Verizon - Earnings Call - Q2 2025

Executive Summary

• Revenue rose 5.2% year over year to $34.50B; adjusted EPS was $1.22, supported by a record consolidated adjusted EBITDA of $12.81B. Total wireless service revenue reached $20.95B, up 2.2% YoY.
• Verizon raised 2025 guidance: adjusted EBITDA growth to 2.5–3.5%, adjusted EPS growth to 1.0–3.0%, cash from operations to $37–$39B, and free cash flow to $19.5–$20.5B, citing strong execution and a $1.5–$2.0B tax reform benefit.
• Broadband momentum continued with 293K net adds (278K FWA), passing 5.1M FWA subscribers; total broadband connections exceeded 12.9M.
• Near-term catalysts: guidance raise and cost actions (voluntary separation savings, copper decommissioning, managed services), AI-enabled customer care launch on June 24, and progress toward the Frontier acquisition close (early 2026).

What Went Well and What Went Wrong

What Went Well

• Record consolidated adjusted EBITDA ($12.81B) and strong adjusted EPS ($1.22); management emphasized “resiliency” and operating leverage from service revenue and cost initiatives.
• Broadband share gains: 293K total net adds in Q2, FWA net adds of 278K with the base surpassing 5.1M; tracking toward 8–9M FWA subs by 2028.
• Business segment operating income +27.6% YoY and EBITDA margin expansion to 22.9%; contributions from private 5G and AI Connect and disciplined deal posture.
  Quote: “Consolidated adjusted EBITDA in the quarter was $12.8 billion, which is the highest we have ever reported” — CFO Tony Skiadas.

What Went Wrong

• Consumer postpaid phone net losses of 51K; postpaid phone churn remained elevated at 0.90%, reflecting lingering effects from Q1 pricing actions and competitive intensity.
• Business phone net adds slowed to 42K vs 135K in the prior year quarter, largely due to public sector pressures expected to persist through H2 (subsiding toward year-end).
• Higher upgrade activity increased device costs; management acknowledged deceleration in postpaid ARPA growth and will maintain discipline (value guarantee offsets).

Transcript

Speaker 3

Good morning and welcome to Verizon's second quarter 2025 earnings conference call. At this time, all participants have been placed in a listen-only mode, and the call will be open for questions following the presentation. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to Mr. Brady Connor, Senior Vice President, Investor Relations.

Speaker 2

Thanks, Brad. Good morning and welcome to our second quarter 2025 earnings call. I'm Brady Connor, and on the call with me this morning are Hans Vestberg, our Chairman and Chief Executive Officer, and Tony Skiadas, our Chief Financial Officer. Before we begin, I'd like to draw your attention to our Safe Harbor statement, which can be found at the start of the investor presentation posted on our Investor Relations website. Information in this presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Discussions of factors that may affect future results are contained in Verizon's filings with the SEC, which are available on our Investor Relations website. This presentation contains certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials posted on our website.

Earlier this morning, information on our second quarter results and supplemental materials relating to today's call were posted to our Investor Relations website. With that, I'll turn it over to Hans.

Speaker 1

Good morning, everyone, and welcome to our earnings call of the second quarter 2025. Our performance in the first half of the year, highlighted by a strong second quarter, demonstrates that our strategy is working. We remain committed to disciplined execution and customer-centric innovation. We have growing profitable connections and the value of our customer relationships. While we always see opportunities to improve, I'm confident in the future of our business. Our financial performance was strong this quarter, with a market-leading wireless service revenue of $20.9 billion, up 2.2% from last year. We delivered an adjusted EBITDA of $12.8 billion, up 4.1% year over year, setting another record for the best reported quarter and the second consecutive quarter with growth exceeding our guided range for the year. Strong profitability drove free cash flow of $5.2 billion for the quarter.

This brings our year-to-date free cash flow to $8.8 billion, an increase of over $300 million compared to the first half of 2024. Our cash flow from operation underscores the strength of our business and provides us flexibility to execute on our capital allocation priorities, which remain unchanged. As a result, we continue to lead the industry with the nation's best network. Our segmented market strategy, which is a diverse portfolio of offerings, is resonating with our customers. Our customer-first offerings, such as My Plan, My Home, and the new My Biz Plan. Along with our Best Value Guarantee, drove significant sales momentum. We're also deploying AI-powered innovations to enhance the customer experience on the nation's best network. On the infrastructure front, our execution is outpacing our targets. CBAN deployment is ahead of schedule.

Our fixed wireless base has surpassed 5 million subscribers, and our fiber build is tracking ahead of its plan. This demonstrates disciplined execution across our entire portfolio. Given our financial performance and the momentum in the first half of the year, we are raising our full-year guidance for adjusted EBITDA and adjusted EPS. We're also raising our guidance for free cash flow for the year, driven by our strong cash flow from operations and further supported by the positive impact from the tax reform. Tony will provide you with more details shortly. Now, let's turn to our operational performance. In the second quarter, we delivered over 300,000 net additions across our mobility and broadband platforms. In mobility, we delivered year-over-year improvements in the combined postpaid and core prepaid phone net adds, including the fourth consecutive quarter of subscriber growth in core prepaid.

