Verizon Communications Inc. · NYSE:VZ

Verizon Communications — Investor Day (February 2020)

52 slides from Verizon Communications's investor day presentation, Feb 13, 2020

Slide 2: Safe harbor statement
Safe harbor statement NOTE: In this presentation we have made forward-looking statements. in technology or technology substitution; disruption of our key suppliers’ These statements are based on our estimates and assumptions and are provisioning of products or services; changes in the regulatory env
Slide 4: Verizon strategy fundamentals
Presented November 2019 Sell-Side Event Verizon strategy fundamentals CUSTOMERS INNOVATION DRIVING FIRST NEW GROWTH  Best Network Experiences  5G & Edge Compute  Customer-Centric Models  New Market Opportunities PURPOSE-DRIVEN 000 Network-as-a- Service / Platform FINANCIAL CULTURE DISCIPLINE  R
Slide 5: Measuring strategy success – Transformation journey
Measuring strategy success – Transformation journey 2018 - 2019 2020 - 2021 2022+ VERIZON 2.0 EXTENDING 5G & PREFERRED BRAND & TRANSFORMATION CUSTOMER INNOVATION 5G EDGE LEADERSHIP Network-as-a-Service / Expanding 5G Public & Private NETWORK Scaling UWB & 5G Nationwide Intelligent Edge Network Edge
Slide 6: 2019 strategy execution across all stakeholders
2019 strategy execution across all stakeholders Four Major Awards Operating Mix & Model Match Highest 3Q 2-Year NFL Launched 2.0 31 5G Gross Adds in Partnership 5 Years Mobile Cities 1Q 2Q 3Q 4Q Industry-First World’s-First 5G Commitments to Best 4Q Phone $1 Bn. Green Mobile Cities Climate & Net Add
Slide 7: 2019 results – Leading indicators driving strong momentum
2019 results – Leading indicators driving strong momentum LEADING INDICATORS 2019 RESULTS & MOMENTUM NETWORK CUSTOMER #1 QUALITY & PERCEPTION #1 LOYALTY & WIN SHARE  Highest total phone net adds since 2013 Leadership in LTE Performance Customer innovation – Mix & and 5G1 Match, Disney+, Yahoo  Hig
Slide 8: Looking forward – 5G execution across existing & new markets
Presented February 2019 Investor Day Looking forward – 5G execution across existing & new markets NEW Fixed EXTEND Manufacturing Wireless Access (FWA) (Consumer & Business) VZ Solutions 3rd Party Developer Ecosystem Business Models Multi-Access Edge Compute (MEC) 5G Mobility DEFEND © 2020 Verizon 8
Slide 9: Market trends and Verizon assets – Right to play & win
Market trends and Verizon assets – Right to play & win CUSTOMER, INDUSTRY & VERIZON ASSETS & TECHNOLOGY TRENDS RIGHT TO PLAY & WIN  Network Reliability & Responsiveness  Network Leadership & Innovation  Broadband Alternatives  Customer-Centric Mindset  Customer Trust & Privacy  Customers, Dist
Slide 10: 2020 commitments – Reflecting an agenda of growth
2020 commitments – Reflecting an agenda of growth  Continued 2.0 Transformation Strengthen & ‒ Network & Customer innovation: Intelligent Edge Network, VZ Credit Card, Mix & Match Grow Core Business ‒ VBG Investments to capture new markets; deliver on 4-year $10B cash savings  5G Deployment Levera
Slide 11: Increased focus on ESG and purpose-driven brand
Increased focus on ESG and purpose-driven brand  Two new directors – Vittorio Colao – Former CEO, Vodafone – Carol Tomé – Former CFO, Home Depot CORPORATE  Established position for Chief ESG Officer GOVERNANCE  Enhancing sustainability reporting and engagement  Joined United Nations Global Compa
Slide 13: Verizon Intelligent Edge Network Architecture
Verizon Intelligent Edge Network Architecture Access Options Technology and Product Development Gigabit LTE and 5G Network and Tech Planning Security LTE, LTE-A, 5G Datasecurity Wireless Business Operations Front Haul Shared/ Unified Multi-Service Edge Converged & Data Smart Cities IoT Virtualized T
Slide 14: Industry leading network performance
Industry leading network performance Root Metrics – Overall Win Rate Verizon Competitor Competitor Competitor Verizon continues to maintain network leadership © 2020 Verizon 14
Slide 15: Staying ahead of data usage growth
Staying ahead of data usage growth LTE Data Usage Growth Trend New Technology Deployment CAGR ~30+% 4x4 MIMO 256-QAM RF Innovation CBRS/LAA Carrier Spectrum 2016 2017 2018 2019 2020* 2021* Aggregation Innovation * Estimated Usage We continue to deploy new technologies and capacity to keep up with gr
Slide 16: Capacity and capabilities in existing spectrum
Capacity and capabilities in existing spectrum Technologies & Spectrum • 4TX Antenna Advancements Densification Solutions • CBRS/LAA Small Cells Macros Sector-Carriers • 256 QAM • FD-MIMO • Network Slicing (QCI8/9) • Interference Management Software Features Growth Rates: • 5G mmWave Technology effi
Slide 17: LTE peak user throughput and spectral efficiency evolution
LTE peak user throughput and spectral efficiency evolution ~4x improvement of spectrum efficiency • Based on technology improvements over past ~10 years • Allows for significantly more bits transferred on each Hz of spectrum 2,000 LTE User Peak Throughput LTE User Peak Throughput LTE Network Spectra
