Q4 2024 Verizon Communications Inc Earnings Call
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[noise] good morning, and welcome to the Verizon fourth quarter 2024 earnings conference call at this time.
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Speaker Change: It is now my pleasure to turn the call over to your host Mr. Brady Connor Senior Vice President Investor Relations.
Speaker Change: Thanks, Brad Good morning, and welcome to our fourth quarter 2024 earnings call and AI update I'm Brady Connor and on the call with me. This morning are Hans Vestberg, Our chairman and Chief Executive Officer, and Tony <unk>, Our Chief Financial Officer.
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Speaker Change: In addition, we have our business group CEO, Kyle M'lady, who will be giving an update on our AI strategy as well as our consumer group CEO Sam path, who will also be joining us for Q&A before we begin I'd like to draw your attention to our safe Harbor statement, which can be found at the start of the investor presentation posted on our Investor Relations website.
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Speaker Change: It is now my pleasure to turn the call over to your host Mr. Brady Connor Senior Vice President Investor Relations.
Speaker Change: Information in this presentation contains statements about expected future events and financial results that are forward looking and subject to risks and uncertainties.
Brady Connor: Thanks, Brad Good morning, and welcome to our fourth quarter 2024 earnings call and AI update.
Speaker Change: Quatre and on the call with me. This morning are Hans Vestberg, Our chairman and Chief Executive Officer, and Tony <unk>, Our Chief Financial Officer in.
Speaker Change: Discussions of factors that may affect future results is contained in verizon's filings with the SEC, which are available on our Investor Relations website.
Speaker Change: In addition, we have our business group CEO, Kyle M'lady, who will be giving an update on our AI strategy as well as our consumer group CEO Sam path, who will also be joining us for Q&A before we begin I'd like to draw your attention to our safe Harbor statement, which can be found at the start of the investor presentation posted on our Investor Relations website.
Speaker Change: This presentation contains certain non-GAAP financial measures.
Speaker Change: Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials posted on our website.
Speaker Change: Earlier this morning, a detailed overview of our fourth quarter and full year results was posted to our Investor Relations website. We will also be posting supplemental materials relating to today's call on our website shortly with that I'll turn it over to Hans Thank you Brady. Good morning, everyone I will begin by addressing the wildfires.
Speaker Change: Information in this presentation contains statements about expected future events and financial results that are forward looking and subject to risks and uncertainties discussed.
Speaker Change: Discussions of factors that may affect future results is contained in verizon's filings with the SEC, which are available on our Investor Relations website.
Speaker Change: And the devastation that the Los Angeles area has expanded in recent weeks.
Speaker Change: This presentation contains certain non-GAAP financial measures.
Speaker Change: Our Hearts go out to everyone who has been impacted.
Speaker Change: Conciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials posted on our website.
Speaker Change: <unk>, we always round to a crisis.
Speaker Change: And this time is no different.
Speaker Change: Teams are working hard to protect and restore service to affected areas.
Speaker Change: Earlier this morning, a detailed overview of our fourth quarter and full year results was posted to our Investor Relations website. We will also be posting supplemental materials relating to today's call on our website shortly with that I'll turn it over to Hans.
Speaker Change: Support first responders and help neighbors safe Gordon himself.
Speaker Change: Frontline crisis response team is closely coordinating with federal and state and local public safety agencies as they continue wildfire response and meet the <unk> efforts.
Hans: Thank you Brady good morning, everyone I will begin by addressing the wildfires and the devastation that the Los Angeles area has expanded in recent weeks.
Speaker Change: Verizon's network is holding up strong maintaining critical connectivity for the community BCD and first responders.
Speaker Change: Our Hearts go out to everyone who has been impacted.
Speaker Change: <unk> had been working around the clock restoring near all of the macro Santa sites that were impacted and we will continue to be here for our employees customers and communities in L. A.
Hans: We always round two crises.
Speaker Change: And this time is no different.
Hans: Teams are working hard to protect our risk.
Speaker Change: The war service to affected areas.
Speaker Change: Support first responders and help neighbors safeguard himself.
Speaker Change: Now, let me turn to earnings.
Speaker Change: We had a successful year with great financial and operational results.
Speaker Change: Front like crisis response team is closely coordinating with federal and state and local public safety agencies as they can.
Speaker Change: We delivered on our financial guidance with three 1% wireless service revenue growth and two 1% adjusted EBITDA growth both exceeding the midpoint of our guided ranges, we generated strong free cash flow, while absorbing higher taxes.
Speaker Change: Continual wildfire response and mitigation efforts.
Speaker Change: Whereas those network is holding up strong maintaining critical connectivity for the community based disease and first responders.
Speaker Change: We added nearly two and a half million postpaid mobility and broadband subscribers in the year, while expanding our margins.
Speaker Change: Engineers have been working around the clock restoring near all of the macro satisfies that were impacted and we will continue to be here for employees customers and communities in L. A.
Speaker Change: Ended the year with an industry, leading quarter wireless service revenue of $20 billion.
Speaker Change: Now, let me turn to earnings.
Speaker Change: We had a successful year with great financial and operational results.
Speaker Change: In mobility postpaid phone net adds were nearly 900000 for the year.
Speaker Change: We delivered on our financial guidance with three 1% wireless service revenue growth and two 1% adjusted to meet the growth both exceeding the midpoint of our guided ranges, we generated strong free cash flow, while absorbing higher taxes.
Speaker Change: Consumer postpaid phone net adds were positive with and without the impact of our second number offering and business postpaid phone net adds exceeded half a million pre.
Speaker Change: Prepaid net adds excluding safely Inc were positive for the year and for the first time since the Tracfone acquisition. This has been a great turnaround by the consumer team.
Speaker Change: We added nearly two and a half million postpaid mobility and broadband subscribers in the year, while expanding our margins.
Speaker Change: In broadband we added nearly $1 6 million subscribers and grew market share in 2024 led by continued success of fixed wireless access where ended the year with over $12 3 million broadband subscribers, including nearly $4 6 million fixed wireless access subscribers and over $2 $1 billion on fixed.
Speaker Change: Ended the year with a industry, leading quarter wireless service revenue of $20 billion.
Speaker Change: In mobility postpaid phone net adds were nearly 900000 for the year.
Speaker Change: Consumer postpaid phone net adds were positive with and without the impact of our second number offering and postpaid phone net adds.
Speaker Change: Access revenue, we're off to a great start to hit our next milestone of $8 million to $9 million fixed wireless access subscribers by 2028.
Speaker Change: The half a million pre.
Speaker Change: Prepaid net adds excluding safely Inc were positive for the year and for the first time since the Tracfone acquisition. This has been a great turnaround by the consumer team.
We continue to scale private networks waning work with <unk> companies, Inc. FIFA and more recently the U S Air Force.
Speaker Change: In broadband we added nearly one 6 million subscribers and grew market share in 2024 led by continued success of fixed wireless access where ended the year with over $12 3 million broadband subscribers, including nearly $4 6 million fixed wireless access subscribers and over $2 $1 billion on fixed.
Speaker Change: We were the only U S carrier to be named a leader in the first ever Gartner Magic quadrant for private wireless services Gartner recognized us for our vision. The work we have done to build the market and our industry leading execution.
Speaker Change: We drove efficiencies and continued the business transformation, we ended the year with less than 100000 employees down close to 20000 over the last three years.
Speaker Change: Access revenue, we're off to a great start to eat our next milestone of eight to 9 million fixed wireless access subscribers by 20 to 28.
Speaker Change: Continued business transformation gave us more flexibility to execute on our strategy and capital allocation priorities. We continue to invest in the business and made strategic moves for long term growth.
Speaker Change: We continue to scale private networks, winning work with say a rocks Cummins, Inc. FIFA and more recently the U S Air Force.
Speaker Change: We were the only U S carrier to be named a leader in their first ever Gartner Magic quadrant for private wireless services got a recognized for our vision. The work we have done to build the market and our industry leading execution.
Speaker Change: We launched customer first offerings, such as my home and Verizon access refreshed, our brand and signed strategic transactions, including frontier that tower deal you a seller of spectrum and satellite partnerships.
Speaker Change: We drove efficiencies and continued the business transformation we ended.
Speaker Change: We raised the dividend for the 18th consecutive year and continued debt pay down ending the year with a net unsecured debt to adjusted EBITDA ratio of two three times.
Speaker Change: The year with less than 100000 employees down close to 20000 over the last three years.
Speaker Change: Continued business transformation gave us more flexibility to execute on our strategy and capital allocation priorities. We continue to invest in the business and made strategic moves for long term growth.
Speaker Change: We have a great year with both customer and financial growth as we continue the strategic transformation of the company.
Speaker Change: Looking forward to 2025, we will continue to focus on our three key financial metrics wireless service revenue adjusted EBITDA and free cash flow, while Tony will provide these details I would highlight the underlying wireless service revenue growth is expected to be nearly double the guided range when excluding promo amortization with that.
Speaker Change: We launched customer first offerings, such as my home and Verizon access refreshed, our brand and science at TD transactions, including Frontier. The tower deal you were a seller of spectrum and satellite partnerships.
Speaker Change: We raised the dividend for the 18th consecutive year and continued debt paydown ending the year with a net unsecured debt to adjusted EBITDA ratio of two three times.
Speaker Change: I would turn it over to Tony to say, a few words about the quarter and cover guidance for 'twenty two and five.
Tony: Thanks, Hans and good morning, everyone.
Tony: As we reported earlier this morning, we closed the year with strong operational and financial performance.
Speaker Change: We have a great year with both customer and financial growth as we continue the strategic transformation of the company looking forward to 2025, we will continue to focus on our three key financial metrics wireless service revenue adjusted EBITDA and free cash flow, while Tony will provide these details I would highlight the underlying wireless services.
Tony: The steps, we took in 2024 and to improve our execution, while maintaining financial discipline continued to bear fruit we.
Tony: We added nearly 1 million postpaid subscribers onto our mobile and broadband platforms in the fourth quarter, our highest quarterly result in over a decade, while also delivering on our financial guidance for the full year.
Speaker Change: The growth is expected to be nearly double the guided range when excluding promo amortization with that I would turn it over to Tony to say, a few words about the quarter and cover guidance for 'twenty one.
Tony: We delivered solid growth in postpaid mobility with 568000 postpaid phone net adds in the fourth quarter. This includes 426000 consumer postpaid phone net ads, giving us positive net adds for the full year with and without our second number offering business had another solid quarter with 142000 phone net adds and saw strong growth across <unk>.
Tony: Thanks, Hans and good morning, everyone as.
Speaker Change: As we reported earlier this morning, we closed the year with strong operational and financial performance.
Speaker Change: The steps we took in 2020 for it to improve our execution, while maintaining financial discipline continued to bear fruit.
Tony: All three customer groups.
Tony: The operational rigor we implemented in prepaid continues to pay off in the fourth quarter prepaid net adds were 65000, excluding safe link, giving us positive net adds for the full year.
Speaker Change: We added nearly 1 million postpaid subscribers onto our mobile and broadband platforms in the fourth quarter, our highest quarterly result in over a decade, while also delivering on our financial guidance for the full year.
Tony: In broadband we continue to take market share delivering 408000 net adds in the corner fixed wireless access accounted for 373000 net adds and fires added 51000 subscribers in the corner a solid result, given the challenges noted by some of our competitors.
Speaker Change: We delivered solid growth in postpaid mobility with 568000 postpaid phone net adds in the fourth quarter. This includes 426000 consumer postpaid phone net ads, giving us positive net adds for the full year with and without our second number offering business had another solid quarter with 142000 phone net adds and saw strong growth across.
Tony: Importantly, we achieved these strong operational results, while delivering on all of our 2024 financial guidance in fact, both wireless service revenue and adjusted EBITDA were above the midpoint of our guided ranges and our adjusted EBITDA margin expanded 50 basis points for the full year.
Speaker Change: All three customer groups.
Speaker Change: The operational rigor we implemented in prepaid continues to pay off in the fourth quarter prepaid net adds were 65000, excluding safely, giving us positive net adds for the full year and.
Tony: In the fourth quarter, we delivered three 1% wireless service revenue growth along with two 1% growth in adjusted EBITDA as we balance investing in customer growth with maintaining financial discipline. Finally, our free cash flow of $5 4 billion in the quarter and $19 8 billion for the full year allowed us to take meaningful steps to further reduce.
Speaker Change: In broadband we continue to take market share delivering 408000 net adds in the corner fixed wireless access accounted for 373000 net adds and fires added 51000 subscribers in the corner a solid result, given the challenges noted by some of our competitors.
Tony: Our debt consistent with our capital allocation priorities and to better position us for the closing of our pending acquisition of frontier.
Speaker Change: Importantly, we achieved these strong operational results, while delivering on all of our 2024 financial guidance in fact, both wireless service revenue and adjusted EBITDA were above the midpoint of our guided ranges and our adjusted EBITDA margin expanded 50 basis points for the full year.
Tony: Note that our fourth quarter free cash flow included approximately $2 billion in proceeds from the vertical bridge tower transaction.
Tony: In addition, we made severance payments of approximately $600 million.
Speaker Change: In the fourth quarter, we delivered three 1% wireless service revenue growth along with two 1% growth in adjusted EBITDA as we balance investing in customer growth with maintaining financial discipline. Finally, our free cash flow of $5 $4 billion in the quarter and $19 8 billion for the full year allowed us to take meaningful steps to further reduce.
Tony: Which represents roughly half of the total payments, we expect to make as part of a voluntary separation program.
Tony: Turning to guidance, we entered 2025 with good operational and financial momentum and that is reflected in our outlook. We expect total wireless service revenue to grow between two and two 8%. The key drivers of this outlook are consistent with 2024 and include improving postpaid consumer phone net additions and continue healthy business.
Speaker Change: Our debt consistent with our capital allocation priorities and to better position us for the closing of our pending acquisition of frontier.
Speaker Change: Note that our fourth quarter free cash flow included approximately $2 billion in proceeds from the vertical bridge tower transaction.
Tony: Phone volumes pricing actions taken in 2024 that carryover into 2025.
Tony: Continuing to scale fixed wireless access.
Speaker Change: In addition, we made severance payments of approximately $600 million, which represents roughly half of the total payments, we expect to make as part of a voluntary separation program.
Tony: Growing adoption of my plan and accompanying perks and an improving prepaid revenue profile.
Tony: Yeah.
Tony: As we shared the fall, we expect promo amortization headwinds to peak in 2025.
Speaker Change: Turning to guidance, we entered 2025 with good operational and financial momentum and that is reflected in our outlook. We expect total wireless service revenue to grow between two and two 8%. The key drivers of this outlook are consistent with 2024 and include improving postpaid consumer phone net additions and continue healthy business.
Tony: That said the underlying customer economics are very healthy.
Tony: Please note that beginning in the first quarter of 2025, we are reclassifying more than $2 $9 billion of annual recurring device protection and insurance related planet revenues from other revenue into wireless service revenue.
Speaker Change: Volumes pricing actions taken in 2024 that carryover into 2025.
Tony: As a result, our wireless service revenue guidance should be viewed in the context of growth off of a higher base of revenue. We expect consolidated adjusted EBITDA to grow two to three 5% compared to 2024. This outlook reflects expected higher wireless service revenue and benefits of ongoing cost transformation initiatives, partially offset by continued pressure in business wireless.
Speaker Change: To scale fixed wireless access.
Speaker Change: Adoption of mine plan and accompanying perks and.
Speaker Change: And an improving prepaid revenue profile.
Speaker Change: As we shared the fall, we expect promo amortization headwinds to peak in 2025.
Speaker Change: That said the underlying customer economics are very healthy.
Tony: <unk> revenues the midpoint of the adjusted EBITDA guidance range reflects an expected year over year increase of more than $1 3 billion.
Speaker Change: Please note that beginning in the first quarter of 2025, we are reclassifying more than $2 $9 billion of annual recurring device protection and insurance related planet revenues from other revenue into wireless service revenue.
Tony: Which is $300 million more of expected growth than we delivered in 2020 for full.
Tony: Full year adjusted earnings per share growth is expected to be in a range of flat to up 3%, reflecting the adjusted EBITDA growth, partially offset by higher depreciation and amortization as we discussed in October capital spending for the full year is expected to be between $17 5 billion and $18 5 billion.
Speaker Change: As a result, our wireless service revenue guidance should be viewed in the context of growth off of a higher base of revenue. We expect consolidated adjusted EBITDA to grow two to three 5% compared to 2024. This outlook reflects expected higher wireless service revenue and benefits of ongoing cost transformation initiatives, partially offset by continued pressure on business wire.
Tony: This guidance is an all in number that includes all of our growth initiatives. This includes incremental investments to deploy C band to 80% to 90% of plant sites.
Speaker Change: Revenues.
Speaker Change: Midpoint of the adjusted EBITDA guidance range reflects an expected year over year increase of more than one $3 billion, which is $300 million more of expected growth than we delivered in 2020 for full.
Tony: Accelerating our <unk> expansion to up to 650000, new open for sale locations and launching our fixed wireless MDU solution.
Speaker Change: Full year adjusted earnings per share growth is expected to be in a range of flat to up 3%, reflecting the adjusted EBITDA growth, partially offset by higher depreciation and amortization as we discussed in October capital spending for the full year is expected to be between $17 $5 billion and $18 $5 billion. This guidance is an all in number then.
Tony: As always we will continue to look for opportunities to efficiently deploy capital.
Tony: Regarding cash flow, we expect free cash flow in the range of 17, five to $18 $5 billion in 2025.
Tony: This outlook assumes mid single digit growth in upgrades and no change to current tax legislation.
Tony: Please note that our guidance excludes any impact from the pending acquisition of frontier well.
Speaker Change: All of our growth initiatives. This includes incremental investments to deploy C band to 80 to 90 per cent of plant sites.
Tony: We're currently working with all regulatory bodies that must approve the transaction. The process is going as planned and we continue to expect the transaction to close by early 2026.
Speaker Change: Accelerating our expansion to up to 650000, new open for sale locations and launching our fixed wireless MDU solution.
Tony: I will now turn the call back over to Hans to go over our 2025 priorities. Thank you Tony looking ahead, our 'twenty to 'twenty five priorities are clear.
Speaker Change: As always we will continue to look for opportunities to efficiently deploy capital.
Speaker Change: Regarding cash flow, we expect free cash flow in the range of 17, five to $18 $5 billion in 2025.
Tony: Our continued focus on wireless service revenue growth adjusted EBITDA expansion and strong free cash flow.
Speaker Change: This outlook assumes mid single digit growth in upgrades and no change to current tax legislation.
Tony: Accelerate the mobile at the momentum in broadband growth, while scaling private networks as we expand five ultra wideband and fiber reach.
Speaker Change: Please note that our guidance excludes any impact from the pending acquisition of frontier well.
Tony: Laser focus on operational excellence financial discipline, and customer experience to drive customer and financial growth.
Speaker Change: We're currently working with all regulatory bodies that must approve the transaction. The process is going as planned and we continue to expect the transaction to close by early 2026.
Speaker Change: Execution of our capital allocation model investing in the business supporting and growing our dividend paying down debt and eventually share repurchases and we will leverage our fiber and edge compute assets to open new revenue streams from the AI ecosystem. So let me talk about verizon's AI stressed at all.
I will now turn the call back over to Hans to go over our 2025 priorities. Thank you Tony looking ahead at 2025 priorities are clear.
