Verizon continues to struggle in several areas of its business, and the Q3 results showed the effects of that, but new CEO Dan Schulman plans a shift in strategy designed to turn the company around and drive customer growth.
Impact: Though Verizon remains the second largest fixed wireless access provider behind T-Mobile with 5.4 million total FWA subscribers (3.2 million residential and 2.2 million business), its numbers have decelerated significantly this year. The company reported 261,000 FWA net adds in Q3, a 6.1% sequential decrease and a 28.1% year-over-year slide. The worst of the slowdown has come on the residential side, with Verizon reporting just 121,000 consumer FWA net adds in Q3, a number that fell 26.2% from Q2 and 42.1% from the year-ago quarter. Verizon’s FWA subscriber slowdown looks even worse compared to 506,000 net adds from T-Mobile, which boosted its total FWA base to 8 million, and a record 270,000 net adds from AT&T, which started down the FWA path with Internet Air much later than its rivals but has already accumulated nearly 1.3 million total customers. T-Mobile’s net adds have also slowed, but the company has managed to keep its quarterly net adds above the 400,000 mark. While the FWA slowdown likely wasn’t the only reason the Verizon Board of Directors made an unexpected CEO change the first weekend in October from Hans Vestberg to Schulman, the lackluster net adds in the category likely didn’t help Vestberg’s cause.
But unfortunately for Schulman and his team, fixed wireless isn’t Verizon’s only problem, with the consumer postpaid phone category reporting a third consecutive quarter of net losses and its fifth in the last seven quarters. Net losses in the category have narrowed the last two quarters, to 51,000 in Q2 and 7,000 in Q3, but that wasn’t difficult after Verizon lost 356,000 consumer postpaid phone customers in Q1. With big goals around convergence, Verizon will need to get its consumer postpaid situation turned around and figure out ways to drive more growth in fiber. In wireline, Verizon reported decent fiber net adds, including 59,000 residential Fios customers, more than double its net adds in Q2 and 51% higher than last year’s Q3 to close the quarter with 7.3 million total residential Fios subs. But Verizon will need to ramp up both its Fios expansion effort and its subscriber numbers if it wants to capitalize on convergence. For its part, Frontier ended Q3 with 2.6 million residential fiber subscribers after net adds grew 4.2% sequentially and 20.2% YOY to 125,000. Frontier also added more than 300,000 new fiber passings to increase its total footprint to 8.8 million and should have at least 9 million passings by the time the deal closes, giving Verizon a “massive cross-sell opportunity.”
Verizon has consistently maintained that the deal to acquire Frontier remains on track to close in Q1 2026, and Schulman said the two companies have already started working on their integration strategy, but the California Public Utilities Commission still has to sign off on the deal and with Verizon under Schulman seemingly unwilling to capitulate to the state regulatory agency’s concerns around DEI, there could be challenges ahead. Schulman also has to manage Verizon’s recent deal to acquire Starry to extend its FWA product into the MDU space. While that should help the company reinvigorate its FWA subscriber numbers in the future, the Starry deal doesn’t address the current deceleration or what specific factors have caused it. Executives didn’t provide many additional details about the company’s wholesale deal with Tillman Global Holdings subsidiary Eaton Fiber that aims to enable Verizon to extend its fiber presence outside its traditional wireline footprint, but convergence appears to be the impetus behind that agreement.
Schulman has promised a more customer-first vision for the company, using words like “bold,” “fiscally responsible,” and “aggressive,” to describe his vision on the Q3 earnings call, though he didn’t get into too many specifics. But he promised to outline everything in more detail early next year. In the meantime, expect Schulman to focus on cutting costs, reining in spending, and making customers the company’s top priority, a change from Vestberg’s heavy focus on 5G and the Verizon network. Potential cost cutting could involve sunsetting some legacy products no longer serving the bottom line, but LightReading said there have been hints that Schulman could undertake additional layoffs designed to make Verizon even leaner. He also reportedly plans to shift away from promotional pricing, which Verizon has found increases churn.
