Q3 2023 Verizon Communications Inc Earnings Call
Good morning, and welcome to the Horizon third quarter 2023 earnings Conference call. At this time, all participants have been placed in a listen only mode and the floor will be opened for questions. Following the presentation.
To ask a question press star one on your Touchtone phone.
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Today's conference is being recorded.
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It is now my pleasure to turn the call over to your host Mr. Brady Connor Senior Vice President Investor Relations. Thanks, Brad Good morning, everyone and welcome to our third quarter earnings Conference call.
Quatre and I'm joined by our Chairman and Chief Executive Officer, Hans Vestberg as well as our Chief Financial Officer, Tony Ski Addis.
Before we begin I'd like to draw your attention to our safe Harbor statement, which can be found on slide two of the presentation.
Information in this presentation contains statements about expected future events and financial results that are forward looking and subject to risks and uncertainties disc.
Discussions of factors that may affect future results is contained in verizon's filings with the SEC, which are available on our website.
This presentation contains certain non-GAAP financial measures reconciliations.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials posted on our website earlier. This morning, we posted to our Investor Relations website, a detailed review of our third quarter results you will find additional details in the earnings materials on our Investor Relations website with that I'll turn the call.
All over to Hans.
Thank you Brady and good morning to everyone.
Our strong third quarter results.
The quarter with solid growth and improving profitability. It is clear that our strategy is working in both the consumer and the pieces groups. We're executing a segmented strategy that provides value to our customers and our bottom line.
We have delivered growth in each of the areas, where you have the greatest zone wireless service revenue.
And free cash flow.
As evidenced that we have the right strategy and are achieving our results in a financially disciplined way now let me share our financials for the quarter.
Third quarter wireless service revenue is up two 9% year over year, driven by expanding and deepening our customer relationships. This revenue growth is a key driver for adjusted EBITDA of $12 $2 billion for the quarter, which is higher than both Q3 last year and sequentially.
Our year to date free cash flow of $14 $6 billion is already exceeding our full year free cash flow for twins into same store focus on high quality revenue growth disciplined promotional strategy cost efficiency and capex reduction off the recent years of heightened capital.
In terms of it driven by the C band and fiber investments I'm proud to share that my team and I have taken actions to further our position of financial strength, our strong cash generation enabled us to reduce net debt strengthen our balance sheet and deliver a higher dividend to our shareholders.
We're working to bring our leverage ratio to pre spectrum acquisition levels. During the third quarter, we paid down $2 $6 billion in depth and increased our dividend for the 17th consecutive year, our current industry record that we take pride in our.
Our dividend coverage is very healthy year to date, our free cash flow dividend payout ratio is approximately 56% a significant improvement from a year ago.
In summary.
Uncertain economic environment, we're on pace to finish 2023 strong we're confident that we will deliver on the financial guidance that we issued to you at the start of the year and this morning, our announcing higher free cash flow guidance for 2023, Tony will provide you more details in a few more.
Now, let me share more on how our business units are driving our strategy forward in there.
Quarter, we delivered on our key growth areas mobility broadband and private networks. Thanks to our network scale and technology advantages in consumer mobility, we achieved sequential and year over year improvement in postpaid phone net adds by continuing to put the customer at the center.
Unknown Executive: Good morning, and welcome to the Verizon third quarter, 2023 earnings conference call. At this time, all participants have been placed in a listen only mode, and the floor will be opened for questions following the presentation. To ask a question, press star one on your touch-tone phone. If at any point your question has been answered, you may remove yourself by pressing star two. Today's conference is being recorded. If you have any objections, you may disconnect at this time.
Everything we do rather than engaging in aggressive promotional activity like others in the industry, we're offering our consumers optionality and flexibility to choose how they want to use our products and services are differentiated approach or segmentation financial discipline is paying off with growth in.
Unknown Executive: It is now my turn.
Brady Connor: Thank you for your pleasure to turn the call over to your host, Mr. Brady Connor, Senior Vice President, Investor Relations. Thanks, Brad. Good morning, everyone, and welcome to our third quarter earnings conference call.
Postpaid phone gross adds and lower promotional cash calls.
There is more work to be done, but a responsible approach position us to grow subscribers profitably.
Brady Connor: I'm Brady Connor, and I'm joined by our Chairman and Chief Executive Officer, Hans Vestberg, as well as our Chief Financial Officer, Tony Skiadas. Before we begin, I'd like to draw your attention to our Safe Harbor statement, which can be found on slide two of the presentation. Information in this presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Discussions of factors that may affect future results is contained in Verizon's filings with the SEC, which are available on our website.
Since its launch in May My plan continues to deliver a personalized experience, giving our customers the value choice and control that they won't during the third quarter, we enhanced my plan by adding ultimate unlimited.
Third tier with more value added services further increasing our premium mix and ARPA growth.
Just one example of the flexibility and speed to market that my plan provides and I'm excited about what is to come are targeted and segmented market approach also served us well during the iPhone 15 loans and we continue to execute with an eye towards meeting our customers needs while maintaining.
Brady Connor: This presentation contains certain non-gap financial measures. Reconciliation of these non-gap measures to the most directly comparable gap measures are included in the financial materials posted on our website. Earlier this morning, we posted to our Investor Relations website a detailed review of our third quarter results. You will find additional details in the earnings materials on our Investor Relations website.
A disciplined approach.
Our competitive position is now stronger and we delivered positive consumer postpaid phone net adds in the month of September we anticipate that momentum will continue as we're on track to exceed our postpaid phone net adds from Q4 of last year.
Hans Vestberg: With that, I'll turn the call over to Hans. Thank you, Brady, and good morning to everyone. I'm pleased to share our strong third quarter results making another quarter with solid growth and improving profitability.
Postpaid phone churn levels are stable.
Even with our targeted pricing actions throughout the year.
Hans Vestberg: It is clear that our strategy is working. In both the consumer and the business groups, we're executing a segmented agile strategy that provides value to our customers and our bottom line. We have delivered growth in each of the areas we ask you to grade us on. Wireless service revenue, EBITA, and free cash flow. This is evidence that we have the right strategy and are achieving our results in a financially disciplined way.
We continue to see muted upgrade levels, which is something we're watching carefully and it's a trend. We expect will continue for the next few quarters.
Turning to business mobility, Verizon business group delivered 151000 phone net adds and reached our ninth consecutive quarter above 125000 businesses and governments continue to place an increased emphasis on best in class reliable connectivity that one.
Hans Vestberg: Now, let me share our financials for the quarter. Our third quarter wireless service revenue is up 2.9% year over year, driven by expawning and deepening our customer relationships. This revenue growth is a key driver for adjusted EBITA of 12.2 billion dollars for the quarter, which is higher than both Q3 last year and sequentially. Our year-to-date free cash flow of $14.6 billion is already exceeding our full year free cash flow for 2022.
The right zone.
Wides across mobility postpaid phone net adds 100000 compared to 8000 last year, we had the largest customer base in the industry and are still finding new ways to add customers through innovation service quality and a variety of offerings and partnerships that competitors.
Match.
As we discussed before we're seeking the optimal balance between price and quantity that allow us to grow our base profitability.
Hans Vestberg: Thanks to our focus on high quality revenue growth, discipline promotion strategy, cost efficiency, and capic reduction of the recent years of heightened capital intensity driven by the CBAN and fiber investments. I'm proud to share that my team and I have taken actions to further our position of financial strength. Our strong cash generation enabled us to reduce net debt, strengthen our balance sheet, and deliver a higher dividend to our shareholders. We're working to bring our leverage ratio to prespectrum acquisition levels.
Our value business, we have had negative volumes, but I'm encouraged by our quarter over quarter improvements.
Before the value base is a key part of our growth strategy and we will continue to invest in it and adjust to the needs of the market.
As we mentioned last quarter, we believe we have seen the bottom for prepaid volumes and the team is committed and working daily to grow our value business.
Moving to broadband we delivered another strong quarter with more than 400000, new subscribers for the fourth quarter in a row. We finished Q3 with $10 3 million broadband subscribers up by more than one 7 million subscribers from a year ago, but 21%.
Hans Vestberg: During a third quarter, we pay down $2.6 billion in debt and increase our dividend for the 17th consecutive year. A current industry record that we take pride in. Our dividend coverage is very healthy. Year-to-date or free cash flow dividend payout ratio is approximately 56%, a significant improvement from a year ago.
Inquiries critical due the strength of this key area is fixed wireless access something you know with deeply believing or fixed wireless access net adds of 384000 continued to be strong even with the recent $10 increase for new bundled customers further evidence of the demand for our <unk>.
Hans Vestberg: In summary, in spite of an uncertain economic environment, we're on pace of finished 2023 strong. We're confident that we will deliver on the financial guidance that we issued to you at the start of the year and this morning are announcing higher free cash flow guidance for 2023.
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F. W. E is available our customers take it and love it as seen by the high net promoter score.
Hans Vestberg: Tony, we'll provide you more details in a few moments. Now, let me share more on how our business units are driving our strategy forward. In the quarter, we delivered on our key growth areas, mobility, broadband and private networks. Thanks to our networks, scale and technology advantages. In consumer mobility, we achieved sequential and year-over-year improvements in post-paid phone net ads by continuing to put the customer at the center of everything we do.
I'm excited towards a share that on the fiber side, we had 72000 Internet net adds for the quarter up almost 20% year over year, and one or best performance in seven years.
<unk> remains a coveted high quality of service and we continue to take share and deliver strong numbers, even in a lower mover environment.
When it comes to private networks, we see demand for the product continues to grow, especially those solutions built with licensed spectrum, which provides a more secure and differentiated experience for the end users businesses are increasingly looking to us for the private network solutions, helping to grow our sales funnel and <unk>.
Hans Vestberg: Rather than engaging in aggressive promotion activity like others in the industry, we're offering our consumers' optionality and flexibility to choose how they want to use our products and services. Our differentiated approach or segmentation, financial discipline, is paying off with growth in post-paid phone growth ads and lower promotion and cash costs. During the third quarter, we enhance my plan by adding ultimate unlimited, a third tier with more value and services, further increasing our premium mix and ARPA growth.
The number of installations each quarter.
And by talking about the backbone of our business our network during the third quarter. We obtained early access toward remaining C band spectrum in urban markets, where our C. Band is already deploying we're firing on all cylinders and leveraging its full potential through software upgrades delivering two to three times more.
