Verizon at UBS Conference Notes

Verizon Communications (VZ) Presents at UBS Global Media and Communications Brokers Conference

Fran Shammo

Promotional activity is a little less than we saw a year ago

“I think the promotional activity this fourth quarter is probably I would rate it a little less than we saw a year ago. But, look coming into this quarter I said everybody is going to do their thing in the fourth quarter. It’s a high retail customer focused quarter. Everybody is going to run promotions like any retailer does and we should expect that and we’re seeing that.”

We are seeing less volume that we had a year ago, but I anticipated that

“I think last year was a much more dynamic year, plus on top of that you had a new iPhone configuration and new format which drove a lot of volume. And coming into this fourth quarter, I continue to say that I did not anticipate volume to be as much this fourth quarter as we had a year ago. And I think if you – most of you if you watch the news around Black Friday, I think that’s what you are seeing, is you are seeing a less volume year than you did a year ago. Now in our sector that’s more true than some others. But – and I think we are seeing less volume than we had a year ago, but I anticipated that. So that is not a surprise to us.”

We’re working on densifying our network with small cells

“if you talk to manufacturers, you’ll hear that Verizon is by far ahead of the competition when it comes to small cell deployment and small cell technology. And we are doing that because you have to stay ahead of that demand or else you’re going to get congestion in your networks, especially in a city like New York and Chicago and LA. These major concentrations of populations you need to densify that network.”

Cost to serve is going down as small cells become more efficient

“So from a small cell perspective, what I would say is the technology from the manufacturers is changing. It’s becoming much more efficient, much more cost effective to deploy these small cells. So from that perspective that’s good because the cost to serve is going down as time goes. So when we think about the revenue equation on service revenue declining because of the installment sale, the cost to serve is also declining and that’s why our Verizon Wireless margin really hasn’t changed.”

We don’t think it’s going to only be four carriers. TV operators need to find a way to get into wireless

“Look, I mean, I think if we sat here and said it’s only going to be the four carriers in the wireless industry, I think that would be pretty stupid on our part. I think that if you look at the wireless world and you believe that the world is going to move to wireless, all wireless with no wires eventually the pie is going to get much bigger for the industry, and people are trying to figure out how they get a piece of that pie. Because if you are just a TV operator or some type of other operator, you are going to need to do something to your business to disrupt yourself in order to change with where the environment is going.”

We’re even trying to figure out how to disrupt our FiOS product

“If you look at millennials, all they care about is broadband and video over mobile. They could care less about linear TV. So we ourselves are looking at how do we disrupt even our FiOS product and adopting to this new world. And I think that you have to look at all of your competitors and see what’s going to happen in that industry.’

Scrapping handset subsidy model for new customers

“for new customers walking in, we only allow them to take the installment sale. With our embedded base if you are a current customer who wants to upgrade if you want to keep the subsidy pricing and the subsidy model, we allow you to do that. But that’s less and less as time goes because most people are jumping into the installment sale and subsidy model.”

When people are picking a la carte, more are picking a non-sports package

“What we did see, one of the disappointments was when you do custom TV you get a basic package and you get to pick two other packages. We thought people would pick three, people are only picking two and what we’re seeing is they are picking more of a non-sports too than sports”