After Verizon's ho-hum results, 5G can't come soon enough

While the company's fourth-quarter profits topped expectations, revenue and phone customers were a mixed bag.

Roger Cheng Former Executive Editor / Head of News
Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
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Roger Cheng
3 min read

Verizon CEO Hans Vestberg speaking at CES about -- what else? -- 5G.

Angela Lang/CNET

There's a reason Verizon can't stop talking about 5G.

The next-generation cellular technology promises a massive speed boost, as well as a network that's smart and responsive enough to connect thousands of different devices around us -- so it's a sexy topic.

What's not sexy? Verizon's fourth-quarter results. The mixed bag, with slightly better earnings and slightly disappointing revenue amid ho-hum customer growth, underscores the need for a shot in the arm.

Shares of Verizon fell 1.1 percent to $54.47 in premarket trading on Tuesday.

Verizon is in the midst of a transformation. Under new CEO Hans Vestberg, the former head of network supplier Ericsson , it's all-in on its investment and focus on 5G and on improvements to its network. At the same time, it's scaling back some of the bets made under his predecessor, Lowell McAdam, to invest in media projects.

Watch this: Samsung, Verizon are jumping into 5G together with next smartphone (The 3:59, Ep. 497)

The New York telecommunications company took a $4.6 billion charge to write down a massive portion of the value of its media assets, and last week said that it's cutting 7 percent of its workforce in the media area, including properties like Huffington Post, TechCrunch and AOL.

Vestberg explained during a conference call with investors that Verizon is making cuts to its workforce now when it's financially and competitively strong in order to be more agile in the future. 

"This is all part of a larger transformation," he said.

It's easy to see why Verizon wants to jump on the 5G bandwagon. The company has long leaned on its reputation of network superiority, and getting to the next advancement in networking technology would cement its position. The company also sees an opportunity to provide home broadband access to more consumers through 5G.

"Our 5G network is predicated on delivering a game changing wireless experience," he said in prepared remarks during the call. "The assets we have compiled and put into place in 2018 have enabled this vision."

Vestberg touted the company's many "firsts" in 5G in 2018, stating the company was first to complete an over the air data transmission on the 5G global standards.  Verizon was also first to complete a 5G data session on a smartphone, he added.  And the company was the first carrier to commercially deploy 5G with its 5G home product

Vestberg also credited Verizon with pushing equipment partners to speed up development of their products, which are necessary to make 5G a reality. He said the 5G market is almost two years ahead of schedule thanks to Verizon's efforts. Still, he said the company is waiting for these hardware partners to deliver their products to fully launch both its home broadband service and mobile service. Verizon has already announced two handsets with 5G capability from Motorola and Samsung. Vestberg confirmed at CES this month that Motorola's Moto Z3 would be the first Verizon 5G handset to launch.  During the conference call, Vestberg said Samsung's 5G handset will be unveiled soon. 

"As soon as [the products] are ready and interoperable, we will launch the service," said Vestberg, adding that it should happen within the first half of 2019.  

But Verizon isn't the only player. Late last year, AT&T was the first to launch a mobile 5G service, and T-Mobile and Sprint are promising wide rollouts this year.

The company added 1.2 million retail net new postpaid customers, or those who pay at the end of the month. It added 873,000 smartphone customers, but its total phone additions were 653,000, suggesting it lost a number of traditional "dumb" phone customers.

Verizon posted a fourth-quarter profit of $2.07 billion, or 47 cents a share, compared with a year-earlier profit of $18.78 billion, or $4.56 a share. Excluding the one-time charges, earnings came in at $1.12 a share, compared with 86 cents a year ago. 

Revenue rose 1 percent to $34.3 billion.

Analysts had projected Verizon to earn $1.09 a share on revenue of $34.4 billion, according to Yahoo Finance.

CNET's Marguerite Reardon contributed to this story.  

First published January 29,  4:39 a.m. PT.
Update, 8:32 a.m. PT:  Added comments from Verizon's earnings call.

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