Spectrum depth as a result peak speeds go from 900 Megabits per second to an amazing two four gigabits per second, enabling an even better experience for our customers.
You've heard me say this before but let me say it again C band is a game changer for our business, giving us better customer retention and step up that's where the strong broadband opportunity with fixed wireless access.
Hans Vestberg: This is just one example of the flexibility and speed to market that my plan provides. And I'm excited about what is to come. Our targeted and segmented market approach also served us well during the iPhone 15 launch and we continue to execute with an eye towards meeting our customers' needs while maintaining a disciplined approach. Our competitive position is now stronger and we've delivered positive consumer post-paid phone net ads in the month of September.
Every day, we see the benefits of our generation investment in C band spectrum and the impact it will have for our customers for years to come.
And our network is winning this quarter, we received J D Power awards in all six U S regions, receiving the most awards for wireless network quality for the 31st time in a row, we have the best network in the market and we will extend our lead as we complete our C band deployment.
Hans Vestberg: We anticipate that momentum will continue as we're on track to exceed our post-paid phone net ads from Q4 of last year. Post-paid phone share on levels are stable, even with our targeted pricing actions throughout the year. We continue to see muted upgrade levels, which is something we're watching carefully and it's a trend we expect will continue for the next few quarters. Turning the business mobility, Verizon Business Group delivered 151,000 phone net ads and reached our ninth consecutive quarter above 125,000.
First augmenting urban areas and next year in suburban and rural markets. This is a key differentiator in the center of everything we do and we're doing all of this in a responsible way we're optimizing our network, while returning to business as usual level. So capex were fine.
<unk> cost efficiencies across our business, both as a result of our new structure.
And by emphasizing profitability when evaluating new opportunities like within business wireline our cost efficiency program remains on track to meet our savings goal of $2 billion to $3 billion annually by 2025.
Hans Vestberg: Businesses and governments continue to place an increased emphasis on best-in-class, reliable connectivity that only the Verizon provides. Across mobility, post-paid phone net ads were 100,000 compared to 8,000 last year. We are the largest customer-based in industry and are still finding new ways to add customers through innovation, service quality, and a variety of offerings and partnerships that competitors cannot match. As we discussed before, we are seeking the optimal balance between price and quantity that allow us to grow our base profitably.
Now, let me turn the call over to Tony to discuss our financial and operational performance in more detail.
Thanks, Hans and good morning, our results for the third quarter continued to demonstrate our progress towards our three priorities growing wireless service revenue and driving EBITDA and free cash flow.
As Hans said, we are executing on our plan and remain on track to meet our financial guidance for 2023, we've talked about improving our operational performance, while maintaining financial discipline with the third quarter results, representing another proof point that demonstrates we can deliver improving key metrics and strong financials consumer postpaid phone net loss.
Hans Vestberg: In our value business, we have had negative volumes, but I'm encouraged by our quarter of a quarter improvements. As I've said before, the value business is a key part of our growth strategy and we will continue to invest in it and adjust to the needs of the market. As we mentioned last quarter, we believe we have seen the bottom for prepaid volumes and the team is committed and working daily to grow our value business.
This totaled 51000 for the quarter, an improvement of 85000 sequentially and 138000 compared to the prior year.
During the quarter, we executed well in a low switcher environment, enabling postpaid phone gross add growth of two 3% year over year.
Hans Vestberg: Moving to broadband, we deliver another strong quarter with more than 400,000 new subscribers for the fourth quarter in a row. We finished Q3 with 10.3 million broadband subscribers up by more than 1.7 million subscribers from a year ago, but 21% increase. Critical to the strength of this key area is fixed wireless access, something you know with deeply believing, or fixed wireless access net ads of 384,000 continue to be strong, even with a recent $10 increase for new bundled customers.
Postpaid phone churn of zeroed that eight 5% represents a stable result, even after implementing over $1 billion of annualized pricing actions in 2023.
Our segmented approach to the market and the structure and discipline of our promotional strategy helped to deliver strong postpaid phone gross adds and lower postpaid upgrades. The third quarter's consumer upgrade rate of three 6% is down 150 basis points year over year the.
The quality of the business, we are writing a consumer remains high as my plant continues to drive an elevated premium mix.
Sumer ARPA of $133 47 increased sequentially by one 2% and year over year by four 5%.
Hans Vestberg: Further evidence of the demand for our product, where FWA is available, our customers take it and love it as seen by the high net promoter score. I'm excited to also share that on the fireside, we had 72,000 internet net ads for the quarter, up almost 20% year over year, and one of our best performances in seven years. FIOS remains a coveted, high quality service and we continue to take share until we deliver strong numbers even in a lower mover environment.
We expect to deliver further ARPA growth as a result of the innovations of my plan as well as our most recent pricing actions.
Verizon business delivered another strong quarter with 151000 phone net adds which as Hans mentioned is our ninth consecutive quarter above 125000.
While the macroeconomic environment is uncertain and businesses are more cautious than a year ago mobility continues to be a top investment priority for our business customers.
Hans Vestberg: When it comes to private networks, we see demand for the product continue to grow, especially those solutions built with license spectrum, which provides a more secure and differentiated experience for the end users. Businesses are increasingly looking to us for the private network solutions, helping to grow our sales partner and scale the number of installations each quarter.
We expect to continue to deliver strong volumes and expand our relationships by leveraging our position as the wireless market share leader for small and medium businesses large enterprises and public sector customers.
Moving onto broadband we delivered 434000 net additions continuing the pace of over 400000 net ads for the fourth quarter in a row.
Hans Vestberg: Let me end by talking about the backbone of our business, our network. During a third quarter, we obtained early access to our remaining CBAN spectrum. In urban markets, where CBAN is already deploying, we're firing on all cylinders and leveraging its full potential through software upgrades, delivering two to three times more spectrum depth. As a result, peak speeds go from 900 megabits per second to an amazing 2.4 gigabits per second, enabling an even better experience for our customers.
Customers are drawn to the quality of our service and overall value proposition for both SWA and files.
For fixed wireless gross add expansion drove 384000 net adds for the quarter growing the base to nearly $2 7 million subscribers.
The addition of the second tranche of C band Spectrum will help US continue our FW and momentum as you work to build a long term sustainable business.
<unk> Internet net adds were 72000 up 11000 year over year, we're pleased with the success of <unk> with strong gross adds and retention, reflecting the quality and overall value of the product for prepaid net losses of 207000 and represents a sequential improvement from the second quarter.
Hans Vestberg: You heard me say this before, but let me say it again. CBAN is a game change for our business, giving us better customer attention and step up as well as strong broadband opportunity with fixed wireless access. Every day we see the benefits of our generation investment in CBAN spectrum and the impact it will have for our customers for years to come. And our network is winning. This quarter we received JD Power Awards in all six US regions receiving the most awards for wireless network quality for the 31st time in a row.
We expect a better trajectory for the remainder of the year as the teams continue to scale some of our key brands such as visible and total by horizon and execute on our ongoing integration efforts.
Let's now look at our financials consolidated revenue for the third quarter was $33 $3 billion down two 6% year over year. The decline can be attributed to wireless equipment revenue, which was approximately 12% lower than the prior year as postpaid upgrades declined 26%.
Hans Vestberg: We have the best network in the market and we will extend our lead as we complete our CBAN deployment. First, augmenting urban areas and next year in suburban and rural markets. Roberts, Eric Luebchow, David and remains on track to meet our savings goal of two to three billion dollars annually by 2025.
Total wireless service revenue was $19 3 billion up two 9% year over year and up $217 million sequentially.
Strong revenue benefited from targeted pricing actions more customer selecting premium unlimited plans and growth and fixed wireless access.
Additionally, as a result of our discipline around promotions and lower upgrade volumes. We saw further reduction in headwinds to service revenue growth associated with promo amortization.
This was partially offset by pressure from prepaid, which reduced total wireless service revenue growth by approximately 60 basis points year over year consolidated adjusted EBITDA in the quarter was $12 2 billion, an increase of $267 million sequentially and up zero to 2% compared to the prior year.
Tony Skiadas: Now, let me turn the call over to Tony to discuss our financial and operational performance in more detail. Thanks Hans and good morning. Our results for the third quarter continue to demonstrate our progress towards our three priorities, growing wireless service revenue and driving EBITDA and free cash flow. As Hans said, we are executing on our plan and remain on track to meet our financial guidance for 2023. We've talked about improving our operational performance while maintaining financial discipline, with the third quarter results representing another proof point that demonstrates we can deliver improving key metrics and strong financials.
Adjusted EBITDA margin improved by 100 basis points year over year, primarily driven by improved wireless service revenue and lower consumer postpaid upgrades.
Operating expenses, excluding depreciation and amortization and special items were down approximately 4% year over year, primarily due to the lower cost of equipment from reduced upgrade volumes, while bad debt is up year over year. It was once again flat sequentially consistent with the first half of the year.
We continue to make progress on our cost efficiency program, having recently implemented transformations within our consumer customer care group as well as business managed services.
Tony Skiadas: Consumer post paid phone net losses total $51,000 for the quarter and improvement of $85,000 sequentially and $138,000 compared to the prior year. During the quarter we executed well in a low switcher environment enabling post paid phone gross add growth of 2.3% year over year. Our post paid phone churn of 0.85% represents a stable result even after implementing over $1 billion of annualized pricing actions in 2023. Our segmented approach to the market and the structure and discipline of our promotional strategy help to deliver strong post paid phone gross add and lower post paid upgrades.
We are on track to deliver $200 million to $300 million of savings in 2023 building momentum to generate incremental savings in 2024. Adjusted EPS was $1 22 and includes <unk> <unk> of pressure from a reduction in capitalized interest due to the early clearance of C band spectrum. We currently anticipate another incremental $3.
<unk> a pressure in the fourth quarter.
Turning the attention to cash flow cash flow from operating activities for the third quarter was $10 8 billion, bringing the 2023 year to date total to $28 8 billion.
The year to date performance is up approximately $600 million compared to the prior year, primarily due to working capital improvements associated with fewer upgrades and lower inventory levels, partially offset by higher interest payments.
Tony Skiadas: The third quarter's consumer upgrade rate of 3.6% is down 150 basis points year over year. The quality of the business we are writing and consumer remains high as my plan continues to drive an elevated premium mix. Consumer ARPA of $133.47 increased sequentially by 1.2% in year over year by 4.5%. We expect to deliver further ARPA growth as a result of the innovations of my plan as well as our most recent pricing actions.
