Verizon Communications Inc. · NYSE:VZ
Verizon Communications — Investor Day (March 2022)
76 slides from Verizon Communications's investor day presentation, Mar 3, 2022
Slide 1: Verizon Investor Day 2022
© 2022 Verizon 1
Slide 2: “Safe Harbor” Statement
“Safe Harbor” Statement NOTE: In this presentation we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of
Slide 3: Network-as-a-Service Strategy
Network-as-a-Service Virtualized Personalized Distributed Metaverse IoT Network 21st Century Infrastructure Mobility Broadband Cloud Network-as-a-Service Strategy Our Network is the Foundation for the 5G Economy 3
Slide 4: Key Verizon Milestones
Key Verizon Milestones 2019 2020 2021 2022 mmWave Acquisition Nationwide 5G C-Band Acquisition C-Band Deployment Verizon Intelligent Public MEC Launch TracFone Acquisition Mix & Match 4.0 Edge Network with AWS VMG Divestiture Verizon Ultra Internet First to 5G Private MEC Launch for Home & Business
Slide 5: Delivering Financial Performance and Growth
Delivering Financial Performance and Growth Wireless Service Revenue Dividends Adjusted EPS $B $B $ per Share 5
Slide 6: 5 Vectors of Growth
5 Vectors of Growth 5 Vectors of Growth Drive Verizon’s Performance 6
Slide 7: Financial Outlook Overview
Financial Outlook Overview Revenue Growth Strong Margins Capital Intensity 4% annual service NaaS to drive long-term Reduction below and other revenue consolidated Adjusted pre-C-Band levels growth in 2024 & EBITDA growth at or above beyond revenue growth Leverage Return of Capital ESG Achieve targe
Slide 8: Rima Qureshi, EVP & Chief Strategy Officer
Rima Qureshi EVP & Chief Strategy Officer @QureshiVZ
Slide 9: Network-as-a-Service Framework
Network-as-a-Service Framework Network-as-a-Service Disrupt Broadband New Market Business Models Leadership in Mobility Fundamentals Network Leadership Customer-Driven Models Trusted Brand Financial Discipline 9
Slide 10: Investments Enabling Our Strategy
Investments Enabling Our Strategy Network Spectrum Acquisition iEN C-Band OneFiber mmWave Strategic Investments are the Key Enablers that Accelerate our Strategy 10
Slide 11: Building an Ecosystem Around Us
Building an Ecosystem Around Us Cloud & Connectivity OEMs Integrators Global Partners 11
Slide 12: First-of-its-kind Strategic Partnership
First-of-its-kind Strategic Partnership ● The Metaverse represents a new use case of Verizon’s multi-purpose network ● Partnership to determine: ○ Verizon’s network requirements to support XR cloud rendering and low latency streaming ○ Measure impact of edge computing with Verizon’s MEC infrastructu
Slide 13: Network-as-a-Service Overview
Network-as-a-Service Overview + Drive new customer + Capture share + Build on the first mover + #1 Share + Return on invested growth advantage capital + Fiber + Increase revenue via + Edge computing and + Wholesale, MVNOs, and step-ups, premium + Fixed Wireless next-gen enterprise other strategic off
Slide 14: Addressable Market
Addressable Market $460B $120B $340B Growth 2021 2026E $120B Serviceable Addressable Market Expansion over Next 5 Years 14
Slide 15: More Pathways to Growth
More Pathways to Growth ● Consistent strategy driving execution ● Portfolio of assets designed to compete ● Vibrant ecosystem, redefining our market ● Multiple new paths to growth 15
Slide 16: Kyle Malady, EVP & President, Global Network and Technology
Kyle Malady EVP & President, Global Network and Technology
Slide 17: Global Networks & Technologies Enable NaaS
Global Networks & Technologies Enable NaaS Build the world’s Deploy the world’s Drive best Develop the world’s best networks best systems efficiency best culture 4 Pillars Serve as Foundation for NaaS Strategy and Underpin the 5G Economy 17
Slide 18: Multi-Purpose Network
What Makes Us Different Core Multi-Purpose Network Fiber RAN Technology 18
Slide 19: Verizon Intelligent Edge Network Vision
Verizon Intelligent Edge Network Vision Supports NaaS 1 93% Reduction in Edge Routers 90% Reduction in Transport Core Network Elements iEN Driving over $1B in Cumulative Benefits 19
