Verizon exited 2022 with modest momentum and a heavy reliance on the completion of its $10 billion C-band spectrum build to both power new 5G opportunities and for the completion of that build to help lower capital spending.

The carrier posted modest increases in overall revenues for both the fourth quarter of 2022 and the full year. Expenses also came in as expected, which helped Verizon meet modest financial results for the quarter and year.

However, company management provided tempered expectations for 2023, which put extra pressure on the carrier to reduce expenses.

Verizon spent $23.1 billion on capex in 2022, which was substantially higher than the $20.3 billion it spent in 2021. Much of that increase was tied to expediting the build out of its C-band spectrum holdings, which the carrier paid $45 billion to acquire.

The carrier is forecasting capex of between $18.25 billion and $19.25 billion for 2023. That will include the final $1.75 billion of guided spend on the C-band deployment, with CFO Matt Ellis stating the year-over-year drop in total capex will “drive higher free cash flow in 2023 despite increases in cash interest and cash taxes.”

CEO Hans Vestberg further tempted investors by stating the carrier was currently planning around $17 billion in capex for 2024, “which we expect to represent the lowest capital intensity in over a decade and among the lowest in the industry. We expect we will deliver a best-in-class network experience while reducing our 2022 capex leveraged by more than $5 billion over the next couple of years.”

Vestberg explained that the accelerated C-band capex has allowed the carrier to fund “the most aggressive deployment plan in our company’s history.” This includes Verizon being on track to cover 200 million potential customers by the end of March, and is ahead of schedule to hit 250 million potential customers covered with its C-band spectrum by year-end 2024.

Vestberg stated that Verizon was still on track to have its 5G standalone (SA) core up and running this year, “so by the end of the year, you should see a network with incredible speeds, both downlink and uplink, and positioned to deliver 5G capabilities such as network slicing, voice over 5G, among others.”

Verizon also remains bullish on its fixed-wireless access (FWA) plans. Vestberg said the carrier expects to grow that customer base from the approximately 1.4 million customers it had at the end of 2022, to up to five million subscribers by the end of 2025. That growth will tap into Verizon’s current build and capital plans, with those customers “expected to contribute more meaningfully to service revenue as we enter the year.”

Vestberg did throw a potential bone for equipment vendors in noting the carrier at some point could look to add more cell sites to meet potential 5G FWA demand, which might necessitate more capex.

“We can always come into sort of decisions of splitting cells in order to get more fixed-wireless access, but that’s very far away from now,” Vestberg said. “We have ample capacity for the guide, and much more than that.”

This might help Verizon's established equipment vendors like Ericsson, which has tempered sales expectations for 2023.

Verizon's FWA deployment will be helped by its ongoing fiber investments, with Vestberg stating around half of the carrier’s cell sites are linked with its own fiber assets, a slight increase from the previous year.

“We believe we are the only provider serving the level of its wireless network with its own fiber,” Vestberg boasted. “This supports superior quality of services and end-to-end owners' economics. That means better reliability and higher margins and look for us to continue to expand the percentage of sites on our own fiber.”

Rival AT&T is echoing that fiber approach, with a big focus on expanding its own footprint both within its traditional wireline footprint and externally through a recently formed partnership with BlackRock.

Verizon remains cautious on its private 5G and mobile edge computing (MEC) efforts. Vestberg said those markets remain a “strategic focus in 2023,” despite tepid uptake so far, and that the carrier’s C-band 5G network will play a role in that focus.

Ellis specifically noted that private 5G adoption has been “a little slower than maybe we would have liked, but as you heard from Hans in the prepared remarks … we're starting to see some momentum there. So I still feel good about the opportunity there, but the pace of the adoption curve a little different than we hoped it might be. But the upside there still looks very good.”

Vestberg recently stated that Verizon’s MEC and private 5G opportunities could reach $2 billion by 2025. However, those efforts have been stalled by the lack of equipment options.

“We need certain radio base stations for private networks, different price ranges. We need modems for certain things. You need more than the handset and the macro sites that is now in there,” Vestberg said at Citi’s 2023 Communications, Media, and Entertainment Conference. “We would now have offerings for cheaper private 5G networks with certain suppliers and more high level, high quality. We didn’t have this optionality, and that’s why we’re now sort of seeing that we’re actually meeting the customer demands of building private 5G networks.”

Vestberg added that the carrier now has “the ecosystem for radios so we are fully committed. We strongly believe in private 5G networks, and that’s a revenue stream we don’t have today because we’re not into Wi-Fi networks and optimization of a manufacturing site. We’re not into that today.”

Verizon did not announce any significant mass-layoffs last year, but it did manage to trim 1,300 jobs from its overall workforce, ending 2022 with approximately 117,100 total employees.