Hans: Our continued focus on wireless service revenue growth.
Hans: Adjusted he beat the expansion and strong free cash flow.
Hans: Accelerate the mobile at the momentum in broadband growth, while scaling private networks as we expand fires you also wideband and fiber reach.
Speaker Change: We have worked with AI for many many years and we are already today have server generated AI products at scale in our company, we outlined a three pronged strategy for AI for iPhone. Let me go through them briefly number one enhanced experiences and drive efficiencies. This is <unk>.
Hans: Laser focus on operation Excellence.
Hans: Disciplined and customer experience to drive customer and financial growth.
Hans: Execution of our capital allocation model investing in the business supporting and growing our dividend paying down debt and eventually share repurchases and we will leverage our fiber and edge compute assets to open new revenue streams from the AI ecosystem. So let me talk about verizon's AI stressed at all.
Speaker Change: All about employee and customer experiences driving down costs in our operations. A good example would be fast pass, which I've talked about before which is deployed in our mobility call centers to intelligently pair customers with the best available care representative the second part of the AI stress.
Hans: We have worked with for many many years and we're already today have server generate AI products at scale in our company, we outlined a three pronged strategy for AI at Verizon, Let me go through them briefly number one and hawes experiences and drive efficiencies.
Speaker Change: Verizon is so personalized product and solutions.
Speaker Change: Is much more about how we can be more personalizing the service for our customers a great product here would be segment of me, which is a tool that uses AI to personalized customer experience with unique offers and products.
Hans: All about employee and customer experiences driving down costs in our operations. A good example would be fast pass, which I've talked about before which is deployed in our mobile at the call centers to intelligently pair customers with the best available care representative the second part of the AI stress.
Speaker Change: The third pillar of the AI at Verizon on strategy, which we haven't talked so much about but I promise you several times, we'll come back to it and we will talk about today is connect to the AI ecosystem and that's the focus of today. If you think about where we are on generating AI today today, It's a large language module itself.
Hans: That's where I sonny's, so personalized product and solutions. This is much more about how we can be more personalizing. The service for our customers a great product here would be segment of me, which is a tool that uses AI to personalized customer experience with unique offers and products.
Speaker Change: At large data centers and that requires enormous capacities overtime that will of course come much closer to the edge of the network both for application, but transport cost and latency in some cases. This is creating an opportunity for us and is already creating opportunities as we had read.
Hans: The third pillar of the AI at Verizon on strategy, which we haven't talked so much about but I promise just separate times will come back to it and we will talk about today is connect to the AI ecosystem and that's the focus of the day. If you think about where we are on generate deep AI today today, it's a large language module itself.
Speaker Change: And it beat the impact in the fourth quarter. We are now looking to how we can use our assets and our capability to serve this market. When it comes to the next step will generate that AI. So I'm very proud and excited to introduce horizon's AI connect today, that's our product and solution to address this market and meeting.
Hans: At large data centers and that requires enormous capacities overtime that will of course come much closer to the edge of the network both for application, but transport cost and latency in some cases. This is creating an opportunity for us and is already creating opportunities as we had rev.
Speaker Change: The end customer's needs in the next step of AI generated AI. So by that I will hand, it over to Kyle that we're talking about and discussed our opportunities and how we're addressing these markets.
Kyle M'lady: Thanks, Hans it's a pleasure to be here this morning.
Speaker Change: Horizon AI connect is the name of our strategy and suite of offerings that are intended to meet the growing demand for AI applications from both our ecosystem partners and end user customers.
Hans: And it beat the impact in the fourth quarter. We're now looking to how we can use our assets and our capability to serve this market. When it comes to the next step will generate that AI. So I'm very proud and excited to introduce varietals AI connect today, that's our product and solution to address these market and meeting.
Speaker Change: It's a vision that allows us to utilize existing assets and new ways to service This technology Revolution.
Speaker Change: Whether the AI workloads are across a multi cloud environment deployed on a customer's premise or at the edge of the networks. We have a suite of offerings that businesses can utilize to fully leverage AI capabilities. Our vision is built around best in class connectivity and edge compute assets. It all starts with connectivity over the last 20 years, we have.
Hans: The end customer's needs in the next step of AI generate that AI. So by that I will hand, it over to Kyle that we're talking about and discussed our opportunities and how we're addressing these markets.
Kyle M'lady: Thanks, Hans it's a pleasure to be here this morning.
Kyle M'lady: Horizon AI connect is the name of our strategy and suite of offerings that are intended to meet the growing demand for AI applications from both our ecosystem partners and end user customers.
Speaker Change: <unk> unmatched fiber assets not only in our ILEC footprint via files, but also outside through our 71 city, one fiber build up together with our industry, leading long haul network that stitches. These metros together, we can provide lit and dark fiber services to our customers over a large geographic area we have.
Kyle M'lady: It's a vision that allows us to utilize existing assets and new ways to service This technology Revolution.
Kyle M'lady: Whether the AI workloads are across a multi cloud environment deployed on a customer's premise at the edge of the networks. We have a suite of offerings that businesses can utilize to fully leverage AI capabilities. Our vision is built around best in class connectivity and edge compute assets. It all starts with connectivity over the last 20 years, we have.
Speaker Change: <unk> edge to cloud connectivity and expertise and we are ahead of the curve in this area. The investments we have made in our converged intelligent edge network over the last several years will pay dividends in this new world as users need even more bandwidth and network visibility.
Speaker Change: Our network is intelligent and programmable customers want to control, where England AI workloads are running and to that we are building new capabilities to give users more insight and control via new tools, essentially we're allowing them to program their network resources to optimize their operation as they see fit and finally edge compute.
Kyle M'lady: <unk> unmatched fiber assets not only in our ILEC footprint via files, but also outside through our 71 city, one fiber build up together with our industry, leading long haul network that stitches. These metros together, we can provide lit and dark fiber services to our customers over a large geographic area we have.
Speaker Change: As AI shifts from training to deep deployment the need for distributed computing will become increasingly important for real time decisions and predictions. We have thousands of distributed telco facilities, many of which already have power space and cooling available for this compute at the edge.
Kyle M'lady: <unk> edge to cloud connectivity and expertise and we are ahead of the curve in this area. The investments we have made in our converged intelligent edge network over the last several years will pay dividends in this new world as users need even more bandwidth and network visibility.
Kyle M'lady: Our network is intelligent and programmable customers want the control wherein Lynn AI workloads are running and to that we are building new capabilities to give users more insight and control via new tools.
Speaker Change: As we take stock of our existing assets verizon's ability to be a foundational player in the AI ecosystem is clear the technical infrastructure required to enable AI is evolving AI demands massive amounts of data powerful chipsets and high speed secure flexible network connectivity.
Kyle M'lady: Essentially we are allowing them to program their network resources to optimize their operations as they see fit and finally edge compute as AI shifts from training to deep deployment the need for distributed computing will become increasingly important for real time decisions and predictions.
Speaker Change: Market analysts estimate there will be over one trillion dollars of investment in AI infrastructure over the next 10 years and some suggest AI network traffic will grow at 35% plus CAGR over the next five years enormous investments have been announced and we expect more to come all of this AI infrastructure will need to be underpinned by secure network connectivity.
Kyle M'lady: We have thousands of distributed telco facilities, many of which already have power space and cooling available for this compute at the edge as we take stock of our existing assets verizon's ability to be a foundational player in the AI ecosystem is clear.
Speaker Change: That will bridge, the new distributed compute landscape.
Eison: Eison, we see ourselves as not just participants in this AI driven future, but as a key player enabling our success.
Kyle M'lady: Technical infrastructure required to enable AI is evolving AI.
Kyle M'lady: Demands massive amounts of data powerful chipsets and high speed secure flexible network connectivity.
Eison: Verizon is leadership in the enterprise connectivity market is poised to become even more crucial as AI applications become more widespread among end users.
Kyle M'lady: Market analysts estimate there will be over one trillion dollars of investment in AI infrastructure over the next 10 years and some suggest a network traffic will grow at 35% plus CAGR over the next five years enormous investments had been announced and we expect more to come all of this infrastructure will need to be underpinned by secure network connectivity.
Eison: We believe Verizon will serve as the essential link between these gen AI applications and the firms who utilize them with growing network of over 16000 near net enterprise locations. Verizon is positioned at the forefront of the AI deployment, providing the connectivity solutions that will enable the seamless integration of AI applications across the wide.
Kyle M'lady: That will bridge, the new distributed compute landscape.
Speaker Change: At Verizon, we see ourselves as not just participants in this AI driven future, but as a key player enabling our success.
Eison: Range of industries and sectors.
Eison: We also have extensive connectivity to third party data centers currently ranking a close third in the market data.
Speaker Change: Verizon is leadership in the enterprise connectivity market is poised to become even more crucial as AI applications become more widespread among end users.
Eison: Data centers will continue to be crucial in this new AI powered world and 40% of data centers are expected to face operational constraints by 2027, which is another factor and workloads moving to the edge.
Speaker Change: We believe Verizon will serve as the essential link between these Jenny I applications and the firms who utilize them with growing network of over 16000 near net enterprise locations. Verizon is positioned at the forefront of the AI deployment, providing the connectivity solutions that will enable the seamless integration of AI applications across the wide.
Eison: Verizon has extensive fiber and programmable networks are ready to meet these demands across key markets.
Eison: And we're not alone in recognizing the opportunity industry analysts are seeing in predicting further significant growth in the AI market hyperscale as we're expanding into new markets and they need high capacity connectivity.
Speaker Change: Range of industries and sectors.
We also have extensive connectivity to third party data centers currently ranking a close third in the market.
Eison: The industry is seeing a surge in cloud migration and co location demand.
Eison: Lastly, power space and cooling of the currencies that are in demand right now and we have all three.
Speaker Change: Data centers will continue to be crucial in this new AI powered world and 40% of data centers are expected to face operational constraints by 2027, which is another factor and workloads moving to the edge.
Eison: As we look across our assets take inventory and compare against other players in the market. We believe that we are in a leadership position when it comes to usable power and space.
Speaker Change: Verizon has extensive fiber and programmable networks are ready to meet these demands across key markets.
Eison: We have facilities across the United States that either have spare power space and cooling or can be retrofitted.
And we're not alone in recognizing the opportunity industry analysts were seeing in predicting further significant growth in the AI market Hyperscale as we're expanding into new markets and they need high capacity connectivity the.
Eison: As we sit here today, we have two to 10 plus megawatts of usable power across many of our sites.
Eison: Also as we move through our network transformation work, we will continue to free up more resources that could be made available for AI connect.
Speaker Change: The industry is seeing a surge in cloud migration and co location demand.
Speaker Change: Lastly, power space and cooling of the currencies that are in demand right now and we have all three.
Eison: In addition, we have between 100 200 acres of undeveloped land. Some currently zoned for datacenter build and much of it in prime datacenter friendly areas.
Speaker Change: As we look across our assets take inventory and compare against other players in the market. We believe that we were in a leadership position when it comes to usable power and space.
Eison: This is not a theoretical discussion we are seeing increasing demand for AI connect offerings, we already have a funnel of over $1 billion.
Speaker Change: We have facilities across the United States that either have spare power space and cooling or can be retrofitted.
Eison: Simply leveraging our existing infrastructure major players such as Google and matter of purchase capacity in our network with the intent of using it for their AI workloads. Some of these deals are reflected in our fourth quarter results and are contributing to the margin improvement you saw in the quarter. We are working closely with industry players like Nvidia to re imagine how telco functions can work along.
Speaker Change: As we sit here today, we have two to 10 plus megawatts of usable power across many of our sites.
Also as we move through our network transformation work, we will continue to free up more resources that could be made available for AI connect.
Speaker Change: In addition, we have between 102 hundred acres of undeveloped land. Some currently zoned for datacenter build and much of it in prime datacenter friendly areas.
Eison: With AI workloads, we're starting the development at the far edge in a private network the.
Eison: The applicability will go beyond that and potentially into the macro network at some point.
Speaker Change: This is not a theoretical discussion we are seeing increasing demand for AI connect offerings, we already have a funnel of over $1 billion simply leveraging our existing infrastructure major players such as Google and met our purchase capacity of our network with the intent of using it for their AI workloads. Some of these deals are reflected in our fourth quarter results.
Eison: I'm also happy to report that we have a new strategic partnership with Vulture.
Eison: A leading global GPU as a service provider and cloud computing provider initially volker will deploy their GPU as a service infrastructure and one of our data centers and tap into a high capacity fiber network for distribution we.
Eison: We anticipate helping to broaden their reach and enable our mutual customers with AI training and inference capabilities at the edge over time. The bottom line is we are ready to help power. The AI ecosystem, we have the assets the expertise and the division to deliver AI solutions at scale.
And are contributing to the margin improvement you saw in the quarter. We are working closely with industry players like Nvidia to re imagine how telco functions can work along with AI workloads. We're starting this development at the far edge in a private network.
Speaker Change: The applicability will go beyond that and potentially into the macro network at some point.
Eison: Unlocking the potential of our existing assets, we can further improve the financial profile of Verizon business the.
Speaker Change: I'm also happy to report that we have a new strategic partnership with Vulture.
Speaker Change: A leading global GPU as a service provider and cloud computing provider.
Eison: The team has worked hard over the last few years to help mitigate the impact of secular wireline revenue pressures together with continued strong results in mobility <unk> expansion and work on cost efficiencies Verizon AI connect positions us for success into the future.
Speaker Change: Italy, Volker will deploy their GPU as a service infrastructure and one of our data centers and tap into a high capacity fiber network for distribution.
Speaker Change: We anticipate helping to broaden their reach and enable our mutual customers with AI training and inference capabilities at the edge over time. The bottom line is we are ready to help power. The AI ecosystem, we have the assets the expertise and the division to deliver AI solutions at scale.
Eison: Thank you Kai I hope you now got more insights to how we see we can connect the AI ecosystem. Both from the capability point of view and also from the assets, we have and that we're already now have customers in solutions in the market and this is just the beginning I'm really excited about what we see right now as an opportunity.
Speaker Change: Unlocking the potential of our existing assets, we can further improve the financial profile of Verizon business.
Speaker Change: The team has worked hard over the last few years to help mitigate the impact of secular wireline revenue pressures together with continued strong results in mobility FWS expansion and work on cost efficiencies Verizon AI connect positions us for success into the future.
Eison: In this area.
Eison: Lastly, we had a great 2094, and I look forward to exciting opportunities and continued growth ahead, so by that I hand, it over to Brady to handle the Q&A.
Speaker Change: Thanks, Hans Brad we're ready for the first question.
Brady Connor: Thank you we will now begin the question and answer session.
Speaker Change: I Hope you now got more insights to how we see we can connect the AI ecosystem. Both from the capability point of view and also from the assets, we have and that's what we already know of customers and solutions in the market and this is just the beginning I'm really excited on what we see right now as an opportunity for us in this.
If you would like to ask a question. Please press star one on your Touchtone phone. Please on mute your phone and record your name clearly when prompted your name is required to introduce your question.
If at any point. Your question has been answered or you would like to withdraw your request you may remove yourself by pressing star two.
Ariel: Ariel <unk>.
Ariel: Firstly, we had a great 'twenty 'twenty four and I look forward to exciting opportunities and continued growth ahead, so by that I hand, it over to Brady to handle the Q&A.
Brady Connor: Once again.
Brady Connor: Please press star one for question one moment for the first question.
Brady Connor: Our first question comes from John Hodulik of UBS. Your line is open Sir.
Brady Connor: Thanks, Hans Brad we're ready for the first question.
John Hodulik: Okay, great. Thanks, and good morning, guys.
Thank you we will now begin the question and answer session.
Speaker Change: Maybe first starting off with Kyle's commentary.
Speaker Change: If you would like to ask a question. Please press star one on your Touchtone phone. Please UN mute your phone and record your name clearly when prompted your name is required to introduce your question.
Brady Connor: Just any sense to you.
Brady Connor: In terms of the overall I know I realize it's early and we're getting these announcements seemingly weekly now but.
Speaker Change: If at any point. Your question has been answered or you would like to withdraw your request you may remove yourself by pressing star two.
Brady Connor: Any sense in how big this opportunity could be both on the connectivity side or in terms of the space and power would be great just to just to frame it out for us and then.
Speaker Change: Once again.
Speaker Change: Please press star one for question one moment for the first question.
Brady Connor: Maybe more operationally you guys showed some real momentum.
Brady Connor: And the year, both on the wireless side with gross adds up over 5% and then the broadband side.
Speaker Change: Our first question comes from John Hodulik of UBS. Your line is open Sir.
Brady Connor: Could you talk a little bit about it.
John Hodulik: Okay, great. Thanks, and good morning, guys.
Brady Connor: Drivers of that momentum and have you seen that momentum continue as we started out.
Speaker Change: Maybe first starting off with Kyle's commentary on.
John Hodulik: Just any sense to you.
Brady Connor: 25.
John Hodulik: In terms of the overall I know I realize it's early and we're getting these announcements it seemingly weekly.
Shawn: Thanks, Shawn let me start with the second question on that and we'll come back today I would guide.
Shawn: When it comes to momentum both in broadband and wireless both in the business group and in the consumer group I think we have actually outlined quite a lot of changes in our structure not only the people will have leading it but also the product.
John Hodulik: Any sense in how big this opportunity could be both on the connectivity side or in terms of the space and power would be great just to just to frame it out for us and then.
John Hodulik: Maybe more operationally you guys have got some real momentum.
John Hodulik: The end of the year, both on the wireless side with gross adds up over 5% and then the broadband side.
Shawn: The rebrand and they were done.
Shawn: We see that our products are resonating I mean this is as we said you know.
John Hodulik: Could you talk a little bit about the drivers of that momentum and have you seen that momentum continue as we started out.
Shawn: When it comes to what we add any new customers in the fourth quarter best in a decade. So we are really really really excited about what we're seeing in and if you think about the broadband side. That's of course fixed wireless access is doing great to me. So we were together in <unk> was over 400000 in the quarter continue to take share.
John Hodulik: 25 thanks.
John Hodulik: Let me start with your second question on that and we'll come back today I would guide.
John Hodulik: When it comes to momentum both in broadband and wireless both in the business group and in the consumer group I think we have actually outlined quite a lot of changes in the structure not only the people will have leading it but also the product.
Shawn: Wireless, where we are getting stronger and stronger now with them.
Shawn: Several quarters of consecutive improvement. So I think it's a lot of execution, but also that our products are right. Our branding right and then the network is just improving them and you have seen our numbers from the network wherever would deploy C band that they're a premium sale through opening fixed wireless access.
Speaker Change: Lloyd the rebrand and they were down.
Speaker Change: Honestly, we see that all products are resonating I mean this is as we said you know.
Speaker Change: When it comes to what were add any new customers in the fourth quarter best in a decade. So we're really really really excited on what we're seeing them and then if you think about the broadband side. That's of course fixed wireless access is doing great to me. So we were together in fire was over 400000 in the quarter continued to take share.
Speaker Change: Of course seeing that the lower shown so all that comes together with an execution was done over the last couple of years and I will ask actually a sample to comment on that and then I will ask you to talk about AI the opportunity, which we think is great with our assets, but first to sample. It. Thank you Hans.
Speaker Change: I know the wireless where we're getting stronger and stronger.
Speaker Change: 2025, we expect higher for net adds down in 'twenty 'twenty four and in the fourth quarter, we saw really strong.