Customer payments continue to be healthy with consistent performance throughout the year Capex for the quarter came in at $4 $1 billion totaling $14 $2 billion year to date.
At this point, we expect 2023 capex to come in at the upper end of our guidance range.
Of $18 five to $19 to $5 billion.
Tony Skiadas: Verizon Business delivered another strong quarter with 151,000 phone net ads which as Hans mentioned is our ninth consecutive quarter above 125,000. While the macro economic environment is uncertain and businesses are more cautious than a year ago mobility continues to be a top investment priority for our business customers. We expect to continue to deliver strong volumes and expand our relationships by leveraging our position as the wireless market share leader for small and medium businesses, large enterprises and public sector customers.
The third quarter was the second consecutive quarter operating at a business as usual run rate.
As a result, we would expect a reduction of approximately $4 billion of Capex in 2023 compared to the prior year.
Free cash flow for the third quarter was $6 7 billion.
Bringing our year to date totaled $14 6 billion or $2 2 billion dollar improvement over the prior year.
As Hans mentioned, we have generated more free cash flow in the first three quarters of this year than in all of 2022.
Based on our year to date results and the strength of our core business. We are pleased to raise our 2023 free cash flow guidance by $1 billion to more than $18 billion.
Tony Skiadas: Moving on to broadband we delivered 434,000 net additions continuing the pace of over 400,000 net ads for the fourth quarter in a row. Customers are drawn to the quality of our service and overall value proposition for both FWA and Fios. For fixed wireless, gross ad expansion drove 384,000 net ads for the quarter growing the base to nearly 2.7 million subscribers. The addition of the second tranche of CBAN Spectrum will help us continue our FWA momentum as you work to build a long-term sustainable business.
We are raising guidance, even with capex at the upper end of our range and absorbing the headwinds from interest expense.
Strong free cash flow provides flexibility and enables us to deliver on our capital allocation priorities.
As Hans said within the third quarter, we executed a successful $2 $6 billion debt tender of which the majority was floating rate while also increasing our dividend once again. Additionally.
Additionally, given our cash position and the performance of the business. This month, we paid approximately $3 $7 billion of spectrum clearing costs, primarily using operating cash flow. The remaining spectrum payments are minimal and will be made in 2024 net unsecured debt at the end of the quarter was $122 2 billion an improvement of <unk>.
Tony Skiadas: Fios internet net ads were 72,000 up 11,000 year over year. We're pleased with the success of Fios, with strong growth ads and retention reflecting the quality and overall value of the product. For prepaid, net losses of 207,000 represent the sequential improvement from the second quarter. We expected better to direct you for the remainder of the year as the teams continue to scale some of our key brands such as visible and total by Verizon and execute on our ongoing integration efforts.
$4 $3 billion from the end of second quarter, and $7 $1 billion lower year over year.
We ended the quarter with $4 $2 billion of cash on hand, which we are using to pay the clearing costs I just described.
Tony Skiadas: Let's now look at our financials. Consolidator revenue for the third quarter was $33.3 billion down 2.6% year over year. The decline can be attributed to wireless equipment revenue, which was approximately 12% lower than the prior year, as post-paid upgrades declined 26%. Total wireless service revenue was $19.3 billion, up 2.9% year over year, and up 217 million dollars sequentially. Strong revenue benefited from targeted pricing actions, more customer selecting premium unlimited plans, and growth in six wireless access.
Our net unsecured debt to consolidated adjusted EBITDA ratio was two six times as of the end of the third quarter, representing a 0.1 turn improvement year over year overall, I'm pleased with our ability to deliver stronger operational and financial trends we.
We are focused on finishing the year strong with continued improvements in volumes and financials setting us up for meaningful deleveraging opportunities in 2024, I will now turn the call back to <unk> for his closing thoughts before we open it up to your questions.
Thank you Tony.
Although the progress our team has made in our operating results over the last three quarters should also give you confidence in us.
Tony Skiadas: Additionally, as a result of our discipline around promotions and lower upgrade volumes, we saw further reduction in headwinds to service revenue growth associated with promo amortization. This was partially offset by pressure from prepaid, which reduced total wireless service revenue growth by approximately 60 basis points year over year. Consolidated adjusted EBITDA in the quarter was $12.2 billion, an increase of $267 million sequentially, and up 0.2% compared to the prior year. Adjusted EBITDA margin improved by 100 basis points year over year, primarily driven by improved wireless service revenue and lower consumer post-paid upgrades.
We're delivering on our financial targets ahead of schedule on several key metrics and restoring our leverage ratios to where we want them to be we have a great network and a free cash flow generation is industry, leading and we have more than 10 million broadband subscribers and that number is growing at near record rates.
As we enter the final quarter of 'twenty three our goals are clear deliver strong growth in wireless service revenue EBITDA and free cash flow are segmented and disciplined approach to consumer mobility is working and we expect our momentum to continue building in the fourth quarter.
Tony Skiadas: Operating expenses excluding depreciation and amortization and special items were down approximately 4% year over year, primarily due to the lower cost of equipment from reduced upgrade volumes. While bad debt is up year over year, it was once again flat sequentially consistent with the first half of the year. We continue to make progress on our cost efficiency program, having recently implemented transformations within our consumer care group as well as business managed services.
Enabling all of this is America's best and most reliable <unk> network. Our C band spectrum has already benefited mobility and broadband deploying the remaining C band will make these network, even stronger and more resilient and I'm excited about the opportunities that lie ahead.
Me close with this our performance has put us firmly on track to meet our full year financial targets and position us well as we approach 2024, we're excited to head into 'twenty 'twenty four with all of our assets in place and a great team to execute our strategy with that I'll hand, the call back to <unk>.
Tony Skiadas: We are on track to deliver 200 to $300 million of savings in 2023, building momentum to generate incremental savings in 2024. Adjusted EPS was $1.22 and includes 3 cents of pressure from a reduction in capitalized interest due to the early clearance of C band spectrum. We currently anticipate another incremental 3 to 4 cents of pressure in the fourth quarter. Turning the attention to cash flow, cash flow from operating activities for the third quarter was $10.8 billion, bringing the 2023 year-to-date total to $28.8 billion.
Brady for questions.
Thanks, Hans Brad we're ready to take questions. This morning.
Q.
We will now begin the question and answer session.
If he would like to ask a question. Please press star one please on mute your phone and record your name clearly when prompted your name is required to introduce your question too.
Tony Skiadas: The year-to-date performance is up approximately $600 million compared to the prior year, primarily due to working capital improvements associated with fewer upgrades and lower inventory levels, partially offset by higher interest payments. Cuts our payments continue to be healthy with consistent performance throughout the year. CapEx for the quarter came in at $4.1 billion, totaling $14.2 billion a year-to-date. At this point, we expect 2023 cat-backs to come in at the upper end of our guidance range of $18.25 to $19.25 billion.
To withdraw your request please press star two.
One moment please for the first question.
And the first question for today will come from Phil Cusick of Jpmorgan. Your line is open Sir.
Hi, guys. Thank you two if I can Tony how should we think about the pieces of free cash flow growing our stability next year and after making the C band relocation payments what obligations other than the dividend will prevent you from delevering.
And then Hans as follow up there's a lot of speculation about M&A in the fiber and wireless space lately can you talk about any interest you have in buying fiber or wireless assets in the market and if so what might be criteria for that.
Tony Skiadas: The third quarter was the second consecutive quarter operating at our business as usual run rate. As a result, we would expect a reduction of approximately $4 billion of cat-backs in 2023 compared to the prior year. Free cash flow for the third quarter was $6.7 billion, bringing our year-day total of $14.6 billion, a $2.2 billion improvement over the prior year. As Hans mentioned, we have generated more free cash flow in the first three-quarters of this year than in all of 2022.
I will start and I'll hand, it over to Tony I mean first on the cash flow I think you have seen us now the last.
A couple of years and focusing very much on the service revenue expansion <unk> Castro expansion.
All our incentives for the management team from the board both short and long term. So this is a key thing for us to see that we're continuing to generate the local cash flow.
Tony Skiadas: Based on our year-day results and the strength of our core business, we are pleased to raise our 2023 free cash flow guidance by $1 billion to more than $18 billion. We are raising guidance even with cat-backs at the upper end of our range and observing the headwinds from interest expense. Strong free cash flow provides flexibility and enables us to deliver on our capital allocation priorities. As Hans said, within the third quarter, we executed a successful $2.6 billion debt tender of which a majority was floating rate while also increasing our dividend once again.
Tony will talk to the puts and takes.
According our fiber assets first of all I love our strategy and our strategy. There was clear from 2017 in the <unk> footprint of course would be the total fiber doing extremely well you saw this quarter again, a record quarter on <unk> subscribers outside we build the one fiber oh.
Sure a couple of years, where basically in all the major markets, where our one fiber to our own network.
Right now our strategy is clear that we want to take the broadband subscribers with fixed wireless access because we get them right now is a superior product.
Tony Skiadas: Additionally, given our cash position and the performance of the business, this month we pay it approximately $3.7 billion to spectrum clearing costs, primarily using operating cash flow. The remaining spectrum payments are minimal and will be made in 2024. Net unsecured debt at the end of the quarter was $122.2 billion and improvement of $4.3 billion from the end of second quarter and $7.1 billion lower year over year. We ended the quarter of a $4.2 billion of cash on hand which we are using to pay the clearing cost I just described.
And we don't see a need right now for adding a new fiber wood to that footprint over time of course, we will always look into it in any one that would dispose any and telecommunication assets anymore, because we'll talk to us but the hurdle is high I mean, we have a great network and we have built a really good strategy around our <unk>.
Or technology.
Hi, Phil Good morning, so on the cash generation. So we're very pleased thus far I'll start with where we are in the third quarter. So we're pleased with the cash generation of the business. The performance of the business and as you saw the continued discipline that we had with promos and retention gave us the confidence to raise the free cash flow guide by $1 billion to more than 18.
Tony Skiadas: Our net unsecured debt to consolidate adjusted EBIT ratio was 2.6 times as of the end of the third quarter representing a 0.1 turn improvement year over year. Overall, I'm pleased with our ability to deliver stronger operational and financial trends.
Billions and that's with Capex at the upper end of the range and also with higher interest expense. So we feel very good about.
Tony Skiadas: We are focused on finishing the year strong with continued improvements in volumes and financials setting us up for meaningful, leveraging opportunities in 2024.
