Verizon CEO Lowell McAdam told investors that he is meeting with city mayors to discuss ways in which cities can work with Verizon to accelerate the company’s 5G deployment. Specifically, McAdam is advocating for cities to provide Verizon with access to conduits so it can install multi-use fiber as part of its intelligent edge initiative.
Intelligent edge is a term the company has coined to describe how it is altering its network by making it function more like a cloud at the core and at the network edge. And that intelligent edge network includes using high-speed fiber infrastructure, network virtualization, and automation.
McAdam, who was speaking to investors during the company’s fourth quarter 2017 earnings call, said that the company has formed successful private/public partnerships with the cities of Boston and Sacramento, California. Verizon has said that it will launch 5G in three to five U.S. cities this year, and Sacramento will be the first city to go live with the technology.
McAdam added that Verizon will soon announce the other 5G cities, and at that time it will be able to talk about how many people its 5G network will cover by year-end. He also touted the results of the company’s 5G tests, noting that it has more than 200 sites outfitted with 5G, and that it is getting better throughput than expected. “We are seeing 10 Gigabits per second in throughput, and we are confident we can deliver 1 Gigabits to everyone we provide services to,” he said.
He reiterated that the company will be initially deploying its 5G network using its own pre-standard gear, but that it will quickly upgrade that to the standardized version as soon as equipment is available. He added that the company is working closely with Qualcomm to have chipsets available that will fit the standard in the second half of 2018.
CapEx Not Increasing
Interestingly, McAdam said that the company’s 5G trials are showing that the company can get higher throughput and lower latency at greater distances than originally anticipated and that means that it won’t have to increase its capital spending to accommodate the 5G buildout. “The number of incremental sites that we will need over 4G is smaller than expected, so we are not seeing the capital intensity that some were assuming,” McAdam said.
Verizon said that the company’s total capex for 2017 was $17.2 billion. In 2018 Verizon expects its capex will remain in the $17 billion to $17.8 billion range even with the launch of 5G.
Other Key Metrics
Like many other tech companies, Verizon will be benefitting from the new tax law that allows U.S. corporations to repatriate offshore earnings at a lower tax rate. The company said that tax reform will result in improved cash flow to the tune of between $3.5 billion and $4 billion. The company will increase its contributions to the Verizon Foundation Fund by $200 million to $300 million over the next two years. In addition, every Verizon employee, except management, will receive 50 shares of restricted stock, the price of which will be set on February 1.
Verizon’s total consolidated operating revenues in the fourth-quarter were $34 billion, up 5 percent from fourth-quarter 2016. Full-year 2017 consolidated operating revenues were $126 billion.
For the fourth quarter, the company reported an adjusted EPS of $3.71 per share. For the full year, the company reported $7.36 in EPS. Non-GAAP 2017 EPS was $3.74.