Speaker Change: Several quarters of consecutive improvement. So I think it's a lot of execution, but also the other products are right a brand new right.
Speaker Change: Momentum in our business look we've had eight quarters of phone gross add growth and we see that momentum continuing into 2025, a couple of reasons why the first one is our value prop is resonating very well I think my plan more than half a basis already on my plan and that value prop is unique in the market because we get savings to customers.
Speaker Change: Network is just improving them and who has seen our numbers from the network wherever would deploy C band that they're a premium sale through opening fixed wireless access.
Speaker Change: Of course seeing that the lower shown so all that comes together with an execution was done over the last couple of years and I will ask actually a sample to comment on that and then I will ask you to talk about AI opportunity, which we think is great with our assets, but first to sample. It. Thank you Hans.
Speaker Change: Just kind of unable to give so that is working very well for us. The second is lots of the work we did in 'twenty three 'twenty four on sales execution local markets local marketing is starting to pay off even well and we see that continuing into 2025. The last is there are some opportunities segments that we've tapped into in Q4 was the start of that the first one.
Speaker Change: 2025, we expect higher for net adds down in 'twenty 'twenty four and in the fourth quarter, we saw really strong.
Speaker Change: Momentum in our business look we've had eight quarters of phone gross add growth and we see that momentum continuing into 2025, a couple of reasons why the first one is our value proposition has anything very well I think my plan more than half our base is already on my plan and that value prop is unique in the market because we get savings to customers.
Tier one markets, we've historically had a slightly lower presence in tier one market that is shifting some of our large markets. We are starting to see share market gain in those segments. Secondly, the Latino segment, we've had a concerted effort last couple of quarters to go after that so we had a financially disciplined operator, we saw growth we saw opportunity in Q4, and we went for it.
Speaker Change: Just gonna unable to give so that is working very well for us. The second did lots of the work we did in 'twenty three 'twenty four on sales execution local markets local marketing is starting to pay off even well and we see that continuing into 2025. The last is there are some opportunities segments that we've tapped into in Q4 was the stock of that the first one.
Hey, John Thanks for the question on AI connect I mean, here's it's.
John Hodulik: Our best guess at the moment is the Tam we can sell into with what we have is probably 40 billion plus.
Speaker Change: But you see that the every single day there is new.
Announcements of hundreds of billions of dollars going into this ecosystem and like I spoke about we have a lot of assets that can play right into this and frankly, we have well over 1 billion plus in funnel right now and that's that's really only with our.
Speaker Change: But tier one market, you've historically had a slightly lower presence in tier one market that is shifting some of our large markets. We are starting to see share of market gain in those segments. Secondly, the Latino segment, we've had a concerted effort last couple of quarters to go after that so we had a financially disciplined operate there'll be saw growth we saw opportunity in Q4, and we went for it.
Speaker Change: The services that we have today, that's not even counting the power space and cooling stuff that I talked about so I feel this is going to grow where it ends up I think it's anybody's guess.
John Hodulik: Hey, John Thanks for the question on the connect I mean, here's it's.
Speaker Change: But the investment going into here was massive and we're going to be able to play right into it.
John Hodulik: Our best guess at the moment is the Tam we can sell into with what we have is there's probably 40 billion plus.
Speaker Change: Alright, Thanks, guys, yeah. Thanks, John Brad we're ready for the next question.
John Hodulik: But you see that the every single day there is new.
Speaker Change: The next question comes from Michael Rollins of Citi. Your line is open.
John Hodulik: Announcements of hundreds of billions of dollars going into this ecosystem and like I spoke about we have a lot of assets that can play right into this and frankly, we have well over a 1 billion plus in funnel right now and that's that's really only with our services that we have today, that's not even counting the power space and cooling stuff that I talked about so I feel.
Michael Rollins: Thanks, and good morning.
Speaker Change: If you can provide a bit more context on the upgrade environment in terms of what you saw from customer behavior during the fourth quarter and if you could share some additional context on the drivers behind your base case for upgrades that are embedded within the 2025 guidance and then second.
John Hodulik: This is going to grow where it ends up I think it's anybody's guess.
John Hodulik: The investment going into here was massive and we're going to be able to play right into it.
Michael Rollins: Just in terms of financials.
Michael Rollins: Yes.
Michael Rollins: Sure some of the additional drivers that are contributing to the faster EBITDA growth guidance for 'twenty fives as well as if you could share some of the bridge items between EBITDA guidance and free cash flow guidance for 2005, including things like tax and working capital.
John Hodulik: Okay. Thanks, guys, yeah, Thanks, John Brad we're ready for the next question.
Speaker Change: The next question comes from Michael Rollins of Citi. Your line is open.
Speaker Change: Thanks, and good morning Chase.
Michael Rollins: If you can provide a bit more context on the upgrade environment in terms of what you saw from customer behavior during the fourth quarter and if you could share some additional context on the drivers behind your base case for upgrades that are embedded within the 2025 guidance.
Michael Rollins: Okay. Thank you Mike.
Michael Rollins: So when it comes to upgrade so I think that after many many quarters of decline we came to a slight growth on upgrades. So that's little strange after many quarters. You you also will get there.
Speaker Change: Then second just in terms of financials.
Michael Rollins: I think that we still have the same sort of factor behind it.
Speaker Change: Yes.
Speaker Change: Sure some of the additional drivers that are contributing to the faster EBITDA growth guidance for 'twenty five as well.
Michael Rollins: Customers on the consumer side keep the phones very long them and now we're way over 40 months and Thats of course contributing to this and as we spoke about earlier, what we have seen an upgrade cycle. This is of course very much driven our new technologies and new hardware design. So we haven't seen much of that lately, but.
Speaker Change: If you could share some of the bridge items between EBITDA guidance and free cash flow guidance for 2005, including things like tax and working capital.
Speaker Change: Okay. Thank you Mike.
Speaker Change: So when it comes to upgrade so I think that after many many quarters of decline we came to a slight growth on upgrades. So that's not strange after many quarters. You. You also will get there I think that we still have the same sort of fact behind it.
Michael Rollins: Of course, the products are way better more resilient as well. So I think that's what you see but I will also ask.
Michael Rollins: A sample to make a couple of more comments on that and on the beta expansion I'm and I will ask Tony to talk about but we have worked on the costs.
Michael Rollins: The initiatives, we have done all the way from voluntary separation program. The outsourcing we have done with age is he would in kind of shop, there changed with evening customer care and we have done a lot on the cost and then of course, we start to get the growth and then the model starts getting leverage and you'll see that cash flow you see it in our a beta.
Speaker Change: Customers on the consumer side keep the phones very long them in our way over 40 months and that's of course contributing to this and as we spoke about earlier and know what we have seen an upgrade cycle is of course very much driven our new technologies and new hardware, Besides who I haven't seen much of that lately, but.
Michael Rollins: I remember we are measured on three things why your service revenue growth and EBITDA and cash flow expansion, we showed that in 'twenty four or our guidance for 25 shows the same. So this team is super committed to it but some of it some about the upgrade environment, yes. The 'twenty 'twenty four is our lowest upgrade rate in a very long time.
Speaker Change: Of course that the products are way better more resilient as well. So I think that's what you see but I will also ask.
Speaker Change: A sample to make a couple of more comments on that and on the beta expansion I mean, I would ask Tony to talk about it but we have worked on the coast.
The initiatives, we have done all the way from voluntary separation program. The outsourcing work down with age is he would in kind of shop, there change with evening customer care and we have done a lot on the cost and then of course, we start to get the growth and then the moat that he started getting leverage and you'll see that cash flow you see it in our repeat though.
Michael Rollins: In Q4, we saw some modest increase 10 basis points increase year on year. So we think 2024 was the bottom of iron.
Michael Rollins: Great right and we're going to start seeing gradual improvements in 2025, I think mid single digits is what we've assumed in our plan and our guidance and I think we're going to be quite comfortable with that it's driven by two very important things. The first is the life of the device. It's exceeded 40 months right now and at some point customers will want new devices the secondaries.
Speaker Change: I remember, we're messing around three things why your service revenue growth and it beat on Casper expansion, we showed that in 'twenty four or our guidance for 25 shows the same. So this team is super committed to it but some of it some about the upgrade environment, yes. The 'twenty 'twenty four is our lowest upgrade rate in a very long time.
Michael Rollins: Customers coming off that three DPP contract, we have a logical heart in 2025 coming off so combination of those two give us comfort that mid single digit increase in upgrade is what we expect in 'twenty five.
Speaker Change: In Q4, we saw some modest increase 10 basis points increase year on year. So we think 'twenty 'twenty four was the bottom of iron low upgrade rate and we're going to start seeing gradual improvements in 2025, I think mid single digits is what we've assumed in our plan and our guidance and I think we're going to be quite comfortable with that.
Michael Rollins: Okay, Hey, good morning, Mike just on EBIT I'll start there. So in 2024, we grew EBIT of about $1 billion and we also as Hans said in the prepared remarks grew subscribers to $5 million between broadband and mobility and that was above the midpoint of the range.
Michael Rollins: <unk> thousand 25, we said the range was two to three 5% growth, which implies about $1 $3 billion of growth at the midpoint of the guide and it's an acceleration as you mentioned and the growth rate and good operating leverage it starts with strong service revenue growth and healthy customer economics, and you heard Hans in the prepared remarks talk about the customer.
Speaker Change: Even by two very important things. The first is the life of the device. It's exceeded 40 months right now and at some point customers will be devices.
Speaker Change: There's customers coming off that three D. P. P contract, we have a logical hot in 2025 coming off so combination of those two give us comfort that mid single digit increase in upgrade is what we expect in 'twenty five.
Michael Rollins: Customer economics without the promo amortization and then Hans mentioned the focus on cost transformation. The work we continue to do to make the business more efficient, whether it's customer care and the work that <unk> doing including AI and you heard that upfront as well as the managed services work Joe is taking a lot of legacy network elements out and that work is ongoing and we also have the violence.
Speaker Change: Okay, Hey, good morning, Mike just on EBITDA I'll start there. So in 2024, we grew EBITDA by $1 billion and we also as Hans said in the prepared remarks grew subscribers, two and a half million between broadband and mobility and that was above the midpoint of the range. In 2025, we said the range was two to three 5% growth, which implies about $1 $3 billion of growth.
Michael Rollins: Terry separation program, which took shape at the end of last year, we will see a full year benefit. This year. The guide assumes as you mentioned a modest increase in upgrades year over year and but overall, we're very confident that we were able to absorb the impact of the <unk> amortization and have EBITDA growth acceleration and you see the investments.
Speaker Change: At the midpoint of the guide and it's an acceleration as you mentioned and the growth rate and good operating leverage it starts with strong service revenue growth and healthy customer economics, and you heard homes in the prepared remarks talk about the customer customer economics without the promo amortization and then Hans mentioned the focus on cost transformation. The work we can.
Pat: We're making the strength of the network and the execution of sand Pat mentioned are positioning us for strong.
Speaker Change: Turning to do to make the business more efficient, whether it's customer care and that worked at sand past doing including AI and you heard that upfront as well as the managed services work Joe is taking a lot of legacy network elements out and that work is ongoing and we also have the voluntary separation program, which took shape at the end of last year, we will see a full year benefit this year.
Michael Rollins: EBIT performance.
Michael Rollins: And then if I move to cash flow as Hans mentioned now the cash flow generation of the business continues to be very strong for the full year and 24, we delivered $19 8 billion in free cash flow and that's inclusive of the tower deal. There was about $2 billion. There from the tower deal and the results of 24 evidence as Tom said earlier that we can manage through significant pressures.
Speaker Change: The guide assumes as you mentioned a modest increase in upgrades year over year and but overall, we're very confident that we were able to absorb the impact of the promo amortization and have EBITDA growth acceleration and you see the investments, we're making the strength of the network and the execution of sand Pat mentioned are positioning us for strong.
Michael Rollins: Cash taxes, and still generate a very strong cash flow profile and when you look at this in the context of the guide we said 17, 5% to $18 5 billion on free cash flow, we still feel very good about the cash generation. That's an all in range and were managing to that and the drivers Mike are very similar to what we saw in 2024, it starts with EBITDA growth and I talked about.
Speaker Change: EBITDA performance.
Speaker Change: And then if I move to cash flow as Hans mentioned, the cash flow generation of the business continues to be very strong for the full year and 24, we delivered $19 8 billion in free cash flow and that's inclusive of the tower deal. There was about $2 billion. There from the tower deal and the results of 24, evidenced as Hans said earlier that we can manage through significant pressures.
Michael Rollins: $1 three at the midpoint, we gave a range of Capex of 17, 5% 18 5 billion for 2025 and as always in our network engineers do a great job and they are always going to be very efficient with our capital spending and you saw that in 2024 interest expense continues to improve we paid down a significant amount of debt.
Speaker Change: Cash taxes, and still generate a very strong cash flow profile and when you look at this in the context of the guide we said 17 five to $18 5 billion.
Michael Rollins: In 2024 were down about $7 billion in total debt. So that will continue to see improvements there and then on working capital. We continue to focus on driving efficiencies in working capital and that goes beyond handsets as well and then with cash taxes really no change there.
Speaker Change: Free cash flow, we still feel very good about the cash generation. That's an all in range and were managing to that and the drivers micro very similar to what we saw in 2024. It starts with EBITDA growth and I talked about the 1 billion three at the midpoint. We gave a range of Capex of 17, five to $18 5 billion for 2025 and as always in our network engineer.
Michael Rollins: We'll continue to see pressure from bonus depreciation will have to see what happens in Washington with any proposed legislation and the assumption we put into free cash flow guide was that we'd see a mid single digit year over year increase.
Speaker Change: Do a great job and they're always going to be very efficient with our capital spending and you saw that in 2024 interest expense continues to improve we paid down a significant amount of debt in 2024 were down about $7 billion in total debt. So that will continue to see improvements there and then on working capital we continue to focus on driving.
Michael Rollins: Upgrades and obviously frontier as we said earlier is excluded from the guidance, but look the guidance reflect the strong cash generation that we have in the business and it allows us to continue our capital allocation priorities, whether it's investing in the business committing to the dividend and continue to delever the balance sheet Youll see us continue to do that in 2025.
Speaker Change: Seasonal working capital and that goes beyond handsets as well and that was cash taxes really no change there.
Thanks.
Michael Rollins: Thanks, Mike Brad we're ready for the next question.
Speaker Change: We'll continue to see pressure from bonus depreciation will have to see what happens in Washington with any proposed legislation and the assumption we put into free cash flow guide was that we'd see a mid single digit year over year increase.
Speaker Change: The next question comes from Sebastiano Petti.
Speaker Change: J P. Morgan your line is open Sir.
Speaker Change: Hi, Thank you for taking the question.
Speaker Change: Just in regards to just a quick housekeeping question I guess for Tony.
Speaker Change: Upgrades and obviously frontier as we said earlier is excluded from the guidance, but look the guidance reflects the strong cash generation that we have in the business and it allows us to continue our capital allocation priorities, whether it's investing in the business committing to the dividend and continue to delever the balance sheet and you'll see us continue to do that in 2025.
Speaker Change: The $2 9 billion of device protection and insurance in 2024, how should we think about that.
Speaker Change: The underlying growth rate within that revenue bucket that will be reclassified just trying to think about apples to apples service revenue guide I mean.
Speaker Change: How how has that been trending I guess relative over the last several years and maybe expectations for contribution next year within the context of the overall service revenue guidance.
Speaker Change: Thanks.
Speaker Change: Thanks, Mike Brad we're ready for the next question.
Speaker Change: The next question comes from Sebastiano Petti with Jpmorgan. Your line is open Sir.
Speaker Change: Another quick question on the fixed wireless.
Sebastiano Petti: Hi, Thank you for taking the question.
Speaker Change: I think in the third quarter, Hans we talked a little bit about perhaps the pace of <unk> growth slowing a little bit.
Speaker Change: Just in regards to just a quick housekeeping question I guess for Tony.
Speaker Change: The $2 9 billion of device protection and insurance in 2024, how should we think about that.
Speaker Change: Maybe because of greater contribution from suburban and rural is C. Band is deployed in those markets strong fourth quarter number here and also just kind of thinking about you you will be standing up an MDU solution in 2025, which should aid the trajectory in the tier one market. So maybe any help in thinking about how you.
Speaker Change: The underlying growth rate within that revenue bucket that will be reclassified just trying to think about apples to apples service revenue guide I mean, you know.
Speaker Change: How how has that been trending I guess relative over the last several years and maybe expectations for contribution next year within the context of the overall service revenue guidance.
Speaker Change: The MDU solution to scale the contribution maybe within I would imagine the 76 C band markets.
Speaker Change: Another quick question on fixed wireless.
Speaker Change: And then one last question.
Speaker Change: I think in the third quarter, Hans we talked a little bit about perhaps the pace of us at February growth slowing a little bit.
Speaker Change: As you think about I think Sam path, you've reiterated expectations for consumer phones to improve net adds to improve ex second lines year over year, great to hear.
Speaker Change: Maybe because of greater contribution from suburban and rural is C. Band is deployed in those markets strong fourth quarter number here and also just kind of thinking about you. You know you will be standing up an MDU solution in 2025, which should aid the trajectory in the tier one markets. So maybe any help in thinking about how you.
Speaker Change: Anything lots of focus on immigration growth, maybe if you can kind of touch upon if there is any slowdown or normal is.
Speaker Change: Beyond the normalization that we've been seeing across the ecosystem is there any expectations for a pronounced slowdown in immigration growth and 25. Thank you. Thank.
Speaker Change: The MDU solution to scale or the contribution maybe within I would imagine the 76 C band markets.
Speaker Change: Thank you <unk>, let me start with <unk>.
Speaker Change: The insurance question and Tony will take that one on fixed wireless access.
Speaker Change: And then one last question.
Speaker Change: As you think about I think Sam path, you've reiterated expectations for consumer phones to improve net adds to improve ex second lines year over year, great to hear.
Speaker Change: You're absolutely right our C band deployment has the priority number one mobility.
And that means that our secondary business case on fixed wireless access as we go to tier two and tier three market that validated that speed is the same and some.
Speaker Change: Anything you know lots of focus on immigration growth, maybe if you can kind of touch upon them. If there is any slowdown or normal is.
Speaker Change: And the market believes we are slowing down we're not slowing down and you saw the numbers into fourth quarter. The guys are doing fantastic.
Beyond the normalization that we've been seeing across the ecosystem is there any expectations for a pronounced slowdown in immigration growth and 25. Thank you. Thank.
Speaker Change: But of course, a little bit.
Speaker Change: Less so but you when it is going into the first half of 'twenty 25, probably but you know with MDU solution also coming in and then ramping up <unk> at the same time, we're going to see a continuation of our strength in broadband and you know we took.
Speaker Change: Thank you so let me start with.
Speaker Change: And by the insurance question and Tony will take that one on fixed wireless access.
Speaker Change: You're absolutely right our C band deployment has the priority number one mobility.
Speaker Change: Market share in <unk> in in 2024 and broadband.
Speaker Change: And that means that our secondary business case on fixed wireless access as we go to tier two and tier three markets like all that is left there.
Speaker Change: So I think we're going to do it again with the fixed wireless access under five years, we'll have so it's going to be a great year again that fixed was that because when we come with new product, we improve all the time.
Speaker Change: Speed is the same and some.
