Q4 2024 Earnings Summary
- Verizon expects underlying wireless service revenue growth to nearly double the guided range as promotional amortization headwinds ease by the end of 2025, driven by improving postpaid consumer phone net additions, healthy business phone volumes, continued scaling of fixed wireless access, and growing adoption of myPlan.
- Verizon is experiencing strong operational momentum, with the fourth quarter of 2024 seeing nearly 1 million postpaid subscriber net adds, the highest quarterly result in over a decade, and expects higher net adds in 2025 than in 2024. This is attributed to their value proposition resonating well with customers, successful products like myPlan, and targeted growth in opportunity segments such as Tier 1 markets and the Latino segment.
- Verizon anticipates continued strong growth in broadband, with expectations of between 350,000 to 400,000 broadband net adds per quarter, taking more than 50% of industry net adds, driven by fixed wireless access and Fios expansion, including the launch of their MDU solution. This contributes to Verizon's confidence in sustaining revenue growth and taking market share in 2025.
- Verizon's promotional amortization headwinds are expected to peak in 2025, potentially impacting wireless service revenue growth and margins. Despite management stating these headwinds will ease towards the end of the year, they remain a significant near-term pressure on financial results.
- The positive impact of AI Connect on Verizon's EBITDA is currently minimal, as initial revenues from AI Connect are small, and the anticipated benefits may take longer to materialize, possibly affecting future growth expectations.
- Fixed Wireless Access (FWA) growth may slow down in the first half of 2025 due to fewer opportunities in Tier 2 and Tier 3 markets and prioritization of mobility over FWA in C-band deployment, which could impact broadband subscriber growth.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Wireless Service Revenue Growth | FY 2025 | no prior guidance | 2% to 2.8% | no prior guidance |
Adjusted EBITDA Growth | FY 2025 | no prior guidance | 2% to 3.5% | no prior guidance |
Free Cash Flow (FCF) | FY 2025 | no prior guidance | $17.5B to $18.5B | no prior guidance |
Capital Expenditures (CapEx) | FY 2025 | $17.5B to $18.5B | $17.5B to $18.5B | no change |
Promo Amortization Headwinds | FY 2025 | no prior guidance | Expected to peak in 2025 | no prior guidance |
Leverage Ratio | FY 2025 | no prior guidance | 2.3x net unsecured debt to adjusted EBITDA | no prior guidance |
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AI Connect Revenue Opportunity
Q: How big is the AI Connect opportunity and revenue timing?
A: The AI Connect total addressable market is over $40 billion, with a funnel exceeding $1 billion. We began booking revenue from AI Connect in Q4, contributing to EBITDA , and expect significant growth leveraging existing assets within our CapEx guidance. -
EBITDA Growth and Free Cash Flow Guidance
Q: What drives the faster EBITDA growth and free cash flow guidance for 2025?
A: We project EBITDA growth of 2% to 3.5%, implying about $1.3 billion at the midpoint. This is fueled by strong service revenue growth, healthy customer economics, and continued cost transformations like the voluntary separation program. Our free cash flow guidance for 2025 is $17.5 to $18.5 billion, driven by EBITDA growth, efficient CapEx, improved interest expense, and working capital focus. -
Wireless Service Revenue Growth
Q: Can you maintain the pace of wireless service revenue growth into 2026?
A: We guided for 2% to 2.8% wireless service revenue growth in 2025, with underlying growth nearly double. The impact of promo amortization will lessen by year-end, positioning us for continued growth into 2026. -
Momentum in Wireless and Broadband
Q: What drives the momentum and net adds expectations in wireless and broadband?
A: We saw strong momentum with over 400,000 broadband net adds in Q4, the best in a decade. This is due to resonating products, rebranding efforts, and network improvements. We expect higher net adds in 2025 than in 2024, driven by offerings like myPlan and focus on segments like Tier 1 markets and the Latino segment. -
Upgrade Rate Expectations
Q: How do you view the upgrade environment for 2025?
A: After a low in 2024, we expect a mid-single-digit increase in upgrades in 2025. Devices are now kept for over 40 months; with customers coming off 3-year contracts, upgrade rates should gradually improve. -
ARPA Growth and Competitive Environment
Q: What supports ARPA growth in a competitive market?
A: Our ARPA grew over 4% in Q4. Our value proposition with offerings like myPlan and network improvements leads customers to take more premium plans. We expect continued ARPA growth through delivering added value and selective pricing actions. -
Fixed Wireless Access Growth
Q: How will fixed wireless access growth progress, especially with MDU solutions?
A: We continue to expect 350,000 to 400,000 broadband net adds per quarter. Fixed wireless access is expanding into Tier 2 and Tier 3 markets, with MDU solutions scaling up in 2025. We're taking more than 50% of industry net adds. -
Device Protection Revenue Reclassification
Q: How does the reclassification of device protection revenue affect growth rates?
A: The handset insurance revenue is about $2.9 billion in 2024. Its reclassification impacts growth rates by only 5 to 10 basis points , with the baseline service revenue at about $82 billion. -
Impact of Possible Comcast-Charter Merger
Q: How would a Comcast and Charter merger impact Verizon?
A: We cannot speculate on such combinations. Our MVNO relationships are important and accretive; we continue to view our network as the best, resonating with customers. -
Immigration and Subscriber Growth
Q: How does immigration affect your subscriber growth outlook?
A: Despite lower immigration in recent quarters, we're seeing strong performance in our value business. We expect the postpaid market to grow by 8 to 8.5 million lines in 2025, with pre to post migrations making up about half.