Verizon said it is in the midst of launching 10 5G market trials across the country in both dense urban and suburban areas beyond its incumbent local exchange carrier (ILEC) footprint. During the company’s fourth quarter earnings call with investors, Matt Ellis, Verizon CFO and executive vice president, said that the goal is to test the 5G service in different neighborhoods as the company prepares for commercial launch.
Verizon has said it will trial what it calls “wireless fiber” using the company’s pre-specification gear. The company released its own 5G specifications to vendors last summer, which it said was intended to help vendors develop interoperable 5G equipment for pre-standard testing and fabrication.
Ellis said that those 10 5G market trials will not be limited to just its ILEC territory, which is primarily in the northeastern U.S.
Because 5G requires a strong fiber or microwave wireless component for backhaul traffic, Ellis noted that the company is anxious to close on its $1.8 billion acquisition of XO Communications, which it expects to happen later this quarter.
Verizon announced its purchase of XO in February 2016. The strategy behind the deal is for Verizon to expand its metro and on-net fiber network using XO’s fiber assets as well as lease XO’s millimeter wave (mmWave) spectrum holdings with an option to buy those leases in 2018.
Ellis noted that the company will be looking closely at the costs involved in deploying 5G. Specifically, he said that the costs will depend upon the distance from the node and how many homes Verizon will be able to cover with one node. “We will treat this the same as any investment and look at the revenue opportunity and at the results of the tests,” Ellis said.
Verizon reported that it spent $3.5 billion on wireless capital expenditures in fourth quarter and $11.2 billion for the full year. Ellis said that spending will continue in 2017 and will include the densification of Verizon’s 4G network as well as expanding its fiber assets in preparation for 5G. “We expect to continue to launch additional LTE-Advanced features this year and expand our CRAN [cloud radio access network] architecture,” he noted.
Verizon also touted its Internet of Things (IoT) growth in the fourth quarter. The company said that its IoT revenue for the quarter was $243 million, which was an increase of 21 percent over the same quarter in the previous year. Verizon also said that including its IoT acquisitions, like Fleetmatics and Telogis, the company’s IoT revenue increased more than 60 percent in the fourth quarter.
Verizon’s overall consolidated operating revenue for the fourth quarter was $32.3 billion, which was a 5.6 percent decrease from the same quarter in 2015. Full year revenues were $126 billion, a 4.3 percent decrease. At mid-day Verizon’s stock was trading down about 4.66 percent from $52.41 to $49.96 a share.