Verizon (NYSE: VZ) showed mixed metrics in its 3Q23 results but portrayed a positive outlook for the balance of the year and into 2024. Consolidated revenue was $33.3 billion, down nearly three percent year-over-year, mainly due to declines in mobile device sales. Adjusted EBITDA was $12.2 billion, up both sequentially and YoY. Free cash flow through 3Q23 of $14.6 billion has already exceeded the company’s full-year 2022 FCF of $12.4 billion.
Aggregate capital expenditures for the quarter were $4.1 billion, bringing the total capex through nine months of 2023 to $14.2 billion, down 10 percent compared to $15.8 billion for the same period in 2022. Nonetheless, the company expects full-year 2023 capex to be at the high end of its $18.25-19.25 billion guidance range. This suggests that the 4Q23 capex will be around $5 billion. Much of that investment will be for C-band and fiber builds.
The company is working on three strategic fronts – wireless, broadband, and private networks.
Wireless service revenues for 3Q23 increased three percent year-over-year to $19.3 billion, reflecting an increase in new customers and customers moving to higher value plans. The company added 100,000 retail postpaid phones and 581,000 retail postpaid connections but dropped 207,000 prepaid connections. The company’s total postpaid and prepaid connections grew less than one percent YoY to 143.6 million. Verizon is the largest U.S. mobile network operator, by retail subscriber count, according to Inside Towers Intelligence.
During the quarter, Verizon obtained early access to its remaining 5G C-band spectrum. In urban markets, where C-band is already deployed, the company is expanding mobile data throughput capacity through software upgrades, delivering two to three times more spectrum depth than originally deployed in the top 46 PEAs, Inside Towers reported. It expects to complete urban deployments by the end of 2023, then move into suburban and rural markets in 2024 and 2025.
Fixed wireless access is another growth front. The company added 284,000 consumers and business FWA connections in the quarter, bringing the total to 2.7 million connections. The company is still projecting 4-5 million FWA connections by 2025, but may consider adding FWA in select markets where it believes it can gain a competitive advantage or take market share.
Verizon is using both C-band and millimeter wave frequencies in FWA applications for augmenting mobile data-handling capacity in high traffic areas, and in multi-dwelling units.
FiOS Internet broadband net additions in the quarter brought the total fiber-connected locations to 7.2 million. Verizon says that FiOS remains an attractive, high-quality service that competes favorably with cable and other wireless and wireline broadband services.
Verizon sees new growth opportunities in private networks, especially where it can utilize licensed spectrum for a more secure and differentiated experience for the end-users. The company is running proof-of-concept trials with a number of organizations and claims it is building a substantial sales funnel in the process.
Hans Vestberg, Verizon Chairman & CEO comments on the company’s private networks initiative, “We are not going to see any significant revenues that have an impact on Verizon overall in ‘24. We are going to see that in ‘25, but why it’s important … this is an area we have never been into.”
The company says that Enterprise and Government customers are seeing the benefits of the capacity, security, and low latency of a private network. Moreover, Verizon can supply an ecosystem of products, infrastructure, modem, chipsets, phones and radios that can serve different use cases.
By John Celentano, Inside Towers Business Editor
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