The wireless market remains competitive, and we continue to take a strategic and segmented approach, maintaining our financial discipline. As expected, postpaid phone churn remained elevated this quarter, reflecting the lingering effects of our pricing actions and ongoing pressure from federal government accounts. We're actively focused on improving retention by strengthening our value propositions and leveraging our AI-powered customer experience innovations. On upgrades, after being down year-over-year for eight out of the last nine quarters, we saw an uptick in the second quarter, driven by our Best Value Guarantee. We continue to expect mid-single-digit growth in upgrade activity for the full year. Our dual fixed wireless access and fiber broadband strategy continues to drive market share gains. A key highlight is fixed wireless access, which surpassed the 5 million subscribers milestone, keeping us firmly on the track to achieve our goal of 8-9 million subscribers by 2028.

We achieved robust broadband growth even as our CBAN build-out expands into less dense markets and despite a softer move environment in our FIOS footprint. We continue to scale our private network business, winning a landmark deal to deploy multiple private fiber networks across the Thames Freeport. This network will serve as a technology foundation for one of the U.K.'s busiest commercial corridors, fueling a multi-billion dollar regeneration project with advanced capabilities like AI and real-time logistics. Our AI Connect offerings are also generating strong interest. Our sales funnel has nearly doubled to $2 billion since launch earlier this year. While these are often complex deals with longer sales cycles, we're actively engaged in several sizable opportunities. This growth highlights a surging demand for high-bandwidth fiber capacity and diverse routes, both lit and dark fiber, to serve different customer needs.

As AI transitions from centralized training to widespread real-time application, compute power at the network edge becomes essential. Our existing infrastructure is uniquely positioned to support this evolution. Our network is our key differentiator, consistently delivering top performance. This quarter, J.D. Power once again recognized Verizon for the best network quality and RouteMetrix First Half of the Year 2025 awards named us the nation's best, fastest, and most reliable 5G network. We're building on this advantage every day. Our CBAN deployment is ahead of schedule and on track to cover 80-90% of planned sites by year-end, with nearly all sites now standalone capable. Our fiber build is tracking ahead of plan, and we're positioned to deliver 650,000 incremental passings this year. Meanwhile, the regulatory approval process for our pending acquisition of Frontier is progressing as planned.

We're encouraged by Frontier's performance and look forward to closing the transaction to further accelerate our fiber expansion. As we near the closing of Frontier acquisition, we will provide a comprehensive update on our strategy, broadband expansion, and capital allocation, considering all stakeholders. We look forward to providing an update in the next few months. With that, I turn it over to Tony to go into the financials in more detail.

Speaker 0

Thanks, Hans, and good morning. The first half of the year reaffirms the strength of our business, highlighting the effective execution of our disciplined strategy and significant progress towards achieving our financial goals. As a leading provider of essential connectivity across the U.S., we are committed to offering the best value and delivering the best service and customer experience within the industry. We are focused on driving wireless service revenue and adjusted EBITDA growth and robust free cash flow. The second quarter demonstrated our ability to deliver strong financial results even in a period of elevated promotional activity and broad economic uncertainty. We remain focused on high-quality, profitable growth, recognizing that volume growth is only valuable when aligned with our disciplined financial framework. Our goal is to improve volume year-over-year, though we will not do this at the expense of delivering on our three key financial priorities.

This past quarter, we achieved strong sales, focusing on high-quality customers without overspending for growth. Even with public sector challenges and ongoing consumer postpaid phone churn pressure, we maintained our financial discipline. Within consumer, second-quarter postpaid phone gross additions were up sequentially and year-over-year. Our sales execution remained strong, leveraging our attractive value proposition, including the recent launch of the Best Value Guarantee. As expected, we saw the residual effects of our first-quarter pricing actions impact our second-quarter consumer postpaid phone churn. Additionally, we continue to see elevated competitor promotional activity. As a result, second-quarter consumer postpaid phone churn remained consistent with the first quarter at 0.90%. We have taken a series of actions to address our elevated churn. On June 24th, we launched initiatives designed to improve the customer experience, including leveraging AI for more personalized support.

In addition, we continue to enhance our value proposition and build customer loyalty through the Best Value Guarantee. We provide exclusive access to the best events and experiences, and our Refresh App helps customers maximize the value of their plans. Mobility phone net adds, which includes both consumer and business retail postpaid, as well as core prepaid, were 16,000 for the second quarter. This represents an improvement of 25,000 from the prior year period. Consumer postpaid phone net losses totaled 51,000 for the second quarter, compared to 109,000 net losses in the prior year period as we benefited from strong gross adds. Verizon Business delivered 42,000 phone net adds in the second quarter, compared with 135,000 net adds in the prior year period. A significant majority of the year-over-year decline was driven by the public sector business.

Though we anticipate public sector pressures to persist in the second half of the year, we expect the impact to subside towards the end of the year. Consistent with our wireline approach, we continue to remain disciplined and not pursue low-margin wireless business or overpay for volumes. We remain confident that the team has the tools to execute effectively in the current environment and deliver healthy volumes for the full year of 2025. Core prepaid net additions were 50,000 for the quarter, an improvement of 62,000 from the prior year period. This marks four consecutive quarters of positive core prepaid net adds, reflecting the strong execution of the team. The Visible, Total Wireless, and Straight Talk brands continue to perform well and are progressively building a high-quality business.