Speaker Change: In the market believed were slowing down we're not slowing down and you saw the numbers in the fourth quarter. The guys are doing fantastic.
Speaker Change: We're delivering I'm going to ask a sample to talk a little bit about that and immigration, but before we come to immigration I think that we have been managing fantastic with that portfolio to all the customer groups, even though.
Speaker Change: But of course, a little bit less.
Speaker Change: Less so but you when it is going into the first half or 2025, probably but you know with them do you solution also coming in and then ramping up <unk> at the same time, we're going to see a continuation of our strength in broadband.
Speaker Change: We see a slower or.
Speaker Change: Less.
Speaker Change: Big switch your pool, we have an offering that's actually appealing to the market. Then we can grow in that in it with the competition. So I feel confident whatever it might mean moves in the market that we can continue so I will attempt, but first a comment a little bit and then Tony was answered on the insurance question Sebastian and good morning to you.
Speaker Change: We took market share in in in in in 2024 and broadband.
So we're going to do it again, we'd do with fixed wireless access under five years, we'll have so it's gonna be a great year again to fix what is that because somebody come with new product, we improve all the time, what where we're delivering I'm going to ask.
Speaker Change: On <unk> and broadband more agenda, our value prop is resonating really well with customers. My home is working very well and it's delivering what customers want and on one end you have <unk>, which attracts the premium service attracts a premium client base. They like the ease and convenience of use on the other end you have fiber, which is highly reliable very high.
Speaker Change: Sample to talk a little bit about that and immigration, but before we come to immigration I think that we have been managing fantastic with that portfolio to all the customer groups, even though what.
What we see a slower or a less.
The big switch your pool, we have an offering that's actually appealing to the market. Then we can grow in that in it with the competition. So I feel confident whatever it might mean moves in the market that we could continue so I will ask Seth, but first a comment a little bit and then Tony was asking on the insurance question Sebastian and good morning to you.
Speaker Change: And so we were able to segment the market very well and Thats why Youre seeing continued success, we are taking more than 50% of all the industry net ads.
The percent of all the growth is coming to us in the market, we're going to continue to see that in 2025 as well as we've done in 2024.
Speaker Change: On <unk> and broadband more general our value prop is resonating really well with customers. My home is working very well and it's delivering what customers want.
Speaker Change: The company, we're gonna have between $3 50, and 400000 broadband net adds a quarter as Hans said, there's going to be some fluctuation across the quarters as we do because we are scaling three very big things in this space. The first is rolling out C band in tier two tier three markets. They have a slightly different density and hence a different pace of sales is.
Speaker Change: And do you have <unk>, which attracts the premium service attracts a premium client base. They liked the ease and convenience of use on the other end you have fiber, which is highly reliable very high performance. So we were able to segment the market very well and Thats why youre seeing continued success, we are taking more than 50% of all the industry net adds 50% of all the <unk>.
Speaker Change: It wasn't too at the secondary MDU product for <unk>, we've started it youre going to see that scaling all into 2025 and the third is our expansion of <unk> 650000 household or fastest so all those three things will scale through the year and but we are very comfortable with that 350 to 400, assuming some fluctuations.
Growth is coming to us in the market, we're going to continue to see that in 2025 as well as we've done in 2024 for the company, we're going to have between $3 50, and 400000 broadband net adds a quarter that as Hans said, there's going to be some fluctuation across the quarters as we do because we are scaling three very big things in this space.
Speaker Change: So we are starting to see good ARPA increase customers are taking more of a premium plant.
Speaker Change: Gig plans on the <unk> side, and our premium plans on <unk> and it goes back to the resilience and the convenience of our service.
Speaker Change: The first is rolling out C band in tier two tier three market. They have a slightly different density and hence a different pace of sales as it was into it.
Speaker Change: On that note, let me kind of speak on behalf of customers for the moment.
Speaker Change: Is that M D product <unk>, we started it you're going to see that scaling all into 2025 and the third is an expansion of five to 650000 household or fastest so all those three things will scale through the year and but we are very comfortable with that 350 to 400, assuming some fluctuation.
Speaker Change: For decades, they don't most customers have had very limited choice. When it comes to broadband providers you tend to hear the same pinpoints over and over again.
Speaker Change: It's opaque pricing for liability and drives low NPS.
Speaker Change: We are very clear this is what customers want.
Speaker Change: And offering that delivers high performance and reliability no gotcha pricing no promotions that expired in 12 months pricing that does not double in the year. They want choice. They want transparency that is what we are delivering to them and that's what customers like so on that foundation, we are very comfortable with our pacing of $2 50 to 400000 broadband net ads every single.
So we are starting to see good ARPA increase customers are taking more of a premium plant.
Speaker Change: Gig plans on the <unk> side, and our premium plans on <unk>.
Speaker Change: It goes back to the resilience and the convenience of our service.
Speaker Change: On that note, let me kind of speak on behalf of customers from the moment for.
Speaker Change: Quarter.
Speaker Change: For decades, they don't most customers have had very limited choice. When it comes to broadband providers you tend to hear the same pinpoints over and over again.
Speaker Change: Good morning, especially out of just on the handset insurance. So just a couple of things here. So it's recurring handset protection revenue and its value that our customers receive that's very complementary to connectivity, we are going to recast the historical revenue. So we will provide them. So you have a comparable view of the impacts about $2 9 billion in 2024, so the baseline of <unk>.
Speaker Change: It's opaque pricing board of liability and drives low NPS.
Speaker Change: We have very clear this is what customers want.
Speaker Change: An offering that delivers high performance and reliability no gotcha pricing no promotions that expired in 12 months pricing that does not double in the year. They want choice. They want transparency that is what we're delivering to them and that's what customers like so on that foundation, we are very comfortable with our pacing of $2 50 to 400000 broadband net adds everything.
Speaker Change: Service revenue exiting 2024 is about 82 billion the impact the growth rates was not significant maybe five to 10 basis points and Theres, obviously, no change to the service and other category.
Speaker Change: Thank you.
Speaker Change: Good quarter.
Speaker Change: Okay, Brad Renfro next question.
Speaker Change: Good morning, especially out of just on the on the handset insurance. So just a couple of things here. So it's recurring handset protection revenue and its value that our customers receive that's very complementary to connectivity.
Speaker Change: The next question comes from Jim Schneider of Goldman Sachs.
Speaker Change: Go ahead Sir.
Speaker Change: Good morning, Thanks for taking my question one on wireless on one on AI, if I may.
Speaker Change: We are going to recast the historical revenue. So we'll provide them. So you have a comparable view the impact of about $2 9 billion in 2024. So the baseline of service revenue exiting 2024 is about 82 billion the impact the growth rates was not significant maybe five to 10 basis points and Theres, obviously, no change to the service in another category.
Speaker Change: On the wireless service revenue I think Tony you talked about the $2 billion step up roughly for this year, but the growth rate essentially underlying roughly doubling when accounting for the accounting change youre introducing so does this sort of imply as we exit 'twenty five and go into 2006 that we're going to be able to kind of maintain that same level of pace in terms of <unk>.
Speaker Change: [noise].
Thank you.
Revenue dollar growth on service revenue.
Speaker Change: Okay, Brad ready for the next question.
Speaker Change: And then secondly on the AI connect Kyle Thanks for the good detail, but can you maybe give us a sense of the $1 billion pipeline of sales when do you think we're going to see.
Speaker Change: The next question comes from Jim Schneider of Goldman Sachs.
Speaker Change: Go ahead Sir.
Speaker Change: Good morning, Thanks for taking my question one on wireless and then one on AI if I may.
Speaker Change: Material revenue recognition revenue being actually recognized in the P&L and whats the split roughly between the connectivity business and data centers long term.
Speaker Change: The wireless service revenue I think Tony you talked about the $2 billion step up roughly for this year, but the growth rate essentially underlying roughly doubling when accounting for the accounting change you're introducing so does this sort of apply as we exit 'twenty five and go into 2006 that we're going to be able to kind of maintain that same level of pace in terms of <unk>.
Speaker Change: Okay.
Program at <unk>.
Speaker Change: Just going to reiterate what I said on the on my opening remarks and then.
Speaker Change: We guide right now from two to two 8%.
Our underlying growth is needed to double.
Speaker Change: Revenue dollar growth on service revenue.
Speaker Change: The end of this year that it would start to fade off basically and so that's.
Speaker Change: And then secondly on the AI connect Kyle Thanks for the detail, but can you maybe give us a sense of the $1 billion pipeline of sales. When do you think we're going to see me.
Have less impact going forward. So that's where we are right now we're not guiding for 26 at the moment.
Speaker Change: We're in a good position on the headwinds that we created for ourselves by investing heavily in 'twenty two 'twenty three as you might remember that was not our best years.
Speaker Change: Actual revenue recognition revenue being actually recognized in the P&L and what's the split roughly between the connectivity business and data centers long term.
Speaker Change: It is still impacting us, but given how the financial discipline and the work that sample has done and even though of course Kyle.
Speaker Change: Okay.
Speaker Change: Program at <unk>.
Speaker Change: Just going to reiterate what I said on the on my opening remarks and then.
Speaker Change: We guide right nothing two to two 8%.
Speaker Change: During the last 12 to 18 months that will have an impact a positive impact for us when we're going to get less of that pressure by year yearend and that's why I would have to be very clear I mean, what we see is really a growth nearly double than what we're guiding for in the in real terms, but of course as you do the accounting you need to follow that.
Speaker Change: Our underlying growth is nearly doubled and at the end of this year that it would start to fade off basically and so that's and have less impact going forward. So that's where we're right now we're not guiding for 26 at the moment.
Speaker Change: But we're in a good position on the headwinds that we created for ourselves by investing heavily in 'twenty two 'twenty three as you might remember that was not our best years.
Speaker Change: On the AI I'm going to hand, it over to Kyle Yeah. Thank you for the question there Jim I think if you look at the funnel right now is basically entirely.
Speaker Change: It is still impacting us, but given how the financial discipline and the work that's happened has down uneven and of course Kyle.
Speaker Change: Connectivity for web scale is right, it's basically lit services wave and dark fiber, but that's why we're happy today to announce that we're going to add the power space and cooling to the portfolio as well and I see over time that will certainly we will be selling the typical wave and dark fiber to players, but I think we'll also be selling bundles.
Speaker Change: During the last 12 to 18 months that will have an impact a positive impact for us when we're going to get less of that pressure by year year round and that's why I would have to be very clear I mean, what we see is really a growth nearly double than what we're guiding for in the in real terms, but of course as you do the accounting you need to follow that.
Speaker Change: Of stuff right. So, we'll put power space and cooling together with our networking and we're going to sell it on a basically a project by project basis, right and make sure that we maintain our are good margins and all of that all.
Speaker Change: On the AI are going to hand, it over to Kyle Yeah. Thank you for the question there Jim I think if you look at the funnel right now is basically entirely.
Speaker Change: All of that kind of thing and in terms of Rev. Rec, we already we already booked revenue in this regard in the fourth in the fourth quarter and that was certainly helpful for me and.
Kyle M'lady: Activity for web scale right, it's basically a lit services wave.
Kyle M'lady: Dark fiber, but that's why we're happy today to announce that we're going to add the power space and cooling to the portfolio as well and I see over time that will certainly we will be selling the.
Speaker Change: And our EBITDA trajectory, so we intend to drive more of that to the bottom line going through 2025, and we look forward to.
Speaker Change: Driving more business here.
Kyle M'lady: Typical wave and dark fiber to players, but I think we'll also be selling bundles of stuff right. So we'll put power space and cooling together with networking and we're going to sell it on a basically a project by project basis, right and make sure that we maintain or are good margins and all that.
Speaker Change: Great.
Speaker Change: Yeah, Thanks, Jim Brad ready for next question.
Speaker Change: The next question comes from Ben Swinburne of Morgan Stanley. Please go ahead with your question.
Ben Swinburne: Thanks, Good morning.
Ben Swinburne: I wanted to ask you guys about ARPA growth in sort of the competitive environment, and then I'm going to come back to Kyle on the AI topic, you guys had 4% plus consumer ARPA growth in Q4 and talked about expecting healthy growth in 'twenty five.
Kyle M'lady: All of that kind of thing and in terms of Rev. Rec, we already we already booked revenue in this regard in the fourth in the fourth quarter and that was certainly helpful for me and and our EBITDA trajectory. So we intend to drive more of that to the bottom line going through 2025, and we look forward to.
Ben Swinburne: Can you just sort of talk a little about the competitive environment and sort of what gives you guys confidence in the ability to continue to take price selectively in some of the drivers around ARPA growth that you see ahead for the consumer business and then you mentioned you were just mentioning dark fiber a bit.
Kyle M'lady: Driving more business here.
Kyle M'lady: Great.
Kyle M'lady: Yeah, Thanks, Jim Brad right from next question.
Speaker Change: The next question comes from Ben Swinburne of Morgan Stanley. Please go ahead with your question.
Ben Swinburne: We haven't seen some of your competitors announced some pretty big investments in.
Ben Swinburne: Thanks, Good morning.
Ben Swinburne: Wanted to ask you guys about ARPA growth and sort of the competitive environment, and then I'm going to come back to Kyle on the AI topic, you guys had 4% plus consumer ARPA growth in Q4 and talked about expecting healthy growth in 'twenty five.
Ben Swinburne: And adding capacity I'm, just wondering if you could talk a little bit about how much of the AI opportunity is leveraging existing assets and to the extent you guys are investing within your capex guidance into this business would be interested in sort of where those investments are targeted thanks. So much.
Ben Swinburne: Can you just sort of talk a little about the competitive environment and sort of what gives you guys confidence in the ability to continue to take price selectively in some of the drivers around ARPA growth that you see ahead for the consumer business and then tell you mentioned, you've just mentioned and dark fiber a bit.
Speaker Change: So I will start on the competitive environment.
Ben Swinburne: I Wouldnt say that theres anything new in the competitive.
Ben Swinburne: It's just that we're performing way better than our usual setup, where you compete to use is really the network it with a product and solutions and services.
Ben Swinburne: We have seen some of your competitors announced some pretty big investments in <unk>.
Ben Swinburne: That we're competing with the brand and if you look at last theorem in a network. It's just continued to improve we're going to now go to C band up to 90%, which means that we will have more to go there.
Ben Swinburne: Adding capacity I'm, just wondering if you could talk a little bit about how much of the AI opportunity is leveraging existing assets and to the extent you guys are investing you know within your Capex guidance into this business would be interested in sort of where those investments are targeted thanks. So much.
Ben Swinburne: I think on the on the product side, we have heard about my home My plan and what the economy is doing all of that is resonating a refresh of the brand even though it's early after six months is really paying off as well.
Ben Swinburne: So I will start on the competitive environment.
Ben Swinburne: I Wouldnt say that Theres anything new in the competitive environment. It's just that we're performing way better.
Ben Swinburne: So all that is really how we are competing way better than the market.
Ben Swinburne: I, usually say that way you'll compete to use is really the network it will with the product and solutions and services.
Speaker Change: Then before but then I will ask <unk> to talk a little bit about the segments. We're doing good then the ARPA growth.
Ben Swinburne: That we're competing with the brand and if you look at La CRM and I'll never forget just continued to improve we're going to now go to C band up to 90%, which means that we will have more to go there.
Ben Swinburne: Dark fiber.
Ben Swinburne: I will hand that to to cut but in general I would say that everything is included in our in our guide.
Ben Swinburne: More is usually I would say the majority of what have you.
Ben Swinburne: On the on the product side, we have heard about my home my plan and what the economy.
Ben Swinburne: Is assets that we already have but.
Speaker Change: Mr. Mr time, but thank you let me build on that at the end of the day. It comes down to value prop for us we've built a very strong value prop at a very strong brand and the foundation of a number one network and that combination is what gives us confidence about ARPA, but let me use the opportunity to step back and talk about a broader so.
Ben Swinburne: It's doing all of that is resonating a refresh of the brand even though it's early after six months is really paying off as well.
Ben Swinburne: So all that is really how we are competing way better than the market.
Speaker Change: Then before but then I will ask Simon to talk a little bit about the segments. We're doing good on the ARPA growth.
Speaker Change: This revenue options. We've always said, we wanted to get to an 80 20 medium term contribution from price and volume. It is important for our long term sustainable business in the subscription category to be in that framework and we are on our way to do that 2024 was a good start for us because we saw positive volume contributions across all our businesses.
Ben Swinburne: Dark fiber.
Ben Swinburne: I will hand that to to cut but in general I would say that everything is included in our in our guide.
Ben Swinburne: But what is usually I would say the majority is assets that we already have but.
Speaker Change: Mr. Mr time, but thank you let me build on at the end of the day it comes down to value prop for us we've built a very strong value prop at a very strong brand on the foundation of a number one network and that combination is what gives us confidence about ARPA, but let.
Speaker Change: Mobility, FW and value, which has historically been negative for a few years for us.
Speaker Change: Youre going to continue to see volume growth in postpaid and the value and sustained momentum in broadband so that takes care of the value volume part of the equation secondary unpriced, which is an important company. There are two types of pricing lever that we have the first is price ups for more value that we provide to customers. We had four major price ups in 2024, we've had to do in 2020.
Speaker Change: Use the opportunity to step back and talk about a broader service revenue options.
Speaker Change: <unk> always said, we wanted to get to an 80 20 medium term contribution from price and volume. It is important for our long term sustainable business in the subscription category to be in that framework and we are on our way to do that 2024 was a good start for us because we saw positive volume contributions across all our businesses mobility FW and value.
Speaker Change: <unk>.
Speaker Change: We are delivering more value to our customers and they feel very comfortable with the price structure that we have.
Speaker Change: We cannot of course comment on future price ups, but we will look where we see lower churn where input prices a little higher and more importantly, the value that we deliver to customers for 2025, the price actions that we've already done in the hopper more than a billion dollars plus of our service revenue growth is already baked in just that those price ups and <unk>.
Speaker Change: Has historically been negative for a few years for us.
Speaker Change: Youre going to continue to see volume growth in postpaid undervalue and sustained momentum in broadband so that takes care of the value volume part of the equation secondary unpriced, which is an important company. There are two types of pricing levers that we have the first is price ups for more value that we provide to customers. We had four major price ups in 2024, we've had to do in 2020.
Speaker Change: C of course ratio and help from the volume side the secondary customers are stepping up.
Speaker Change: It's a bigger opportunity for us as they buy more books, because we give them savings that they don't get anywhere else. They are taking more premium plan, especially as C. Band gets rolled out so you're also starting to see a little bit of tailwind from that lastly, we've there are other ways to monetize the network that we've started exploding aggressively. The first one is network slicing in Q4 'twenty four we.
Speaker Change: <unk>.
Speaker Change: We are delivering more value to our customers and they feel very comfortable with the price structure that we have.
Speaker Change: We cannot of course comment on future price ups, but we will look where we see lower churn where input prices a little higher and more importantly, the value that we deliver to customers for 2025, the price actions that we've already done in the hopper more than a billion dollars plus of our service revenue growth is already baked in just with those price ups and even.
Speaker Change: Launched our first networks life.
Speaker Change: And you're going to see us do more of that and then secondly on satellite connectivity, we have best in class partnerships with Apple and Skyler and as that scales out youre going to start seeing more monetization in the piece. So we have upside on network monetization as well. So a combination of all of this gives us a lot of comfort of good ARPA growth in 2025.