The balance of the year and our positioning heading into next year, obviously, we're not going to guide on 2024 at this time, but I can share some qualitative aspects as we look ahead to free cash flow for 2024 on the plus side. We continue to focus the team on improving EBIT profile and that's a big focus of the team with respect to Capex.
Hans Vestberg: I will now turn the call back to Hans for his closing thoughts before we open it up to your questions. Thank you Tony. I'm proud of the progress our team has made and our operating results over the last three quarters should also give you confidence in us. We are delivering on our financial targets a head of schedule on several key metrics and restoring our leverage ratios to where we want them to be. We have a great network and our free cash flow generation is industry leading and we have more than 10 million broadband subscribers and that number is growing at near record rates.
Said, a couple of times here in the past that we expect to run at 17% to $17 5 billion.
For 2024, which is back to a business as usual level of spend.
That you've seen from US and then we also strive to make continued improvements in working capital and then offsetting that we expect higher interest costs from both from the rate environment and the reduction in capitalized interest due to the early clearing of the C band spectrum, and then with taxes as you know under current legislation taxes are going to be.
Hans Vestberg: As we enter the final quarter of 2023 our goals are clear. Deliver strong growth in wireless service revenue, EBITDA and free cash flow or segmented and disciplined approach to consumer mobility is working and we expect our momentum to continue building in the fourth quarter. Enabling all of this is America's best and most reliable fire network or CBAN spectrum has already benefited mobility and broadband. Deploying the remaining CBAN will make this network even stronger and more resilient and I'm excited about the opportunities that lies ahead.
<unk> by the continued phase out of a bonus depreciation and we'll see how that plays out.
And so heading into 2024, we continue to focus on strong free cash flow generation and opportunities for meaningful debt reduction and we don't see any obstacles to delevering.
Thanks, both of you guys great. Thanks, Thanks, Phil.
Brad we're ready for the next question.
Next question comes from Simon Flannery of Morgan Stanley . Your line is open Sir.
Alright. Thank you very much good morning, Hans you talked a lot about fixed wireless yes, you've got the rest of the C. Band can you help update the fixed wireless footprint the open for sale.
Hans Vestberg: Let me close with this our performance has put us firmly on track to meet our full year financial targets and position as well as we approach 2024. We are excited to head into 2024 with all of our assets in place and a great team to execute our strategy.
Where you are today and how you get to the 50 million households, or any updated targets that you have there and then Tony.
Talk a little bit about some of the pricing actions you've taken so far can you just tease out for us.
Brady Connor: With that I hand the call back to Brady for questions. Thanks Hans, Brad Array, take questions this morning. Thank you.
Recognized in Q3, and I think you've talked about a tailwind going into Q4, so how we think about some of the.
Unknown Executive: We will now begin the question and answer session. If you would like to ask a question, please press star one. Please unmute your phone and record your name clearly when prompted. Your name is required to introduce your question. To withdraw your request, please press star two, one moment please for the first question.
The kind of sequential benefits that are still to come. Thank you.
Sorry, when I can start with fixed wireless access.
As you can see we continue on that read them.
With the 350 400000 every quarter the additional C band, we got used to a couple of weeks ago will initially go straight to augmenting or urban areas, where we already have the sites and then in the in the early part of next year. We will also start deploying that in suburban and rural areas and of course.
Phil Keesick: And the first question for today will come from Phil Keesick of JP Morgan, your line is open sir. Hi guys, thank you too if I can. Tony, how should we think about the pieces of free cash flow growing or stability next year? And after making the CBAN relocation payments, what obligations other than the dividend will prevent you from delivering? And then Hans, there's a lot of speculation about M&A and the fiber and wireless bases lately. Can you talk about any interest you have in buying fiber or wireless asset in the market? And if so, what might be criteria for that? Thank you.
That's an even greater opportunity for us because there are more on the sort of markets.
<unk> will become extremely quickly into those markets. So that will use fortify our situation on how we want to I want to roll. This out we have a target of four to 5 million subscribers by 2025, we keep that of course, we have dimension our network for way more.
The team of course.
Have internal targets that we've set but by me, but right now Theres nothing else then we want to deliver these targets as well to the market. We always want to deliver both would tell the market and we're going to do that and then we have a conversation about that when we're past it.
And Simon on the on your question on pricing. So a few things here, we executed a number of pricing actions as you saw the legacy mix and match that we did.
Hans Vestberg: Regarding fiber assets, first of all, I love our strategy. I mean, our strategy was clear from 2017. In the FIOS footprint, of course, we build a lot of fiber doing extremely well. You saw this quarter again, record quarter of FIOS subscribers. Outside, we build the one fiber over a couple of years. We're basically in all the major markets we have one fiber to our own network. Right now, our strategy is clear that we want to take the broadband subscribers with FIOS access because we get them right now.
Earlier in September will yield about $100 million of incremental benefit in the fourth quarter and we also see improving volumes on mobility and.
And year over year improvements there and we also see a an increasing contribution from fixed wireless access you saw the growth we had in the quarter with 384000 net adds we have $2 seven almost $2 7 million subs in our base. So we feel very good about the momentum there. So very good progress on service revenue and setting us up well for next year.
Hans Vestberg: It's a superior product. And we don't see a need right now for adding any fiber to that footprint. Over time, of course, we will always look into it and anyone that would dispose any telecommunication assets in the market will talk to us. But the hurdle is high. I mean, we have a great network and we have built a really good strategy around our technology.
Okay. Thanks, a lot.
Brad we're ready for the next question.
The next question comes from John Hodulik of UBS. Your line is open Sir.
Great. Thanks, Good morning, guys just two questions first on the upgrades.
Yeah.
That number continues to come down we're solidly into the sort of 3% range.
Honda in your prepared remarks, you sort of suggested that you expect to see the same for the next few quarters I guess two questions here first of all what do you in your view what is really driving it and do you think that this is a temporary issue or and then it'll go back to some sort of normalized rate and then any comments on what that low rate is really doing for your business and then.
Tony Skiadas: Hi, Phil. Good morning. So on the cash generation. So we're very pleased thus far. I'll start with where we are in the third quarter. So we're pleased with the cash generation of the business. The performance of the business, you know, and as you saw, the continued discipline that we had with promos and retention gave us the confidence to raise the free cash flow guide by a billion dollars to more than 18 billion. And that's with cat X at the upper end of the range and also with higher interest expense that we feel very good about the balance of the year and our positioning heading into next year.
Secondly in the past you guys have given some.
Some numbers and some metrics on what the C band is doing for your business as it gets rolled out any update there you're still seeing improvement in things like gross adds are pooh churn as you roll that C band.
Tony Skiadas: Obviously, we're not going to guide on 2024 at this time, but I can share some qualitative aspects as we look ahead to pre cash flow for 2024. On the plus side, we continue to focus the team on improving EBITDA profile. And that's a big focus of the team. With respect to cat X, we said a couple of times here in the past that we expect to run at 17 to 17 and a half billion for 2024, which is back to a business as usual level of spend that you've seen from us.
Thank you all on the up rate.
We're seeing now for a couple of quarters. When we started our segmented approach on the consumer side.
Where we actually tried to meet our customers in the different segments with the right offerings. That's of course, driven a lower upgrade rate, but as we are not doing a peanut butter spread so that everybody gets everything so we're really trying to see that we have the right off of where our customers and we'll just give them a confidence is that our gross adds as yours.
Tony Skiadas: And then we also strive to make continued improvements in working capital. And then offsetting that we expect higher interest costs from both in the rate environment and the reduction in capitalized interest due to the early clearing of the feedback spectrum. And then with taxes, as you know, under current legislation, taxes are going to be pressured by the continued phase out of bonus depreciation and we'll see how that plays out. And so heading into 2024, we continue to focus on strong free cash flow generation and opportunities for meaningful debt reduction. And we don't see any obstacles to delivering.
We need to grow for us. So we have the right offering in the market together with my plan of course fourth quarter is always a little bit higher on upgrades because that's normally.
Seasonality, but in general I see that our model is working and this is both helping our customers with your rightful frings, but not only that is helping us with their bottom line and the cash flow generation that we're very focused here at horizon.
And then on the C band, we see the same things as we have discussed before we see lower shown where we deploy C band, we see better step ups are up.
Phil Keesick: Thanks both of you again. Yeah, great. Thanks. Thanks Phil.
Pumps in those regions.
Brady Connor: Bratwell Ray for the next question.
And then on top of it we increased fixed wireless access so theres no difference on that so I think we same thing and that's why we're so excited by C band continue to rollout I've gotten hold of all C band here a couple of weeks ago.
Simon Flannery: The next question comes from Simon Flannery of Morgan Stanley. Your line is open for. Right. Thank you very much. Good morning. Hans, you talked a lot about fixed wireless. Yeah, you've got the rest of the C van.
Simon Flannery: Can you help update the fixed wireless footprint, the open for sale and where you are today and how you get to the 50 million households or any updated target that you have there. And then Tony, you talked a little bit about some of the pricing actions you've taken so far. Can you just tease that for us? What you've recognized in Q3 and what I think you've talked about a tailwind going into Q4. So how we think about some of the, the kind of sequential benefits that are still to come. Thank you.
Great. Thanks, Brad.
Brad we're ready for the next question.
The next question comes from Brett Feldman of Goldman Sachs. Your line is open Sir.
Thanks for taking the question coming back to the service revenue growth as we're looking ahead into next year, and maybe digging a little bit into Arps drivers I know you don't report postpaid phone <unk>, but it's clearly an important component of what drives your ARPA and I was hoping you could give us some insight into how youre thinking about these drivers next year. So for example are you still you still.
Hans Vestberg: Simon, I can start with fixed wireless access. As you can see, we, we continue on that rhythm with 350, 400,000 every quarter. The additional C van we got just a couple of weeks ago will initially go straight to augmenting our urban areas. We already have the sites. And then in the early part of next year, we will also start deploying that in suburban and rural areas. And of course, that's an even greater opportunity.
The opportunity to make further pricing adjustments in the base could you maybe give us some insight into what the mix is looking like and are you continuing to see the ice tiered plans being among the most popular and then are there any headwinds that might be emerging.
The RP dynamic we need to be taken account. Thank you.
So.
Let me start on the high 11 am at first of all.
We need to think about our total offering in wireless and we haven't spoken so far much about the business side, but the BC side again for the ninth quarter in a.