Overall, core prepaid ARPU rose above $32, and we have now reached an inflection point where, after four quarters of volume growth, we expect prepaid to positively contribute to wireless service revenue growth for the remainder of the year. Turning to Total Wireless postpaid upgrades, we saw a 14% increase in the first half of the year as compared to the same period of 2024. This result was driven by a healthy initial uptake of our Best Value Guarantee program, which is an investment in our high-quality customer base. As Hans said earlier, we continue to expect upgrade activity to increase by a mid-single-digit percentage in 2025 as compared to 2024. Moving on to broadband, we delivered 293,000 net additions in the quarter.

We are taking broadband share and see strong demand for both our fiber and fixed wireless access offerings, even with seasonal impacts and a softer move environment as compared to prior years. In fixed wireless access, we delivered 278,000 net adds for the quarter, growing the base to more than 5.1 million subscribers. FWA demand remains strong, and we are on track to deliver our goal of 8-9 million FWA subscribers by 2028. FIOS internet net adds for the second quarter were 32,000 versus 28,000 in the prior year period. FIOS provides customers with industry-leading connectivity and delivers high customer satisfaction reflected in both robust ARPU and consistently low churn rates. We are expanding our FIOS footprint and remain on track to deliver 650,000 new passings in 2025. As we talk about fiber, let me provide a brief update on the pending Frontier transaction.

The team is working through the necessary steps to complete the acquisition, and we remain on track for an early 2026 close. We have received regulatory approvals from eight states, as well as the FCC and DOJ, and are productively engaged with the remaining state regulatory agencies. Based on Frontier's publicly reported results, the company continues to perform extremely well and remains on track with their fiber expansion goals. Our integration planning efforts are well underway, and we anticipate a smooth transition upon the deal closing. We are looking forward to having Frontier's assets serve as an important catalyst for our fiber expansion and broadband growth acceleration. Turning to our financial results, we delivered another strong quarter. Second-quarter consolidated revenue reached $34.5 billion, up 5.2% year-over-year. This result was driven by solid wireless service revenue and a more than 25% increase in wireless equipment revenue.

Service and other revenue rose 1.6%. Total wireless service revenue reached $20.9 billion in the second quarter, a 2.2% increase year-over-year. Growth was driven by consumer ARPA, which rose 2.3% year-over-year. We realized benefits from recent pricing actions, expansion in fixed wireless access, and increased revenue from perks and other adjacent services. Our robust perk offerings continue to grow at a steady pace, keeping us on track to achieve our goal of 15 million perks by year-end and providing a healthy contribution to service revenue. In addition, prepaid revenue has reached a turning point and was flat in the second quarter compared to the prior year period. We expect prepaid to positively contribute to wireless service revenue growth in the second half of the year. Overall, we are well positioned for continued service revenue growth with healthy underlying customer economics.

Consolidated adjusted EBITDA in the quarter was $12.8 billion, which is the highest we have ever reported and an increase of 4.1% compared to the prior year period. Wireless service revenue growth, coupled with the benefits from cost savings initiatives, more than offset the impact from the elevated upgrade activity. Through the first half of 2025, both wireless service revenue and adjusted EBITDA are up nearly $1 billion from the prior year, reflecting strong operating leverage. Within that result, the business segment EBITDA has now grown for three consecutive quarters on a year-over-year basis. From a cost perspective, our voluntary separation program is now complete, generating substantial savings. In addition, we are actively pursuing opportunities within our legacy businesses. These include copper decommissioning and savings from the managed services initiative within our business segment, among other cost efficiency programs.

Adjusted EPS was $1.22 in the quarter, up 6.1% year-over-year, primarily due to the strength in adjusted EBITDA. Turning to our cash flow summary, cash flow from operating activities for the first half of the year was $16.8 billion, up more than 1% compared with the same period a year ago. CapEx for the first half of 2025 came in at $8 billion, compared to $8.1 billion in the prior year period. We continue to realize efficiencies in our CBAN deployment and FIOS expansion, enabling us to effectively meet or exceed our network goals well within our capital budget. For the first half of the year, the net effect of cash flow from operations and CapEx resulted in free cash flow of $8.8 billion, an increase of 3.6% compared to the same period a year ago. Net unsecured debt at the end of the quarter was $116 billion.

A $6.9 billion improvement year-over-year. In the first half of the year, our debt reduction was offset by non-cash mark-to-market adjustments. Our net unsecured debt to consolidated adjusted EBITDA ratio was 2.3 times at the end of the quarter, a 0.2 times improvement year-over-year and in line with the prior quarter. We continue to make progress towards our long-term leverage target ahead of the closing of the Frontier transaction. Our balance sheet remains a significant strength of our organization. Notably, we have under $700 million in unsecured debt maturities remaining in 2025. We will continue to focus on reducing debt ahead of completing the Frontier transaction. As Hans mentioned earlier, our capital allocation framework remains unchanged. We will continue to strategically invest in the business, enhancing our mobile and broadband networks, support a healthy and growing dividend, and paying down debt towards our long-term leverage target.

As we've mentioned previously, we will consider buybacks once we reach our leverage target. Our strong operational execution in the first half of the year, coupled with favorable tax reform, gives us the confidence to increase our guidance for the full year. Given the strong adjusted EBITDA performance in the first half of the year, we are increasing our full-year guidance to 2.5%-3.5% growth, an increase of approximately $125 million at the midpoint. We are increasing our guidance for adjusted EPS growth to a range of 1%-3% to reflect a new adjusted EBITDA outlook. We are raising our 2025 free cash flow guidance to a range of $19.5 billion-$20.5 billion.

