Earnings Call Insights: Verizon Communications Inc. (VZ) Q4 2025
Management View
- CEO Daniel Schulman highlighted the company’s transformation efforts, stating, “Our transformation will be driven by bold and meaningful actions to affect what is essentially a turnaround story.” Schulman emphasized the organizational overhaul, including rightsizing, headcount reductions, and eliminating redundancies: “We are building an in-year war chest of $5 billion in OpEx savings, with a substantial portion realized by headcount reductions, alongside marketing efficiencies, real estate rationalization, contract renegotiations and more.”
- Schulman announced the closing of the Frontier acquisition, taking Verizon to over 30 million fiber passings and noting plans to add at least 2 million fiber passings this year, with a medium-term goal of reaching 40 million to 50 million. He stated, “We now expect to realize over $1 billion of run rate operating cost synergies by 2028, double our initial estimate.”
- Schulman reported a renewed MVNO partnership with Comcast and Charter, describing it as “an accretive deal that ensures their customers remain on the best network.”
- Verizon is preparing to launch a new value proposition in the first half of 2026 and aims to become “an AI-first company, deploying AI at scale.”
- CFO Anthony Skiadas said, “We finished 2025 with strong operational momentum while also achieving our full year financial guidance… In the fourth quarter, we added over 1 million net adds across mobility and broadband, our highest reported quarterly volumes in 6 years.”
Outlook
- Management guided for approximately 750,000 to 1 million postpaid phone net adds in 2026, which is 2 to 3 times the 2025 total. Schulman called the target “very doable… in year 1 of our transition.”
- 2026 mobility and broadband service revenue is expected to grow 2% to 3%, equating to approximately $93 billion. Wireless service revenue is expected to be approximately flat in 2026.
- Adjusted EPS is projected in the range of $4.90 to $4.95 for the full year, representing 4% to 5% year-over-year growth. Free cash flow is expected to reach $21.5 billion or more, growing about 7% or more.
- CapEx guidance for 2026 is $16 billion to $16.5 billion, a $4 billion reduction from combined 2025 expenditures of Verizon and Frontier.
- The company plans at least $3 billion in share repurchases as part of a $25 billion authorization over three years.
Financial Results
- In Q4, Verizon reported 616,000 postpaid phone net adds and 372,000 broadband net adds, with fixed wireless access contributing 319,000 and Fios Internet 67,000.
- Consolidated adjusted EBITDA was $11.9 billion for the quarter; full year adjusted EBITDA reached $50 billion, up $1.2 billion or 2.5% year-over-year.
- Adjusted EPS for Q4 was $1.09, and full year adjusted EPS was $4.71, a 2.6% increase from the prior year.
- Cash flow from operating activities was $37.1 billion for 2025, CapEx totaled $17 billion, and free cash flow reached $20.1 billion.
- Net unsecured debt ended at $110.1 billion, a $3.6 billion year-over-year improvement; net unsecured debt to consolidated adjusted EBITDA was at 2.2x.
- Verizon paid down approximately $5.7 billion of Frontier’s debt since closing the acquisition and made $1.3 billion in discretionary pension contributions.
Q&A
- Michael Ng, Goldman Sachs: Asked about investments to drive subscriber growth and whether improvements would come from churn reduction or marketing. Schulman responded, “If we reduce churn by 5 bps, we are already halfway to our target… we’re going to leverage strongly all the convergence opportunities we have.”
- Ng, Goldman Sachs: Inquired about the increased fiber passings target. Schulman explained, “We want to get to at least 40 million or 50 million fiber passings… combination of what we’re seeing at Frontier and what we can do internally here at Verizon.”
- Benjamin Swinburne, Morgan Stanley: Questioned customer lifetime values and CapEx reductions. Schulman stated the quality of new adds was high and emphasized churn reduction. Skiadas detailed that CapEx focus is now on mobility and broadband, with noncore areas being reduced or eliminated.
- John Hodulik, UBS: Asked about composition of service revenue and broadband volume expectations. Skiadas said, “We guided to 2% to 3% mobility and broadband service revenue growth… we have now combined 16 million, over 16 million broadband subs in the base.”
- Michael Rollins, Citigroup: Queried on opportunities for ARPU growth and post-2026 cost savings. Schulman outlined “three waves of efficiency”—organizational, complexity reduction, and automation—and noted, “I think some of the broadband stuff that we’re doing, where you’re putting gig plus out there, that’s real value to customers.”
Sentiment Analysis
- Analysts pressed for specifics on growth drivers, churn, value proposition, and capital allocation, reflecting a neutral to slightly positive tone as they sought clarity on the execution of transformation and new targets.
- Management maintained a confident and assertive tone, frequently emphasizing efficiency, execution, and the achievability of their targets. Schulman repeatedly underscored commitment: “We are heads down focused and ready to show the world that a fiscally responsible Verizon is playing to win.”
- Compared to the previous quarter, there is a shift from planning and strategic intention to detailed execution, with management projecting greater confidence and urgency. Analysts’ tone has shifted from cautious inquiry to more targeted questioning about operational specifics.
Quarter-over-Quarter Comparison
- Previous quarter focused on strategic resets and foundational changes, whereas this quarter emphasized execution, cost reductions, and aggressive targets.
- Guidance language shifted from broad ambitions to concrete metrics and specific volume and profitability targets for 2026.
- Analysts in both quarters focused on churn, subscriber growth, and capital allocation, but this quarter included more questions about the impact and achievability of stated cost and revenue goals.
- Management’s tone evolved from outlining vision to communicating progress and measurable outcomes, displaying increased confidence in turnaround efforts and in confronting past underperformance.
- Key metrics such as postpaid phone net adds and broadband net adds showed marked improvement, with explicit targets for further acceleration provided this quarter.
Risks and Concerns
- Schulman acknowledged the recent network outage and its negative impact on the brand, stating, “We did not meet the standard of excellence our customers expect and that we expect of ourselves.”
- Churn remains a pivotal risk, with elevated postpaid phone churn cited as a major challenge due to past pricing actions and competition.
- Management identified ongoing promo amortization and lapping of prior year price increases as headwinds for 2026 revenue growth.
- Execution risk around integrating Frontier and realizing projected synergies was mentioned, but management indicated confidence in the ongoing process and in achieving cost targets.
- Analysts also questioned the sustainability of lifetime value and the ability to balance growth with efficiency without resorting to heavy promotional activity.
Final Takeaway
Verizon management underscored a transition from strategic planning to execution, highlighting robust Q4 results, a major cost reduction initiative, and ambitious 2026 targets for net adds, EPS, and free cash flow. With the integration of Frontier, renewed partnerships, and a sharpened focus on efficiency and customer experience, the company articulated a turnaround plan that it believes will drive both growth and shareholder returns, while closely managing operational and competitive risks.