Verizon 1Q15 Earnings Call Notes

Launching direct to consumer aftermarket auto product

“innovation within the transportation industry presents a great opportunity for us.

Through Verizon telematics we are already providing a platform of manufacturer, aftermarket and fleet services through two-way broadband connectivity to vehicle. Additionally, we will be launching Verizon Vehicle, our direct to consumer aftermarket product which modernizes traditional roadside assistance and enhances driver safety and convenience.”

Launching OTT video too

“In terms of video we are on track to launch our mobile first OTT video product this summer and we have already announced some initial content partners. ”

Committed to delevering

“We ended the quarter with $113.4 billion of gross debt, net debt of $109 billion and a ratio of net debt to adjusted EBITDA of 2.5 times. We are on track with the plans to de-lever and remain committed to returning to our pre-Vodafone transaction credit rating profile in the 2018 to 2019 timeframe.”

Half of phones moving to edge pricing

“customer demand for our Edge equipment installment plan continued to increase. The percentage of phone activations on the Edge program was about 39% compared with about 25% in the fourth quarter. We expect the percentage of phone activations on Edge to increase in the second quarter as we are currently running near 50%.”

More traffic is good

“Within More Everything accounts average data usage continues to rise, up 54% year-over-year. This is beneficial to us because increasing consumption of content will ultimately drive higher revenue with a lower cost to serve due to the efficiency of our LTE network”

Secular and economic challenges in enterprise

“In the enterprise space, we continue work through secular and economic challenges. In the first quarter, global enterprise revenue declined 6%…declines in legacy transport revenue and CPE continue to outweigh growth in newer and more strategic applications, which are smaller in scale. Revenue from services in the IP layer has been impacted by competitive price compression, which is offsetting growth in applications and services.”

Breaking the bundle is what consumers want. This is a way to give the consumers what they want and we think this is allowed under existing contracts

“Look, this is a product that the consumer wants. It’s all about consumer choice. I mean, if you look at the TV bundles today, most people only on average watch 17 channels. So, this is a way to give consumers what they want on a choice basis. And we believe that we are allowed to offer these packages under our existing contracts. So, we will leave it at that.”

We’re not going to chase every add based on just cheap price

“we are in a competitive pricing standpoint. And as I said coming out of the fourth quarter, we will not – we have to be rationale and we will not chase every customer, but we are making every effort to maintain our base and keep our customers and upgrade them into a price plan that’s fitting for them. And we made improvement in that. But I will tell you we still have some more improvement to do, but we are not satisfied with any losses. But then again, we will not chase every add either, based on just cheap price. So, I think that’s the balanced equation that we showed in the first quarter.”

Too early to talk about take rate or profitability on breaking the bundle

“on the video tiers look, I think it’s way, way too early to start talking about what the take rate is or where the profitability. So, we will leave that until we get some trending behind us.”

Develop other ecosystems to monetize customer usage

“the key to this is to develop these other ecosystems to create more monetization around customer usage whether that’s premium subscription pay-per-view or advertising models. And that’s really what we are concentrating on.”