The increase is driven by an estimated benefit of $1.5 billion-$2 billion from the recently enacted tax legislation, as well as the disciplined operational execution that drove our strong adjusted EBITDA and free cash flow performance in the first half of the year. Our wireless service revenue and CapEx guidance remains unchanged. As we get closer to the closing of the Frontier transaction, we expect to provide an update on our broadband plans as well as our capital allocation strategy. In summary, we have a resilient business model with a high-quality customer base and continue to execute well in both mobility and broadband. Our second quarter financial performance reflects our disciplined approach to growth, and we are well positioned to deliver on our improved outlook in the second half of the year. With that, I will turn the call back over to Hans. Thank you, Tony.

Our strong first half results reaffirm our confidence in Verizon's strategy. Our strategic execution and the ongoing momentum across our business underpin our decision to raise full-year guidance. Our focus remains clear. We are committed to growing wireless service revenue, expanding adjusted EBITDA, and generating strong free cash flow. We will achieve this through three key priorities. First. Building on the network leadership to create compelling customer offerings that accelerate growth in our mobility and broadband businesses. Secondly, maintaining operational excellence and financial discipline across the organization. Thirdly, scaling our next-generation platforms from capturing new enterprise opportunities with private networks to enabling AI at scale and unlocking new revenue streams from our existing assets. The opportunities ahead are significant, and the pending Frontier acquisition will accelerate our fiber strategy. Verizon's unique market position and the essential nature of our services are fundamental to empowering individuals, businesses, and society.

Verizon has the assets, the strategy, and most importantly, the team to deliver sustainable long-term growth. We're excited about the opportunities ahead. With that, Brady, it's time for Q&A. Thanks, Hans. Brad, we're ready for questions. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your touch-tone phone. Please unmute your phone and record your name clearly when prompted. Your name is required to introduce your question. If at any point your question has been answered or you would like to withdraw your request, you may remove yourself by pressing star two. One moment for the first question. The first question will come from Ben Swinburne of Morgan Stanley. Please go ahead, sir. Thank you. Good morning.

I want to ask about free cash flow, kind of capital allocation, and then also the outlook for consumer wireless. Hans and Tony, you guys have meaningfully more cash flow to play with now. I know you said a billion and a half to two this year. I think these tax benefits continue beyond 2025. What's the best use of incremental capital at Verizon from your perspective? I know you laid out your priorities, but can you help us think about your ambition to get to buyback sooner, build more fiber faster, etc., etc.? And then on the consumer wireless front. Should we still expect consumer net add improvement, postpaid net add improvement in 2025 versus 2024? I don't think that was reiterated on the prepared remarks.

And maybe you could talk a little bit about the churn outlook in the second half, where you'll be moving beyond the price increases and so whether we should still be expecting kind of churn normalization. Thanks so much. Thank you. Let me start with the capital allocation. I think your comments and question there is more than valid. As you saw, we raised our guidance for free cash flow partly because our cash flow from operation is improving, but also the tax reform that we indicated how much it is. As I said before, I mean, our capital allocation priorities are unchanged. I mean, it's first of all in our business, and we have increased the CapEx this year compared to 2024. The dividend, of course, 18 years of increase. We want to put the board in a position to continue to grow. We paid down our debt.

We paid down our debt again with almost $3 billion in the first half, and then it will be buybacks. Now we are in a situation where we are just about, or in the couple of months from now, in the beginning of next year, closing Frontier. What I said in my prepared remarks is I want to get a holistic view on all the capital allocation. I mean, how are we going to invest in fiber, what synergies we see, how are we going to do the capital allocation priorities? Clearly, the tax reform is helping us to get faster to the priorities we have. We feel good about that. Let me come back to that so we can give you a holistic view on capital allocation. Clearly, we are very excited about Frontier. The performance is great. The synergies are great.

Of course, the convergence and the fiber opportunities are also great. Very excited for that. So far, Frontier has performed really good. On the wireless consumer, I think that our ambition, as was outlined by Sampath in the beginning of the year, doing better this year is still valid. I mean, there's no difference on that. However, we're going to continue to be very financially disciplined. For us, we will not sacrifice our financials just to getting net adds if it doesn't make sense, if it's too expensive. You saw us in the fourth quarter last year being aggressive because we saw the opportunities of creating and gaining a lot of high-quality customers. You saw our gross adds in the second quarter. It all depends where the market is and where we go. Ultimately, our goal is to increase our service revenue and then expand our EBITDA and cash flow.

That's our main KPIs. On churn, Tony will probably shine in on all of this. On churn, expected in the second quarter was elevated, coming from the price ups, but also from the competitive environment. I think the whole industry is up. Sampath put in a lot of very important churn measurements, 624, that now is going through our system. All our AI-empowered customer service impacting. Very encouraged about what the team is doing and how they are working on the loyalty and retention of our customers. That's all a little bit. Tony will shine in on all three, I guess. Yeah. Thanks, Hans. Good morning, Ben. A couple of things on churn. Obviously, we're focused on reducing churn in a financially disciplined manner. As Hans mentioned, we have a great value proposition with the Verizon value guarantee and also My Biz on the business side.

We have further deployment of CBAN. We said we're going to get to 80%-90% of CBAN this year deployed. We see lower churn where CBAN is deployed. The work that Hans mentioned on customer experience, we did a CX launch on June 24. That work is also augmented by AI. We expect to see improvements there. Obviously, convergence will also reduce mobility churn. The team has the retention tools to get there, and they're focused on it. One other comment just on tax reform, as your question around looking ahead. We're not going to guide on 2026, but the extensions of bonus and R&E are permanent. While we won't guide on 2026, I would expect that the impacts in 2026 would be significant. Yeah. Thanks so much. Yeah. Thanks, Ben. Brad Ray for the next question. The next question comes from John Hudlick of UBS. Your line is open, sir.