Slide 20: Virtualization is Transforming Networks
Virtualization is Transforming Networks Best-in-class Owned Webscale World leader for latency Platform VRAN deployment RAN Core Virtualization Layer Compute Network Storage Verizon is a World Leader in VRAN 20
Slide 21: Fiber is Fundamental to NaaS
Fiber is Fundamental to NaaS Sites on Verizon Fiber Fios Open for Sale YE 2021 YE 2021 45% 16.5M Expect 50% YE 2022 Expect Incremental 550K in 2022 Owned Fiber Assets Improves Performance and Reliability 21
Slide 22: Fiber Owner’s Economics
Fiber Owner’s Economics Expected Backhaul Increase Owner’s Economics Benefits 10x ~$300M Access cost savings in 2021 Fiber Owner’s Economics Drives Cost Efficiency 22
Slide 23: Transforming the Network
Transforming the Network 4.5M Circuits Off Copper 60M kWhs Saved 36 Wire Centers Converted to Fiber 11% Copper Trouble Reduction YoY due to network transformation Copper to Fiber Transformation Drives Additional Cost Savings 23
Slide 24: Industry Leading RAN Design
Industry Leading RAN Design mmWave High density + Urban + Enterprises + Industrial Mid-Band Suburban + In-building + Complements mmWave Low-Band Wide Coverage Rural + Delivers IoT over distances Satellite Global Coverage +Enterprise grade connectivity + Automobile + IoT + Backhaul & Broadband + 5G I
Slide 25: mmWave Usage is Growing Fast
mmWave Usage is Growing Fast mmWave Usage Growth mmWave Usage in Deployed Footprint Avg. daily usage (TB) Percentage usage on mmWave mmWave is Vital to 5G Plan to Support and Scale Usage in Dense Areas 25
Slide 26: C-Band Performance
C-Band Performance Peak DL speeds Peak DL speeds on C-Band with aggregation Ultra Speed >900 >1 Mbps Gbps Unique devices connected to C-Band network Massive C-Band Spectrum (MHz) C-Band Spectrum (MHz) 12M Capacity 60 Today 161 2023+ C-Band off to a Fast Start with Better than Expected Performance 26
Slide 27: Efficient Use of One Network for Mobility and FWA
Efficient Use of One Network for Mobility and FWA Peak Mobility Usage Peak FWA Usage 12PM – 7PM – 6PM While customers are at work 9PM While customers are binge watching video Mobility & FWA Peak Usage is Complementary 27
Slide 28: Spectral Efficiency Forecast with C-Band
Spectral Efficiency Forecast with C-Band Capacity Enablers ● More spectrum ● Complementary usage patterns ● Bits per Hertz efficiency 5G Spectrum is 80% more Efficient than LTE 28
Slide 29: C-Band Coverage Exceeding Expectations
C-Band Coverage Exceeding Expectations 2021 100M 175M 250M+ Investor Day Guide POPs POPs POPs EOY EOY EOY EOY 2021 2022 2023 2024 2022 175M 250M+ 100M+ Investor Day Guide POPs POPs POPs C-Band Deployment is Accelerating Faster than Original Build Plan 29
Slide 30: Network Leadership in MEC & Multi-Cloud Services
Network Leadership in MEC & Multi-Cloud Services Cloud Provider 1 Cloud Provider 2 Customer Cloud MEC iEN: Multi-Cloud Customer Leverage Intelligent Edge Network to Connect Customers to Multiple Cloud Environments 30
Slide 31: 5G Services Evolution
5G Services Evolution Capabilities LTE, 5G Broadband, Fixed Wireless, Voice over LTE Consumer & Private Network Slices Technologies Evolved Packet Core Non-Standalone Standalone Ultra Reliable Cloud Native 5G Packet Core 5G Core Evolution will Enable Network Slicing Use Cases as the Ecosystem Evolve
Slide 32: Advanced Fios Network
Advanced Fios Network Multi-gig up to 10 Gbps symmetrical using NG-PON2 Speed Efficiency Multi-Purpose Reliability Upgraded Technology Enhances Fios Customer Speeds © 2022 Verizon 32
Slide 33: Internet of Things
Internet of Things ● Cloud integration and digitization ● Market-leading platform ● Coverage ● Low latency ● Real-time Unique Network Capabilities Make Verizon an Ideal IoT Partner © 2022 Verizon 33
Slide 34: More Pathways to Growth
More Pathways to Growth ● Network leadership in core, fiber, RAN and technology ● Reliable, differentiated and scalable platform ● Top engineering talent © 2022 Verizon 34
Slide 35: Verizon confidential and proprietary. Unauthorized disclosure, reproduction or other use prohibited.