Hans Vestberg: For us, because there are more underserved markets and our fixed wireless actually come extremely quickly into those markets. So that will use 45 or situation on how we want to, how want to roll this out. We have a target of 45 million subscribers by 2025. We keep that. Of course, we have dimension on network for way more. And the team, of course, have a have an internal target that was set by me.
In a row I had more than 125000 phone net adds actually 150 50, plus so they are doing really good in a market where our customers on that side is really looking on the performance of the network into high quality distribution would have so I'm very pleased without than I have.
I'd like to say it on the consumer side.
Hans Vestberg: But right now, there's nothing else than we want to deliver this target as well to the market. We, we always want to deliver what we tell the market. And we're going to do that. And then we have a conversation about that when we're past it.
We have found the model with my plan and how we go to market all the changes the consumer group and sample have done since earlier this year with the plans decentralization sales incentives is helping after being the right proposition then we'll always look to order new value add that we can get you've talked customers to grow.
Tony Skiadas: And Simon, on the on your question on pricing. So a few things here. We executed a number pricing actions.
Tony Skiadas: As you saw, the legacy mix and match that we did earlier in September will yield about a hundred million dollars of incremental benefit in the fourth quarter. And we also see, you know, improving volumes on mobility. And you're over your improvements there. We also see an increasing contribution fixed wireless access. You saw the growth we had in the quarter with 384,000 at ads. We have 2.7 almost 2.7 million subs in our base. So we feel very good about the momentum there.
The scope for us and for our customers like we did with a third tier one on the network side on my plan or that we took away the discount on the on the convergence within mobility and fixed wireless access in these quarters. So we will continue to look at it but it's nothing that is the most important right now because I think we're having.
Offering that is really compelling to our customers.
And then Brett on the on your service revenue question, just some qualitative thoughts for you.
Tony Skiadas: So very good progress on service revenue and setting us up well for next year. Thanks for it.
On the plus side I would say look the pricing actions. We took this year. Obviously you have a tailwind in the fourth quarter and carryover into next year. So we continue to see momentum. There also as I mentioned earlier, we do expect an improving volume profile in the consumer business. So that's something that the team is very focused on fixed wireless access continues to scale.
Brady Connor: Brad, we're ready for the next question.
Tom Hadlich: The next question comes from Tom Hadlich of UBS. Your line is open, sir. Great. Thanks. Good morning, guys. And just two questions. First, first on the upgrades. Obviously, you know, that number continues to come down or solidly into this sort of 3% range. I mean, in your program, if you sort of suggested that, you know, you expect to see the same for the next few quarters. I guess two questions there. First of all, what do you interview? What is really driving it?
So as I mentioned earlier.
384000, net adds even as Hans said.
Taking away the discount as well so the momentum is strong there and continued increased premium mix with my plans and my plans seeing roughly 70% premium mix and we're very pleased with the progress there and we're also seeing some of the headwinds from the promo amortization starting to ease a little bit that's starting to flatten out which is which is good news and also a function of both the.
Tom Hadlich: And do you think that this is a temporary issue or and that it'll go back to some sort of normalized rate? And then, you know, any comment on what that low rate is really doing for your business. And then secondly, in the past, you guys have given some numbers and some metrics on what the C band is doing for your business as it gets rolled out. So any update there, you still seeing improvement and things like gross ads are approved, you know, as you go, that's you band out. Thanks.
Plan that we've had this year and then offsetting that as we've mentioned in the prepared remarks prepaid continues to be a headwind in the near term as we continue to work to improve the business and that's still ongoing. So those are the puts and takes in terms of service revenue.
Hans Vestberg: Thanks, John. On the upgrade, as we're seeing now for a couple of quarters, when we started our segmented approach on the consumer side, where we actually tried to meet our customers in different segments with the right offerings, that, of course, I've driven a lower upgrade rate, but as we are not doing a peanut butter spread sort of that everybody gets everything. So we're really trying to see that we have the right offer for our customers and what is giving me confidence is that our gross ads is just continue to grow for us. So we have the right offering in the market together with my plan.
Thank you.
Brad we're ready for the next question.
The next question comes from Michael Rollins of Citi. Your line is open.
Thanks, and good morning, I'm curious if you can unpack the ways in which Verizon will look to achieve its cost cutting targets through 2025.
As well as how much of those benefits come through in 2024 versus 2025, and then just separately on prepaid just an update would be great on the integration of Tracfone and how Verizon is thinking about the opportunities and timing of potentially taking some of those prepaid customers and migrating there.
Hans Vestberg: Of course, fourth quarter is always a little bit higher on upgrades because that's normally seasonality. But in general, I see that our model is working and this is both helping our customers with the right offerings, but not only that, it's helping us with the bottom line and the cash flow generation that we're very focused here at Verizon. And then on the C band, we see the same things as we have discussed before.
Over to your postpaid base. Thanks.
Thank you Mike on the cost target, we are definitely on track for delivering on the $2 million to $3 million that we talked about when we launched the new structure.
Hans Vestberg: We see lower share and where we deploy C band, we see better stepups or up stepups in those regions. And then on top of it, we increase fixed while taxes. So there's no difference on that. So I think we same same and that's where we're so excited by C band continue to roll out and we've gotten hold of the all C band here just a couple of weeks ago.
Unknown Executive: Thank you.
The new structure started this this year. The first of January we see a lot of traction on it and probably as you follow US closely you have seen that where we have worked on the managed services side together with DHL, we have done the big transaction on the customer care side.
We are doing.
A lot of transaction on the IP side, we're bringing more AI into the network and to the customer care.
Brett Feldman: Brad, we're ready for the next question. The next question comes from Brett Feldman of Goldman Sachs. Your line is open, sir. Thanks for giving me a question. Coming back to service revenue growth is we're looking ahead into next year and maybe digging a little bit into our food drivers. I know you don't report post-paid food on our food. It's clearly an important component of what drives your arpa. And I was hoping you could give us some insight into how you're thinking about those drivers next year.
A lot of things ongoing so I have a high confidence that we're finding.
Along the road there all the savings we need and the traction is very high in the company on efficiency given that we'll have one organization right now Ross and global services supporting all others to see that we find the best measurements across the company.
And I can go back to prepay that maybe told to have some more comments on the coal side sure. Thanks, and Mike just a couple of other additional points that Hans mentioned.
Brett Feldman: So, for example, are you still see opportunity to make further pricing adjustments in the base? Could you maybe give us a insight into what the mix is looking like and are you continuing to see the highest tiered plans being among the most popular? And then are there any headwinds that might be emerging in the arpa dynamic? We need to be taking account.
So we are on track to deliver two to 3 billion as Hans said $2 million to $300 million of that will come this year in 2023, and EBITDA and that was already contemplated in the guide Hans mentioned a lot of the initiatives. The other item I would mention is we're being very disciplined in business wireline by deemphasizing low margin deal. So that's something that the team is very very focused on as well, we're not going to give cost targets.
Tony Skiadas: Thank you.
Tony Skiadas: So, let me start on the high level. I mean, first of all, we need to think about our total offering on wireless and we haven't spoken so far much about the business side, but the business side, again, for the ninth quarter in a row, had more than 125,000 phone net ads, actually 150 plus. So, they are doing really good in the market where our customers on that side is really looking on the performance of the network and the high quality.
For 24.
At this time, but we feel good that we have a good foundation there.
Our driving EBIT improvements and you saw it in the quarter with both sequential and year over year improvements in EBITDA, that's going to set the foundation.
For an improving EBIT profile in 2024.
On the value segment than prepaid in Tracfone.
We said in the prepared remarks, we we were at the low point the first half of 'twenty three on from here on we should start sequentially improving.
Tony Skiadas: So, I'm very pleased with that, and I would like to say, on the consumer side, I think we have found the model with my plan and how we go to market. All the changes the consumer group and Samper have done since earlier this year with the plans, decentralization, sales incentives is helping out to be in the right proposition. Then we always look to all the new value added we can give to our customers to broaden the scope for us and for our customers, like we did with the third tier on the network side on my plan, or that we took away the discount on the convergence within mobility and fixed wireless access in these quarters. So, we would continue to look at it, but it's nothing that is the most important right now, because I think we have an offering that is really compelling to our customers.
Secondly, this is really important for our strategy.
We want to build a network once and have as many connections as possible and address the entire market on wireless and of course being strong and being the number one in the value segment is important.
From a market point of view, we all know that there has been some sort of a blend between the low end on postpaid and prepaid which means that the volumes in <unk>, but it's a little bit lower and we have not been part of that transformation.
Or taking customer for prepaid so what we're doing right now in our own operation, which is a lot, but one we're building up a tortured by where ice on which is a great speed will have on opening new doors, that's going to help us to move up to postpaid for the customers that want to do that but also having high and our value proposition.
Tony Skiadas: And then, Brett, on your service revenue question, just some qualitative thoughts for you. On the plot side, I would say, look, the pricing actions we took this year obviously have a tailwind in the fourth quarter and carry over into next year, so we continue to see momentum there. Also, as I mentioned earlier, we do expect an improving volume profile in the consumer business, so that's something that the team is very focused on.
Secondly, we work with a national retailer that will have to see that we are fortifying our offerings.
Finally, you'll seen that feasible continuous with the pace. It has and that we're working with a lot of other things. So it's a lot of ongoing.
That gives us confidence that we will sequentially continued to improve and but clearly this is very important part of our overall strategy.
Tony Skiadas: Fixed wireless access continues to scale. So, as I mentioned earlier, another 384,000 that adds, even as Hans said, and taking away the discount as well, so the momentum is strong there. And continue to increase premium mix with my plan. So, my plan seeing roughly 70% premium mix, and we're very pleased with the progress there. And we're also seeing some of the headwinds from the promo amortization starting to ease a little bit, that's starting to flatten out, which is good news, and also a function of all the discipline that we've had this year.
Thanks.
Brad ready for the next question.
Question comes from Bryan Kraft of Deutsche Bank. Your line is open Sir.
Hi, good morning.
I have a question on fixed wireless there there continues to be a lot of debate regarding the sustainability of fixed wireless served by macro cell sites, given the trajectory of broadband usage and of course, the unit economics of radio access networks versus fiber.
Tony Skiadas: And then, offsetting that, as we've mentioned in the prepare remarks, prepaid continues to be a headwind in the near term, as we continue to work to improve the business, and that's still ongoing. So, those are the puts and takes in terms of service revenue.
So really I guess two questions. One since you started the fixed wireless deployment have your assumptions changed at all regarding usage or the number of fixed wireless customers you can optimally loved the network with over time.
