Top 5G Takeaways From Verizon's Analyst Day

Mike Dano
11/20/2019

Verizon hosted an analyst day this week with a number of top Wall Street research firms, and the company's big message on 5G can be summed up in three words: staying the course.

"We found Verizon's network progress update at its analyst day in New York positive and confident, chiefly apropos of 5G," wrote the analysts at Wall Street research firm Nomura's Instinet in a note to investors.

"CEO Hans Vestberg started by stating he is happy with how the company has performed YTD [year to date] including the performance of the LTE network (as evidenced by the awards they continue to win) and burgeoning 5G network," wrote the analysts at Wall Street research firm Cowen in their own note to investors.

"While it remains somewhat difficult to forecast the exact financial impact of its 5G deployment initiatives, we do believe it [Verizon] has a plan in place to maintain a leadership position once 5G is more broadly embraced," added the Wall Street research analysts at Wells Fargo in a note to investors.

Verizon, of course, has made 5G a centerpiece not only of its marketing this year but also as its central message to investors. And company executives throughout this year haven't strayed much from Vestberg's initial 5G talking points in January: that Verizon will build a superfast 5G network in major American cities using its millimeter-wave spectrum, that the process will take years to complete, and that the result will be a network demonstrably better than those from the competition.

Importantly, given Verizon's relatively miniscule 5G coverage footprint today, executives reiterated at the company's analyst day that Verizon doesn't expect the new network technology to have much of a financial impact until 2021 at the earliest.

"We retain our stance that Verizon's progress may pause in 2020 before 5G restores momentum in 2021," noted the analysts at Nomura's Instinet.

"There was little new or noteworthy on Verizon. The team came across as confident, with a focused strategy, that they feel is working," added the analysts at New Street Research in a note to investors.

Aside from the broad picture of 5G at Verizon, there were a number of minor but noteworthy takeaways provided by the analysts (such events are typically closed to the press) who attended Verizon's event:

  • Verizon's 5G network is providing speeds in New York City between 1Gbit/s and 3Gbit/s, and the operator will implement dynamic spectrum sharing sometime next year to expand the reach of 5G across other spectrum bands, according to the analysts at Nomura's Instinet.
  • Verizon is satisfied with its 5G Home overhaul and will expand the offering further starting next year, according to the analysts at Wells Fargo.
  • The company is interested in C-Band spectrum but "their current plans contemplate only using their existing assets in place," noted the Well Fargo analysts.
  • Verizon reiterated its plans to launch a mobile edge computing product sometime by the end of this year, and is "hopeful this enterprise-targeted product will over time help offset some of the pressures in the wireline business from legacy product migration and pricing headwinds," explained the analysts at Wells Fargo
  • The analysts at Nomura's Instinet said they don't expect Verizon to alter its network capital expenses next year, but said that Verizon's spending "is likely to shift from routing (Cisco, Juniper) to mobile (Nokia, Ericsson, Samsung, CommScope)."
  • When questioned about its decision to offer the Disney+ streaming service to its mobile customers on unlimited plans, Verizon's management explained that the operator would continue to focus on "partnerships" such as its previous offers of YouTube TV and Apple Music, noted the Cowen analysts.
  • Finally, pointing to Verizon's "most provocative comment," the analysts at Cowen said Verizon executives did not immediately shoot down the idea of a network sharing agreement similar to the one Sprint has with Altice USA. Verizon management said "it 'takes two to tangle,' that 'both sides have to view it as a good idea,' and that it is 'exploring all options,' " the Cowen analysts wrote of Verizon executives' response to questions on the topic.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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