35 Verizon confidential and proprietary. Unauthorized disclosure, reproduction or other use prohibited.
Slide 36: Path to Accelerated Growth
Path to Accelerated Growth Be our customers’ Build on our strong Expand into new choice for their digital leadership position growth categories transformation journey Network-as-a-Service © 2022 Verizon 36
Slide 37: Market Leader in Mobility and Fiber Broadband
Market Leader in Mobility and Fiber Broadband 44% 49% Wireless Share B2B Fios Share #1 in Wireless across #1 broadband provider in Enterprise, Public Sector & SMB Fios footprint © 2022 Verizon 37
Slide 38: 5G Mobility
5G Mobility 5G Phone Adoption Outlook Expected 5G Mobility Drivers 80% ● Continued growth in premium plan step-ups ● Suite of above network products ○ Security 18% ○ One Talk ○ Unified Communications YE2021 YE2025 4Q21 Delivered Highest Wireless Win Share in More than 2 Years; C-Band Accelerates Ind
Slide 39: Nationwide Broadband
Nationwide Broadband Fixed Wireless Access (FWA) Subscribers 14M 1M+ ~100K Expected FWA business YE2021 YE2025 locations covered by 2025 FWA as Primary Broadband Access for Every Customer Segment and New Use Cases © 2022 Verizon 39
Slide 40: Verizon Addressable Opportunity by 2025
Verizon Addressable Opportunity by 2025 $30B • Rapid ecosystem development Private Networks + Edge Compute + Enterprise Solutions • First and only player with all 3 major cloud platforms • Seamlessly integrate Public and Private MEC into hybrid, multi-cloud solutions © 2022 Verizon 40
Slide 41: 5G Enables Increased Sensor Capacity & Accelerated Adoption
5G Enables Increased Sensor Capacity & Accelerated Adoption Continued double-digit IoT connections growth expected © 2022 Verizon 41
Slide 42: Enterprise Private Networking Solutions
Enterprise Private Networking Solutions Increased Revenue Cost Network Operations Productivity Opportunity Savings Customization Monetization Gateway to Enable 5G Private Edge Computing © 2022 Verizon 42
Slide 43: Private Networking Use Cases
Private Networking Use Cases In-building coverage Financial Industrial Logistics with Hybrid MEC Services Operations Automotive Education/ Sporting Events Universities & Entertainment Superior Network Positions Verizon to Drive the Market to Accelerated Adoption of Private Networks © 2022 Verizon 43
Slide 44: Business Transformation
Business Transformation 1 New Customers & Revenue Acceleration 2 Enhanced Customer Experiences & Digital 3 Strong Cost Control & Business Simplification Initiatives Targeting 25% EBITDA Margin © 2022 Verizon 44
Slide 45: More Pathways to Growth
More Pathways to Growth ● Building the 21st Century infrastructure: ○ Mobility, Broadband & Cloud ● Accelerating Growth with Many Ways to Win ● Delivering Transformational Customer Outcomes 45
Slide 46: Manon Brouillette, EVP & Group CEO Verizon Consumer
Manon Brouillette EVP & Group CEO Verizon Consumer @brouilletm
Slide 47: Even Stronger Consumer Group than 12 Months Ago
Even Stronger Consumer Group than 12 Months Ago 1 2 3 Diversified Home broadband Connecting everyone, brand portfolio coverage everything, everywhere 100M POPs mobility C-Band coverage 30M FWA HHs coverage Verizon Prepaid 47
Slide 48: Go to Market Strength
Go to Market Strength Customer Value Prop Product Lifetime Value Experience Differentiation Innovation Management Wholesale Omni-Channel Capabilities Brand Equity Network-as-a-Service © 2022 Verizon 48