Speaker Change: C of course ratio and help from the volume side the secondary customers are stepping up.
Speaker Change: It's a bigger opportunity for us as they buy more books, because we give them savings that they don't get anywhere else. They are taking more premium plan, especially as C. Band gets rolled out so you're also starting to see a little bit of tailwind from that lastly, we've.
Speaker Change: The market is competitive, but we like our playbook a lot and I think it's hunting very well and you'll see us execute on that similar to how we executed in 2024.
Speaker Change: Other ways to monetize the network that we've started exploding aggressively the first one is network slicing in Q4 2004, we launched our first Netbooks life.
Speaker Change: I appreciate that.
Speaker Change: Question, Ben So I think some of our competitors are doing investments now, but what our game plan is here is to leverage the investments we've made over time.
Speaker Change: And you're going to see us do more of that and then secondly on satellite connectivity, we have best in class partnerships with Apple and Sky LOE and as that scales out you're going to start seeing more monetization and so we have upside on Netflix monetization as well. So a combination of all of these gives us a lot of comfort of good ARPA growth in 2025.
Speaker Change: And as Mpls the secular decline continues to go down there we can re imagine the assets, we have and to Hunter's point. So most of the things that we're going to be.
Speaker Change: Using to get into this markets things we've already done so it's the assets, we already have tweaked a little bit and we do have the capex in there because.
Speaker Change: The market is competitive, but we like our playbook a lot and I think it's hunting very well and you'll see us execute on that similar to how we executed in 2024.
Speaker Change: Listen in some of these deals what will have to do is spend some capital capital to edge out our fiber a little bit to go meet people at the right data Center's indoor locations of business and then retrofitting technical space. So we have money in for that.
Speaker Change: I appreciate that.
Speaker Change: The question Ben So I think yeah. Some of our competitors are doing investments now, but what our game plan is here is to leverage the investments we've made over time.
Speaker Change: But.
We're ready to go with that is all it's all included in the envelope. So we have we have we're just really leveraging all the work we've done over the last decade with one fiber files.
Speaker Change: And as Mpls the secular decline continues to go down there we can re imagine the assets, we have and to Hunter's point. So most of the things that we're gonna be.
Speaker Change: And all of those assets that we have we're just going to leverage them in our edge out and capture market here.
Speaker Change: Using to get into those markets things, we've already done so it's the assets, we already have tweaked a little bit and we do have the capex in there.
Speaker Change: Thanks, a lot guys, yes, thanks, Ben Brad we're ready for the next question.
Speaker Change: Listen in some of these deals what will have to do is spend some capital capital to edge out our fiber a little bit to go meet people at the right data centers indoor locations of business and then retrofitting technical space. So we have money in for that.
Speaker Change: The next question comes from David Barden of Bank of America. Please go ahead with your question.
David Barden: Hey, guys. Thanks, so much for taking the question.
Speaker Change: I guess first.
More of a.
Speaker Change: Housekeeping item for you Tony.
Speaker Change: We've pulled fees out of other in 2023 now we're pulling insurance out of other in 2025, what is other and is it now more of a pure play representation.
Speaker Change: But.
Speaker Change: But we're.
Speaker Change: We're ready to go with that at all it's all included in the envelope. So we have we have we're just really leveraging all the work we've done over the last decade with one fiber files.
Speaker Change: And all of those assets that we have we're just going to leverage them in our edge out and captured market here.
Speaker Change: The monetization of your cable relationship perhaps.
Speaker Change: And then the second question is obviously in the New administration.
Speaker Change: Thanks, a lot guys, yes, thanks, Ben Brad ready for the next question.
Speaker Change: You guys are well aware.
Speaker Change: Everybody is now thinking about big deals and one of the bigger deals people are talking about is.
Speaker Change: Yeah.
Speaker Change: The next question comes from David Barden of Bank of America. Please go ahead with your question.
Speaker Change: Could Comcast and charter come together and I guess the question is what.
David Barden: Guys. Thanks, so much for taking the question.
Speaker Change: I guess first.
Speaker Change: What would that mean as we think about that possibility how should we think about what it would mean.
Speaker Change: More of a.
Speaker Change: Housekeeping item for you Tony you know now that we've pulled fees out of other in 2023 now we're pulling insurance out of other in 2025, what what is other and is it now more of a pure play representation of the monetization of your cable relationship perhaps.
Speaker Change: For Verizon in terms of are there change of controls would this larger entity have more bargaining power with you. The next time, we have a conversation about pricing.
Speaker Change: How would it all work.
Speaker Change: I'll, let Tony answer the first question I think that yes sure. Good morning, Dave So on the other look what's what's left is really you know USF and.
Speaker Change: And then the second question is obviously in the New administration I know you guys are well aware that.
Speaker Change: Everybody is now thinking about big deals and one of the bigger deals people are talking about is.
Speaker Change: Other fees and also the <unk> relationships are in there, but everything all the other recurring.
Speaker Change: Could Comcast and charter come together and I guess the question is.
Speaker Change: Revenues are up in the up in service revenue.
Speaker Change: So first of all.
Speaker Change: What would that mean as we think about that possibility how should we think about what it would mean.
Speaker Change: Cannot speculate on whatever combination youre seeing in front of you.
Speaker Change: But again our M. There no relationships are very important to us.
Speaker Change: For Verizon in terms of are there change of controls would this larger entity have more bargaining power with you. The next time, we have a conversation about pricing.
Speaker Change: They're treated like large enterprises I think we're both are.
How would it all work.
Speaker Change: Satisfied with the relationship we have and what we have built together and remember our strategy is to build a network once and have as many profitable connections on top of the network and this is accretive to US is what I said before so no.
Speaker Change: I'll, let Tony answer the first question I'll take that yeah sure. Good morning, Dave So on the other look what's what's left is really you know USF and other fees and also the ambient our relationships are in there, but everything all the other recurring.
Speaker Change: Cannot comment on any.
Speaker Change: And the culmination of that can happen I think we're in a good position we have the best network in the market I don't think that that resonates with customers and I think that's the most important.
Speaker Change: Revenues are up in the up in service revenue.
Speaker Change: So first of all.
Speaker Change: Cannot speculate on whatever combination you are seeing in front of you but.
Speaker Change: But again, our and there are no relationships are very important to us.
Speaker Change: Thanks, Jonathan if I could just do one more follow up Tony is there a specific increment in cash taxes that you've baked in that you can share with us for the cash flow number. So day, we gave a guide this year, so and I gave you the puts and takes so we're going to manage to that guide we delivered on our guidance for 2024, and I expect us to continue to deliver on our guidance for 2025.
Speaker Change: They're treated like large enterprises I think we're both are.
Speaker Change: Very.
Speaker Change: Satisfied with the relationship we have and what we have built together and remember our strategy is to build a network once and have as many profitable connections on top of the network and this is accretive to US is what I said before so no.
Speaker Change: It is a higher Tac.
Speaker Change: It is.
Speaker Change: But we're not going to get this at all but clearly we manage that with all the other puts and take in and if you took the midpoint of this I mean, we are me equal or better than 2004, when would take away. The tower deal. So we as you understand we feel confident that will help us with our capital priorities are to continue to.
Speaker Change: Cannot comment on that.
Speaker Change: And the culmination of that can happen I think we're in a good position we have the best network in the market I don't think that that resonates with customers and I think that's the most important.
Speaker Change: Thanks, Jonathan if I could just do one more follow up Tony is there a specific increment in cash taxes that you've baked in that you can share with us from a cash flow number. So day, we gave a guide this year, so and I gave you the puts and takes so we're going to manage to that guide we delivered on our guidance for 2024, and I expect us to continue to deliver on our guidance for 2025, but.
Speaker Change: In business, we have increased our dividend for 18 consecutive years, we have paid down our debt and that team has done a great job wearing two three right now.
Speaker Change: On the leverage which is very close to the 225, when we're going to consider.
Speaker Change: So how you attack it as well.
Speaker Change: Repurchasing shares so that will put me on the board in a very different situation when it come to the Optionality all doing repurchases when that happens.
Speaker Change: We're not going to give this to say now, but clearly we manage that with all the other puts and take in and if you took the midpoint of the summit, we are me equal or better than 2004, when we take away. The tower deal. So we as you understand we feel confident that will help us with our capital priorities.
Speaker Change: Perfect guys. Thanks, so much yes, thanks, Dave Brad ready for the next question.
Speaker Change: The next question comes from Frank Louthan of Raymond James. Please go ahead Sir.
Speaker Change: To continue to invest in business, we have increased our dividend for 18 consecutive years, we have paid down our debt and that team has done a great job well and two three right now.
Speaker Change: Hey, guys. Good morning, this is rob on for Frank.
Speaker Change: And you briefly touched on this earlier, but how would you assess the opportunity to expand <unk> in your legacy footprint from here do.
Speaker Change: On the leverage which is very close to the 225, when we were going to consider.
Speaker Change: Do you expect to build faster going forward and as a follow up how attractive is the bead opportunity for you guys.
Speaker Change: Repurchasing shares so that will put me on the board in a very different situation when it come to the Optionality all doing repurchases when that happens.
Speaker Change: Any updates you can share with us.
Speaker Change: Are you feeling about that would be great. Thank you.
Speaker Change: Perfect guys. Thanks, so much yes, thanks, Dave Brown right from the next question.
Speaker Change: So on the files.
Speaker Change: We have been amplifiers more than 20 years, the product is resonating with our customers as we outlined our broadband strategy at the end of last year around October or whatever we said that we're now going to.
Speaker Change: The next question comes from Frank Louthan of Raymond James. Please go ahead Sir.
Rob: Hey, guys. Good morning, this is rob on for Frank.
Speaker Change: You briefly touched on this earlier, but how would you assess the opportunity to expand bias in your legacy footprint from here do.
Speaker Change: Increased basically 50% open for sales going to 650000 in this year we are scaling.
Speaker Change: Scaling that is pretty easy for us.
Speaker Change: Do you expect to build faster going forward and as a follow up how attractive is the bead opportunity for you guys.
Speaker Change: And so we continue to scale, we see more opportunities for two reasons first of all the economical situation in the country is better today I'm in purchasing power and number two broadband he says necessity, that's and we also find out that we can deploy.
Speaker Change: Any updates you can share with us on.
Speaker Change: Are you feeling about that would be great. Thank you.
Speaker Change: So on the files.
Speaker Change: We have been amplifiers more than 20 years, the product is resonating with customers as we outlined our broadband strategy at the end of last year around October or whatever we said that we're now going to.
Speaker Change: Labour cheaper we offline all of these in our broadband strategy. So all that is playing in that we can keep our our return on investment.
Speaker Change: On these increase of fire. So we feel good about the fires on the beads, we will participate where it makes sense for us we think.
Speaker Change: Increased basically 50% and opened for sales going to 650000 in this year we are scaling.
Speaker Change: That we will have a good opportunity to get a subsidy for building out in maybe rural areas et cetera. So we're going to participate it's so far fairly little that's been out there because the states are sorta about doing it but we will participate wherever we we think it makes sense from a return on investment.
Speaker Change: Scaling that is pretty easy for us.
Speaker Change: And so we continue to scale, we see more opportunities for two reasons first of all the economical situation in the country is better today I'm in purchasing power and number two broadband he says necessity, that's and we'll also find out that we can deploy.
Speaker Change: Labour cheaper, we offload and all of these in our broadband strategy. So all that is playing in that we can keep our our return on investment.
Speaker Change: Okay, great. Thanks, Rob Brad ready for the next question.
Speaker Change: The next question comes from Sam Mchugh of BNP Paribas. Your line is open.
Speaker Change: On these increase of fire. So we feel good about the fires on the bead, we will participate where it makes sense for us we think that we will have a good opportunity to get a subsidy for building out in maybe rural areas et cetera, So we're going to participate it so far.
Sam Mchugh: Thanks, guys two questions on the wireless service revenue and you always have a few puts and takes with the program I'm also to parse out how should we think about box or anything of the headwinds and tailwind through the course of 2025 number one and then secondly on the business EBITDA you mentioned some of the AI related sales, maybe you can elaborate on how material now.
Speaker Change: Little that's been out there because the states are sorta about doing it but we will participate wherever we we think it makes sense from a return on investment.
Speaker Change: I know a place now where we should be confident.
Sam Mchugh: Inflexion point and business EBITDA.
Speaker Change: Yeah, great. Thanks, Rob Brad ready for the next question.
Speaker Change: Cannot be an answer.
Speaker Change: Yes.
Speaker Change: Thanks very much.
Speaker Change: Hey, good morning, <unk>. So on the service revenue, we feel very good about the shape.
Speaker Change: The next question comes from Sam Mchugh of BNP Paribas. Your line is open.
Speaker Change: It's based on 82 billion and as I said earlier and the midpoint of the guide implies and stand Pat mentioned this earlier about $2 billion of additional growth we executed a number of pricing initiatives Pat mentioned that carry into 2025, we also talked about an improving volume profile in consumer and.
Sam Mchugh: Thanks, guys two questions on the <unk>.
Sam Mchugh: The service revenue you always have a few puts and takes with the program I'm also to parse out how should we think about mix or anything of the headwinds and tailwind through the course of 2025 number one and then secondly on the business EBITDA you mentioned some of the AI related sales, maybe you can elaborate on how material Val.
Speaker Change: <unk> talked about that along with stable business volumes, we continue to see great volumes on the on the <unk> side, and then fixed wireless access continues to grow we have a $2 billion base of revenue and <unk> and that continues to scale and you saw the results in the fourth quarter there.
Sam Mchugh: A place now where we should be confident on this.
Sam Mchugh: Inflexion point and business EBITDA.
Speaker Change: Could that be enough to.
Sam Mchugh: Yes.
Sam Mchugh: Thanks very much.
Yeah. Good morning, so on the service revenue, we feel very good about the shape.
Speaker Change: The other thing that will will inflect here is prepaid and the positive volumes and the turnaround that sand Pat talked about will result in improving revenue profile towards the back half of 2025, so that headwind will become a tailwind on the prepaid and then offsetting that obviously as Hans mentioned as the promo amortization.
Sam Mchugh: It's based on 82 billion as I said earlier and the midpoint of the guide implies and stand Pat mentioned this early about $2 billion of additional growth we executed a number of pricing initiatives that Pat mentioned that carry into 2025, we also talked about an improving volume profile in consumer and.
Speaker Change: And that we said would peak in 2025, and but as Hans mentioned the customer economics are very healthy and we said, we expect the headwinds to ease towards the end of the year and into 2026, but as <unk> mentioned, we're seeking a better balance of <unk> and I think you'll see that across both mobility and broadband and we expect it to continue in 'twenty five and the ask.
Sam Mchugh: <unk> talked about that along with stable business volumes, we continue to see great volumes on the on the <unk> side, and then fixed wireless access continues to grow we have a $2 billion base of of revenue and <unk> and that continues to scale and you saw the results in the fourth quarter there.
Pat: The other thing that will will inflect here is prepaid and the positive volumes and the turnaround that sand Pat talked about will result in improving revenue profile towards the back half of 2025, so that headwind will become a tailwind on the prepaid and then offsetting that obviously as Hans mentioned as the promo amortization.
Speaker Change: <unk> and other stand Pat that line in terms of execution are positioning us for for sustainable revenue growth.
Speaker Change: The Verizon business group I'm going to ask Scott to comment on it but we.
Speaker Change: Of course, the AI connect is one contributor, but I think that the whole Verizon basis T basis group team has done a great job with many things some of the wireless growth have had the last couple of years, just keeping a grinding between 125 to 150000, new net adds every quarter the fixed wireless access.
Pat: We said would peak in 2025, and but it sounds mentioned the customer economics are very healthy and we said, we expect the headwinds to ease towards the end of the year and into 2026, but the SAP has mentioned, we're seeking a better balance of P and Q and I think you'll see that across both mobility and broadband and we expect it to continue in 'twenty five and the <unk>.
Speaker Change: We were I would say a little bit surprised the whole successful fixed wireless access is in the business group, but then all the cost Takeouts are doing and if you saw the fourth quarter turning to a positive year over year improvements I think we are onto something even though with the pressure of the secular so I wanted to say that doesn't mean to say it.
Pat: <unk> the standpipe outline in terms of execution are positioning us for for sustainable revenue growth.
Pat: On the Verizon business group I'm going to ask Scott to comment on it but we.
Of course, the AI connect is one contributor, but I think that the whole Verizon basis tea business group team has done a great job with many things some of the wireless growth over the last couple of years, just keeping a grinding between 125 to 150000, new net adds every quarter the fixed wireless access.
Speaker Change: But the guys have done a terrific job and I.
Speaker Change: I'm cautiously optimistic that we can continue that work. Thank you Hans and thanks for the question Sam.
Speaker Change: Won't be labor that I think.
Speaker Change: The revenue, we booked that help with EBITDA as far as they are connected small that was our first quarter that we book revenue. There. So that did have a little impact, but it's mainly due to the factors that harm spoke about it.
Pat: We were I would say a little bit surprised the whole successful fixed wireless access is in the business group, but then all the cost Takeouts are doing and if you saw the fourth quarter turning to a positive year over year improvements I think we are onto something even though with the pressure or the secular so I want to say that so it kind of doesn't mean to say it.
Speaker Change: We went with focus on our cost and driving efficiencies as well as finding new opportunities in our revenue line and the team has done a good job at that and you can see we've had sequential growth.
Speaker Change: First quarter. So we've had three quarters in a row of sequential growth of EBITDA and for the first time in a long time, we've had growth year over year in the fourth quarter of EBITDA and I expect those trends to continue in 2025, given the groundwork that we've laid and the.
Pat: But the guys have done a terrific job and I.
Pat: Im cautiously optimistic.
Pat: Domestic because we can continue that work. Thank you Hans and thanks for the question Sam I won't be labor that I think.
Speaker Change: What I would say the Hans talked about SWA, that's turned into a really good new story for us because.
Pat: The revenue that we booked that help with EBITDA as far as they are connected small that was our first quarter that we book revenue. There. So that did have a little impact, but it's mainly due to the factors that harm spoke about its relent.
Speaker Change: We had certain expectations on the product and now that we see customers are getting much more comfortable business customers will be using this as a primary option for them for connectivity.
Pat: We went with focus on our cost and driving efficiencies as well as finding new opportunities in the revenue line and the team has done a good job at that and if you can see we've had sequential growth.
Speaker Change: Continue to see great growth and great interest in the product as a matter of fact, a lot of large customers who were first we weren't sure. They would use this as a primary use case.
Pat: First quarter. So we've had three quarters in a row of sequential growth of EBITDA and for the first time in a long time, we've had growth year over year in the fourth quarter of EBITDA and I expect those trends to continue in 2025, given the groundwork that we've laid and the.
Speaker Change: Are we a big banks, we have big retailers et cetera going in doing this and then you just saw a.
Speaker Change: An announcement, we made with bright speed and I think this is a new area of the market that we can tap and we call. This a really copper catch so it's using our fixed wireless access network to help people, who have old kind of copper lines out there low bandwidth lines replace it and modernize it with <unk> and we see this as a great place that we can sell into two and.
Speaker Change: What I would say the Hans talked about SWA, that's turned into a really good new story for us because.
Speaker Change: We had certain expectations of the product and now that we see customers are getting much more comfortable business customers will be using this as a primary option for them for connectivity.
Speaker Change: Continue to see great growth and great interest in the product as a matter of fact, a lot of large customers who were first we weren't sure. They would use this as a primary use case.
