Verizon today said mid-band 5G deployment activity is on pace to cover 100 million people within the next nine months, but a 15% year-over-year decline in capex during second-quarter 2021 doesn't fully support that claim.

Total capex declined to $4.5 billion during the quarter, and capex for the first six months of the year hit $8.7 billion, an 11.5% decline from the first half of 2020. After spending $52.9 billion to acquire C-band spectrum for its mid-band 5G network, Verizon CEO Hans Vestberg committed to a cumulative $10 billion capex increase through early 2024 to deploy a mid-band 5G network on that spectrum. 

"C-band capex was more than $160 million in the first half and we have placed orders for approximately $1.4 billion for related equipment year to date, giving us confidence that we will be within the previously provided $2 billion to $3 billion range for the year," CFO Matt Ellis said on the earnings call.

The additional $10 billion investment won't be evenly spent during the next three years, and that pledge to increase capex by as little as $2 billion this year indicates that Verizon plans to ramp up capex more aggressively in 2022 and 2023.

"Capital spending remained well below expectations," Craig Moffett, senior analyst at MoffettNathanson, wrote in a research note, adding that Verizon runs the risk of not meeting expectations it set for increased capex.

Verizon, during the first weeks of the global pandemic, pledged to increase its capex by $500 million in 2020, and it met that goal.

Vestberg noted that Verizon's mid-band 5G deployment targets are on schedule despite the more recent inconsistencies and uneven capex levels.

“We’re on track to build 7,000 to 8,000 sites by year end and we’re on plan to launch the first 46 markets,” Vestberg said. “Now we feel we have a full funnel in the supply chain. … We have all the gear we need to deploy 7,000 to 8,000” sites. 

Ellis followed up on that point, adding “the vast majority of the radios that we need to turn on those 7,000 to 8,000 sites are already in our warehouses.” Some of those units include Samsung’s fully virtualized 5G radio access network (RAN) equipment for mid-band spectrum packing massive MIMO.

Verizon, AT&T, and T-Mobile US are all focused on mid-band 5G deployments to varying extents, but Verizon also continues to push its millimeter-wave (mmWave) 5G strategy, particularly as the COVID-19 crisis slowly wanes.

Verizon’s mobile network traffic is “almost back to pre-pandemic levels,” and “as mobility traffic comes back, we have seen mmWave usage increase 290% year to date,” Vestberg said. “As we continue to deploy mmWave sites, and we get more device penetration, we expect these numbers to increase fast and track toward 5% to 10% of traffic in most dense urban areas by year end.”

The operator said it will deploy a cumulative 14,000 mmWave sites this year, reaching a footprint of more than 30,000 mmWave sites by 2022. It also intends to cover up to 2 million U.S. households with the high-band 5G spectrum by the end of this year.

5G compatible devices, most of which support mmWave and C-band spectrum, are currently in the hands of about 20% of Verizon’s current customer base, Vestberg indicated. 

Verizon banked $5.95 billion in net income on nearly $33.8 billion in revenue during the quarter, marking an almost 23% year-over-year increase in profit and nearly 11% growth in revenue. Total wireless service revenue jumped 5.9% year over year to $16.9 billion.

Verizon Business reported a 3.7% year-over-year increase in revenue at $7.8 billion. Revenue from small to midsized businesses increased 11.3% to $2.9 billion. Enterprise revenue declined 0.2% to nearly $2.6 billion, public sector revenue grew 6% to $1.6 billion, and wholesale revenue mostly from mobile virtual network operators declined almost 13% to $670 million.

Verizon ended the quarter with $151.9 billion in total debt and 129,300 employees, marking a 2% decrease in headcount from the end of 2020.