Verizon CEO Vestberg on $9.6 Billion Frontier Deal

Look, it wasn't long ago that you actually owned some of these assets. Why go back in to wireline? Why are we seeing this convergence again? Thank you for having me. First of all, I think this is a very straight into our core strategy. We are sort of in mobility and broadband serve basically all types of customers in these market consumers and these large enterprises and governments. This is us extending the offerings and optionality for the customers will have. So this is a really good decision by us to do with an economical right. And on top of that, as you mentioned, yes, we owned these assets before, but they weren't told the different type of assets. There was a basically a copper based business. Nowadays, Frontier is more than 50% of the revenue is fiber and more than way more than 50% of the things coming from fiber. So a large transformation have been done and it fits in straight to our strategy over Operation Hines. Good morning. It's Ed in San Francisco. Frontier's trading at $35 a share ish below the $38.50 per share offer. What does that tell you about the market's reaction to the offer and what you think might happen next? I don't. Tell me so much is so early and these are 2 hours of trading. I think first of all, we feel really good about this deal from a from also from closing it and seeing that this is a possible transaction from many angles, because given that we believe it's going to take 18 months and all all the regulatory bodies, of course, will it be a thorough job? But this is improvements for customers because you're going to get more choice. And not only that, we're going to bring our mobility broadband to these customers. At the same time, we also have the offerings that we have on our broadband today, which is everything from streaming services, other services that we have on insurance, etc.. So we're going to bring a lot of new opportunities for the customer base of Frontier. So I'm really positive on this acquisition. Can you tell us a little bit about the future as well? The short term is the convergence trade is wireless wireline content, but then there's a I, then we're talking about the Internet of Things as we've been talking about for years. Hands. Where does that come into play? It come definitely into play in these assets. I mean, that's how we expect these to take in. They take 18 months. We're already right now have a sort of a prepared network with a lot of compute and storage at the edge of the network. We decided already some six years ago into fiber ice, all our transport. So we are really prepared of it. The frontier as it is just coming in, that's an extension of that. And we can meet even more customers to have a processing storage at the edge of the network with the fiber ized transport. So this is really also another advantage we're getting with the even more assets in the ground and of course, serving consumers with home broadband, together with our mobile and home offering, is of course a strength in the overall acquisition where we're doing hands. We have a question from an audience member on Bloomberg Technology who notes the 2015 sale of wireline assets. But I think the question that he and many others have is what's changed around the economics in this deal. You said the economics work, but give me specifics on what's different, particularly for fiber in 2024. So so if you look at a deal right now at closing, we believe that's going to be accretive on growth, revenue growth and EBITA on day one. So that's really good economics. And then it's going to take some 12 months and EPS and cash flow will be accretive as well. And the reason it takes 12 months and there are some integration costs coming up in the beginning. So definitely a very economical sound basis for us. But I said the assets we sold that previously was of course in a totally different standard. The Frontier Team has put in billions and billions of dollars to fiber ice, the network to be the next generation. And many of the metrics that they have, you know, churn, penetration, etc. are fairly similar to files and fiber uses. Of course, the best fiber network in the in the states. So there's a lot of similarities on that and that we can offer to our customers. And some analysts were a little bit surprised by the timing and the fact that you're going all in on convergence now, a bold step, some call it, because of your leverage and your commitment to reducing reducing your debt. Why do this now? Are you worried about leverage? No, I think, first of all, we have very strong balance sheet. And as we said this morning at closing, this will be maybe 0.2 0.30 on our leverage, which is very, very low. We still are committed to our capital location number one, invest in the business. And that's what we're doing today. Number two, committed to the dividend. And you might have seen yesterday we came out with our dividend, which was for the eight. Consecutive year we increased our dividend and that is to pay down our debt. We have been paying down our debt since we bought the C-BAND. We still have some 18 months here that we are going to continue to pay down the debt. So we're going to be in a really good position balance wise when when this deal is coming to fruition. Hans, what opportunity is there for you in data center interconnects? DCI In the context of I look at what like lumens done with Microsoft, for example. I think that the difference here is that we have so many assets in the ground when it comes to fiber and central offices. Many of these central offices, of course, have compute storage power, etc. and many of the A.I. solutions, when there's a real product, they actually need to be way closer to the users, the corporations, etc.. And that's means that because the transport cost and many other things, it will be hosted at the edge of the network. That's how we built the Verizon Intelligent Edge Network in 2018 when we started with the journey, which we now always use adding frontier to it. So I see a great opportunity for us on the B2B side with this footprint to serve customers that want to host A.I. at the close to them a secure, lower transport cost, etc.. You're just announcing one deal and you know, we always love to push forward hands. Are you going to continue to be acquisitive when it comes to convergence? I think, first of all, we are really happy with assets we have and now we're adding frontier. I don't think we need much more. We going to be big as a wireless. We're going to be clearly the ones having the largest broadband offering with fixed wireless access and fiber in the market. We have the largest distribution and the customers. So we're going to be in a really good position to see that we execute for our customers, but also for our shareholders. So I'm really happy with the assets we're we're going to have and we have today. When it comes to convergence, I think what is important in convergence, we will have the scalable economy for both. We will have the ownerships for the wireless network and the fiber networks and fixed wireless access. If customers want to make the convergence, we will have the economics for doing it. I don't believe it's going to be sort of you. You discount one product for customer taking both. That's all really. It's two great products and we all know mobility and broadband is essential for society and everyone needs individual corporation, a private person or a or a corporation. You need these services that are even more important today than were five years ago. And Verizon is number one in basically every segment of that. And this is just fortifying. And so, yeah, we're going to see convergence, but it's not like we're going to discount products. They're great to products that we're going to offer to our customers if they want to join. We have improvements on share. And of course, if customers both have mobility and broadband with us. And so we're going to see how this plays out in the market. But clearly, we're going to be best positioned in the market when it comes to convergence.