Verizon Communications at Goldman Sachs 2016 Notes

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Consumer wallet spend on telecommunications has not changed for 20 years

“So, if you look at consumer wallet spend, consumer wallet spend on telecommunications products, and telecommunications products includes cable, wireless, and telephone. It really, the percentage of spend by the consumer has not changed for 20 years. It’s around 4% to 5%.” Fran Shammo – EVP & Chief Financial Officer

 

Working advertisers into the consumer-data consumption model is key for VZ

“in the wireless world, we know the consumer is going to hit a certain peak, where they say, I just can’t pay for the consumption of data anymore. So we created this model that said we need to be able to deliver data through the network and have someone else pay for it other than the end consumer… That’s why we purchased AOL. That’s why we looked at Yahoo, because at the end of the day in order to make that model work, you need to have the viewership in order for the advertisers to sell to.” Fran Shammo – EVP & Chief Financial Officer

 

Free iPhone 7 promo may or may not continue past the end of the month

The question, though is, when those promos end, and of course, the market right now is saying, they’re going to end at the end of the month, does that continue? And quite honestly, I don’t know the answer to that yet. Fran Shammo – EVP & Chief Financial Officer

 

Because the iPhone 7 promo deal doesn’t apply to the secondary market, it has minimal to no impact on VZ

“the trading is only on the iPhone 6 and the 6 Plus. And those phones really have not been available in the secondary market. So, as we collect these phones and we go to the secondary market, that value of that phone, I will tell you on average is somewhere between $320 to $400… now you’re down to a $250 number… So for us at Verizon, I will tell you, this will have no impact in our margins for – especially for the third quarter. I can’t really talk to the fourth quarter, because I’m not quite sure yet what volume is and what other promotional activity will come out. But here sitting at the third quarter, this will really have no impact on our profitability for the quarter. So from this perspective, this is just another promotion. It’s to stimulate the marketplace, but from a mathematical perspective, it really has no impact to us.” Fran Shammo – EVP & Chief Financial Officer

 

No company has more than a single-digit share of the IoT market

If you look at the industry itself, I mean, from a market share standpoint, there really no one owns the market at this point, it’s all single-digit market shares… It also sets you up down the road when you have smart city, autonomous cars, it sets us in a premier environment to be able to deliver those solutions. Once they’re solidified, which I think will take a couple more years before we get there. So it puts us in a really great position in that segment of the IoT marketplace. Fran Shammo – EVP & Chief Financial Officer

 

VZ’s brand rests upon having the best network

I’m going to speed into the 5G world in 2017, and it’ll be just similar to LTE as far as I’m concerned, where we get a leap on all of our competitors. So we’re moving forward. I mean, at least, two of our competitors are still trying to deal with building out their LTE network. I mean, that’s like five years ago already… They’re still dealing in the LTE world. I’m dealing in the IoT world, smart city world, telematics. So I’m moving ahead and they’re still talking about how great their network is in LTE So, look, every drive test proves it, Verizon Wireless has the best network. We’ve built our brand on that. We’re not going to lose that and we’ll continue to move forward. Fran Shammo – EVP & Chief Financial Officer