Verizon's Strategic Reinvention: A High-Conviction Investment Case for Growth-at-a-Reasonable-Price

The appointment of Dan Schulman as Verizon's CEO in October 2025 marks a pivotal inflection point for the telecommunications giant. With a mandate to redefine the company's trajectory, Schulman-a former PayPal and American Express executive-has initiated a sweeping strategic transformation centered on operational efficiency, customer-centric innovation, and disciplined capital allocation. This shift, underpinned by aggressive cost-cutting, AI-driven operational overhauls, and a refocused capital strategy, positions Verizon as a compelling high-conviction investment for growth-at-a-reasonable-price (GARP) investors.

Operational Efficiency: The Foundation of Sustainable Growth

Schulman's leadership has prioritized operational rigor, beginning with a $3 billion cost-reduction initiative. This includes the elimination of 15,000 jobs-primarily in enterprise operations-and the conversion of 180–200 retail stores to franchise models, aiming to improve margin discipline while maintaining customer touchpoints. These measures are not merely defensive but strategic, as Schulman emphasized in his inaugural address: "Relying on price increases without corresponding growth in subscribers is not sustainable".

The CEO's focus on AI integration further amplifies efficiency gains. Verizon is leveraging artificial intelligence to streamline customer service, personalize marketing campaigns, and reduce churn by up to 40% through converged broadband-mobility offerings. For instance, AI-powered tools are simplifying pricing structures and enhancing user experiences, directly addressing a key pain point in the telecom sector. These innovations align with broader industry trends, where AI adoption in customer service is projected to grow at a 23.78% CAGR through 2032.

Capital Allocation: Balancing Shareholder Returns and Strategic Growth

Verizon's capital allocation strategy under Schulman reflects a disciplined approach to value creation. The company has reaffirmed its commitment to maintaining a $0.69 quarterly dividend per share, with the next payment scheduled for February 2026. Simultaneously, free cash flow generation has surged, reaching $15.8 billion in the first nine months of 2025-up from $14.5 billion in the same period of 2024. This financial flexibility supports both deleveraging and strategic investments, such as the $20 billion acquisition of Frontier Communications, expected to close in early 2026.

The Frontier deal exemplifies Schulman's focus on long-term value. By expanding Verizon's fiber footprint to 29 million passings, the acquisition accelerates cross-selling opportunities and positions the company to capitalize on the $5.63 billion U.S. private 5G network market, which is projected to grow at a 23.78% CAGR. Meanwhile, capital expenditures remain tightly controlled, with 2025 spending capped at $17.5–18.5 billion to fund 5G and fiber infrastructure. This balance between reinvestment and fiscal prudence is critical in a sector where AT&T and T-Mobile are aggressively expanding 5G networks.

Industry Trends and Competitive Positioning

Verizon's strategic pivot aligns with macroeconomic and technological shifts in the telecom industry. The U.S. 5G market, expected to reach 350 million connections by 2025, remains highly competitive, with T-Mobile leading in network availability (231+ points of presence) and Verizon trailing slightly. However, Schulman's emphasis on customer retention-driven by bundled services and AI-enhanced experiences-positions the company to mitigate churn, a persistent challenge in the sector. For example, Q3 2025 saw 306,000 broadband net additions, with fixed wireless access (FWA) subscribers nearing 5.4 million.

The CEO's strategy also addresses structural challenges in the postpaid wireless segment, where Verizon Wireless held a 34% market share as of 2025. By shifting from expansion to customer acquisition in fiber services and leveraging AI to reduce operational costs, Schulman is repositioning Verizon to compete more effectively against T-Mobile's aggressive pricing and AT&T's hybrid media-telecom model. Analysts have taken note: Verizon's stock has received a "Buy" rating, with a median price target of $49.00, reflecting confidence in its transformation.

Financial Performance and Analyst Sentiment

Verizon's Q3 2025 results underscore the early success of Schulman's strategy. Wireless service revenue rose 2.1% year-over-year to $21.0 billion, while consolidated earnings per share hit $1.17. Free cash flow growth and reaffirmed full-year guidance signal operational resilience, even as the company navigates a slowdown in FWA subscriber growth. These metrics, combined with Schulman's track record of driving profitability at PayPal and American Express, have bolstered investor confidence. As one analyst noted, "Verizon's transformation under Schulman is a full reboot-balancing growth ambitions with financial discipline."

Conclusion: A High-Conviction GARP Investment

Verizon's strategic transformation under Dan Schulman represents a compelling case for growth-at-a-reasonable-price. By prioritizing operational efficiency, disciplined capital allocation, and AI-driven customer-centricity, the company is addressing long-standing challenges while positioning itself to capitalize on industry tailwinds. With a robust free cash flow profile, a clear path to deleveraging, and a strategic acquisition pipeline, Verizon offers investors a rare combination of near-term stability and long-term growth potential. For those seeking undervalued exposure to the telecom sector, this is a high-conviction opportunity.