C-Band Issues Should Be Resolved Quickly: Verizon CEO

Verizon CEO Hans Vestberg assured investors Tuesday remaining issues on the C band will be resolved quickly (see 2201190064), as the company became the first of the major national carriers to report full Q4 results. AT&T announces Wednesday.

Executives fielded several questions about the C band during a call with analysts. Verizon reported 558,000 phone net adds in the quarter, which is less than the 844,000 already reported by T-Mobile and 880,000 by AT&T (see 2201060063). Verizon said 34% of its phone base had a 5G-capable device at year-end.

“Our deployment on C band has been extremely successful,” running a quarter ahead of schedule, Vestberg said on the call: “Everybody is focused. We have the highest assurance from the White House that this will be resolved very soon.” Verizon can’t turn the band on near some airports, but that affects only a small portion of the network, he said: “Clearly, we want this to be resolved as soon as possible.”

Chief Financial Officer Matt Ellis said the $10 billion the company plans to spend to build out the C band won’t be enough to cover the U.S. That amount “is helping us build out significant parts of the first 46 markets, the ones we got access to and turned on last week, and also begin the early build in the other markets that are scheduled to be turned on” late next year, he said.

Verizon’s C-band spectrum now covers 95 million POPs, up 5 million in a week, Vestberg said. Millimeter-wave is also getting high use in urban areas, with 10% of urban markets covered, he said: “It's exceeding our expectations. This confirms our millimeter wave strategy.”

Verizon has been helped by its Tracfone buy, which closed in November, Vestberg said. “Tracfone is being rapidly integrated into our operations,” he said: The acquisition “added 20 million customers to our prepaid model and cements Verizon as a leading prepaid vendor at Walmart and Best Buy forming a strong foundation of our retail efforts.”

Verizon and AT&T have outperformed the market in recent weeks, said MoffettNathanson’s Craig Moffett. “Beyond serving as a relatively safe port in a storm … is there a long-term growth case for Verizon?” he asked in a note to investors. “A true bull case for Verizon” requires a belief “industry pricing will hold, or even rise, in the face of pressure from T-Mobile and Cable Wireless,” he said: “One must believe that Verizon’s network will hold its own in the face of T-Mobile’s 5G spectrum and time-to-market advantage” and that “at least some of the use cases for 5G will materialize as real revenue drivers.”

Verizon should make gains over the first half of the year “with (already elevated) Sprint churn rising further into the network shutdown, and with Verizon’s lead over AT&T on deploying C-Band likely boosting gains,” wrote New Street’s Jonathan Chaplin. “Verizon’s massive investment in C-Band resolves much of the capacity shortfall that had worried us,” he said. More competition is coming from T-Mobile, especially after it completes the Sprint shutdown, he said: T-Mobile has a “big lead over Verizon on deploying upper mid-band and big lead on total holdings in mid-band spectrum.”

Verizon reported of $34.1 billion revenue, down 1.8% from last year because of the Verizon Media sale in September. Net income was $4.7 billion, 0.4% higher than a year ago. Wireless service revenue had a 6.5% increase to $17.8 billion.