Unknown Executive: Thank you.
Currently what developments have occurred in millimeter wave.
Michael Rollins: Brad, we're right for the next question. The next question comes from Michael Rollins of City. Your line is open. Thanks and good morning. I'm curious if you can unpack the ways in which Verizon will look to achieve its cost-cutting targets through 2025, as well as how much of those benefits could come through in 2024 versus 2025. And then just separately, pre-paid, just an update would be great on the integration of track-zone, and how Verizon is thinking about the opportunities and timing of potentially taking some of those pre-paid customers and migrating them over to your post-paid base. Thanks. Thank you, Mike.
Delivered fixed wireless this year and how at this point are you thinking about millimeter wave evolving over the next couple of years as our scale will access technology.
Hi, Brian .
Yeah, our assumption has changed some fixed wireless access because our technology has improved more than we thought from the beginning that means that we can take on even more capacity.
And we're only on the first evening on the software improvements.
Our optimization of the network I think Joe and his team is doing a fantastic job with it.
Customers are using it on the consumer side equally marches on the file so that theres no difference of usage.
Hans Vestberg: On the cost target, we are definitely on track for delivering on the 2-3 million that we talked about when we launched a new structure.
I think we have a great path forward with technology, and we have not seen everything we can do still with the fixed wireless access when it comes to software development radio improvement et cetera. So hum.
Tony Skiadas: The new structure started this year, the 1st of January. We see a lot of attractions on it, and probably as you follow us closely, you have seen that we have worked on the managed services side together with HL. We have done a big transaction on the customer care side. We are doing a lot of transaction on the IT side. We are bringing more AI into the network and to the customer care.
No hesitation over the assumption, we've made that we're actually having better assumptions today.
When it comes to millimeter wave.
<unk> is playing a vital role for us for many reasons.
First of all it takes in all high density areas. They take the majority of the capacity and that's very important for several reasons I unleashed a mid band spectrum in order to have better performance on the street, but also in fixed wireless access so millimeter wave will continue to play a very vital role.
Tony Skiadas: It's a lot of things ongoing. So I have a high confidence that we are finding along the road. They are all the savings we need, and the traction is very high in the company, on the efficiency.
What I've said several times, we built very very quickly in all.
Hans Vestberg: Given that we have one organization right now, Verizon Global Services, supporting all others to see that we find the best measurements across the company.
Major places.
Now, we're sort of augmenting where we see a lot of traffic on top of that of course, we see opportunities for using our millimeter wave also MD used over time to see the address that market would be fixed wireless access. So all in all we still haven't no till technology evolution to see that we can serve even more customers would even.
Tony Skiadas: I can go back to pre-paid, and maybe Tony has some more comments on the course side. Sure, thanks. Mike, just a couple of other additional points that Hans mentioned. We are on track to deliver 2-3 billion, as Hans said. 2-300 million of that will come this year in 2023 and EBITDA, and that was already contemplated in the guide. Hans mentioned a lot of the initiatives. The other item I would mention is we are being very disciplined in business wireline by deemphasizing low margin deals.
The performance and add more capacity, so I'm very.
Very happy and as you've seen on fixed wireless access or NPS scores is also the short I'm into customers loves. It is E. C is quick to deploy it self install so I think we hit it.
Tony Skiadas: Also, that's something that the team is very focused on as well. We are not going to give cost targets for 24 at this time, but we feel good that we have a good foundation that are driving EBITDA improvements. And you saw it in the quarter with both sequential and year-over-year improvements in EBITDA. That's going to set the foundation for improving EBITDA profile in 2024.
Clearly with these product and we want to push it with our team and see the customer gets the right products.
Thank you guys.
Brad we're ready for the next question.
Hans Vestberg: On the value segment in pre-paid and track form, as we said in the prepared remarks, we were at the low point the first half of 2023, and from here on we should start sequentially improving. Secondly, this is really important for our strategy. We want to build the network once and have as many connections as possible and address the entire market on wireless, and of course being strong and being the number one in the value segment is important.
The next question comes from Frank Louthan of Raymond James Your line is open.
Yeah.
Great. Thank you very much quick question and I apologize. If this was addressed can you quantify how much of the interest expense going from capitalization to the income statement from the C band and then secondly, where are you as far as being able to utilize.
Wireless to help reduce cost from type two circuits and that sort of thing.
I can't start when it takes a lot of taxes and I'm told I mean, yeah yeah.
Hans Vestberg: Then from a market point of view, we all know that there has been some sort of blend between the low end on post-paid and pre-paid, which means that the volumes in pre-paid is a little bit lower, and we have not been part of that transformation or taking customer for pre-paid. So what we're doing right now in our own operation, which is a lot, but one, we're building up a total by Verizon, which is a great speed we have on opening new doors.
Great question.
Sometimes we were focused on fixed wireless access being in sort of a consumer solution for broadband today, we sell a lot of fixed wireless access for <unk> in the BC segment as well both for large enterprises and for a small and medium customers.
Which has a different usage pattern, which is great.
Also we see him Kyle has discussed that several times. He see also this is a way of optimizing our access cost by having fixed by taxes.
Hans Vestberg: That's going to help us to move up the post-paid for the customers that want to do that, but also having high end value proposition. Secondly, we work with the national retailers that we have to see that we are fortifying our offerings in our store. And finally, you're seeing that visible continuous with the pace it has, and now we're working with a lot of other things. So it's a lot of ongoing hair that gives us confidence that we will sequentially continue to improve, but clearly this is very important for our overall strength.
They are all transport in many cases, so clearly again this is how we built our network from the beginning to be able from the data center to the Angel networks.
Unknown Executive: Thank you. Thanks.
The harmonized network that can Fastly move all the data and then at the edge of the network. We will have different type of access technologies in order to serve our customers and fixed wireless access cancer many different use cases.
We tend to talk a lot about the consumer fixed wireless access use case, but I have it or kind of have a lot of use cases in the beef segment NSE. If you look at the numbers. This quarter. He is continuing to add a lot of fixed wireless access customers as well.
Brady Connor: Brad, we're ready for the next question.
Bryan Kraft: The next question comes from Bryan Kraft of Deutsche Bank. Your line is open, sir. Hi, good morning. I have a question on fixed wireless. There continues to be a lot of debate regarding sustainability of fixed wireless served by Maclas also. It's given the trajectory of broadband usage and of course, you need an economics of radio access networks versus fiber. So really, I guess two questions.
Hans Vestberg: One, since you started the fixed wireless deployment, have your assumptions changed at all regarding usage or the number of fixed wireless customers you can ultimately load the network with over time. And secondly, what developments have occurred in millimeter waves delivered fixed wireless this year. And now, how at this point, are you thinking about millimeter waves evolving over the next couple of years as a scalable access technology? Thanks.
And then Frank on the capitalized interest question in the quarter, we saw about three cents a pressure from capitalized interest and the time, we got the licenses and then for the fourth quarter. We estimate three to four cents of pressure from capitalized interest so hope that helps.
Alright, great. Thank you.
Brad ready for the next question.
The next question comes from David Barden of Bank of America. Your line is open.
Hey, guys. Thanks for taking the question.
Two if I could just the first one.
<unk>.
Beginning of the call you said that you were being really successful at it three things.
Mobility broadband and private networks.
Hans Vestberg: Hi, Brian. And for, yeah, our assumption. Has changed on fixed wireless access because our technology has improved more than we thought from the beginning. That means that we can take on even more capacity. And we're only on the first evening on the software improvements and our optimization on the network. I think Joe and his team is doing a fantastic job with it. Customers are using it on the consumer side equally much on the file so that there's no different on usage.
And we haven't really heard a lot about what youre doing in private networks. What your goals are and what your success has been so if you could elaborate a little bit on what that is and why it's one of the big three things that we should care about Verizon being good at it would be Super helpful. And then the second is maybe this is.
As more Tony.
I think we just touched on it a little bit but the success that you guys have been having in the postpaid phone subscriber net adds in business could you elaborate a little bit on on where that's coming from lake.
Hans Vestberg: So I think we have a great path forward with the technology. And we are not seeing everything we can do still with the fixed wireless access when it comes to software development, radio improvement, et cetera. So I have no hesitation over the assumption we made. They were actually having better assumptions today. When it comes to millimeter waves, that is playing a vital role for us for many reasons. First of all, it takes in all high density areas.
Given that the consumer isn't growing.
How is it that the business continues to be so successful quarter after quarter after quarter end.
Should we assume that that can continue thank you so much.
Thank you David on their private networks.
Good question.
Hans Vestberg: They take the majority of the capacity. And that's very important for several reasons. I unleashed a mid-band spectrum in order to have better performance on the street, but also in fixed wireless access. So millimeter wave will continue to play a very vital role. As we said several times, we build very, very quickly in all major places. And now we're sort of augmenting where we see a lot of traffic on top of that.
What is happening in the private network right. Now is that we are doing a proof of concept to go to commercials, we have ramped up the fantastic funnel, we're starting getting more and more deals every quarter. They started pretty small they start sort of like Oh Wi Fi substitution.
And then when Theyre at it works, let's say you have one big.
The logistic company they take it the one logistics center and then they do it in all we are in that phase to ramping that up to do in in one to many at the moment. What we have done we have done two things very important work cut the lead times on proof of concept to actually.
Hans Vestberg: Of course, we see opportunities for using our millimeter wave. Also, we're md use over time to see the world rest that market with fixed wireless access. So all in all, we still have a lot of technology evolution to see that we can serve even more customers with even better performance and more capacity. So I'm very happy and as you've seen on fixed wireless access, our MPS course is all out to the short.
Two commercial deal.
And it's very clear for our customers that the capacity the security and the low latency is a game changer for them when they see it and secondly, we also now have an ecosystem of products infrastructure modem chipsets phones and radios that can serve different use cases. So that's why we're excited over it.
Hans Vestberg: I mean, the customers love it. It's easy. It's quick to deploy itself in stores. So I think we hit it clearly with this product. And we want to push it with our team and see their customer get the right products.
Unknown Executive: Thank you.
We're not going to see any significant revenues that has an impact on Verizon old rule in 'twenty four we're going to see that in 'twenty five but why is important is that this is an area. We never been into this is a totally new time, we can address by running private networks for different industries with different large enterprises.
Frank Louthan: Brad, we're ready for the next question.
Frank Louthan: The next question comes from Frank Loutin of Raymond James. Your line is open. Great. Thank you very much.
