are wireless customers and FiOS customers, which are FIs of FIs. This is my fiber customer and is much lower penetration or not higher because A and frontier are even lower. So my opportunity is very much about my fiber customers being my wireless customers as well. And, um, these days we can offer Fios. This is our textile brand.
04:21 Speaker a
I am a customer. I'm still a customer.
04:22 Hans Bestberg
Ah, great, great. So, um, we can serve it in the store, but this was not before. And of course, the frontier footprint has thousands of UH or over 1,000 stores, and can also be used for footprints. So, all this will play into an exciting future. There, there are some verticals that can grow from fiber, fixed and wise access, all of the perks we have.
04:44 Speaker a
What do you think about some of these media companies that charters are involved in the convergence scene?
04:50 Hans Bestberg
No, I think they chose the model that is on our network. That's why Comcast and Charter provide wireless services to our customers based on our network. So for us, it is a strategy to build a network once and want as many profitable connections as possible. And both Charter and Comcast are great enterprise customers, and they provide them to their customers, but they do with our network. So for us, it's part of our strategy, serving them and serving their customers to UH with our own brand. Um, this is a white label, you can say.
05:27 Speaker a
Hans, I like about 20 interviews here at this meeting. They were all AI companies and II was thinking about this. I think these companies are sucking up a large amount of energy from the world and putting a lot of demand on their networks. What is this AI? It's not an instant, but what stress does this AI generation put on the telecommunications industry?
05:43 Hans Bestberg
No, it would be a great opportunity for us. So, what we need to understand is that AI is the first inning right now, or whatever you say in baseball, isn't my sport. Um, but they are now building data centers. The next step when you have all the equipment and everything is to connect. There is no better connection in the US when it comes to backhauling as Verizon. And then move some of these applications to the edge. There is all metro networks and edge computing. So for a company like us, this creates great opportunities. We call it AI Connect. Ultimately, AI needs to be connected to either enterprise or consumer customers. And that will be in the coming years. We have already placed ourselves in the area. The funnel has grown from $1 billion to $2 billion. So we work with not only all hyperscalers, but also large companies that need it.
06:30 Speaker a
Can these hyperscalers break the system? I'm an amateur. In other words, I just look at all the energy they are using.
06:36 Hans Bestberg
Of course, it's a massive energy use. We also consider why we are not only on the edge of the center, but also on the network, as well as on the distribution of AI over time. We sit in small data centers across the country with central offices that also have the power to offer AI companies. But they said that was the next step in building a big data center after completing their first big training on a large language model.
07:06 Speaker a
Hans, I'm sure you saw what it was. So, at some point do you consider SpaceX as an AA competitor in the mobile phone business?
07:18 Hans Bestberg
Well, first of all, I think the people on satellites have four different business cases. Of course, it helps us with a backhaul that doesn't have fibers. Because ultimately, you need to say it's a great opportunity. Here we will be looking to get more of that opportunity. Of course, they provide to fleets of aircraft and boats that I am not doing. The service is then called Direct to Device, which covers areas where Verizon is not covered. So we cover where everyone lives in the United States. However, there are many masses on land that are not even allowed to be built in national parks. I want customers to access text and call. Satellite companies like AST already offer their services by satellite companies that have Skylo on both iPhones and Android phones. This only creates another opportunity to work on the fourth opportunity. That's how I read it.
08:00 Speaker a
Um, do you see them as a threat to competition?
08:02 Hans Bestberg
I think they're more free to my offer. Of course, they can compete broadband with consumers. Well, there are many other competitors too. Of course, I'm not naive, they compete with us in several areas, but I think they are very free and have increased the opportunity to provide even better service to my customers.
08:18 Speaker a
$17 billion. That's a lot to the spectrum.
08:21 Hans Bestberg
Every billion is big. Yeah, it's big, II can't judge why they have value, but of course it's a lot of money.