Slide 49: Winning with Mix & Match 4.0 and C-Band
Winning with Mix & Match 4.0 and C-Band Expanded 5G Ultra Unlimited premium data The most hotspot 6 entertainment Wideband coverage with no speed caps capacity offered by any subscriptions carrier Mix and Match Offers Flexibility and Efficiency that brings more Value to Customers © 2022 Verizon 49
Slide 50: Personalized Customer Base Management
Personalized Customer Base Management ARPA & Step-up Exclusive Personalized Strategy Partnerships Upgrade Offers Maximize Yield Drive Lifetime Value Create Loyalty © 2022 Verizon 50
Slide 51: Exceeding 2021 Investor Day Targets
Exceeding 2021 Investor Day Targets 5G Postpaid Postpaid Plan Mix ARPA Forecast Phone Penetration 2021 Outlook Exceeded Expectations 34% EOP 2021 33% Premium UNL EOP 2021 3.3% ARPA growth to $122.30 FY 2021 © 2022 Verizon 51
Slide 52: Raising our Outlook
Raising our Outlook 5G Postpaid Postpaid Plan Mix ARPA Forecast Phone Penetration 2022 Outlook © 2022 Verizon 52
Slide 53: YE 2025 Nationwide Broadband Targets
YE 2025 Nationwide Broadband Targets 50M 18M Expected HHs covered FWA Expected Fios Open For Sale Opportunity to be THE Nationwide Broadband Provider in the U.S. © 2022 Verizon 53
Slide 54: Winning with Mobile & 5G Home
Winning with Mobile & 5G Home No contracts, 50% off pricing for Self set-up Base & Acquisition Increase 5G Open data caps or extra Mobile & Home enhancements management for Sale (OFS) fees, equipment customers to support stress included free switching Disrupting the Industry with Unparalleled Experie
Slide 55: Home Broadband Subscribers
Home Broadband Subscribers 6.5M 11M YE 2021 2025 E Total Broadband Subscribers = Fios + Fixed Wireless Access © 2022 Verizon 55
Slide 56: Scaling Value Drives Churn Benefits
Scaling Value Drives Churn Benefits Incremental Improvement in Consumer Phone Churn 16bps Active Content Subscription 34bps Premium Unlimited + Broadband © 2022 Verizon 56
Slide 57: Unlocking Substantial Value
Unlocking Substantial Value Go to Market Agility & Lean Structure Value Premium Market Market Amplify Mission with New Products, Services and Innovation © 2022 Verizon 57
Slide 58: Verizon Value Market Outlook
Verizon Value Market Outlook Prepaid Wireless Service Revenue © 2022 Verizon 58
Slide 59: Network Monetization
Network Monetization Strong Revenue Healthy Margins Open for Business Stream Network-as-a-Service Strategy Creates an Additional Pathway to Revenue Growth © 2022 Verizon 59
Slide 60: Operational Excellence Model
Operational Excellence Model Better Customer Experience Financial Go to market Imperatives Portfolio Lower Costs to Serve Consumer Strong Margins Omni Operations © 2022 Verizon 60
Slide 61: More Pathways to Growth
More Pathways to Growth ● Multiple paths to grow ● Leading all customer segments ● Disrupting home broadband nationwide ● Agility and nimbleness ● Customer-centric model 61
Slide 62: Matt Ellis, EVP & Chief Financial Officer
Matt Ellis EVP & Chief Financial Officer
Slide 63: 2021 Goals Delivered
2021 Goals Delivered ● Acquired C-Band and achieved 100M POPs Target ● Completed TracFone acquisition ● Divested non-core assets ● Achieved financial targets 63
Slide 64: Platform for Accelerating Performance
Platform for Accelerating Performance Revenue Operating Capital Free Cash Flow Capital Growth Leverage Efficiency Conversion Allocation Model © 2022 Verizon 64
Slide 65: 5 Vectors Drive Accelerating Revenue
