Verizon Communications reiterated plans to reposition the company for growth in new services.
In a full day of analyst presentations, senior executives at Verizon Communications outlined its business plans for 2004. A webcast of the event is available online. Some highlights:
Domestic Telecom
Larry Babbio, president of Verizon’s domestic wireline business, told analysts to look for continued customer gains in DSL and long-distance; improved share in enterprise markets; stability in wholesale markets; and continued improvement in Domestic Telecom’s cost structure. Excluding pension and OPEB (other post-retirement employee benefit) costs, margins will be stable, Babbio said, with continued strong cash generation.
Regarding broadband, Babbio described plans to expand DSL availability and reiterated Verizon’s target of passing 1 million homes with fiber optics. He also elaborated on technology plans to evolve Verizon’s nationwide wireline network to packet-switching technology.
Regarding VoIP, Babbio confirmed that Verizon will launch a consumer VoIP service over its own DSL network beginning in Q2. By Q4, Verizon will also introduce a QoS-based voice-over-DSL service using a completely softswitched based network.
Babbio outlined cost-management strategies, such as the increased automation of internal processes, wider use of customer self-service through the Web and “touch-free” delivery of services to large customers.
Consumer and small-business plans call for a continued emphasis on product bundling and Babbio discussed rollout strategies for VoIP in all retail customer segments.
Verizon Wireless
Denny Strigl, president and CEO of Verizon Wireless, said the company is set to expand its BroadbandAccess service nationally beginning this year. This will provide wireless capabilities including video messaging, video and music content, multiplayer-gaming and broadband mobility at speeds of 300 to 500 kbps.
2004 Financial Outlook
- revenue growth percentage is expected to be in the low single digits
- free cash flow will continue to be used to reduce debt
- CAPEX is expected to be in the range of $12 billion to $13 billion in 2004, compared with $11.9 billion in 2003, with a higher%age of the spending this year allocated to growth areas.
- Wireline CAPEX will be essentially flat, ranging from $6.5 billion to $7.0 billion in 2004, including spending for the company’s fiber optic and VoIP initiatives.
- Wireless CAPEX is expected to increase from $4.6 billion in 2003 to the $5.0 billion to $5.5 billion range in 2004, including investments for the deployment of EV-DO and supporting infrastructure.
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