Verizon Surges on Subscriber Gains and $5B Savings, But Revenue Growth Stalls

Date of Call: Jan 30, 2026

Financials Results

• Revenue: Wireless service revenue for full year 2025 grew 2%. Fourth quarter mobility and broadband service revenue growth not explicitly quantified.
• EPS: Adjusted EPS for Q4 2025 was $1.09; full year 2025 adjusted EPS was $4.71, up 2.6% YOY.
• Operating Margin: Adjusted EBITDA for Q4 2025 was $11.9 billion; full year 2025 adjusted EBITDA was $50 billion, up 2.5% YOY.

Guidance:

• Postpaid phone net adds in 2026 expected to be 750,000 to 1 million, approximately 2-3x 2025 total.
• Mobility and broadband service revenue growth guided at 2% to 3% for 2026, equating to ~$93 billion.
• Wireless service revenue growth in 2026 expected to be approximately flat.
• Adjusted EPS for 2026 guided at $4.90 to $4.95, representing 4% to 5% YOY growth.
• Adjusted EBITDA expected to grow at a faster rate than adjusted EPS.
• 2026 CapEx expected at $16 billion to $16.5 billion.
• Free cash flow for 2026 expected to be $21.5 billion or more, up ~7% or more YOY.
• Target leverage ratio of 2.0 to 2.25x expected to be achieved by 2027.

Business Commentary:

Subscriber and Net Add Growth:

• Verizon reported over 1 million net adds across mobility and broadband in Q4, marking the highest reported quarterly net adds since 2019. This included 616,000 postpaid phone net adds, the highest in six years.
• The growth was driven by effective promotional offers and a focus on convergence opportunities, particularly in underpenetrated markets.

Capital Expenditure and Efficiency:

• Verizon's 2026 CapEx guidance is set between $16 billion to $16.5 billion, reflecting a $4 billion improvement from 2025 combined Verizon and Frontier expenditures.
• The reduction is due to efficiencies in network build-out, rationalization of non-core areas, and a focus on mobility and broadband investments.

Financial Performance and Guidance:

• Verizon achieved adjusted EPS of $4.71 for 2025, reflecting a 2.6% year-on-year increase, with free cash flow of $20.1 billion.
• The company expects adjusted EPS growth of 4% to 5% in 2026, supported by operational efficiencies and strategic investments.

Cost Transformation and Savings:

• Verizon has identified $5 billion in operating expense savings for 2026 through workforce reductions, asset rationalization, and marketing efficiencies.
• These efforts are part of a broader strategy to streamline operations and reinvest in customer experience and growth initiatives.

Broadband and Fiber Expansion:

• Verizon's broadband net adds reached 372,000 in Q4, the highest of the year, with significant contributions from fixed wireless access and fiber.
• The expansion is bolstered by the Frontier acquisition, adding over 9 million fiber passings, and plans to add at least 2 million fiber passings in 2026.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed confidence in transformation, stating guidance represents a 'step function improvement' and 'measurable and improved performance.' Tone focused on renewed momentum, cost savings ($5 billion in 2026), and actions to 'delight customers and build trust' to drive long-term growth and shareholder returns.

Q&A:

• Question from Michael Ng (Goldman Sachs Group, Inc.): Would you talk about the investments needed to drive postpaid phone subscriber growth in 2026? Will improvements be more on churn rates or marketing promotions?
  Response: Growth will be driven by reducing churn (e.g., avoiding price increases without value), improving customer experience, leveraging convergence, and targeted promotions, not overutilizing promotions.

• Question from Michael Ng (Goldman Sachs Group, Inc.): The fiber passings outlook was raised to 40-50 million over the medium term. Could you talk about the reasoning behind this increase?
  Response: The increase reflects optimism from the Frontier acquisition, the Tillman partnership, and internal Verizon capacity, providing flexibility for inorganic or partnership opportunities.

• Question from Benjamin Swinburne (Morgan Stanley): How are you thinking about customer lifetime values (CLVs) moving forward, and what is being done to ensure high-value customer acquisition?
  Response: CLVs can be improved by reducing churn (a key lever), addressing customer pain points, and leveraging convergence (which lowers churn and increases ARPU).

• Question from Benjamin Swinburne (Morgan Stanley): You mentioned CapEx efficiencies. Where were these opportunities found, and will they impact business growth?
  Response: Opportunities came from focusing CapEx on mobility and broadband, eliminating investments in non-core/loss-making areas, and achieving unit cost efficiencies in wireless and fiber builds.

• Question from John Hodulik (UBS Investment Bank): Can you provide components of the flat service revenue growth in mobility and the organic EBITDA growth?
  Response: Mobility revenue flat due to lapping price increases (~180 bps headwind), promo amortization, and transitional volume growth. EBITDA growth accelerated due to Frontier contribution and $5 billion in cost synergies/transformation.