Slide 18: Network capacity vs. busy hour usage
Network capacity vs. busy hour usage Expanded Network Capacity Capacity Margin Busy Hour Usage since 2015 Capacity Margin 2015 2016 2017 2018 2019 2020 Network capacity continues to expand ahead of data growth © 2020 Verizon 18
Slide 19: 5G build-out plan
5G build-out plan 5G Small Cells Deployed >5x 2018 2019 2020 Accelerating our 5G small cell deployment and performance © 2020 Verizon 19
Slide 20: Dynamic Spectrum Sharing (DSS)
Dynamic Spectrum Sharing (DSS) • DSS allows for the deployment of 4G and 5G in the same spectrum at the same time • Lab testing on track • Field testing in progress • Network providers, chip manufacturers, OEMs delivering • Network preparations underway for nationwide rollout Commercially driven lau
Slide 21: One Fiber update
One Fiber update Value Creation • ~30k route mile completed (EoY 2019) • Monthly pacing at full run-rate and will VBG (SMB) continue Future VBG • Majority of 5G build leveraging One (Enterprise/Wholesale) Fiber Telco Building Conversions • Work with municipalities scaling with master license agreeme
Slide 22: 2020 Focus Areas
2020 Focus Areas 1. 4G augmentation 2. 5G UWB build 3. Nationwide DSS launch 4. One Fiber expansion 5. Cost efficiencies Superior network performance © 2020 Verizon 22
Slide 24: Ten year total shareholder return
Ten year total shareholder return Annualized Total Return 12.3% • 220% cumulative total shareholder return • 2.4% annualized growth of dividend per share 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Dividend per Share Total Shareholder Return Source: Bloomberg. 10 year return range from 12/31/2
Slide 25: Delivering healthy earnings growth
Delivering healthy earnings growth $0.27 ($0.12) ($0.05) $4.71 $4.81 $0.84 $0.22 ($0.09) $3.74 Share Dilution Divested Business 25.9% YoY 2.1% YoY growth growth 2017 2018 2018 ASC 606** 2018 2019 Deferral of ASC 842 2019 Adjusted EPS* Operational Headwinds and Tax Reform Adjusted EPS* Operational Co
Slide 26: Strong 2019 consolidated performance
Strong 2019 consolidated performance Consolidated Revenue ($B) & Margin (%) • 0.8% consolidated revenue growth in 2019 35.0% 36.2% 35.8% o 1.6% growth in service revenues and other $126.0 $130.9 $131.9 $18.9 $22.3 $21.6 • Maintained strong Adjusted EBITDA* performance $107.1 $108.6 $110.3 • 4.1% gro
Slide 27: Driving growth in 4G wireless market
Driving growth in 4G wireless market Wireless Service Revenue ($B) $11.2 2019 total wireless service revenue growth of 3.2% Business $11.1 $10.5 • 2.5% growth in Consumer Consumer $52.0 $52.5 $53.8 • 6.7% growth in Business 2017 2018 2019 Postpaid Phone Net Adds (K) 1,435 Offers resonating with cust
Slide 28: On track to deliver $10B cash savings goal
On track to deliver $10B / 4 year cash savings goal 2019 2020+ • End to end process redesign • Voluntary separation program • VBG transformation • Supply chain optimization • Sourcing / supply chain • Continued capex efficiency transformation Realized $5.7B in cumulative cash savings over two years
Slide 29: 2020 financial guidance
2020 financial guidance Revenue EPS Capital Expenditures • Low-to-mid single digit percentage • 2% – 4% EPS growth on an adjusted • Capex of $17B – $18B growth in consolidated revenues basis* • Continued momentum and growth in • Strength in recurring revenues • Capital intensity consistent with both
Slide 30: Large 5G opportunity ahead
Large 5G opportunity ahead Opportunity 2018 2019 2020 2021+ • Launched in 4 • Launched with • Next generation FWA Share gain NR CPE • Continued network cities chipsets 2H20 expansion • Meaningful revenue • DSS for broader contribution begins • Prepositioned • Launched 31 coverage Mobility Share gain
Slide 31: Strengthened balance sheet provides flexibility
Strengthened balance sheet provides flexibility Net Unsecured Debt / Adj. EBITDA* 2.75x 2.50x 2.4x 2019 performance supported: 2.3x • Consistent network investment 2.25x 2.1x 2.0x • Spectrum acquisition 2.00x • Dividend increase Leverage target of 1.75x – 2.0x 1.75x • Strengthened balance sheet 1.50
Slide 32: Consistent capital allocation
Consistent capital allocation Priority #1 Priority #2 Priority #3 Priority #4 Investment in the Commitment to Strong Balance Sheet Share Repurchases Business Dividend Capex • 13 consecutive years of • Return to pre-Vodafone • Efficient return of • $17B–$18B expected in increases credit profile exces
Slide 33: Summary
Summary 1 Strong momentum heading into 2020 2 2.0 Continued 2.0 transformation driving customer innovation & growth mindset 3 Scale 5G deployment and ecosystem partnership to drive new revenue 4 Disciplined capital allocation with focus on operational efficiencies 5 Drive differentiated and purpose-
Slide 35: Verizon Business Group & Partnerships
Verizon Business Group & Partnerships Tami Erwin & Rima Qureshi © 2020 Verizon
Slide 36: Verizon Business Group
