Verizon Envisions Steady Capex Despite Tax Reform

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Don’t expect Verizon to dramatically increase its capital expenditures this year based on the benefits from the tax reform legislation.

Verizon previously signaled its 2018 capex would likely be consistent with the past several years. It’s pegged at about $17 billion. Company Chairman and CEO Lowell McAdam told analysts on the Q4 2017 earnings call Tuesday, “Verizon has long supported corporate tax reform. We’re very pleased to see this legislation passed.” Tax-reform legislation will have a positive impact on cash flow from operations in 2018, of approximately $3.5 billion to $4 billion.

“We’re only 30 days into the tax reform process. We’re really trying to understand the implications and what we can accelerate. 5G is influencing where we put our capital dollars. I expect to see things pick up.”  

Verizon is using available funding to beef-up its network and look to the future with its 5G trials. The company has said it intends to commercially launch 5G in three to five cities this year, beginning with Sacramento. “Verizon has the spectrum bandwidth needed to provide true services of 5G and the engineering knowledge to provide a full suite of 5G services,” said McAdam.

The trials are going well, with more than 200 sites online. “The distances and throughputs are consistent up to about 2,000 feet,” he said. The carrier is seeing about 10 megabytes of throughput in trials. It’s placing fiber where needed. McAdam is meeting with mayors of other potential trial cities, “talking about what we’re going to be able to provide.” He expects it won’t be too much longer before Verizon can announce those other cities.

January 24, 2018   

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