Great. Thanks. Good morning, guys. Two, if I can. First, it looks like you saw further deceleration in postpaid ARPA growth. Can you just talk a little bit about the drivers that are causing that deceleration? And then a follow-up on one of the comments. The upgrade rates in the teens in the first half, and you expect mid-single digits for the year. What's the driver of the, what would suggest to be a pretty rapid deceleration in the upgrades? Thanks. Thank you. On the postpaid ARPA, I think, again, I mean, we have been growing our ARPA for a long time, and we continue to do. We have many levers in there, all the way from our broadband, my step-ups. Only 50% of our customers are on my plan. We have the adjacent services.

You heard when we had our prepared remarks on our perks, basically doubling this year up to 15 million perks. We have a lot of drivers for it. We still believe that we have a good run rate on that. On the upgrades, as you articulated, we have been down eight quarters of the last nine when it comes to upgrades for many reasons. This quarter, we put in, first of all, a couple of incentives for customers to upgrade. That's why we saw a little bit higher. Remember, when we're talking about the mid-single digits, that's both business and consumer. That's the total investment we have in upgrades. Yeah. And then just a couple of other points on the upgrades. I mean, we absorbed the higher upgrades. The upgrades were up 30% year over year, and we still produced strong EBITDA and cash flow in the quarter.

We had good operating leverage across the board there. Great. Thank you. Okay. Yeah. Thanks, John. Brad Ray for the next question. The next question comes from Sebastiano Petty of J.P. Morgan. Your line is open, sir. Hi. Thanks for the question. Just to follow up on Ben and John's theme there for a second, as we think about the consumer net add results in the quarter, any way to unpack maybe free line contribution intra quarter? I know that was a below-the-line offer that was in market, as well as anything to quantify or read through from the deceleration in core prepaid down pretty materially sequentially. Is there any migration activity within the quarter there? And then lastly, on the Frontier deal close, you said early 2026. Is that implying a later-than-expected close versus 1Q 2026?

Was the previous guidance given maybe some utility commission reviews that are ongoing out there? Thank you. No, we can start with the Frontier. No, nothing has changed. It's on the plan we said actually since we announced the acquisition. It's the first quarter of 2026. Nothing has changed on that. On any particular things on our net adds, first of all, we had a great gross add. I mean, the team did a great job. Our sales channels were working. Our product is resonating with the market. The free lines were insignificant. It was part of the 624 launch, and it just was on for a very short time period, and it's off right now. That had nothing to do with it. It was a really good execution by the team. On prepaid, as you can see, the segmentation strategy is working.

The operational rigor now that we have is paying dividends, and we have four straight quarters of growth in our prepaid business. We're seeing good results across all of our main brands, whether it's Straight Talk, Visible, or Total Wireless, and we continue to scale the distribution there. The other thing I want to point out on prepaid is now that we have four straight quarters of volume growth, we've reached an inflection point, and we now expect prepaid will be a contributor to service revenue growth in the second half of 2025. We feel good about the progress and the momentum we have in the prepaid business. Just a quick follow-up there. Within prepaid to postpaid migrations, the 19% increase in gross additions in the quarter, would that reflect any migrations across the base? No. Not significant for us. No. Thank you. Okay. Yeah. Thanks, Sebastiano.

Brad Ray for the next question. The next question comes from Jim Schneider of Goldman Sachs. Please go ahead, sir. Good morning. Thanks for taking my question. I was wondering if you could maybe broadly comment on the broadband market trends that you're seeing right now. I think you talked about a softer move environment, but what are you seeing in terms of the gross add environment more broadly across both fixed wireless and FIOS heading into the back half of this year? Any change in competitive dynamics that would make you feel more or less confident about your ability to sustain better net add additions into the back half? Specifically, can you maybe comment on your expectation for fixed wireless adds and whether they can improve and recover heading into year-end? Thank you. Thank you, Jim.

When it comes to growth in the first half year, FIOS has been fairly consistent. Of course, what we saw here in the second quarter was a way lower mover market. Still, the product is the best product out there. The churn is very low, performing really well. On the fixed wireless access, it's the same phenomenon we talked before. As we go suburban and rural to the 80%-90% of CBAN, that's where we create the opportunities for fixed wireless access, as it's a secondary business case on our build. That means that we have less passing. Whatever we call it in fixed wireless access world, we have less open for sale. That is very natural. If I look into the second quarter, I am pretty certain we will do better on broadband in the second half this year than we did in the first.

Maybe could you just comment on the status of your MDU rollout? I know it is in trial phases right now, but would you expect that to be a significant contributor as we head into 2026? The MDU solution, which is a world's first, again, Verizon is leading with a solution that nobody else has done. That is more than trials right now, even though it is a smaller scale where in many states we start rolling it out. We want to have a short time period between when we have the product and we talk to the landlords. It is going to start scaling even more in the second half. I think it will be a bigger contributor in 2026 than in 2025.