• Question from John Hodulik (UBS Investment Bank): What are the expected broadband volumes for 2026, including fiber and fixed wireless?
  Response: Broadband volume growth expected in both FWA and fiber, with specific targets not quantified; focus on convergence and combined Verizon-Frontier base of over 16 million subs.

• Question from Michael Rollins (Citigroup Inc.): Given maturation of penetration rates, is there opportunity to inject more value into services to capture better ARPUs over time?
  Response: Yes, by adding value (e.g., gigabit broadband) and building brand trust through improved customer experience, but price increases will be tied to corresponding value to avoid churn.

• Question from Michael Rollins (Citigroup Inc.): What savings have been identified for 2027 and 2028 to fund top-line strategy and capital allocation?
  Response: Three waves of efficiency: 1) removing underperformance/structural inefficiencies; 2) reducing business complexity; 3) automating processes, with significant ongoing savings expected beyond 2026.

Contradiction Point 1

Strategy for Postpaid Subscriber Growth

Growth focus shifts from aggressive promotions to minimal promotion reliance, impacting growth strategy and investor expectations.

What investments are needed to drive postpaid phone subscriber growth by 2026, and will they focus on churn reduction, marketing, promotions, or both? - Michael Ng (Goldman Sachs Group, Inc., Research Division)

2025Q4: The path to 750,000-1,000,000 postpaid phone net adds in 2026 is achievable without excessive promotions. - Daniel Schulman(CEO)

Is Verizon's back book overpriced, and how can share growth be achieved without painful repricing? - Benjamin Swinburne (Morgan Stanley)

2025Q3: Goal is to win fairly by increasing share of new-to-industry postpaid adds and reducing churn. - Daniel Schulman(CEO)

Contradiction Point 2

Capacity and Focus of CapEx

CapEx guidance appears to shift from being constrained to being deemed sufficient, affecting capital allocation strategy.

Where were the CapEx efficiencies realized to achieve the ~$4B reduction in 2026 guidance, and how will this affect the business? - Benjamin Swinburne (Morgan Stanley, Research Division)

2025Q4: The $16-16.5 billion CapEx envelope is prudent and sufficient. - Daniel Schulman(CEO)

Is Verizon's back book overpriced, and how can share growth be driven without painful repricing? - Benjamin Swinburne (Morgan Stanley)

2025Q3: Focus remains on strong cash flow, debt repayment, and opportunistic strategic investments. - Anthony Skiadas(CFO)

Contradiction Point 3

Timeline for Cost Transformation Savings

Savings timeline shifts from a clear 2026 target to an extended 2027-2028 horizon, altering cost efficiency expectations.

What cost savings opportunities are identified for 2027 and 2028 beyond 2026? - Michael Rollins (Citigroup Inc., Research Division)

2025Q4: Three waves of efficiency are planned... The company sees significant additional savings potential in 2027 and 2028. - Daniel Schulman(CEO)

What are the main categories of cost reduction opportunities? - Peter Supino (Wolfe Research)

2025Q3: Goal is to reclaim market leadership through significant investment, funded by cost reductions. - Daniel Schulman(CEO)

Contradiction Point 4

Fiber Expansion Strategy and Targets

Contradiction on the scale and timing of fiber deployment targets, impacting long-term network expansion plans.

Why was the fiber passings target increased from 35-40 million to 40-50 million over the medium term? - Michael Ng (Goldman Sachs Group, Inc., Research Division)

2025Q4: The increase is due to optimism from the Frontier acquisition... Verizon plans to add at least 2 million fiber passings organically in 2026 and has the balance sheet capacity for further inorganic or partnership opportunities. - Daniel Schulman(CEO)

What is the 35-40 million fiber passing goal and its framework, and how are you approaching upcoming spectrum auctions? - Kannan Venkateshwar (Barclays)

2025Q1: The 35-40 million fiber passings is a long-term goal communicated with the Frontier acquisition. More details on timing and plans will be provided closer to the expected Q1 closing of the deal. - Hans Vestberg(CEO)

Contradiction Point 5

Churn Outlook and Drivers

Contradiction on churn trends and the timeline for improvement, affecting subscriber growth projections.

What investments are needed to drive strong postpaid phone subscriber growth by 2026, and will improvements stem from churn reduction, marketing, promotions, or both? - Michael Ng (Goldman Sachs Group, Inc., Research Division)

2025Q4: The path to 750,000-1,000,000 postpaid phone net adds in 2026 is achievable... Key drivers are: 1) Churn reduction (a 5 bps improvement gets halfway to the target)... - Daniel Schulman(CEO)

How might tariffs on handsets and telecom equipment impact the business, including promotions, handset upgrades, capital expenditures, and consumer churn? When will new plans and promotions reduce churn, and when is industry-leading churn expected? - John Hodulik (UBS Investment Bank, Research Division)

2025Q1: Elevated churn in Q1 was concentrated in cohorts priced up in late 2024... Churn is considered transitory and is expected to abate, returning to normal by the second half of the year. - Hans Vestberg & Sowmyanarayan Sampath(CEO & COO)