Speaker Change: We talked about private wireless and AI connect so we have a lot of great things on board here and I feel good about our trajectory into 2025, great awesome. Thank you, yes. Thanks, Sam Brad we have time for one more question.
Speaker Change: Are we a big banks big retailers et cetera going in doing this and then you just saw a.
Speaker Change: Your final question will come from Kannan Venkatesh <unk> of Barclays. Your line is open.
An announcement, we made with bright speed and I think this is a new area of the market that we can tap and we call. This a really copper catch so it's using our fixed wireless access network to help people, who have old kind of copper lines out there low bandwidth lines replace it and modernize it with <unk> and we see this as a great place that we can sell into two.
Speaker Change: Thank you.
Speaker Change: It sounds like maybe on the consumer side.
Speaker Change: You mentioned a couple of drivers of growth.
Speaker Change: Tier one markets.
Speaker Change: The Latino segment and so on and.
Speaker Change: Lines have obviously grown on the postpaid side, but the account growth.
Speaker Change: We talked about private wireless and AI connect so we have a lot of great things on board here and I feel good about our trajectory into 2025, great awesome. Thank you, yes. Thanks, Sam Brad we have time for one more question.
Speaker Change: Negative so is there an opportunity to done account growth positive with some of these newer segments that you're targeting.
Speaker Change: And is that something that you started to see over the course of the year.
Speaker Change: And then secondly on immigration I may have missed this.
Speaker Change: Your final question will come from Kannan Venkatesh <unk> of Barclays. Your line is open.
Speaker Change: The response to the prior question, but is there a way for us to.
Speaker Change: Thank you.
Speaker Change: I understand how you guys are thinking about the impact on overall volumes.
Speaker Change: So it sounds like maybe on the consumer side.
Speaker Change: You mentioned a couple of drivers of growth.
Speaker Change: The industry as a whole over the course of this year.
Speaker Change: Tier one markets.
Speaker Change: Yes.
Speaker Change: The Latino segment and so on and.
Speaker Change: Thank you Kannan I would ask the sample to answer those questions, but I think we're in a really good position with our offerings to continue regardless of so but somewhat thank you can earn good money too.
Speaker Change: Lines have obviously grown on the postpaid side, but the account growth is still.
Speaker Change: Negative so is there an opportunity to count towards positive with some of these newer segments that you're targeting.
Speaker Change: On the question on the overall market growth, we think full speed is expected to grow between eight and eight in the half million.
Speaker Change: And is that something that you started to see over the course of the year.
Speaker Change: And then secondly on immigration I may have missed this.
Speaker Change: Lines in 2025, all in for business and consumer it's a robust market. It's a very resilient market and similar to 2024 pre to post migration makes up almost half of that it's not a segment. We play in on the retail side, but we leveraged our wholesale channel to go after that segment aggressively.
Speaker Change: The response to the prior question, but is there a way for us to.
Speaker Change: Uh huh.
Speaker Change: Understand how you guys are thinking about the impact on overall volumes.
Speaker Change: The industry as a whole over the course of this year.
Speaker Change: Sure.
Speaker Change: Thank you cannot I would ask Sam to answer those questions, but I think we're in a really good position with our offerings to continue regardless of so but somewhat thank you Ethan and good morning too.
Speaker Change: Yeah.
Speaker Change: Despite that's been lowered immigration in the last few quarters, yet we are seeing really strong performance in our value business and I think <unk>.
Speaker Change: <unk> value brands and value proposition, our relationship with Walmart as well as an expanded total wireless distribution is working very well. So we can continue to grow for net adds in this environment and feel very comfortable with that now to answer. Your first question on account growth we saw account growth in Q4.
On the question on the overall market growth, we think full speed is expected to grow between eight and Eaton to half a million.
Speaker Change: <unk> in 2025, all in for business and consumer it's a robust market. It's a very resilient market and similar to 2024 pre to post migration makes up almost half of that it's not a segment. We play in on the retail side, but we leveraged our wholesale channel to go after that segment aggressively.
Speaker Change: You see that but I think at the end of the day. What we are focused on is building deep relationships with our customers. If you look at the way our offering framework works is we start with connectivity we want to offer the best connectivity product brought home an on the go and mobility and of course on the value side and then on that foundation of that relationship we start selling.
Speaker Change: Yeah.
Speaker Change: Despite that's been lowered immigration in the last few quarters, yet we are seeing really strong performance in our value business.
Speaker Change: Got a refreshed value brands and value proposition our relationship with Walmart as well as our expanded total wireless distribution is working very well. So we can continue to grow for net ads in this environment and feel very comfortable with that now to answer. Your first question on account growth. We saw account growth in Q4, you see that.
Speaker Change: More to those customers.
Speaker Change: Whether it's some of our entertainment products with books. It gives your savings that other Scott gave it.
Speaker Change: R. P M P R.
Speaker Change: <unk> products are cloud product, so we want to deepen our relationship with customers and I think that's the way we see long term growth in our business you saw very strong ARPA growth in the north of 4% and underlying growth is of course much higher than that when you take care of promo amortization. So our control. It is important to us, but what is important to us is profitable customers who value.
Speaker Change: But I think at the end of the day, what we're focused on is building deep relationships with our customers. If you look at the way our offering framework works is we start with connectivity we want to offer the best connectivity product bought home and on the go and mobility and of course on the value side and then on that foundation of that relationship we start selling more.
Speaker Change: Quality of the network and offering framework, we want to grow in those.
Speaker Change: Thank you, yes, thanks, Kevin Brad that's all the time, we have today.
Speaker Change: Those customers.
Speaker Change: Whether it's some of our entertainment products with books. It gives you a savings that other Scott gave it.
Speaker Change: This concludes the conference call for today. Thank you for your participation and for using Verizon Conference services you may now disconnect.
Speaker Change: M P R.
Speaker Change: <unk> products are cloud products. So we want to deepen our relationship with customers and I think that's the way we see long term growth in our business you saw very strong ARPA growth in the north of 4% and underlying growth is of course much higher than that when you take care of promo amortization. So our control is important to us, but what is important to us is profitable customers who value.
Quality of the network and offering framework, we want to grow in those.
Speaker Change: Thank you, yes, thanks, Kevin Brad that's all the time, we have today.
Speaker Change: This concludes the conference call for today. Thank you for your participation and for using Verizon Conference services you may now disconnect.
Speaker Change: [music].
Speaker Change: To ask a question press star one on your Touchtone phone.
Speaker Change: If at any point. Your question has been answered you may remove yourself by pressing star two.
Speaker Change: Today's conference is being recorded if you have any objections you may disconnect at this time.
It's now my pleasure to turn the call over to your host Mr. Brady Connor Senior Vice President Investor Relations.
Speaker Change: Thanks, Brad Good morning, and welcome to our fourth quarter 2024 earnings call and AI update I'm Brady Connor and on the call with me. This morning are Hans Vestberg, Our chairman and Chief Executive Officer, and Tony Skeoch, Our Chief Financial Officer.
Speaker Change: In addition, we have our business group CEO, Kyle M'lady, who will be giving an update on our AI strategy as well as our consumer group CEO Sam path, who will also be joining us for Q&A before we begin I would like to draw your attention to our safe Harbor statement, which can be found at the start of the investor presentation posted on our Investor Relations website.
Speaker Change: 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 Investor Relations website.
Speaker Change: This presentation contains certain non-GAAP financial measures.
Speaker Change: Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials posted on our website.
Speaker Change: Earlier this morning, a detailed overview of our fourth quarter and full year results was posted to our Investor Relations website. We will also be posting supplemental materials relating to today's call on our website shortly with that I'll turn it over to Hans Thank you Brady. Good morning, everyone I will begin by addressing the wildfires.
Speaker Change: And the devastation that the Los Angeles area has expanded in recent weeks.
Speaker Change: Our Hearts go out to everyone who has been impacted.
Speaker Change: <unk>, we're always wrong to a crisis.
Speaker Change: And this time is no different.
Speaker Change: Teams are working hard to protect and restore service to affected areas.
Speaker Change: Support first responders and help neighbors safeguard himself.
Speaker Change: On frontline crisis response team is closely coordinating with federal state and local public safety agencies as they can.
Speaker Change: Continual wildfire response and mitigation efforts.
Speaker Change: Verizon's network is holding up strong maintaining critical connectivity for the community basis and first responders.
Speaker Change: Engineered that'd been working around the clock restoring area all of the macro satisfies that were impacted and we will continue to be here for our employees customers and communities in L. A.
Speaker Change: Now, let me turn to earnings.
Speaker Change: We had a successful year with great financial and operational results.
Speaker Change: We delivered on our financial guidance with three 1% wireless service revenue growth and two 1% adjusted EBITDA growth both exceeding the midpoint of our guided ranges, we generated strong free cash flow, while absorbing higher taxes.
Speaker Change: We added nearly two and a half million postpaid mobility and broadband subscribers in the year, while expanding our margins.
Speaker Change: Ended the year with a industry, leading quarter wireless service revenue of $20 billion.
Speaker Change: In mobility postpaid phone net adds were nearly 900000 for the year.
Speaker Change: Consumer postpaid phone net adds were positive with and without the impact of our second number offering and business postpaid phone net adds exceeded half a million prepaid net adds excluding safely Inc were positive for the year and for the first time since the <unk> acquisition. This has been a great turnaround.
Speaker Change: But the consumer team.
Speaker Change: On broadband we added nearly $1 6 million subscribers and grew market share in 2024 led by continued success of fixed wireless access where ended the year with over $12 3 million broadband subscribers, including nearly $4 6 million fixed wireless access subscribers and over $2 $1 billion on fix.
<unk> access revenue.
Speaker Change: We're off to a great start date, our next milestone of eight to 9 million <unk> subscribers by 2028.
Speaker Change: Continued scale private networks, winning work with <unk> coming as ink FIFA and more recently the U S. Air Force, we were the only U S carrier to be named a leader in the first ever Gartner Magic quadrant for private wireless services.
Speaker Change: Arthur recognized us for our vision. The work we have done to build the market and our industry, leading execution, we drove efficiencies and continued the business transformation.
Speaker Change: Ended the year with less than 100000 employees down close to 20000 over the last three years continued business transformation gave us more flexibility to execute on our strategy and capital allocation priorities. We continue to invest in our business and made strategic moves for long term.
Speaker Change: <unk>.
Speaker Change: We launched customer first offerings, such as my home and Verizon access.
Speaker Change: Refresh our brand and science at TD transactions, including Frontier that tower deal you will sell our spectrum and satellite partnerships.
Speaker Change: We raised the dividend for the 18th consecutive year and continued debt paydown ending the year with a net unsecured debt to adjusted EBITDA ratio of two three times.
Speaker Change: We have a great year with both customer and financial growth as we continue the strategic transformation of the company.
Speaker Change: Looking forward to 2025, we will continue to focus on our three key financial metrics wireless service revenue adjusted EBITDA and free cash flow, while Tony will provide these details I would highlight the underlying wireless service revenue growth is expected to be nearly double the guided range when excluding promo amortization with that.
Speaker Change: I will turn it over to Tony to say, a few words about the quarter and cover guidance for 'twenty, two and five thanks.
Tony Skeoch: Thanks, Hans and good morning, everyone as.
Speaker Change: As we reported earlier this morning, we closed the year with strong operational and financial performance.
Speaker Change: The steps, we took in 2024 and to improve our execution, while maintaining financial discipline continued to bear fruit.
Speaker Change: We added nearly 1 million postpaid subscribers onto our mobile and broadband platforms in the fourth quarter, our highest quarterly result in over a decade, while also delivering on our financial guidance for the full year.
Speaker Change: We delivered solid growth in postpaid mobility with 568000 postpaid phone net adds in the fourth quarter. This includes 426000 consumer postpaid phone net ads, giving us positive net adds for the full year with and without our second number offering business had another solid quarter with 142000 phone net adds and saw strong growth across <unk>.
Speaker Change: All three customer groups.
Speaker Change: The operational rigor we implemented in prepaid continues to pay off in the fourth quarter prepaid net adds were 65000, excluding safe link, giving us positive net adds for the full year.
Speaker Change: In broadband we continue to take market share delivering 408000 net adds in the quarter fixed wireless access accounted for 373000 net adds and <unk> added 51000 subscribers in the quarter. A solid result, given the challenges noted by some of our competitors.
Speaker Change: Importantly, we achieved these strong operational results, while delivering on all of our 2024 financial guidance in fact, both wireless service revenue and adjusted EBITDA were above the midpoint of our guided ranges and our adjusted EBITDA margin expanded 50 basis points for the full year.
Speaker Change: In the fourth quarter, we delivered three 1% wireless service revenue growth along with two 1% growth in adjusted EBITDA as we balance investing in customer growth with maintaining financial discipline. Finally, our free cash flow of $5 4 billion in the quarter and $19 8 billion for the full year allowed us to take meaningful steps to further reduce.
Speaker Change: Our debt consistent with our capital allocation priorities and to better position us for the closing of our pending acquisition of frontier.
Speaker Change: Note that our fourth quarter free cash flow included approximately $2 billion in proceeds from the vertical bridge tower transaction.
Speaker Change: In addition, we made severance payments of approximately $600 million, which represents roughly half of the total payments, we expect to make as part of a voluntary separation program.
Turning to guidance, we entered 2025 with good operational and financial momentum and that is reflected in our outlook. We expect total wireless service revenue to grow between two and two 8%. The key drivers of this outlook are consistent with 2024 and include improving postpaid consumer phone net additions and continue healthy business phone.
Speaker Change: Volumes pricing actions taken in 2024 that carryover into 2025 continuing.
Continuing to scale fixed wireless access.
Speaker Change: Growing adoption of mine plan and accompanying perks.
Speaker Change: And an improving prepaid revenue profile.
Speaker Change: As we shared in the fall, we expect promo amortization headwinds to peak in 2025.
Speaker Change: That said the underlying customer economics are very healthy.
Speaker Change: Please note that beginning in the first quarter of 2025, we are reclassifying more than $2 $9 billion of annual recurring device protection and insurance related planet revenues from other revenue into wireless service revenue.
Speaker Change: As a result, our wireless service revenue guidance should be viewed in the context of growth off of a higher base of revenue. We expect consolidated adjusted EBITDA to grow 2% to three 5% compared to 2024. This outlook reflects the expected higher wireless service revenue and benefits of ongoing cost transformation initiatives, partially offset by continued pressure on business wire.
Speaker Change: Revenues the midpoint of the adjusted EBIT guidance range reflects an expected year over year increase of more than $1 3 billion.
Speaker Change: Which is $300 million more of expected growth than we delivered in 2024.
Speaker Change: Full year adjusted earnings per share growth is expected to be in a range of flat to up 3%, reflecting the adjusted EBITDA growth, partially offset by higher depreciation and amortization as we discussed in October capital spending for the full year is expected to be between $17 5 billion in 18 5 billion.
Speaker Change: This guidance is an all in number that includes all of our growth initiatives. This includes incremental investments to deploy C band to 80% to 90% of planned sites.
Speaker Change: Accelerating our <unk> expansion to up to 650000, new opened for sale locations and launching our fixed wireless MDU solution.
Speaker Change: As always we will continue to look for opportunities to efficiently deploy capital.
Speaker Change: Regarding cash flow, we expect free cash flow in the range of 17, five to $18 5 billion in 2025.
Speaker Change: This outlook assumes mid single digit growth in upgrades and no change to current tax legislation.
Speaker Change: Please note that our guidance excludes any impact from the pending acquisition of frontier.
Speaker Change: We're currently working with all regulatory bodies that must approve the transaction. The process is going as planned and we continue to expect the transaction to close by early 2026.
Speaker Change: I will now turn the call back over to Hans to go over as 2025 priorities. Thank you. Tony looking ahead are planted 25 priorities are clear.
Speaker Change: Our continued focus on wireless service revenue growth.
Speaker Change: Adjusted EBITDA expansion and strong free cash flow.
Speaker Change: Accelerate the mobility momentum in broadband growth, while scaling private networks.
Speaker Change: <unk> also wideband and fiber reach.
Speaker Change: Laser focus on operation Excellence.
Speaker Change: <unk> disciplined and customer experience to drive customer and financial growth.
Speaker Change: Execution of our capital allocation model investing in the business supporting and growing our dividend paying down debt and eventually share repurchases and we will leverage our fiber and edge compute assets to open new revenue streams from the AI ecosystem.
Speaker Change: Let me talk about Verizon's AI stressed it in all we have worked with AI for many many years and we're all.
Speaker Change: Already today have server generate AI products at scale in our company.
Speaker Change: We outlined a three pronged strategy for AI for iPhone, Let me go through them briefly number one enhanced experiences and drive efficiencies. This is all about employee and customer experiences driving down costs in our operations. A good example would be fast path, which I've talked about before which is deployed.
Speaker Change: In our mobile at the call centers to intelligently pair customers with the best available care representative.
Speaker Change: Second part of the AI strategy, where ice on these so personalized product and solutions. This is much more about how we can be more personalizing. The service for our customers a great product here would be segment of me, which is a tool that uses AI to personalized customer experience with unique offers.
Speaker Change: The third pillar of the AI at Verizon on strategy, which we haven't talked so much about but I promise you several times to come back to it and we will talk about today is connect to the AI ecosystem and that's the focus of today. If you think about where we are on generate deep AI today today, it's a large lab.
Speaker Change: <unk> modules that are trained at large data centers and that requires enormous capacities overtime that will of course come much closer to the edge of the network both for application, but transport cost and latency in some cases. This is creating an opportunity for us and has already created an opportunity to ask.
Speaker Change: <unk> had revenue in a beat the impact in the fourth quarter.
Speaker Change: Now looking into how we can use our assets and our capability to serve this market. When it comes to the next step will generate the AI. So I'm very proud and excited to introduce varietals AI connect today, that's our product and solution to address this market and meeting the end customer's needs in the next step of.
Speaker Change: AI generate an AI so by that I will hand, it over to Kyle that we're talking about and discussed our opportunities on how we are addressing these markets. Thanks.
Kyle M'lady: <unk>, it's a pleasure to be here this morning.
Kyle M'lady: Ryzen AI connect is the name of our strategy and suite of offerings that are intended to meet the growing demand for AI applications from both our ecosystem partners and end user customers.
Kyle M'lady: It's a vision that allows us to utilize existing assets and new ways to service This technology Revolution.
Kyle M'lady: Whether the AI workloads are across a multi cloud environment deployed on a customer's premise or at the edge of the networks. We have a suite of offerings that businesses can utilize to fully leverage AI capabilities. Our vision is built around best in class connectivity and edge compute assets. It all starts with connectivity over the last 20 years, we have.
Kyle M'lady: Bill unmatched fiber assets not only in our ILEC footprint via files, but also outside through our 71 city, one fiber buildout together with our industry, leading long haul network that stitches. These metrics together, we can provide lit and dark fiber services to our customers over a large geographic area we have.
Kyle M'lady: <unk> edge to cloud connectivity and expertise and we are ahead of the curve in this area. The investments we have made in our converged intelligent edge network over the last several years will pay dividends in this new world as users need even more bandwidth and network visibility.
Kyle M'lady: Our network is intelligent and programmable customers want to control, where inland AI workloads are running and to that we are building new capabilities to give users more insight and control via new tools, essentially we are allowing them to program their network resources to optimize their operation as they see fit and finally edge compute.
