Verizon at Deutsche Bank Conference Notes

John G. Stratton – EVP and President of Operations

Need to grow revenue per sub

” And when we talk about the wireless business it’s really become a simple strategy of acquiring and maintaining the account and then growing the value of the account. As the market gets to a point of near saturation how do you expand the value within the account. And so things that are obvious like tablets and WiFi hotspot, we call jet pack type opportunities are evident. We’ll continue to look for those opportunities. More recently things like connected devices like smart watches and the like create some meaning — some sort of incremental value creation. But there’s other opportunities as well. We’ve built and created products that are now beginning to scale. So I look at in the telematics space, right. We have huge telematics to largest fleetmatics those are principally in the commercial markets right B2B. So we have spun a product out which we call HUM last year that now is creating some nice growth. So the chance to add devices of different types to tap the network is important.”

Unlimited is for peace of mind

“Data is going to be going through its own pace of evolution and what we saw here was there are those who want to consume high volumes of data and I would say that by and large the tiered plans that we have had in the market did a reasonably good job of covering the vast, vast majority of users in terms of their actual requirement. But there’s another element to this which became increasingly important to consumers which is the whole peace of mind factor, right. And so the predictability of the bill and not having to worry about it or if you have one line on an account that has a breakaway usage which is typically someone who’s 15 years old and just going, so the ability for us to care for that was a driver here.”

Ready to take on the competition

“Yeah, obviously as you said Comcast and Charter have signaled their intent to go forward. I know the guys from those companies have talked a bit about that. I think as we consider that play obviously they’re triggering their MVNO on the Verizon Network. So we don’t have a whole lot of information as who is appropriate, about their specific plans but certainly we’re ready to go. From a — we call reseller but from an MVNO standpoint that’s a business we’ve been in forever and it’s good business. So we’re happy to have it and in terms of the retail side of my company and how we would see incremental competitors in the market, look I think we feel pretty good about our ability to compete. What is our brand position, the state of our distribution and the like, all very solid. Competition generally is good for an industry, it brings and draws attention to it, and I think this has been a pretty dynamic market already. The addition of a couple more guys just bring it on, we’ll see how we go.”

Meaningful 5G deployment in 2018

“How do we work those aspects as well with the goal of being first to market in the U.S. with a meaningful commercial deployment of 5G which we expect in 2018.”

Mobile 5G in 2020

“I think what we would more likely see is maybe the end 2019 into 2020 where you might see the first sort of delivery of mobile based 5G. And remember also to scale you have to seed the base of handsets and so you’ll have that curve. There’s a cost curve, there’s an initial integration that needs to happen. But in the long run what we see in terms of the value there is that where the highest demand on these mobile wireless networks will occur is in the places that are most densely populated. Where 5G works best is those places where it’s most densely populated. For the mobile use case is a no brainer as far as we’re concerned. The detail of it is remarkable, the reinvention that’s required has surprised us. We believe that the work that we’ve done so far and I will tell you about RF design is a really critical point. We’ve run and managed and design these networks a certain way for 20 years and the 5G paradigm is completely different. I think that’s going to surprise some people.”

Virtualization of the network is a big opportunity

“Virtualization I mentioned briefly a moment ago is an area that is just in its early stages. We maybe a third of the way through the journey to full stage virtualization of the network which has significant implications to the cost to provision as we go. The ability for us to leverage things like unlicensed spectrum for example, to do self optimizing networks less touch as the network policy expands to more cells, you have to have the ability to manage it in an automated way. So there’s a huge level of effort that’s going on in that side of the business.”

Biggest shift in enterprise has been to the cloud

“Yeah, we’ve seen other trends in enterprise that are more to do with how large enterprise clients buy. And it’s virtualization no longer sort of needing to host everything in their own facilities, the as a service model, etc. That has been a huge shift in the last couple of years. We expect that to continue because it almost feels generational. The CIA you work with today has a different orientation and then the one that may have preceded him or her and that’s important.”

Haven’t seen anything yet in terms of growth from sentiment

‘ In terms of sentiment about broader growth and investment we haven’t seen it yet. I’m optimistic about some of the changes that we see more broadly in the environment but at this point in time there’s nothing really that’s quite happened yet. Tax reform is still a discussion, it hasn’t occurred, etc. So what we’ll be watching for very closely is as the environment shifts, if there’s a move to greater growth we’ll certainly look to be in a position to capitalize on that as it comes.”