It is a great product that can get very, very good broadband services all the way up to 1 gig, which is something extraordinary that the guys have been doing. We will scale to see that we have the highest quality that Verizon is known for and is our trademark. Thank you. Yeah. Thanks, Jim. Brad Ray for the next question. The next question comes from Mike Rollins of Citigroup. Please go ahead. Thanks. Good morning. Two topics, convergence and then EBITDA. First on convergence, curious if you could share an update on how Verizon's progressing with the uptake of these converged bundles within the base. If you can share how Verizon's looking to differentiate your converged offers versus the competition. Then on EBITDA, you referenced that it was up 4% in the second quarter, first half, and that is better than the guidance range of 2.5%-3.5%.

Can you unpack within the full-year guidance what you are anticipating for the rest of the year, and what are the factors that would put you at the high end versus the low end of that range? I can start, and then I am going to hand it over to Tony. On the convergence, I think that of course our main key differentiator is that we have owners' economics on mobility and broadband. We have the biggest mobility base, and we are now adding our fiber base with Frontier. We are going to have an unparalleled opportunity for convergence that our customers have a chance to work on both. As I said before, we have a very high degree on our broadband net adds per quarter that are already converged. It is more about when we are going to scale that opportunity, we have even more chances.

If you think about coming into the Frontier footprint when that is approved, we have a huge opportunity for convergence. We're excited over that, and that's our offering. On the EBITDA, before Tony says something, I think you see right now our leverage, the cost takeouts we've done, the growth we're doing, and it's falling straight down to bottom line. We will continue to focus on that. As I said so many times before, the whole executive management and the whole company had three KPIs. It's the service revenue growth, and then it's EBITDA and cash flow generation. Very good start of the year. Thanks, Hans. Hey, Mike. On the EBITDA, we were up over $500 million in the quarter and about $1 billion of EBITDA growth year to date.

That's also in light of having a pretty significant upgrade activity, mostly driven by the launch of our Best Value Guarantee. We stayed very disciplined in the quarter. We didn't chase volumes, and it gave us the confidence. The resiliency in the business gave us the confidence to raise the guide. It starts with the top-line revenue, and service revenue is up 2.4% year to date. We're seeing great operating leverage, as Hans mentioned. There's a lot of work going on on the cost side of the house to continue to make the business a lot more efficient in serving customers day in and day out. If you think about the customer care and the work we launched on June 24th, that includes having AI-enabled customer care, managed services.

We're seeing great progress now with the managed services work that Kyle and the team were doing, and we're seeing good savings here ramping up in 2025. The network team continues to take out cost and legacy network elements. That includes copper decommissioning, and that work is ongoing. Even in business wireline, we continue to de-emphasize low-margin deals and stay very disciplined there. From a headcount standpoint, the voluntary separation program is now behind us, and we're seeing a full run rate benefit for the balance of the year. There's really no assumption changes in upgrades. As you asked before, we said mid-single digits for the full year. That still stays intact. What we've said is volumes are important, but we're going to stay disciplined in our approach and in support of the three measures that Hans mentioned: service revenue, EBITDA, and free cash flow.

We'll pulse in, pulse out where it makes sense, but we're not going to chase unprofitable growth for the sake of net adds. Very pleased with the progress on EBITDA in the first half of the year and very comfortable raising the guidance for the back half. Thanks. Yeah. Thanks, Mike. Brad Ray for the next question. The next question comes from Cut Gun Morrell of Evercore ISI. Please go ahead. Good morning, and thanks for taking the question. I want to ask about your wireless go-to-market strategy. I know you pulse in and out of the market, Tony, just like you said, but looking through some of your postpaid offers in the second quarter, at times there seemed to have been a bit more promotional activity on the device side targeting the value end.

Over the last few years, you've expanded your portfolio in the segments that you target with Track Phone and fixed wireless, for example, but the value end had historically been perhaps less of a focus on the postpaid side. I was curious if this was more of an opportunistic tilt that was specific to the quarter or if it's part of a more strategic shift in the way that you expect to go to market moving forward. Thank you. Thank you. First of all, Sam, the team together with our CMO, Leslie, have been working really hard to segment up our market. As we see the market having less and less new customers coming into the market, a segmented approach becomes important. We're running now, I think, eight or nine different brands. All of them have different brand attributes and appealing to different segmentations.

This is sort of a segmented growth strategy we have in wireless for consumer, and that will continue and just refine it and see that we have the right offerings in all the different types of brands we have. I would say some of the brands are doing extraordinarily well. I mean, Total Wireless, Visible, very good, very targeted. Some of them have some sort of promotions. Some of them are just having a service fee. It's very different, and you're going to see us continue doing that work because that is part of our growth story that we can actually meet any consumer with different economical background with the service. As you can see in this quarter and the previous quarters, we were actually excited about those opportunities. Great. Thanks, Hans. Yeah. Thanks, Cooken. Brad, we're ready for the next question.

The next question comes from Frank Loudon of Raymond James. Please go ahead, sir. Great. Thank you. Can you talk to us about the pace of the fixed wireless deployment? Are you seeing that increase, doing more investment there, or is that kind of staying the same? Can you characterize the promotion activity in July? Do you think that's going to be similar this quarter with seasonality? How should we think about that? Thanks. Thank you. On the pace on fixed wireless access, that's not changing at all. We are gearing up for reaching 80% and 90% of CBAN this year. That's where we followed through with our fixed wireless access opportunities. By next year, we're going to have basically built all our CBAN on top of the grid we defined from the beginning. After that, we can always debate how we're going to continue to allocate capital.

