Verizon Communications Inc. · NYSE:VZ
Verizon Communications — Investor Day (2022)
76 slides from Verizon Communications's investor day presentation, May 27, 2022
Slide 1: Investor Day 2022
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 $18.0 $11.0 $6.00 $17.5 $5.50 $10.5 $17.0 $5.00 $10.0 $16.5 $4.50 $9.5 $16.0 $4.00 $9.0 $15.5 $3.50 $15.0 $8.5 $3.00 4017 4018 4019 4020 4021 2017 2018 2019 2020 2021 2017 2018 2019 2020 202
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
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 Tracfone· ~ OneFiber mmWave Bluejeans 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 I aws ~~ E1me..--1c:=E1 ~ ..._.., • SAMSUNG mO'-"'•I a~~on I project kuiper ~--'.Azure let V ISA verizon✓ Google f) Google Cloud laMc+ ~ NOKIA ~~ SAMSUNG &. ~f-/"+ ERICSSON i5 ---- 0 ROGERS. hulu ii5Fii + ==-= ':'
Slide 12: First-of-its-kind Strategic Partnership with Meta
First-of-its-kind Strategic Partnership verizon✓ ● 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 inf
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
Kyle Malady EVP & President, Global Network and Technology 16
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 §.Q 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 800 +856%YoY 10% 600 8% 6% 400 4% 200 2% 0 0% Jan 2019 Jan 2020 Jan 2021 Jan 2022 Jan 2020 Jan 2021 Jan 2022 mmWave is Vital to 5G Plan to Support and Scale Usage in D
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 ✓ 2
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 1"2.3x Capacity Enablers ● More spectrum ● Complementary usage patterns ● Bits per Hertz efficiency 2018LTE-A 2020 5G-NR 2022 5G-NR 20245G- NR 4TRX 64TRX Adv. mMimo 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 2021 • EOY 2022 • EOY 2023 • EOY 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 D D D D 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: Tami Erwin
Tami Erwin EVP & Group CEO Verizon Business @TamiErwinVZ 35 Verizon confidential and proprietary. Unauthorized disclosure, reproduction or other use prohibited.
Slide 36: Path to Accelerated Growth
Path to Accelerated Growth Q 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 YE 2021 YE 2025 4Q21 Delivered Highest Wireless Win Share in More than 2 Years; C-Band Accelerates I
Slide 39: Nationwide Broadband
Nationwide Broadband Fixed Wireless Access (FWA) Subscribers 14M 1M+ ~100K Expected FWA business YE 2021 YE 2025 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 cm) Honeywell Cooler Screens® nuro Audi ✓ © 2022 Verizon 41
Slide 42: Enterprise Private Networking Solutions
Enterprise Private Networking Solutions DD□ 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
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
Manon Brouillette EVP & Group CEO Verizon Consumer @brouilletm 46
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 Metered/ 2% + CAGR 55% Entry UNL 2021 ~$ 118 Outlook 9% Premium ~ 50% Unlimited 21% YE 2020 YE 2023 YE 2020 YE 2023 YE 2020 YE 2023 Exceeded Expectations 34% EOP 2021 33% Premium UNL EOP 2021 3.3% ARPA
Slide 52: Raising our Outlook
Raising our Outlook 5G Postpaid Postpaid Plan Mix ARPA Forecast Phone Penetration Metered/ 2.5% + CAGR Entry >80% UNL 2022 >60% ~$ 122 Outlook Premium Unlimited 33% ~55% ~ 70% YE 2021 YE 2023 YE 2025 YE 2021 YE 2023 YE 2025 YE 2021 YE 2023 YE 2025 © 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 3 % CAGR 2021 2025E © 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
Matt Ellis EVP & Chief Financial Officer 62
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 □IJ□ 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 ~ ~ "':(a ~ 5G J~ Mobility ·..... Nationwide Broadband ___., g MEC&B2B A Solutions © ~ Value Market Network Monetization 2023 3%+ YoY 2024+ 4% YoY Proof Point: FWA Scaling Quickly. Positioned to Deliver
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% $124 SG Mobility Business • Nationwide Broadband MEC & B2B Solutions • Value Market Consumer • Network Monetization 202 1 2025 * Excludes impact from Verizon Media ✓ © 2
Slide 67: 5G Mobility Growth Drivers
5G Mobility Growth Drivers 5G Mobility Growth Outlook* Expected Key Drivers Consumer $7B+ • 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 •
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 • Mergers & Acquisitions EBIT
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