Verizon Business Group Customer-Centric Investment Transformation Priorities Wireless and Wireline VBG Headwinds and $31.4B1 Opportunities Routes to Market Complemented with Bolt-on / Tuck-in acquisitions Business Markets Public Sector Global Enterprise Wholesale Investing in core capabilities to ca
Slide 37: VBG investments
VBG investments Portfolio rationalization Upskill workforce • Retiring non-directional products • Leadership and technology Digitize legacy systems training Expand sales channel capabilities • Simplify ordering provisioning and reach Build market leading • Accelerated workflow revenue realization •
Slide 38: 5G Built Right: Verizon Ultra Wideband
5G Built Right: Verizon Ultra Wideband E2E Peak Latency Data Rate Latency & <10ms 10Gb/s Speed & Reliability Throughput Mobile Data Reliability 99.999% Volume 10Tb/s/km2 Service Mobility Deployment 500km/h Time 90 mins Energy Service Deployment & Efficiency Connected Mobility & Connected 10% of Curr
Slide 39: Leading our customer digital transformation journey
Leading our customer digital transformation journey 5G Built Right • Edge Apps and SaaS Solutions • Security • Managed Network Services • 5G Edge • Computer vision Platforms • IoT • Telematics • Private Networks Connectivity • Wireless • Wireline • Fiber 5 Stages of Digital Transformation Start Adap
Slide 40: 5G built right, across every industry vertical
5G built right, across every industry vertical Retail Manufacturing Venues Healthcare Real-time transactions Autonomous production eSports and Gaming Robotic controlled surgery Smart Communities Transportation Construction Logistics Massive embedded intelligence Vehicle to anything Robotic construct
Slide 41: Verizon Strategy – Enablers
Verizon Strategy – Enablers NEW EXTEND Adjacent market, businesses, New businesses and share of wallet Existing businesses and markets DEFEND Maximized Selective Strategic Bolt-on / Tuck-in Existing Assets Partnerships Investments M&A Foundation: Network Strength, Customer Base, Technology Leadershi
Slide 42: Strategic partnerships
Strategic partnerships Consumer Business Media Additional partnerships in 2020 © 2020 Verizon 42
Slide 43: Verizon Consumer & Verizon Media Groups
Verizon Consumer & Verizon Media Groups Ronan Dunne & Guru Gowrappan © 2020 Verizon
Slide 44: Building on success of 2019
Building on success of 2019 Highest Wireless Phone Net New Launches Adds since 2013! 2014 2015 2016 2017 2018 2019 1st in the World Mobile + Home 1Q’20 Next Generation Entertainment © 2020 Verizon 44
Slide 45: Execute our strategy and leverage the strength of the group
Execute our strategy and leverage the strength of the group Strengthen & Grow Core  Network leadership 1 Business  Customer innovation Leverage Assets 2 to Drive New Growth  Deliver segmented connectivity and experiences that customers want Drive Financial Discipline &  Drive value through Quali
Slide 46: Verizon's platform strategy enables segmented plays and curated partner experiences
Verizon’s platform strategy enables segmented plays and curated partner experiences Consumers Customer Enhancements Brands Enabling tech layer Modular, API-driven, AI-ready technology stack and data layer Core Networks Customer Distribution Billing Platforms (incl. MEC) Service © 2020 Verizon 46
Slide 47: Driving multi-vector growth
Driving multi-vector growth Metered to Unlimited Premium Tiers as % of Unlimited Drivers to Growth Drivers to Growth 53% 40% 20% 26% 8% 14% 2017 1 2 3 4 2017 1 2 3 4 Connections per Account Market Expansion Drivers to Growth Drivers to Growth • Branded 2.6 2.6 2.7 • Wholesale • Home 2017 1 2 3 4 Tim
Slide 48: VMG – building on success of 2019
VMG – building on success of 2019 Overall VMG Overall NPS Mail Finance & News Sports Platforms Recognitions Demand/ Supply Side Native Media Platforms #2 +5 4.6 #1 2B Double Digit Brand of the Digital media company, YoY NPS growth Rating on iOS vs. Finance and Minutes watched YoY growth Year 2019 se
Slide 49: VMG's Ecosystem Strategy
Ad Platforms VMG’s Ecosystem Strategy: DOOH Media Platforms CTV/OTT trusted content, Search B2B commerce, Audio and networks Video Strategic Partners to grow 5G advertising, subscriptions, ~900M #2 and transaction Unique Viewers Globally Digital media company, per month1 second only to Google2 reven
Slide 50: Bringing together Verizon Consumer and Verizon Media via mobility access
Bringing together the capabilities of Verizon Consumer and Verizon Media via mobility access Accelerate Verizon Diversify VMG subscriber growth revenue with subscriptions Networks ~900M monthly Address new (incl. MEC) active users within segments the VMG ecosystem as target audience Distribution Cre
Slide 51: Making 5G impossible to ignore
Making 5G impossible to ignore VMG VCG Next gen Immersive Fan experiences 60+ 10+ filmmaking and creators content and ads & partnerships 5G UWB mobile 5G Home cities with cities Next Gen CPE 20+ UWB device portfolio $600-$800 UWB devices *2020 Targets © 2020 Verizon 51

