It’s been three weeks since Verizon launched its 5G Home product, which the company is billing as the first commercial 5G service to go live in the world. CFO Matt Ellis told investors on the company’s third quarter earnings call today that the 5G Home service is performing as expected. “The technology works,” he said.
Verizon launched its pre-standard fixed residential wireless 5G service on October 1 in just four markets: Indianapolis, Houston, Los Angeles, and Sacramento, California.
Ellis said that the company is learning a lot about installing the equipment, which currently requires a costly truck roll. When asked whether Verizon will be able to migrate to a “self-install” model soon, Ellis was cagey. “We are learning about that,” he said.
Nevertheless, he did say that the company is prepared to roll out 5G Home on a broader basis once the equipment makers have standardized 5G equipment ready to deploy. Verizon’s current service uses proprietary equipment based upon early 5G specs created by the 5G Tech Forum (a group organized by Verizon that includes vendors such as Samsung, Ericsson, and others).
Ellis added that Verizon believes the early rollout in the four markets will position it to be first with a 5G mobile service and a larger 5G fixed rollout in 2019. Competitor AT&T has said that it will launch mobile 5G service in a dozen markets this year.
Interestingly, Ellis downplayed the Federal Communications Commission’s (FCC) recent approval of rules that establish time limits for local officials to make decisions regarding small cell deployments in cities. That ruling also put a limit on how much city officials can charge operators to deploy those small cells. “While we are glad to see the FCC rules around small cells, it doesn’t necessary increase the velocity [of deals],” Ellis said. “Our teams have been engaged with municipalities for some time.”
Ellis also said it was too soon to gauge the impact of Verizon’s voluntary severance packages that it offered to about 44,000 employees late last month. He said that employees are still deciding whether to accept the offer.
Verizon offered the severance packages to about one-quarter of its employees as part of its efforts to trim its workforce and cut about $10 billion in costs by 2021. As part of that initiative, the company also signed a $700 million agreement with India-based Infosys to outsource much of its IT operations. The deal is structured so that Verizon employees that currently handle these jobs become Infosys employees.
Ellis touted the company’s operational efficiencies and said that Verizon now has $14.2 billion in free cash flow. It has also decreased its debt by $4.2 billion year to date. He also said that the company expects its capital expenditures for 2018 to be in the range of $16.6 billion to $17 billion. Ellis said capex tied to its 5G work will not surge because the carrier will take advantage of the efficiencies in the network and also will use existing assets that it deployed for its 4G LTE network, such as small cells.
Verizon reported consolidated revenue of $32.6 billion for the third quarter, an increase of 2.8 percent year-over-year. The company reported non-GAAP earnings per share of $1.22, up from 98 cents in the third quarter of 2017. Capital expenditures for the year so far are at $12 billion.
The company’s wireless revenues were $23 billion for the year, an increase of 6.5 percent year-over-year. Verizon’s wireline revenues were $7.4 billion.