Excerpts from https://www.bloomberg.com/news/articles/2022-12-16/verizon-vz-lost-its-network-superiority-now-it-s-paying-the-price?
For Verizon Communications Inc. investors, 2022 can’t end fast enough. By the time the books close, the largest US wireless carrier will have logged a third-straight year of below-industry growth, going from first to last in mobile-subscriber gains.
“Verizon bungled 5G and lost its network leadership position,” said Roger Entner of Recon Analytics, a boutique advisory group.
Some investors worry Verizon will ignite a costly price war to win back market share, hurting all of the players as they continue to spend billions of dollars on network expansion and upgrades. The last few years have been marked by more stable industry pricing, record high margins and low customer churn.
This isn’t how the era of better, faster wireless service — known as 5G — was supposed to unfold for the No. 1 US provider. Verizon headed into the decade with a reputation for the best network and service. But management was outflanked by T-Mobile US Inc.’s rapid ascent in network quality, as well as lower prices, and out marketed by AT&T Inc.’s free-phone giveaways.
“The Verizon brand was closely tied to its network prowess,” said Tammy Parker, an analyst with GlobalData, a consulting company. “But it’s difficult to pin down what exactly Verizon stands for now, and that’s a tremendous problem.”
Trailing the Pack
Verizon has gone from first to worst in annual mobile-phone subscriber growth.
Verizon shares reflect all that concern. The stock is down 29% this year and near an 11-year low, including a loss of more than 2% Friday in New York to $36.96. That compares with an 19% drop for the S&P 500 in 2022. No. 2 T-Mobile is up 20% while AT&T, the No. 3 player, is down over 1% after unwinding years of investments in media and pay-TV businesses and refocusing on phone service.
Next year looks challenging, too. Analysts expect Verizon revenue to rise 1% in 2023, trailing T-Mobile again.
Vestberg, who has taken on the duties of his departing consumer chief Manon Brouillette, isn’t tipping his hand, saying he’ll be guided by “what’s happening in the market.”
The good news for Verizon is it’s still No. 1 by a wide margin, with 120 million regular monthly customers, compared with more than 90 million for T-Mobile and almost 84 million for AT&T. As the company builds out its 5G network, it can remind consumers about its record of superior coverage and reliability.
A Verizon spokesman said Vestberg wasn’t available to discuss the company’s strategy.
The 57-year-old Swede joined Verizon in 2017 as head of network technology after more than 20 years at telecom equipment maker Ericsson AB, where he rose to CEO and then was pushed out in 2016 amid slowing growth. He became CEO of Verizon in 2018, focused on ushering in 5G service.
However, the 2020 sale of Sprint Corp. upended the status quo. With that acquisition, T-Mobile gained airwaves that allowed management to build out crucial parts of its 5G network more quickly than either of its competitors.
Turning Verizon around will be a challenge for Vestberg, who has never run a large consumer business.
That will involve more than just a new pricing or advertising strategy. Accelerating customer sign-ups requires getting back to what Verizon used to do well — improving the network, its reliability and the company’s message to consumers, Recon’s Entner said.
“It’s going to take strong leadership to break from what’s not been working,” Entner said. “Hans needs the courage to do that.”