Verizon Communications — Investor Day (February 2020) on 6ix

Verizon Communications — Investor Day (February 2020)

Slide 1: 2020 Verizon Investor Day

Slide 2: Safe harbor statement

Slide 3: © 2020 Verizon

Slide 4: Verizon strategy fundamentals

Slide 5: Measuring strategy success – Transformation journey

Slide 6: 2019 strategy execution across all stakeholders

Slide 7: 2019 results – Leading indicators driving strong momentum

Slide 8: Looking forward – 5G execution across existing & new markets

Slide 9: Market trends and Verizon assets – Right to play & win

Slide 10: 2020 commitments – Reflecting an agenda of growth

Slide 11: Increased focus on ESG and purpose-driven brand

Slide 12: © 2020 Verizon

Slide 13: Verizon Intelligent Edge Network Architecture

Slide 14: Industry leading network performance

Slide 15: Staying ahead of data usage growth

Slide 16: Capacity and capabilities in existing spectrum

Slide 17: LTE peak user throughput and spectral efficiency evolution

Slide 18: Network capacity vs. busy hour usage

Slide 19: 5G build-out plan

Slide 20: Dynamic Spectrum Sharing (DSS)

Slide 21: One Fiber update

Slide 22: 2020 Focus Areas

Slide 23: © 2020 Verizon

Slide 24: Ten year total shareholder return

Slide 25: Delivering healthy earnings growth

Slide 26: Strong 2019 consolidated performance

Slide 27: Driving growth in 4G wireless market

Slide 28: On track to deliver $10B cash savings goal

Slide 29: 2020 financial guidance

Slide 30: Large 5G opportunity ahead

Slide 31: Strengthened balance sheet provides flexibility

Slide 32: Consistent capital allocation

Slide 33: Summary

Slide 34: © 2020 Verizon

Slide 35: Verizon Business Group & Partnerships

Slide 36: Verizon Business Group

Slide 37: VBG investments

Slide 38: 5G Built Right: Verizon Ultra Wideband

Slide 39: Leading our customer digital transformation journey

Slide 40: 5G built right, across every industry vertical

Slide 41: Verizon Strategy – Enablers

Slide 42: Strategic partnerships

Slide 43: Verizon Consumer & Verizon Media Groups

Slide 44: Building on success of 2019

Slide 45: Execute our strategy and leverage the strength of the group

Slide 46: Verizon's platform strategy enables segmented plays and curated partner experiences

Slide 47: Driving multi-vector growth

Slide 48: VMG – building on success of 2019

Slide 49: VMG's Ecosystem Strategy

Slide 50: Bringing together Verizon Consumer and Verizon Media via mobility access

Slide 51: Making 5G impossible to ignore

Slide 52: © 2020 Verizon