Verizon Business’ wireless momentum continued into the fourth quarter as the company saw gains with postpaid phone service and its emerging private wireless network solutions.
During the quarter, Verizon reported postpaid phone net adds of 131,000, marking its tenth consecutive quarter of postpaid phone net adds above 125,000. For the full year, Verizon Business added 562,000 phone net adds.
Broadband wireless is also becoming a more significant factor in the business segment. Verizon Business reported 144,000 fixed wireless net additions in the fourth quarter of 2023.
Business wireless service revenue in the fourth quarter of 2023 was $3.4 billion, up 3 percent year over year. Verizon said this was driven by the more significant allocation of our administration and telco recovery fees from other revenue into wireless service revenue, continued substantial net additions and the benefit of pricing actions implemented earlier in the year.
The full-year 2023 business wireless service revenue was $13.4 billion, an increase of 4.1 percent compared to the full-year 2022.
“The Business Markets Group had its best phone net add performance in the last two years, demonstrating how our value proposition resonates with small and medium businesses,” said Tony Skiadas, CFO for Verizon, during the fourth quarter earnings call.
Skiadas added that while it is making pricing adjustments in the first quarter of the business segment that could cause churn to rise, the provider said it is on track to see ongoing positive wireless results for Verizon Business.
“Similar to Consumer, we are taking pricing actions in the first quarter in Business that could result in elevated phone churn,” he said. “However, we are confident that we will continue to deliver strong Business volumes in 2024.”
Private wireless rising
Like earlier quarters, Verizon Business continues to see its new private wireless offering gaining greater adoption by its large enterprise customers. The private wireless network solution allows business customers to add devices to their internal network IP addressing to be managed by their support personnel.
Virginia’s Norfolk International Terminal (NIT) contracted Verizon Business in November to build a second private 5G network. The agreement between Norfolk International Terminal (NIT) and Verizon Business follows the deployment of a private 5G network at the neighboring Virginia International Terminal, another Port of Virginia property.
The Private 5G Network will cover 270 acres of the NIT campus with a dedicated Ultra-Wideband spectrum, replacing spotty outdoor Wi-Fi and enabling secure, instant voice, text, and data communication within the campus through Verizon Push to Talk Plus (PTT). PTT is a mobile app ideal for industrial and commercial worksite collaboration across phones, smartphones, and tablets, all through the Verizon Private Network.
“We continue to see interest from large enterprises running complex logistics and operations like ports, automotive and heavy industries,” said Hans Vestberg, CEO of Verizon.
Vestberg added that it has won similar agreements in the steel and automotive industry segments. “One of our partners in smart car development has contracted us to build a private network for their automotive tech testing environment,” he said. “And Nucor, one of the country's largest steel companies, has us building private networks for three of its sites with more to come over the next year.”
Battling secular wireline declines
Despite the ongoing wireless growth, Verizon Business revenues continued to lag in the fourth quarter due to ongoing declines in legacy wireline services.
Verizon Business revenue was $7.6 billion in the fourth quarter of 2023, down 3.6 percent year over year as lower wireline and wireless equipment revenue was partially offset by higher wireless service revenue. For the full year 2023, total Business revenue was $30.1 billion, a 3.1 percent decrease year over year.
Earlier this month, Verizon filed an SEC form 8K, outlining how it would take a $5.8 billion impairment charge in its Verizon Business wireline group in the fourth quarter of 2023.
The company said its Verizon Business group had been experiencing “secular declines, as well as continuing competitive and macroeconomic pressure, in wireline revenue across its customer groups.”
In the fourth quarter of 2023, Verizon's Business operating income was $443 million, a decrease of 24.3 percent year over year.
Vestberg acknowledged the ongoing declines in the business segment and emphasized how the company incorporates new efforts to increase Verizon Business's efficiency. “We have had the secular decline for quite a while, so there's nothing new and nothing new to that story,” he said. “Our cost efficiency is happening very quickly. We also see that we have the right pricing for our customers, and seeing where we don't have a great contract, we have decided to walk away from them.”
He added that it will continue to conduct activities to improve Verizon Business. “There’s a lot of blocking and tackling to see that we'll continue to improve,” Vestberg said. “Our target is to get that to be neutral to our profit and loss over time, which is one of the essential pieces for the 25% of the Verizon Business Group in EBITDA. We're offsetting that by growing our Wireless and broadband businesses.”
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