Verizon Says 'Probably No' to Capex Increase After Tax Cut

Dan Jones
News Analysis
Dan Jones, Mobile Editor
1/9/2018



Verizon's new CTO, Hans Vestberg, poured cold water today on the idea that corporate tax reform would trigger a ramp in its capital spending for deploying and updating networks in the US.

"Quick answer is probably no," said Vesterberg -- formerly Ericsson's CTO -- when asked, at a Citi analyst conference in Las Vegas, if tax reform would stimulate Verizon Communications Inc. (NYSE: VZ) capital expenditure (capex) in 2018. He stressed that CFO Matt Ellis would lay out the final guidance as the provider reports its fourth quarter results at the end of January.

"You don't want to have big surges in capital allocation as it creates ineffencies," Vestberg elucidated further.

In fact, the CTO is expecting to play his part in cutting costs over the next four years by up to $10 billion as Verizon deploys more software-based, virtualized network gear, moves to a common core, and runs all of its business units over the same fiber network.

"I feel responsible for a big part of that $10 billion," Vestberg said. He expects the savings to come out of both capital and operating expenses.

AT&T Inc. (NYSE: T), in contrast, has pledged an additional $1 billion in "capital investment" in 2018. (See AT&T Pledges $1B Capital Investment After Tax Reform.)

Vestberg, meanwhile, said that he saw the passage of the 3rd Generation Partnership Project (3GPP) Release-15 5G specification on December 21 -- the same day as legislators passed the tax bill -- as the more important occurrence of the two.

Vestberg didn't add any new detail to the anticipated Verizon mobile 5G timeline. Executives have previously said that the operator won't rapidly move from fixed 5G to mobile 5G in 2018. (See Verizon Says Fixed 5G Will Happen in 2018, Less Clear on Mobile.)

Instead, Vestberg's comments suggest a late 2019 to 2020 launch for Verizon's mobile 5G. "From there it is a year before you have something," Vestberg said of the 3GPP 5G ratification. "Commercially, maybe a little bit more [time]."

AT&T says it expects to have mobile 5G in late 2018 in 12 markets in the US. (See AT&T's Mobile 5G Plan Leaves as Many Questions as Answers.)

— Dan Jones, Mobile Editor, Light Reading

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