Kyle M'lady: As AI shifts from training to deep deployment the need for distributed computing will become increasingly important for real time decisions and predictions. We have thousands of distributed telco facilities, many of which already have power space and cooling available for this compute at the edge.
Kyle M'lady: As we take stock of our existing assets verizon's ability to be a foundational player in the AI ecosystem is clear the technical infrastructure required to enable AI is evolving AI demands massive amounts of data powerful chipsets and high speed secure flexible network connectivity.
Kyle M'lady: Market analysts estimate there will be over one trillion dollars of investment in AI infrastructure over the next 10 years and some suggest AI network traffic will grow at 35% plus CAGR over the next five years.
<unk> investments have been announced and we expect more to come all of this AI infrastructure will need to be underpinned by secure network connectivity that will bridge the new distributed compute landscape.
Speaker Change: Ryzen, we see ourselves as not just participants in this AI driven future.
Kyle M'lady: As a key player enabling our success.
Kyle M'lady: Verizon is leadership in the enterprise connectivity market is poised to become even more crucial as AI applications become more widespread among end users.
Kyle M'lady: We believe Verizon will serve as the essential link between these gen AI applications and the firms who utilize them with growing network of over 16000 near net enterprise locations. Verizon is positioned at the forefront of the AI deployment, providing the connectivity solutions that will enable the seamless integration of AI applications across the y.
Kyle M'lady: Range of industries and sectors.
Kyle M'lady: We also have extensive connectivity to third party data centers currently ranking a close third in the market.
Kyle M'lady: Data centers will continue to be crucial in this new AI powered world and 40% of data centers are expected to face operational constraints by 2027, which is another factor and workloads moving to the edge.
Kyle M'lady: Verizon has extensive fiber and programmable networks are ready to meet these demands across key markets.
Kyle M'lady: And we're not alone in recognizing the opportunity industry analysts were seeing in predicting further significant growth in the AI market Hyperscale as we're expanding into new markets and they need high capacity connectivity.
The industry is seeing a surge in cloud migration and co location demand.
Kyle M'lady: Lastly, power space and cooling of the currencies that are in demand right now and we have all three.
Kyle M'lady: As we look across our assets take inventory and compare against other players in the market. We believe that we're in a leadership position when it comes to usable power and space.
Kyle M'lady: We have facilities across the United States that either have spare power space and cooling or can be retrofitted.
Kyle M'lady: As we sit here today, we have two to 10 plus megawatts of usable power across many of our sites.
Kyle M'lady: Also as we move through our network transformation work, we will continue to free up more resources that could be made available for AI connect.
Kyle M'lady: In addition, we have between 100 200 acres of undeveloped land. Some currently zoned for datacenter build and much of it in prime datacenter friendly areas.
Kyle M'lady: This is not a theoretical discussion we are seeing increasing demand for AI connect offerings, we already have a funnel of over $1 billion.
Kyle M'lady: Simply leveraging our existing infrastructure major players such as Google and meta have purchase capacity in our network with the intent of using it for their AI workloads. Some of these deals are reflected in our fourth quarter results and are contributing to the margin improvement you saw in the quarter. We are working closely with industry players like Nvidia to re imagine how telco functions can work along.
Kyle M'lady: With AI workloads, we're starting the development at the far edge in a private network the.
Kyle M'lady: The applicability will go beyond that and potentially into the macro network at some point.
Kyle M'lady: I'm also happy to report that we have a new strategic partnership with Vulture.
Kyle M'lady: A leading global GPU as a service provider and cloud computing provider.
Kyle M'lady: Italy, Volker will deploy their GPU as a service infrastructure and one of our data centers and tap into our high capacity fiber network for distribution we.
Kyle M'lady: We anticipate helping to broaden their reach and enable our mutual customers with AI training and inference capabilities at the edge overtime. The bottom line is we are ready to help power. The AI ecosystem, we have the assets the expertise and the division to deliver AI solutions at scale.
Kyle M'lady: Unlocking the potential of our existing assets, we can further improve the financial profile of Verizon business the.
Kyle M'lady: The team has worked hard over the last few years to help mitigate the impact of secular wireline revenue pressures together with continued strong results in mobility <unk> expansion and work on cost efficiencies Verizon AI connect positions us for success into the future.
Guy: Thank you Guy I Hope you now got more insights to how we see we can connect the AI ecosystem. Both from the capability point of view and also from the assets, we have and that's what we already know of customers and solutions in the market and this is just the beginning I'm really excited about what we see right now as an opportunity.
Kyle M'lady: In this area.
Kyle M'lady: Lastly, we had a great 2024, and I look forward to exciting opportunities and continued growth ahead, so by that I hand, it over to Randy to handle the Q&A.
Randy: Thanks, Hans Brad we're ready for the first question.
Randy: Thank you we will now begin the question and answer session.
Speaker Change: If you would like to ask a question. Please press star one on your Touchtone phone. Please on mute your phone and record your name clearly when prompted your name is required to introduce your question.
Speaker Change: If at any point. Your question has been answered or you would like to withdraw your request you may remove yourself by pressing star two.
Speaker Change: Once again.
Speaker Change: Please press star one for question one moment for the first question.
Operator: The first question comes from John Hodulik of UBS. Your line is open Sir.
John Hodulik: Okay, great. Thanks, and good morning, guys.
Speaker Change: Maybe first starting off with Kyle's commentary on.
John Hodulik: AI connect.
John Hodulik: Any sense too.
In terms of overall I know I realize it's early and we're getting these announcements seemingly weekly.
John Hodulik: Any sense in how big this opportunity could be both on the connectivity side or in terms of the space and power.
John Hodulik: Great just to just to frame it out for us and then.
John Hodulik: Maybe more operationally you guys showed some real momentum.
John Hodulik: The end of the year, both on the wireless side with gross adds up over 5% and then the broadband side.
John Hodulik: Could you talk a little bit about it.
John Hodulik: Drivers of that momentum and have you seen that momentum continue as we started out.
John Hodulik: 25.
John Hodulik: Thanks, Shawn let me start with the second question on that and we'll come back today I would guide.
John Hodulik: When it comes to momentum both in broadband and wireless both in the business group and in the consumer group I think we have actually outlined quite a lot of changes in our structure not only the people will have leading it but also the product well deploy the rebrand and they were done.
John Hodulik: Honestly, we see that our products are resonating I mean this is as we said you know.
John Hodulik: When it comes to what were add any new customers in the fourth quarter best in a decade. So we are really really really excited about what we're seeing and then if you think about the broadband side. That's of course fixed wireless access is doing great. So we were together in fire was over 400000 in the quarter continued to take share.
John Hodulik: Wireless, where we are getting stronger and stronger now.
John Hodulik: Several quarters of consecutive improvement. So I think there is a lot of execution, but also that our products are right. Our branding. The network is just improving them and you have seen our numbers from the network wherever would deploy C band better premium sell through opening fixed wireless access.
Sam: Of course seeing that the lower shown so all that comes together with an execution was done over the last couple of years and I will ask actually Sam.
Sam: But to comment on that and then I will ask you to talk about the AI the opportunity, which we think is great with our assets, but first to sample. It. Thank you on <unk>.
Sam: 2025, we expect higher for net adds down in 2024 and in the fourth quarter. We saw really strong momentum in our business look we've had eight quarters of phone gross add growth and we see that momentum continuing into 2025, a couple of reasons why the first one is our value prop is resonating very well I think.
Sam: My plan more than half a basis already on my plan and that value prop is unique in the market because we get savings to customers that just.
Just kind of unable to give so that is working very well for us the secondary lots of the work we did in 'twenty three 'twenty four on sales execution local markets local marketing is starting to pay off even well and we see that continuing into 2025. There is some opportunity segments that we've tapped into in Q4 was the stock of that the first one was.
Sam: Tier one markets, we've historically had a slightly lower presence in tier one markets that is shifting some of our large markets. We are starting to see share market gain in those segment second is the Latino segment. We've had a concerted effort last couple of quarters to go after that so we had a financially disciplined operator, we saw growth we saw opportunity in Q4, and we went for it.
Speaker Change: Hey, John Thanks for the question on AI connect I mean, here's it's.
John Hodulik: Our best guess at the moment is the Tam we can sell into with what we have is probably 40 billion plus.
Speaker Change: But you see that the.
John Hodulik: Every single day, there is new.
John Hodulik: Announcements of hundreds of billions of dollars going into this ecosystem and like I spoke about we have a lot of assets that can play right into this and frankly, we have well over $1 billion plus in funnel right now and that's that's really only with our.
John Hodulik: Services that we have today, that's not even counting the power space and cooling stuff that I talked about so I feel this is going to grow where it ends up I think it's anybody's guess.
John Hodulik: But the investment going into here is massive and we're going to be able to play right into it.
Speaker Change: Great. Thanks, guys, Yeah, Thanks, John Brad we're ready for the next question.
Michael Rollins: The next question comes from Michael Rollins of Citi. Your line is open.
Michael Rollins: Thanks, and good morning Chase.
Michael Rollins: You can provide a bit more context on the upgrade environment in terms of what you saw from customer behavior during the fourth quarter and if you could share some additional context on the drivers behind your base case for upgrades that are embedded within the 2025 guidance and then secondly, just in terms.
Michael Rollins: The financials, if you could just.
Michael Rollins: Im sure some of the additional drivers that are contributing to the faster EBITDA growth guidance for 'twenty five as well as if you could share some of the bridge items between EBITDA guidance and free cash flow guidance for 2005, including things like tax and working capital.
Speaker Change: Okay. Thank you Mike.
Speaker Change: So when it comes to upgrade so I think that after many many quarters of decline we came to.
Speaker Change: A slight growth on upgrades. So that's not strange after many quarters Youll also will get there.
Speaker Change: I think that we still have the same sort of fact behind it.
Speaker Change: Customers on the consumer side keep the phones very long them in our way over 40 months and Thats of course contributing to this and as we spoke about earlier, what we have seen an upgrade cycle. This is of course very much driven our new technologies and new hardware design. So we haven't seen much of that lately, but.
Speaker Change: And of course, the products are way better more resilient as well. So I think that's what you see but I will also ask.
Speaker Change: Sample to make a couple of more comments on that and on the beat that expansion I mean, I would ask Tony to talk about but we have worked on the costs.
Initiatives, we have done all the way from voluntary separation program. The outsourcing we have done with <unk> with in <unk> shop, there changed with deepening customer care and we have done a lot on the cost and then of course, we start to get the growth and then the model starts getting leverage and you'll see that cash flow you see it in our a beta I remember.
Speaker Change: We are measured on three things, while your service revenue growth and EBITDA and cash flow expansion, we showed that in 'twenty four or our guidance for 25 shows the same. So this team is super committed to it but some of it some about the upgrade environment. Yes on the 2024 is our lowest upgrade rate in a very long time.
Speaker Change: In Q4, we saw some modest increase 10 basis points increase year on year. So we think 2024 was the bottom of our low upgrade rate and we're going to start seeing gradual improvements in 2025, I think mid single digits is what we've assumed in our plan and our guidance and I think we're going to be quite comfortable with that it is driven by <unk>.
Speaker Change: Two very important things. The first is the life of the device. It's exceeded 40 months right now and at some point customers will want new devices. The secondary customers coming off that three DPP contract, we have a logical heart in 2025 coming off so combination of those two give us comfort that mid single digit increase in upgrades is what we expect in 'twenty five.
Speaker Change: Okay, Hey, good morning, Mike just on EBIT I'll start there. So in 2024, we grew EBIT of about $1 billion and we also as Hans said in the prepared remarks grew subscribers $2 5 million between broadband and mobility and that was above the midpoint of the range. In 2025, we said the range was two to three 5% growth, which implies about $1 3 billion.
Speaker Change: Growth at the midpoint of the guide and it's an acceleration as you mentioned and the growth rate and good operating leverage it starts with strong service revenue growth and healthy customer economics, and you heard homes in the prepared remarks talk about the customer customer economics without the promo amortization and then Hans mentioned the focus on cost transformation.
Speaker Change: We continue to do to make the business more efficient, whether it's customer care and the work that sand past doing including AI and you heard that upfront as well as the managed services work Joe is taking a lot of legacy network elements out and that work is ongoing and we also have the voluntary separation program, which took shape at the end of last year, we will see a full year benefit this.
Speaker Change: This year. The guide assumes as you mentioned a modest increase in upgrades year over year and but overall, we're very confident that we were able to absorb the impact of the promo amortization and have EBITDA growth acceleration and you see the investments, we're making the strength of the network and the execution of sand Pat mentioned are positioning us for strong.
Speaker Change: EBIT performance.
Speaker Change: And then if I move to cash flow as Hans mentioned now the cash flow generation of the business continues to be very strong for the full year and 24, we delivered $19 8 billion in free cash flow and that's inclusive of the tower deal. There was about $2 billion. There from the tower deal and the results of 24, evidenced as Tom said earlier that we can manage through significant pressures.
Speaker Change: Cash taxes, and still generate a very strong cash flow profile and when you look at this in the context of the guide, we said 17, 5% to $18 5 billion.
Speaker Change: Free cash flow, we still feel very good about the cash generation. That's an all in range and were managing to that and the drivers Mike are very similar to what we saw in 2024. It starts with EBITDA growth and I talked about the $1 three at the midpoint. We gave a range of Capex of 17, 5% to $18 5 billion for 2025 and as always our network engineer.
Speaker Change: To do a great job and they are always going to be very efficient with our capital spending and you saw that in 2024 interest expense continues to improve we paid down a significant amount of debt in 2024 were down about $7 billion in total debt. So that will continue to see improvements there and then on working capital we continue to focus on driving.
Speaker Change: <unk> been working capital and that goes beyond handsets as well and then with cash taxes really no change there.
Speaker Change: We'll continue to see pressure from bonus depreciation will have to see what happens in Washington with any proposed legislation and the assumption we put into free cash flow guide was that we'd see a mid single digit year over year increase.
Speaker Change: Upgrades and obviously frontier as we said earlier is excluded from the guidance, but look the guidance reflects the strong cash generation that we have in the business and it allows us to continue our capital allocation priorities, whether it's investing in the business committing to the dividend and continue to delever the balance sheet Youll see us continue to do that in 2025.
Speaker Change: Thanks.
Speaker Change: Thanks, Mike Brad we're ready for the next question.
Speaker Change: The next question comes from Sebastiano Petti.
Speaker Change: J P. Morgan your line is open Sir.
Sebastiano Petti: Hi, Thank you for taking the question.
Speaker Change: Just in regards to just a quick housekeeping question I guess for Tony.
Speaker Change: The $2 9 billion of device protection and insurance in 2024, how should we think about that.
Speaker Change: The underlying growth rate within that revenue bucket that will be reclassified just trying to think about apples to apples service revenue guide.
Speaker Change: How has that been trending I guess relative over the last several years and maybe expectations for contribution next year within the context of the <unk>.
Speaker Change: Overall service revenue guidance.
Speaker Change: Another quick question on the fixed wireless.
Speaker Change: I think in the third quarter, Hans we talked a little bit about perhaps the pace of <unk> growth slowing a little bit.
Speaker Change: Maybe because of greater contribution from suburban and rural is C. Band is deployed in those markets strong fourth quarter number here and also just kind of thinking about your we'll be standing up an MDU solution in 2025, which should aid the trajectory in the tier one markets. So maybe any help in thinking about how you.
Speaker Change: Spec the MDU solution to scale the contribution maybe within I would imagine the 76 C band markets.
Speaker Change: And then one last question.
As you think about I think Sam path, you've reiterated expectations for consumer phones to improve net adds to improve ex second lines year over year, great to hear.
Anything yes lots of focus on immigration growth, maybe if you can kind of touch upon if there's any slowdown or normal is.
Speaker Change: Beyond the normalization that we've been seeing across the ecosystem is there any expectations for a pronounced slowdown in immigration growth and 25. Thank you.
Speaker Change: Let me start.
Speaker Change: And by the insurance question and Tony will take that one on fixed wireless access.
Speaker Change: Absolutely right our C band deployment has the priority number one mobility.
Speaker Change: And that means that our secondary business case on fixed wireless access as we go to tier two and tier three markets like validate is less dense speed is the same and some.
Speaker Change: In the market believes we are slowing down we're not slowing down and you saw the numbers into fourth quarter. The guys are doing fantastic.
Speaker Change: But of course, a little bit.
Speaker Change: Less so but you when it is going into the first half of 'twenty 25, probably but with MDU solution also coming in and then ramping up <unk> at the same time, we're going to see a continuation of our strength in broadband.
Speaker Change: Market share in in in 2024 and broadband.
So I think we're going to do it again with the fixed wireless access under five years, we'll have so it's going to be a great year again to fix what is that because when we come with new product, we improve all the time.
Speaker Change: What where we're delivering I'm going to ask.
Speaker Change: Sample to talk a little bit about that and immigration, but before we come to immigration I think that we have been managing fantastically with our portfolio to all the customer groups, even though what.
Speaker Change: What we see a slower or.
Less big.
Speaker Change: Big switch a pool, we have an offering that's actually appealing to the market then we can grow in that.
Speaker Change: The competition, so I feel confident whatever it might mean moves in the market that we could continue so I will ask Sanford first to comment a little bit and then Tony was answered on the insurance question Sebastian Good morning to you.
Speaker Change: I think on FW and broadband more general our value prop is resonating really well with customers. My home is working very well and it's delivering what customers. One on one end you have <unk>, which attracts the premium service attracts a premium client base. They like the ease and convenience of use on the other end you have fiber which is highly reliable.
Speaker Change: Very high performance. So we were able to segment the market very well and Thats why Youre seeing continued success, we are taking more than 50% of all the industry net adds 50% of all the growth is coming to us in the market, we're going to continue to see that in 2025 as well as we've done in 2024th the company, we're going to have between $3 50 and 400.
Speaker Change: 1000 broadband net adds a quarter as Hans said, there's going to be some fluctuation across the quarters as we do because we are scaling three very big things in this space. The first is rolling out C band in tier two tier three markets. They have a slightly different density and hence a different pace of sales as it was into it the second is that MDU Prada.
Speaker Change: For <unk>, we started it youre going to see that scaling all into 2025 and the third is our expansion of <unk> to 650000 household or fastest so all those three things will scale through the year and but we are very comfortable with that 350 to 400, assuming some fluctuation.
Speaker Change: Also we are starting to see good ARPA increase customers are taking more of a premium plant.
Speaker Change: Gig plans on the <unk> side, and our premium plans on <unk> and it goes back to the resilience and the convenience of our service.
Speaker Change: That note, let me kind of speak on behalf of the customers for the moment.
Speaker Change: For decades, most customers have had very limited choice when it comes to broadband providers you tend to hear the same pinpoints over and over again.
Speaker Change: <unk> pricing board of liability and drives low NPS.
Speaker Change: We are very clear this is what customers want and offering that delivers high performance and reliability no gotcha pricing no promotions that expired in 12 months driving that does not double in the year. They want choice. They want transparency that is what we're delivering to them and that's what customers like so on that foundation, we are very comfortable with that pace.
Speaker Change: Of $2 50 to 400000 broadband net ads every single quarter.
Speaker Change: Good morning, especially auto just on the handset insurance. So just a couple of things here. So it's recurring handset protection revenue and its value that our customers receive that's very complementary to connectivity.
