After serving as the CEO of Ericsson, Hans Vestberg took over the CEO position at Verizon in 2018. Roughly four years later, many of Vestberg's big bets don't show any signs of paying off.

Mike Dano, Editorial Director, 5G & Mobile Strategies

July 25, 2022

6 Min Read
Will they come for Hans Vestberg?

Hans Vestberg started his telecom career at network equipment giant Ericsson in the early 1990s. He worked his way up through the Swedish company's ranks until, in 2010, he became the vendor's first CEO who didn't have a background in engineering.

But Ericsson ejected Vestberg in 2016 following a string of poor financial results and a slide in the company's share price.

The second big phase of Vestberg's telecom career started in 2017 when he joined Verizon, a massive, US-based network operator, to lead the company's network and technology team. The move made sense considering Vestberg's long history at what remains one of Verizon's biggest equipment suppliers.

Then, just over a year later, Vestberg took over Verizon's CEO slot from Lowell McAdam. It was a noteworthy development considering Verizon typically promotes from within its deep bench of "Big Red" veterans. Nonetheless, Vestberg was quick to make his mark on Verizon, reorganizing the company's leadership team under the "Verizon 2.0" banner.

Figure 1: Vestberg in 2021. (Source: Erik Pendzich / Alamy Stock Photo) Vestberg in 2021.
(Source: Erik Pendzich / Alamy Stock Photo)

Vestberg's remit at Verizon was clear: To lead the company into the 5G era. Vestberg outlined the broad strokes of his big 5G plan during a lengthy CES presentation in 2019. Verizon, he said, would eventually offer up eight "currencies" of 5G that would unlock all kinds of opportunities for the company specifically and the wider telecom market in general. Vestberg's presentation coincided with the peak of the 5G hype cycle.

Today, though, things are much, much different.

Another bad quarter

"Verizon hits five-year low as slashed outlook points to no growth ahead," reads one headline following Vestberg's release of Verizon's second quarter 2022 results. In a word, the company's performance in the second quarter was bad – and it came after a similarly bad first quarter.

"Hans, I wonder as we think about growth, maybe we revisit some of the comments you have made over the past couple of years about 5G. As the market has evolved, what is your latest thinking about the opportunity?" asked longtime telecom financial analyst Craig Moffett, of MoffettNathanson, during Verizon's quarterly conference call Friday.

In response, Vestberg pointed out that Verizon's 5G-based fixed wireless access (FWA) business is progressing. But he acknowledged that profiting from 5G smartphones has been "a little bit more challenging."

Nonetheless, "I am confident that this is a great opportunity," Vestberg said.

And therein lies the rub: Vestberg, who previously fronted one of Verizon's biggest network equipment suppliers, was tasked four years ago with safely guiding the operator into the 5G era. But today, his company is widely viewed as playing catchup to T-Mobile in 5G. Verizon's stock recently fell to around $44 per share, below the company's $47-per-share low point when Vestberg first took over in 2018. And perhaps even more concerning, Verizon now expects its 2022 earnings to be flat, down from its previous hopes for 2% to 3% of growth.

"Verizon's longer-term prospects in wireless are increasingly doubtful, fueled by T-Mobile's lead over Verizon on deploying upper midband [5G] and big lead on total holdings in midband spectrum," wrote the financial analysts at New Street Research in an assessment of Verizon's second quarter results. "Verizon management's aspirations for strong service revenue growth driven by rising ARPU [average revenue per user] and growing subscribers seems way too optimistic in the face of rising competition from a challenger with a similar (if not soon-to-be better) network priced at a steep discount."

Pointing fingers

Vestberg – having been ousted from Ericsson just six years ago – must be aware of the tenuous position of his job at Verizon.

"ANY CEO's job is on the line if the financial results do not meet the investors/board's expectations. This is true regardless of technology, industry, size of company. Just because '5G is hard' does not protect a CEO from the consequences of a poor financial performance," wrote analyst Iain Gillott, founder and president of research and consulting firm iGR, in response to questions from Light Reading. "That said, there are many factors that go into a decision to let a CEO go – how many times have we heard rumors that a CEO is under pressure only to see the board renew the CEO contract... and then let them go a couple of quarters later?"

Analyst Mark Lowenstein, of Mobile Ecosystem, agreed. He argued that Verizon has been making the right investments into 5G, such as private wireless networking, but that those efforts may not pay off for another few years. "On Vestberg, it depends how patient the market is," he wrote in response to questions from Light Reading.

But analyst Roger Entner, with Recon Analytics, argued that some of Vestberg's latest gambits don't look promising. He said his firm's recent consumer surveys show little interest in Verizon's new "Welcome Unlimited" plan. That was the plan Vestberg on Friday suggested could help grow Verizon's customer base in the second half of 2022.

Similarly, Lowenstein said he was disappointed that Vestberg didn't have much to say about TracFone. Vestberg set aside $7 billion to purchase the prepaid provider shortly before he spent another $50 billion on midband spectrum for 5G. "This was one of Vestberg's major bets," Lowenstein said of TracFone. "In a toughening economy, there could be opportunities here."

Musical chairs

Already Vestberg has replaced the head of Verizon's consumer business and the head of its enterprise business. Manon Brouillette took over Verizon Consumer Group in January from Ronan Dunne. And Tami Erwin, head of Verizon Business Group, announced in May that she would retire; Verizon subsequently named Sowmyanarayan Sampath as her replacement.

Might Vestberg be next?

One longtime industry observer, who asked to remain anonymous, said some big Verizon investors have already begun calling for Vestberg's dismissal. However, there are few clear candidates to replace him. After all, any Verizon CEO must demonstrate competency, experience and success in order to lead a company that remains the biggest wireless network operator in the US in terms of customers served.

But that situation might not protect the rest of Verizon's C suite. Next out the door might be Diego Scotti, Verizon's CMO.

After all, "we had a little bit less of traffic in our stores in April and May and the latter part of March. We saw some pickup in June, but still a little bit below earlier trends," Vestberg said Friday of the customers visiting Verizon's retail outlets.

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

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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