Tony Skiadas: I'm quick question. I apologize. This was addressed. Can you quantify how much of the interest expense going from capitalization to the income statement from the C band? And then secondly, where are you as far as being able to utilize fixed wireless to help reduce costs for type two circuits? And that's what I think.
Tony Skiadas: Thank you.
Across the country with our distribution and technology ICD is a great opportunity to how we use our spectrum. So that's why we pay a lot of attention to it and.
Opportunities coming to it and before.
Ah Tony talks about the BC segment.
Hans Vestberg: I can't start with a fixed-wise access and tournament. Yeah, great question. Sometimes we were focused on fixed-wise access being sort of a consumer solution for broadband. Today we sell a lot of fixed-wise access for in the BC segment as well, both for large enterprises and for small and medium customers, which has a different usage pattern, which is great. And also, we see, and Kyle has discussed that several times. He's also, this is a way of optimizing our access cost by having fixed-wise access as the bearer or transport in many cases.
On the wireless I would say one main reason why we continue to do so well is our network is the best I mean, if you ask any of our enterprise customers or SMB customer the reliability and the performance of our network is the best and that's a very important buying criteria in that segment Tony sure. So David a couple of <unk>.
We're pleased again with the strong results from Kyle and the team we saw great phone net adds in the quarter 151000, and over 430000 year to date and we saw healthy demand across the board that would be enterprise public sector and small medium business.
Hans Vestberg: So clearly, again, this is how we build on network from the beginning, to be able from the data centre to the edge on the network have a total harmonized network that can fastly move all the data, and then at the edge of the network we will have different type of access technologies in order to serve our customers. And fixed-wise access can serve many different use cases, and we tend to talk a lot about the consumer fixed-wise access use case, but I have a, or Kyle have a lot of use cases in the BC segment.
And that performance is in a very uncertain environment and as Hans said strong results validate that our businesses continue to trust the Verizon network.
Even during uncertain economic times.
We do see certain pressures in certain sectors, and we're certainly not immune to it but we're not seeing anything significant and from a competitive standpoint, I would tell you that we're being very disciplined and we're not going to chase bad deals that are that are unprofitable. The other thing I would mention is SWA volumes also continue at a strong pace and in business and we had 132.
Hans Vestberg: And as if you look at the number of these quarters, he's continuing to add the lot of fixed-wise access customers as well. And then Frank, on the capitalize interest question, in the quarter, we saw about three cents a pressure from capitalized interest. So I hope that helps.
Our net adds in the third quarter and over 400000 year to date. So we have great momentum heading into the fourth quarter here and as we set up for next year.
Unknown Executive: All right, great.
And if I could just one more and I apologize. Thank you Tony.
So Hans it's been six months since the team.
Got reset and you put all the people to work.
Yeah.
The results seem to be moving in the right direction are you.
How happy are you with the choices you made right now.
I'm very happy with the choices I think.
Unknown Executive: Thank you.
As always when you make a change and we did quite a big change I think six out of the HCC seats in the leadership team changed in one swoop.
I think we have good alignment.
The first week, what we need to do all the way from Kyle to only in some path, which was very important and Joe which is sort of the the four operational units and you can see the results right now I mean, the guys are executing extremely well so no I am happy with it we're going to push them even harder, but these guys are really good you know they they take hold pressure in there.
David Barden: Brad, right from the next question. The next question comes from David Barton of Bank of America. Your line is open. Hey, guys. Thanks for taking the question. Two, if I could, just the first one, cons, you know, at the very beginning of the call, you said that, you said, you were being really successful at three things, mobility, broadband, and private networks. And we haven't really heard a lot about what you're doing in private networks where your goals are, what your success has been.
David Barden: So if you could elaborate a little bit on what that is and why it's one of the big three things that we should care about, Verizon being good at, it would be super helpful. And then the second is, maybe this is for Tony, just, I think we just touched on it a little bit, but the success that you guys have been having in the post-payphone subscriber, net ads in business. Could you elaborate a little bit on where that's coming from?
Deliver on it so no.
Happy on the choices and the team is doing one great. Thanks, guys.
Probably for the next question.
Our next question comes from Craig Moffett of Moffett Nathanson Your line is open.
Alright, thank you.
Maybe starting with Tony Tony can you talk about what contribution you're getting from your wholesale wireless revenues as the cable industry scales and then.
David Barden: You know, given that the consumer isn't growing, how is it that the business continues to be so successful? Well, quarter after quarter after quarter, and should we assume that that just can continue. Thank you so much. Thank you David.
Could you just talk about what benefits that is having in terms of margin accretion and what have you.
Hans Vestberg: On the private networks, yeah, a good question. What is happening in the private networks right now is that we are doing a proof of concept to go to commercials. We have ramped up a fantastic funnel, we're starting getting more and more deals every quarter. They start pretty small, they start sort of like a Wi-Fi substitution. And then when it works, let's say you have one big logistics company, they take the one logistics center and then they do it in all.
And then I Wonder if you just how we should think about potential risk to that revenue stream as Comcast and charter start to rollout.
Hans Vestberg: We are in that phase of ramping that up to do in one to many at the moment. What we have done, we have done two things very important, we have cut the lead times on proof of concept to actually, to commercial deal. And it's very clear for our customers that the capacity, the security and the low latency, it's a game change of what them when they see it. And secondly, we also now have an ecosystem of products, infrastructure, mold them, chipset, phones and radios that can serve different use cases. So that's why we're excited over it.
<unk> mounted small cells to potentially offload more of that traffic on to their own networks.
Okay. So a few things here. So as you know we cant discuss that particular economics of any commercial deal and that includes the commercial deals we have with the cable companies. What I can tell you is that we are very happy with the <unk> agreements and those agreements are accretive.
It's important business for us and as Hans said many times, it's consistent with our strategy to monetize the network, it's very profitable business for us, it's growing and we're very comfortable with the arrangement, that's but that's as far as we'll go.
Alright, Thanks, Craig Brad we're ready for the next question.
The next question comes from <unk> Venkatesh far from Barclays. Your line is open Sir.
Thank you.
So maybe <unk> in terms of the fixed wireless business when you think about that.
Hans Vestberg: We're not going to see any significant revenues that has an impact on Verizon over rule in 24. We're going to see that in 25. But why is importantly that this is an area we've never been into. This is a total new time we can address by running private networks for different industries, for different large enterprises across the country with our distribution and technology. I see this is a great opportunity to use our spectrum. So that's why we pay a lot of attention to it and with a lot of opportunities coming to it.
<unk> that you have with you then.
And you've talked a couple of things about momentum heading into next year that you're extending throughout the footprint.
Is there any kind of.
Gulfport that you have in terms of the.
Kind of cool.
Growth aspirations that you have.
Balance it with the capacity to use at the network may have.
<unk> 400 kind of a number or does it go to $500 is there some kind of a.
Look you guys are thinking about in terms of.
Tony Skiadas: And before Tony talks about the business segment and why I would say one main reason why we continue to do so well is our network is the best. And if you ask any of our enterprise customers or SMB customers, the reliability and the performance of our network is just the best. And that's a very important buying criteria in that segment.
Expiration there thanks.
Thank you I think on the fixed wireless access where I've said, a couple of times and I thought we like the read them on 400000 per quarter, because it is putting our sort of R. R.
Our operations in the right mood or deploying this and have also decentralized or regionalized. Our go to market. We can work with the markets, where we actually open for sale our fixed wireless access work with the local community work with the local government and also address it through our stores. We can we can.
Tony Skiadas: Tony, sure. So Dave, a couple of things. You know, we're pleased again with the strong results from Kyle and the team. We saw a great phone at ads in the quarter, 151,000 and over 430,000 year to date. And we saw a healthy demand across the board that would be enterprise public sector and small meeting biz. And that performance is in a very, you know, uncertain environment. And as I said, you know, strong results validate that businesses continue to trust the Verizon network. Yeah, even during uncertain economic times. And, you know, we do see certain, you know, pressures and certain sectors and we're certainly not immune to it, but they were not seeing anything significant.
We can focus our efforts in that region and see that we capture all the demand and the funnel. We have there. So we think it's a good model that we have right now and that's also there was some loss of physics. How quickly we can roll out are the C band, but I can tell you. There's no one holding back any investments here in order to get the C band.
Our customers as soon as possible. So I think we will continue to look at that I mean.
That type of level going forward as well and that will help us with the reaching any goalposts web or whatever goalposts were communicated to the market.
Tony Skiadas: And from a competitive standpoint, I would tell you that we're being very disciplined and we're not going to chase bad deals that are that are unprofitable. The other thing I would mention is FWA volumes also continue at a strong pace in business. And we had 132,000 net ads in the third quarter, number 400,000 year to date. So we have great momentum, you know, heading into the fourth quarter here and as we set up for next year.
Thank you Brad.
The next question the.
Our next question comes from Greg Williams of TD Cowen Your line is open.
Thanks for taking my questions first one Hans you mentioned.
Susan Kpis when you launched the band in the markets similar to last quarter.
Unknown Executive: And if I could just one more and I apologize, thank you, Tony.
Just thinking should we see churn improvements from here as you've answered a maturation, it's markets or sort of optimal levels.
Hans Vestberg: So Hans, it's been six months since the team kind of got reset and you put all the people to work. You know, the results seem to be moving in the right direction. Are you, how happy are you with the choices you made right now? I'm very happy with the choices. I think as always, when you make a change and we did quite a big change, I think six out of the eight seats in the leadership team, changing one swoop.
And then Stefan just on.
Media reports, suggesting that youre hiring feverishly on the wireline side and I'm just thinking about your.
Fiber to the home build maybe it's not on the M&A side. You said this I heard all that from the organic side, if you would.
And if you build or even the beat opportunity there. Thanks.
Okay on the on the Kpis, you're you're correct and when we rollout the C band, where better retention and better step ups and of course, we also expect that we can take share I think in the consumer side. Then it is decided and both sides are we see opportunities as we come with a fixed wireless access to this market and we did.
Hans Vestberg: I think we had good alignment from the first week, what we need to do all the way from Kyle, Tony and Sampath, which was very important and Joe, which is sort of the four operational units. And you can see the results right now. I mean, the guys are executing extremely well. So though I'm happy with it. I want to push them even harder, but these guys are really good. You know, they take hard pressure and they deliver on it. So no, I'm happy on the choices and the team is doing well.
C band. So there there is share gains we are planning to do here and the teams are very focused on it going forward.
The second question was around fiber.