Speaker Change: We are going to recast the historical revenue. So we will provide them. So you have a comparable view of the impact is about $2 9 billion in 2024. So the baseline of service revenue exiting 2024 is about 82 billion the impact the growth rates was not significant maybe five to 10 basis points and Theres, obviously, no change to the service and other category.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay, Brad ready for the next question.
Speaker Change: The next question comes from Jim Schneider of Goldman Sachs.
Go ahead Sir.
Good morning, Thanks for taking my question one on wireless on one on AI, if I may.
On the wireless service revenue I think Tony you talked about the $2 billion step up roughly for this year, but the growth rate essentially underlying roughly doubling when accounting for the accounting change youre introducing so does this sort of imply as we exit 'twenty five and go into 2006 that we're going to be able to kind of maintain that same level of pace in terms of <unk>.
Speaker Change: Revenue dollar growth on service revenue.
Speaker Change: And then secondly on the AI connect Kyle Thanks for the detail, but can you maybe give us a sense of the $1 billion pipeline of sales. When do you think we're going to see me.
Speaker Change: Material revenue recognition revenue being actually recognized in the P&L and whats the split roughly between the connectivity business and data centers long term.
Speaker Change: Okay.
Speaker Change: Program amortization.
Speaker Change: You're just going to reiterate what I said on the on my opening remarks, and then we.
Speaker Change: We guide right now from two to two 8%.
Speaker Change: Our underlying growth has nearly doubled.
Speaker Change: At the end of this year that it would start to fade off basically and so thats.
Speaker Change: And have less impact going forward. So that's where we're right now we're not guiding for 26 at the moment.
Speaker Change: But we're in a good position on the headwinds that we created for ourselves by investing heavily in 'twenty. Two 'twenty three so you might remember that was not our best years.
Speaker Change: It is still impacting us, but given how the financial discipline and the work that sample has down uneven and of course Kyle.
Speaker Change: During the last 12 to 18 months that will have an impact a positive impact for us when we're going to get less of that pressure by year yearend and that's why I would have to be very clear I mean, what we see is really a growth nearly double than what we're guiding for in the in real terms, but of course as you do the accounting you need to follow that.
Speaker Change: On the AI.
Speaker Change: Hand, it over to Kyle yes. Thank you for the question there Jim I think if you look at the funnel right now is basically entirely.
Activity for web scale right, it's basically lit services wave.
Speaker Change: Dark fiber, but that's why we're happy today to announce that we're going to add the power space and cooling to the portfolio as well and I see over time that will certainly we will be selling.
Speaker Change: Typical wave and dark fiber to players, but I think we'll also be selling bundles of stuff right. So we'll put power space and cooling together with networking and we're going to sell it on a basically a project by project basis, right and make sure that we maintain our are good margins and all that.
Speaker Change: All of that kind of thing and in terms of Rev. Rec, we already we already booked revenue in this regard in the fourth in the fourth quarter and that was certainly helpful for me.
Speaker Change: And our EBITDA trajectory, so we intend to drive more of that to the bottom line going through 2025, and we look forward to.
Speaker Change: Driving more business here.
Speaker Change: Great.
Speaker Change: Yeah, Thanks, Jim Brad ready for next question.
Speaker Change: The next question comes from Ben Swinburne of Morgan Stanley. Please go ahead with your question.
Ben Swinburne: Thanks, Good morning.
Ben Swinburne: Wanted to ask you guys about ARPA growth in sort of the competitive environment, and then I'm going to come back to Kyle on the AI topic, you guys had 4% plus consumer ARPA growth in Q4 and talked about expecting healthy growth in 'twenty five.
Ben Swinburne: Can you just sort of talk a little about the competitive environment and sort of what gives you guys confidence in the ability to continue to take price selectively in some of the drivers around ARPA growth that you see ahead for the consumer business.
Ben Swinburne: And then you mentioned, you just mentioned and dark fiber a bit.
Speaker Change: I've seen some of your competitors announced some pretty big investments.
Speaker Change: And adding capacity I'm, just wondering if you could talk a little bit about how much of the AI opportunity is leveraging existing assets and to the extent you guys are investing within your capex guidance into this business would be interested in sort of where those investments are targeted thanks. So much.
Speaker Change: So I will start on the competitive environment.
Speaker Change: I Wouldnt say that Theres anything new in the competitive environment. It's just that we're performing way better.
Speaker Change: I, usually say that way you compete to use is really the network it with a product and solutions and services.
That will compete with the.
Brian If you look at last DRM and our networks continue to improve we're going to now go to C band up to 90%.
Speaker Change: It means that we will have more to go there.
Speaker Change: I think on the on the product side, we have heard about my home My plan.
It's doing all of that is resonating a refresh of the brand even though it's early after six months is really paying off as well.
Speaker Change: So all that is really how we are competing where you better in the market.
Speaker Change: Then before but then I will ask Simon to talk a little bit about the segments. We're doing good then the ARPA growth.
Speaker Change: On the dark fiber.
Speaker Change: Have that to a card, but in general I would say that everything is included in our in our guide and then nothing more is usually I would say the majority will have <unk>.
Speaker Change: Is assets that we already have.
Speaker Change: Mr. Smith.
Speaker Change: Thank you let me build on at the end of the day it comes down to value prop for us we've built a very strong value prop with a very strong brand on the foundation of a number one network and that combination is what gives us confidence about ARPA, but let me use the opportunity to step back and talk about a broader service revenue options we've always.
We said we wanted to get to an 80 20 medium term contribution from price and volume. It is important for our long term sustainable business in the subscription category to be in that framework and we are on our way to do that 2024 was a good start for us because we saw positive volume contributions across all our businesses mobility, FW and value because of <unk>.
Speaker Change: Directly been negative for a few years for that Youre going to continue to see volume growth in postpaid undervalue and sustained momentum in broadband so that takes care of the value volume part of the equation secondary unpriced, which is an important company. There are two types of pricing levers that we have the first is price ups for more value that we provide to customers we had four major.
Speaker Change: Price ups in 2024, we've had during 2025, because we are delivering more value to our customers and they feel very comfortable with the price structure that we have.
Speaker Change: We cannot of course comment on future price ups, but we will look where we see lower churn where input prices a little higher and more importantly, the value that we deliver to customers for 2025, the price actions that we've already done in the hopper more than a billion dollars plus of our service revenue growth is already baked in just that those price ups and.
Speaker Change: You're going to see of course ratio and help from the volume side. The secondary customers are stepping up.
Speaker Change: It's a bigger opportunity for us as they buy more books, because we give them savings that they don't get anywhere else. They are taking more premium plan, especially as C. Band gets rolled out so you're also starting to see a little bit of tailwind from that lastly, we've.
Speaker Change: Other ways to monetize the network that we've started exploding aggressively the first one is Netflix licensing in Q4 'twenty four we launched our first network slice.
Speaker Change: And youre going to see us do more of that and the second is in non satellite connectivity, we have best in class partnerships with Apple and Skyler and as that scales out you're going to start seeing more monetization and so we have upside on netbook monetization as well. So a combination of all of this gives us a lot of comfort of good ARPA growth in 2025.
Speaker Change: The market is competitive, but we like our playbook a lot and I think it's hunting very well and you'll see us execute on that similar to how we executed in 2024th.
Speaker Change: I appreciate that.
Speaker Change: The question Ben So I think some of our competitors are doing investments now, but what our game plan is here is to leverage the investments we've made over time.
Speaker Change: And as Mpls the secular decline continues to go down there we can re imagine the assets, we have and to <unk> point. So most of the things that we're going to be.
Speaker Change: Using to get into this markets things we've already done so it's the assets, we already have tweaked a little bit and we do have the capex in there because.
Speaker Change: Listen some of these deals what will have to do is spend some capital capital to edge out our fiber a little bit to go meet people at the right data centers indoor locations of business and then retrofitting technical space. So we have money in for that.
Speaker Change: But.
Speaker Change: But.
Speaker Change: We're ready to go with that so it's all included in the envelope. So we have we were just really leveraging all the work we've done over the last decade with one fiber files.
Speaker Change: And all of those assets that we have we're just going to leverage them and agile and capture market here.
Speaker Change: Thanks, a lot guys, yes, thanks, Ben Brad ready for the next question.
Speaker Change: Yeah.
Speaker Change: The next question comes from David Barden of Bank of America. Please go ahead with your question.
David Barden: Guys. Thanks, so much for taking the question.
Speaker Change: First.
Speaker Change: More of a.
Speaker Change: Housekeeping item for you Tony you know.
Speaker Change: Now that we've pulled fees out of other in 2023 now we're pulling insurance out of other in 2025, what is other and is it now more of a pure play representation of the monetization of your cable relationship perhaps.
Speaker Change: And then the second question is obviously in the New administration.
Speaker Change: You guys are well aware of that.
Speaker Change: Everybody is now thinking about big deals and one of the bigger deals people are talking about is.
Speaker Change: Could Comcast and charter come together and I guess the question is what would that mean as we think about that possibility how should we think about what it would mean.
Speaker Change: For Verizon in terms of are there change of controls would this larger entity have more bargaining power with you. The next time, we have a conversation about pricing.
Speaker Change: How would it all work.
I'll, let Tony answer the first question I think that yes sure good morning, Dave.
Speaker Change: Other look what's left is really USF and other fees and also the ambient our relationships are in there, but everything all the other recurring.
Speaker Change: Revenues are up in the up in service revenue.
Speaker Change: So first of all.
Speaker Change: Cannot speculate on whatever combination youre seeing in front of you.
Speaker Change: But again.
Speaker Change: And there are no relationships are very important to us.
Speaker Change: They're treated like large enterprises I think we're both are.
Speaker Change: Very.
Speaker Change: At this phase of the relationship we have.
Speaker Change: We have built together and remember our strategy is to build a network once and have as many profitable connections on top of the network and this is accretive to US is what I said before so no.
Speaker Change: Cannot comment on that.
Speaker Change: And the culmination of that can happen I think we're in a good position we have the best network in the market I don't think that that resonates with customers and I think that's the most important.
Speaker Change: Thanks, Jonathan if I could just do one more follow up Tony is there a specific increments in cash taxes that you've baked in that you can share with us from the cash flow number.
Speaker Change: So Dave we gave a guide this year, so and I gave you the puts and takes so we're going to manage to that guide we delivered on our guidance for 2024, and I expect us to continue to deliver on our guidance for 2025, but it is a higher tax rate is.
Speaker Change: We're not going to give this to say now, but clearly we manage that with all the other puts and takes and if you took the midpoint of the summit, we are equal or better than 2004, when would take away. The tower deal. So we as you understand we feel confident that will help us with our capital priorities.
Speaker Change: We continue to invest in business.
Speaker Change: We have increased our dividend for 18 consecutive years, we have paid down our debt team has done a great job well and two three right now.
Speaker Change: On the leverage which is very close to the 225, when we're going to consider.
Speaker Change: Repurchasing shares so that will put me on the board in a very different situation when it come to the Optionality all doing repurchases when that happens.
David Barden: Perfect guys. Thanks, so much yes, thanks, Dave Brad right from the next question.
Speaker Change: The next question comes from Frank Louthan of Raymond James. Please go ahead Sir.
Rob: Hey, guys. Good morning, this is rob on for Frank.
Rob: You briefly touched on this earlier, but how would you assess the opportunity to expand bias in your legacy footprint from here do.
Rob: Do you expect to build faster going forward and as a follow up how attractive is the bead opportunity for you guys.
Rob: Any updates you can share with us.
Rob: Are you feeling about that would be great. Thank you.
Rob: So on the files.
Rob: We have been amplifiers more than 20 years, the product is resonating with customers as we outlined our broadband strategy at the end of last year around October or whatever we said that we're now going to.
Rob: <unk> increased basically 50% and opened for sales going to 650000 in this year.
Rob: That's a scaling that is pretty easy for us.
Rob: And so we continue to scale, we see more opportunities for two reasons first of all the economical situation in the country is better today I'm in purchasing power and number two broadband usage necessity.
Rob: We are also find out that we can deploy fiber cheaper we offline all of these in our broadband strategy. So all that is playing in that we can keep our alright.
Rob: Our return on investment.
Rob: On this <unk>.
Rob: Increase of <unk>. So we feel good about the fires on the bead, we will participate where it makes sense for us we think that we will have a good opportunity to get a subsidy for building out in maybe rural areas et cetera. So we're going to participate it's so far fairly little that's been out there.
Rob: Because the states are sorta about doing it but we will participate wherever we we think it makes sense from a return on investment.
Speaker Change: Yeah, great. Thanks, Rob Brad ready for the next question.
Speaker Change: The next question comes from Sam Mchugh of BNP Paribas. Your line is open.
Thanks, guys just two questions on the wireless service revenue and you always have a few puts and takes with them also to parse out how should we think about box or anything of the headwinds and tailwind through the course of 2025 number one and then secondly on the business EBITDA you mentioned some of the AI related sales, maybe you can elaborate on how material buyout.
Speaker Change: I know we are placing that why we should be confident of this.
Speaker Change: Inflexion point and business EBIT.
Speaker Change: Can that be an answer.
Speaker Change: Yes.
Speaker Change: Thanks very much.
Speaker Change: Hey, good morning, so on the service revenue, we feel very good about the shape.
Speaker Change: It's based on 82 billion as I said earlier and the midpoint of the guide implies and stand Pat mentioned this earlier about $2 billion of additional growth we executed a number of pricing initiatives that Pat mentioned that carry into 2025, we also talked about an improving volume profile in consumer and.
Speaker Change: <unk> talked about that along with stable business volumes, we continue to see great volumes on the on the <unk> side, and then fixed wireless access continues to grow we have a $2 billion base of revenue and <unk> and that continues to scale and you saw the results in the fourth quarter there.
The other thing that will will inflect here is prepaid and the positive volumes and the turnaround that sand Pat talked about will result in improving revenue profile towards the back half of 2025, so that headwind will become a tailwind.
Speaker Change: On prepaid and then offsetting that obviously as Hans mentioned as the promo amortization.
Speaker Change: And that we said would peak in 2025, and but it sounds mentioned the customer economics are very healthy and we said, we expect the headwinds to ease towards the end of the year and into 2026, but as <unk> mentioned, we're seeking a better balance of <unk> and I think youll see that across both mobility and broadband and we expect it to continue in 'twenty five and the <unk>.
<unk> the standpipe outline in terms of execution are positioning us for for sustainable revenue growth.
Speaker Change: On the Verizon business group was going to ask Scott to comment on it but of course, the AI connect is one contributor, but I think that the whole Verizon basis tea business group team has done a great job with many things some of the wireless growth ever had the last couple of years, just keeping grinding between 125 to 150.
Speaker Change: The new net adds every quarter the fixed wireless access that we were I would say a little bit surprised the whole successful <unk> in the business group, but then all of the cost Takeouts are doing and if you saw the fourth quarter turning to a positive year over year improvements I think we are onto something even though with the <unk>.
Speaker Change: Sure all the secular so I wanted to say that so it kind of doesn't mean to say it but the guys have done a terrific job and I.
Speaker Change: Im.
Speaker Change: Cautiously optimistic that we can continue that work.
Sam: Hi, and thanks for the question, Sam I won't belabor that I think.
Sam: The revenue, we booked that help with EBITDA as far as they are connected small that was our first quarter that we book revenue. There. So that did have a little impact, but it's mainly due to the factors that harm spoke about.
Sam: Relentless focus on our cost and driving efficiencies as well as finding new opportunities in the revenue line and the team has done a good job at that and you can see we've had sequential growth.
Sam: Since the first quarter. So we've had three quarters in a row of sequential growth of EBITDA and for the first time in a long time, we've had growth year over year in the fourth quarter of EBITDA and I expect those trends to continue in 2025, given the groundwork that we've laid and the what.
Sam: What I would say the Hans talked about SWA, that's turned into a really good new story for us because.
Sam: We had certain expectations of the product and now that we see customers are getting much more comfortable business customers will be using this as a primary option for them for connectivity.
Sam: Continue to see great growth and great interest in the product as a matter of fact, a lot of large customers who were first we werent sure. They would use this as a primary use case.
Sam: Are we a big banks, we have big retailers et cetera going in doing this and then you just saw a.
Sam: Sure.
Sam: An announcement, we made with bright speed and I think this is a new area of the market that we can tap and we call. This really copper catch so it's using our fixed wireless access network to help people, who have old kind of copper lines out there low bandwidth lines replace it and modernize it with <unk> and we see this as a great place that we can sell into two.
Sam: We talked about private wireless and AI connect so we have a lot of great things on board here and I feel good about our trajectory into 2025, great awesome. Thank you, yes. Thanks, Sam Brad we have time for one more question.
Speaker Change: Your final question will come from Kannan <unk> of Barclays. Your line is open.
Sam: Thank you.
Speaker Change: It sounds like maybe on the consumer side.
Speaker Change: You mentioned a couple of drivers of growth.
Speaker Change: Tier one markets.
Speaker Change: The Latino segment and so on and.
Lines have obviously grown on the postpaid side, but the account growth still.
Speaker Change: Negative so is there an opportunity to do an account growth positive with some of these newer segments that you're targeting.
Speaker Change: And is that something that you started to see over the course of the year.
Speaker Change: And then secondly on immigration I may have missed this.
Speaker Change: The response to the prior question, but is there a way for us to.
Speaker Change: Sure.
Speaker Change: Understand how you guys are thinking about the impact on overall volumes.
Speaker Change: The industry as a whole over the course of this year.
Speaker Change: Yes.
Speaker Change: Thank you Kannan I would ask Sam to answer those questions, but I think we're in a really good position with our offerings to continue regardless of so but somewhat thank you Ethan and good morning to you.
Speaker Change: On the question on the overall market growth, we think full speed is expected to grow between 8% and Eaton to half a million.
Speaker Change: <unk> in 2025, all in for business and consumer it's a robust market. It's a very resilient market and similar to 2024 pre to post migration makes up almost half of that it's not a segment. We play in on the retail side, but we leveraged our wholesale channel to go after that segment aggressively.
Speaker Change: Yeah.
Speaker Change: Despite that's been lowered immigration in the last few quarters, yet we are seeing really strong performance in our value business.
Speaker Change: <unk> got a refreshed value brands and value proposition our relationship with Walmart as well as expanded total wireless distribution is working very well. So we can continue to grow for net ads in this environment and feel very comfortable with that now to answer. Your first question on account growth. We saw account growth in Q4, you see that.
But I think at the end of the day, what we're focused on is building deep relationships with our customers. If you look at the way our offering framework works is we start with connectivity we want to offer the best connectivity product bought home and on the go and mobility and of course on the value side and then on that foundation of that relationship we start selling more.
Speaker Change: Those customers.
Speaker Change: Whether it's some of our entertainment products with books. It gives you a savings that other Scott gave it.
Speaker Change: <unk>.
Speaker Change: <unk> products are cloud product, so we want to deepen our relationship with customers and I think that's the way we see long term growth in our business you saw very strong ARPA growth in the north of 4% and underlying growth is of course much higher than that when you take care of promo amortization. So our control is important to us, but what is important to us is profitable customers who value.
Speaker Change: Quality of the network and offering framework, we want to grow in those.
Speaker Change: Thank you, yes, thanks, Kevin Brad that's all the time, we have today.
Speaker Change: This concludes the conference call for today. Thank you for your participation and for using Verizon Conference services you may now disconnect.