But right now, we allocate capital for mobility for the simple reason that where we build the CBAN, we have better step-ups, we have better upgrades from our customers. That is the number one. Let us finish this, and then we are going to see. The pace has not changed. The same CBAN build-out. What you see on the CapEx is actually also an efficiency work. We are doing everything that was planned for 2025 right now, but we do it more efficiently. The network team is doing a great job, actually creating efficiencies on our CapEx. That is very important for us going forward when we are also going to have Frontier inside. Yep. Got it. Thanks, Frank. Brad Ray for the next question. The next question comes from Craig Moffitt of Moffitt Nathanson. Please go ahead. Hi.

I want to follow up to Ben's first question where you talked about capital allocation. Under the new budget or the One Big Beautiful bill, there is an expectation of significant spectrum sales, even though the spectrum has not been identified. Can you just talk a little bit about that, as to how you would prioritize spectrum purchases if there is either a government auction or alternatively if private market spectrum comes available from EchoStar, as to how that might affect, for example, your discussion about possible share buybacks? Thank you. When it comes to spectrum, I mean, I think that we are sitting on a really good position on spectrum. With our CBAN, millimeter wave, and our low band, that is what you see our deploying right now. We feel good about where we are with spectrum. I have said all the time that the U.S.

over time needs more spectrum, especially as 6G comes up, etc., in order to stay competitive and be the most digitalized country in the world. We are, of course, thinking it is good. That is part of the bill. As you rightfully said, it still needs to be auctioned out. It has to be free up spectrum and all of that, and that will take some time. When it comes to, in general, our capital allocation to spectrum, we always do the build versus buy. We have done it way before I joined. We look into, will this buy, this spectrum, be better than building on our own spectrum today? That is the comparison we are always going to do when we see spectrum in the market.

Again, we feel good about the position we have, and we are encouraged that the government is planning over time to bring more spectrum to the market for the competitiveness of the United States of America. Thank you. Thank you. Yeah. Thanks, Craig. Ready for the next question. The next question comes from Michael Funk of Bank of America. Please go ahead. Yeah. Hi. Good morning. Thank you for the question. On postpaid phone subscriber acquisition cost, what are you seeing for the increase in acquisition cost year over year? And then what are you modeling for second half? What's the right mix of budget for retention versus acquisition? This is close to how we work constantly between Sam, Pat, me, and Tony, seeing that we have an envelope for the full investment of customers, which is including acquisition, retention, and media.

To give you an exact number, that would not be appropriate. I think that what you should be feeling confident about is that we weekly think about what is the best allocation that we get the best return on investment on the LTV and getting the right customers to over retention or acquisition. That is a fluid work we are doing constantly, and we have improved this dramatically over the years. Before, it was an overall budget. Now it is much more dynamic, but we stay within the financial discipline we have, so we are not overshooting on anything. Yeah. Great. Thanks, Mike. Brad Ray for the next question. The next question comes from Greg Williams of TD Cowen. Please go ahead. Great. Thanks for taking my questions. First one's just on the consumer phone gross ads.

You guys said you are disciplined and not chasing volumes, but it is up 19%. I think that is a 2Q record. How sustainable is this level of gross ads going forward in the balance of the year? The second question is just on the customer experience that you guys launched on June 24, because you are talking it up quite a bit here, and wanted to get more color on what it is and the specifics. You mentioned AI-enabling customer care, etc. Any color there would be great. Thanks. Okay. Sure. Greg, on the gross ads, a couple of things here. The strength came from two places. First, we had very strong sales execution in our stores and distribution. The team did a great job.

Secondly, the value proposition, when you think about we launched the Best Value Guarantee back at the beginning of April, and that is resonating with customers in the market. We see a healthy mix of new to Verizon in the quarter, and we are also writing good business as well. What we said many times is volumes are important, and we will pulse in and pulse out, but where it makes financial sense. As we said earlier, the biggest opportunity for us is loyalty and retention, and the team is focused on it. Yeah. If we talk about what was launched June 24, I think that it was a lot of AI-supported customer experience tools we put in. I mean, first of all, when it comes to the process, we now will have a customer care employee following a request or a complaint from our customers all the way.

So we actually finish it out with the same person starting and ending and also having updates. That was a concern for our customers that we heard through the year and that we needed to improve. The other thing is we're also opening up our customer service 24 by 7. Very important. Again, that was a feedback that people are having different work hours. They want to call different times. We're going to fix that. Of course, we're giving our customer care employees an AI tool so they can treat our customer better and know their problems better. Because this could be stressful. We know that having the connectivity is such an essential service, mobility, and broadband. The last thing, we're going to leverage even more our stores. I mean, 93% of the U.S. population has less than 30 minutes to a Verizon store.

We're going to leverage that more, see that that's going to be a place where we can get more support and help as well. We leverage all the assets and all our employees to see that we're treating our customer better. I think it's an area we can excel in. We basically have worked a lot on our product side, where we have My Plan, My Biz, My Home, all of that with perks, which is really resonating. We have worked on the brand. That's where we refreshed the brand last year, and that is actually going really good as well. The network is, of course, the best network in the market that once again was proven by J.D. Power and Root Metrics.