Unknown Executive: Great. Thanks, guys.
In our ILEC I guess.
Craig Moffett: Proud, we're ready for the next question.
We're not holding back on that first of all you saw great. We're doing this quarter with violets will continue to invest in five years, we'll see whereby customers outside the fires are our primary strategy is to build on that one fiber and fixed wireless access to capture the market before anybody else is even remotely there that's what we do.
Craig Moffett: The next question comes from Craig Maffet of Maffet, Nathan, your line is open. Hi, thank you.
Unknown Executive: Maybe starting with Tony, Tony, can you talk about what contribution you're getting from your wholesale wireless revenues as the cable industry scales? And then could you just talk about what benefits that's having in terms of margin accretion and what have you. And then I wonder if you just how we should think about potential risk to that revenue stream as contest and charter start to roll out strand mounted small cells to potentially offload more of that traffic on to their own networks.
And then over time as I've said 100 times I'm going to have Optionality, if I would have another access technology all the time, but that's not in the cards right now we have all the capacity and the technology out in the field right now and the fit and the quicker we can come out the quicker we can meet the demand that's out there and meeting the customer that's one.
Our broadband which is a lot of them.
Got it. Thank you Yep, Hey, Brad we have time for one more question. Please.
Unknown Executive: Okay. So a few things here. So as you know, we can't discuss the particular economics of any commercial deal. And that includes the commercial deals we have with the cable companies. What I can tell you is that we are very happy with the NVNO agreements and those agreements are creative. It's important business for us. And as Hans said many times, it's consistent with our strategy to monetize the network. It's very profitable business for us. It's growing and we're very comfortable with the arrangement, but that's as far as we'll go. All right.
Tony Skiadas: Thanks, Craig.
Our last question will come from Tim Horan of Oppenheimer. Your line is open.
Unknown Executive: Brad, we're ready for the next question.
Thanks, guys.
Back a second can you talk about the ability for yourselves and industry to monetize all the investments the last few years.
To accelerate growth and free cash flow.
Horton pricing here because it replaces running 4% GDP is growing about 5% inflation is probably about 4% again next year and we're not really seeing much revenue growth. So.
What do you think needs to be done for the industry to kind of monetize all the investments.
Kenan: The next question comes from Kenan. Thank you. Maybe Hans, so you in terms of six wireless business, when you think about, you know, the capacity that you have the demand. And you've talked a couple of times about momentum heading into next year as you expand into other footprints. Is there any kind of a goal post that you have in terms of the kind of growth your growth aspirations that you have to balance it with the capacity use that the network may have.
I can talk for ourselves, but I think we are in a in a moment, where we actually are.
Monetizing by being very segmented bolt in RPC side than in our consumer side and and.
That we both having the right offers for our customers at the same time, we are generating bottom line for ourselves so.
I think that's where we are and we have done some price adjustment, but that has also included new values for our customers I think.
We're coming to a moment, where we probably going to have a little bit more on quantities not only price given the track that we're having in our business right now so we're going to balance that out doing the right for our customers, but also doing right for our shareholders and then we're of course, adding that with our broadband growth, which is also helping us and then as Tony said, we're taking out.
Kenan: So, you know, the 350 400 kind of a number does it go to 500 or is there some kind of a framework you guys are thinking about in terms of your aspiration there. Thanks. Thank you, Kenan. I think on a fixed wireless access, we have said a couple of times that we like to read them on 400,000 per quarter because it's putting our sort of our operations in the right mood of deploying this.
Cost at the same time, so that's how we work and that's why we we can lift the the free cash flow for this year the guidance, even though we're on the high end on our Capex guidance.
Kenan: And as we have also decentralized or regionalized or go to market, we can work with the markets where we actually open for sale, fixed wireless access, work with the local community, work with the local government. And also address it through our stores. We can focus our efforts in that region and see that we capture all the demand and the fund that we have there. So, we think it's a good model that we have right now.
Guidance as well as higher or headwinds from the interest rate. So that tells you a little bit how we feel about the business. How we now have the right propositions in the market and we can sort of.
Retooling that if it's something happen, but right now we we feel confident about the mobile web.
And related to that I know you want to get that EBITDA back to pre auction levels do you have kind of a timeframe on that and just remind us what you know what.
Kenan: And that's also there's some laws of physics how quickly we can roll out the C band. But I can tell you there's no one holding back any investments here in order to get the C band to our customers as soon as possible. So, I think we will continue to look at that and that type of levels going forward as well and that will help us with reaching any goalposts we have or whatever goalposts were communicated to them all.
How do you do that yeah. So what we have said before was that we want to come to a ratio of two point 25, all the net debt to EBITDA.
And are we going to continue to work our way down and that is a prime primary goal for US number one in the capital allocation is to invest in our business number two we continue to put our board in a position. So they can increase our dividend. We're on 17 years, so consecutive increases and certainly we're paying down our debt.
Kenan: Thank you. Brad Ray for the next question. The next question comes from Greg Williams of TD Cowan. Your line is open. Great. Thanks for taking my questions. First one, Hans, you mentioned the improving KPI's when you want to see band in the markets, similar to last quarter. Just what thinking should we see turn improvements from here as the events sort of media reports suggesting that you're hiring feverishly on the wireline side.
When we come to that ratio, we will start having a conversation about buybacks, but we want to do buybacks not that's one one off or something it has to be a consecutive program. All the time, so but we're not there yet but the team is doing great job that Tony talked about the $2 6 billion that we're used to that this quarter.
With the tender is wound down so we will continue to do that with the cash flow that we're dealing right now.
Kenan: And I'm just thinking about your fiber to the home builds. Maybe it's not on the M&A side, we said this I heard all but on the organic side if you would bring up your builds or even the need opportunity there. Thanks. Okay, on the KPI's, you're correct. We roll out the C band, we're better retention and better setpups, and of course we'll also expect that we can take share. I think in the consumer side and the business side, in both sides, we see opportunities as we come with fixed wild access to the market and with the C band.
Thank you, yes, thanks, Tim Brad before we end the call I want to turn it back over to Hans for a few closing statements here.
Before we close I wanted to take a moment to address the humanitarian crisis in Israel and Palestine.
That has continued to escalate over the past few weeks.
At Verizon, we stand against terrorism in all its forms and condemn the violence that has claimed the lives of so many innocent civilians.
The Verizon Foundation has committed 2 million donation to organizations supporting relief efforts and we continue to waive international long distance charges for calls and texts from U S to the region.
Kenan: So there are share gains. We are planning to do here and our teams are very focused on it going forward. The second question was around fiber in our eye lake, I guess, and we're not holding back on that. First of all, you saw how great we're doing these quarter with fires. We'll continue to invest in fires to see wherever customers. Outside the fires, our primary strategy is to build on a one fiber and do fixed wild access to capture the market before anybody else is even remotely there.
My hope is that we will move to a peaceful resolution as soon as possible in the meantime, we need to come together as a society and leaning towards connect us not what divides us.
Okay.
Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation and for using Verizon Conference services you may now disconnect.
Kenan: That's what we do. Then over time, as I said, 100 times, I'm going to have optionality if I would have another access technology over time, but that's not in the cards right now. We have all the capacity and the technology out in the fields right now and the quicker we can come out, the quicker we can meet the demand that's out there and meeting the customer that wants our broadband, which is a lot more than that. Got it. Thank you.
Hans Vestberg: Hey, Brad, we have time for one more question, please.
Tim Horan: Your last question will come from Tim Huran of Oppenheimer. Your line is open.
Tim Horan: I think, guys, Ahaan, just let me back a second. Can you talk about the ability for yourself and the industry to monetize all the investments for the last few years, both to accelerate growth and pre-cash flow? How important is pricing here? In places running 4%, GDP is growing above 5%, in places probably about 4% again next year, and we're not really seeing much revenue growth. What do you think needs to be done for the industry to monetize all the investments?
Hans Vestberg: Thanks. I can talk for ourselves. I think we are in a moment where we actually are monetizing by being very segmented both in our business side and in our consumer side, and that we both have in the right offers for our customers at the same time we are generating bottom line for ourselves. So I think that's where we are, and we have done some price adjustment, but that has also included new values for our customers.
Hans Vestberg: I think we now are coming to a moment where we're probably going to have a little bit more of quantities, not only price, given the trajectory we're having in our business right now. So we're going to balance that out, doing the right for our customers, but also doing right for our shareholders. And then we're, of course, adding that with our broadband growth, which is also helping us. And then, as Tony said, we're taking out costs at the same time, so that's how we work, and that's why we can lift the free cash flow for this year, the guidance, even though we're on the high end on our KPIX guidance, as well as higher or headwinds from the interest rate.
Hans Vestberg: So that tells you a little bit how we feel about our business, how we now have the right propositions in the market, and we can sort of retooling that if something happens. But right now, we feel confident about the model we have.
Hans Vestberg: And related to that, I know you want to get that deep agave back to pre-awction levels. Do you have a kind of a timeframe on that? It just reminds us what, you know, what, how do you do that? Yeah, so what we have said before was that we want to come to a ratio of 2.25 over net depth to beta. And we, we're going to continue to work our way down and that is a primary goal for us.
Hans Vestberg: Number one in the capital location is to be invest in our business. Number two is continue to put our board in the position so they can increase our dividend. We are on 17 years, so consecutive increases. And third, we're paying down our debt. When we come to that ratio, we will start having a conversation about buybacks. But we want to do buybacks, not that of one, one off for something. It has to be a consecutive program over time.
Hans Vestberg: But we're not there yet, but the team is doing great job. Tony talked about the 2.6 billion that reduced the depth is quarter. So we will continue to do that with the cash flow that we are yielding right now.
Unknown Executive: Thank you.
Unknown Executive: Yeah, thanks, Tim.
Hans Vestberg: Brad, before we end the call, I want to turn it back over to Hans for a few closing statements here.
Hans Vestberg: Before we close, I want to take a moment to address the humanitarian crisis in Israel and Palestine that has continued to escalate over the past few weeks. At Verizon, we stand against terrorism in all its forms and condemn the violence that has claimed the lives of so many innocent civilians. The Verizon Foundation has committed a 2 million donation to organizations supporting relief efforts. And we continue to waive international long distance charges for calls and texts from the US to the region. My hope is that we will move to a peaceful resolution as soon as possible. In the meantime, we need to come together as a society and lean into what connects us, not what divides us.
Unknown Executive: Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation and for using Verizon conference services. You may now disconnect.