5 Vectors Drive Accelerating Revenue Expected Annual Service & Other Revenue Growth 2022 ~3%* YoY 2023 3%+ YoY 2024+ 4% YoY Proof Point: FWA Scaling Quickly. Positioned to Deliver 150K+ FWA Adds in 1Q22 *Organic (excludes Verizon Media Group and TracFone) © 2022 Verizon 65
Slide 66: Revenue Growth Drivers
Revenue Growth Drivers Expected Service & Other Revenue Growth ($B) Vector Contributions to 2022-2025 Growth Growth rates 2.2%* 4% Business Consumer * Excludes impact from Verizon Media © 2022 Verizon 66
Slide 67: 5G Mobility Growth Drivers
5G Mobility Growth Drivers 5G Mobility Growth Outlook* Expected Key Drivers Consumer • 2.0%+ ARPA CAGR thru 2025 (excl. FWA) • ~2/3 from Premium mix and ~1/3 from products • Growth from subscribers and accounts • Customers with 5G phones are 2.5X more likely to take premium unlimited Business • Grow
Slide 68: Nationwide Broadband Growth Drivers
Nationwide Broadband Growth Drivers Broadband Revenue Outlook* Expected Key Drivers FWA • 50M Households Covered by YE 2025 • 14M Businesses covered by YE 2025 • 4M–5M Subscribers by YE 2025 Fios • >18M Open For Sale by YE 2025 • ~8M Internet Subscribers by YE 2025 • Consumer Internet-only mix grows
Slide 69: MEC & B2B Solutions Growth Drivers
MEC & B2B Solutions Growth Drivers MEC & B2B Solution Revenue Outlook* Expected Key Drivers • IoT revenue grows from $1.5B+ in 2021 driven by double-digit connections CAGR thru 2025 • ~$1B of growth from Public MEC by YE 2025 • Scaling private networks, delivering private MEC and solutions revenue *
Slide 70: Value Market Growth Drivers
Value Market Growth Drivers Prepaid Revenue Growth Outlook Expected Key Drivers • Growing subscriber base over long term • Shift to unlimited plans and growth in value added services driving ARPU • Migrating 6M+ off-net subs helps drive ~$1B in synergies * Tracfone contribution only includes incremen
Slide 71: Operating Leverage Plan
Operating Leverage Plan Operating Scale Network Adjusted EBITDA from Multiple Owner’s Growth at or Above Revenue Sources Economics Revenue Growth $300M 2021 Fiber Access Cost Savings and Annualized Savings Approaching $1B by 2025 © 2022 Verizon 71
Slide 72: Improving Capital Efficiency over Time
Improving Capital Efficiency over Time Capex Outlook ($B) Expected Key Drivers • C-Band accelerated $10B spend concludes in 2023 • $3B run-rate savings from key programs by 2024 ○ Less reliance on 4G LTE capacity over time ○ Completion of One Fiber core build in 2023 ○ iEN efficiencies result in virtual
Slide 73: Target Leverage Ratio
Target Leverage Ratio Leverage Ratio (Net Unsecured Debt/Adjusted EBITDA) Revenue Growth plus Capital Intensity Reduction Support Deleveraging © 2022 Verizon 73
Slide 74: Capital Allocation Model
Capital Allocation Model 1 Investment 2 Commitment to 3Strong 4 Share in the Business Dividend Balance Sheet Repurchases • Capital Expenditures • 15 consecutive years of • Target net unsecured • Efficient return of • Spectrum increases debt to adjusted excess cash flow to EBITDA range of shareholders
Slide 75: More Pathways to Growth
More Pathways to Growth ● Clear path to 4% annual service and other revenue growth in 2024+ ● Adjusted EBITDA growth at or above revenue growth ● Efficiencies drive lower capital intensity and overall spend ● Target leverage ratio remains at 1.75x – 2.0x with share repurchases considered at 2.25x 75
Slide 76: © 2022 Verizon
© 2022 Verizon