We're working on all the cylinders, how we compete for any type of customer, all the way from enterprise, government, small and medium, to prepaid, postpaid customers on broadband and mobility. It's a holistic thinking how we're going to do this. Thank you for the question. Thank you. Yeah. Thanks, Greg. Brad Ray for the next question. The next question comes from Peter Sopino of Wolf Research. Your line is open. Hi. Good morning, everybody. A question about costs and one about churn. On costs, you mentioned your expectations for continuing cost efficiency, and we see, obviously, headcount is flat year to date in your reporting compared to 5% improvement or decline in 2024. Thinking at medium term, thinking about 2026, 2027, I wonder if you could describe any opportunities you see for ongoing efficiency gains outside of price increases.

On churn, now that we're well past the impact of extended installment plans on consumer churn, what do you think is the cause of today's churn levels? Obviously, your initiatives in June indicate some incremental concern. Does that trend require less aggressive, less positive price increases in the future? Thanks. First of all, any future commercial plans, I will not share. That I cannot do. I start with the cost. I think that both Tony and I see more cost opportunities than we have seen in a long time. That is what you see in our leverage right now. Many of the AI solutions we are putting in, we talked about them last year. We are putting into our both in the capital planning for our customers, for our employees. That is still not into any cost base for us.

The headcount, we have been very, very good, and it is going down all the time. We have been very efficient on managing our resources, that is. Handling this market. Very happy with that. I hand it over to Tony to talk a little bit more about cost and the churn. Yeah. Thanks. Peter, a couple of things. The headcount is down 3.7% year over year. As I said earlier, we had a lot of EBITDA margin expansion in the first half. We continue to take cost out, whether it is AI, whether it is network. The team continues to take copper out of the network, and network continues. Whether it is IT or real estate, IT platform consolidation or real estate, we are continuing to push cost out of the business. Even on business wireline, as I said before, we are being really disciplined at the deal desk.

Even on wireless, we are being disciplined at the deal desk as well. We are not chasing growth for the sake of growth. As Tom says, we are operating differently, and we feel good about the cost actions that are driving the EBIT improvements and also the increase in the guide. Thank you. All right. Yeah. Thanks, Peter. Brad Ray for the next question. The next question is from Brian Craft of Deutsche Bank. Your line is open, sir. Hi. Good morning. I just had a question on BEAD. With the recent changes in the program, I was wondering how you are thinking about the opportunity to participate and maybe make some incremental investments into footprint expansion through that program. Thanks. Thanks. Yeah. There are some slight changes to the BEAD program rules, which open up some opportunities for us, of course. Then it is a process of rebuilding.

I think that is one area. The other area, of course, we have been building since the first BEAD opportunity came up. The combination of this probably means that we have the same opportunities as we had when the BEAD program started. We are going to bid where we see that we have a good return and with some subsidized from the government. No major change for us. We are in this process right now. Need to come back to you when we see the outcome of that rebuilding. Okay. Thank you. Yeah. Thanks, Brian. Brad, we have time for one more question. Your last question will come from Tim Horan of Oppenheimer. Your line is open, sir. Because the business revenues and margins have improved pretty substantially. Just any more color on what you're doing there?

I know you touched on it a little bit, but can you give us a little bit more examples of what's going on? I guess the key question is, is it secular? I guess particularly on the margins? Thank you. Yeah. It's a lot going on there. I mean, some of you have been following us for quite a while. You know that somewhere in 2023, our performance was not the best. We took a lot of decisions, including getting basically a total new management team. Since then, we have been aligning on what we need to do. You see so many vectors of growth that we didn't have before. I mean, all the way from fiber, fixed-wireless access, and of course, the fiber will be added to the Frontier over time. You see our AI Connect that we talk about on the business side.

Suddenly, we can leverage our assets on the fixed side. We have the adjacent services that for a couple of years ago were very small. Now, with the perks and all of that, we're doubling the growth there. We have the convergence coming up as well. We have prepaid that Tony talked about. That was zero or negative for us for quite a while. Now we're basically flattish and, of course, expecting that the team is going there. We have all the step-up and the segmented growth that I talked about. The team is executing really good. In the foundation, we have a great network that we now are sort of capturing all the opportunities with the CBAN investment we did a couple of years ago. That's what you see. On top of that, with the discipline from Tony and the team, we're taking out cost. You see the leverage.

Sometimes we just underestimate what great business this is. I mean, it's an enormous business when it comes to revenue and subscriber-based services. The generation of cash is extraordinary. We will just continue to drive that and see that we have the right offerings for our customer. That's what's behind it. Really well executed and what you should expect from Verizon, which is our trademark. Thanks. Hans, just a couple of things to add, Tim, on the business segment. The team continues to grow volumes, both mobility and FWA, and the business continues to skew more wireless, which is great to see. We said the goal was to improve the EBITDA profile in this segment, and we saw really good progress in the first half of the year. We have three straight quarters now of growth.

If you look between the revenue and the margins on the revenue side, as I said, more wireless, FWA, and mobility growing, even though we're growing through even the public sector pressures as well. We're also seeing contributions from private 5G networks and AI Connect. That's also offsetting some of the wireline decline that we see. On the cost side, Kyle and the team are doing a great job with our managed services. The transformation, the deal we signed with HCL, is providing a lot of benefits this year. There is a lot of good discipline in terms of moving customers off of legacy products and de-emphasizing low-margin deals and also operating with lower headcount. We're well positioned to continue to improve the business EBITDA margins this year. Very happy with the progress. Thanks, guys. Yeah. Thanks, Tim. Brad, that's all the time we have today.

This concludes the conference call for today. Thank you for participating and for using Verizon Conference Services. You may now disconnect.