Verizon says it’s on pace to grow to add 1M-plus fiber locations per year
Verizon is on the trail of setting a new growth pace for its Fios fiber-to-the-home (FTTH) footprint with its recent announcement that it would purchase Frontier Communications.
Frontier’s 2.2 million fiber subscribers across 25 states will join Verizon’s approximately 7.4 million Fios connections in 9 states and Washington, D.C. In addition to Frontier’s 7.2 million fiber locations, the company is committed to building an additional 2.8 million fiber locations by the end of 2026.
Verizon is on track to reach about 500,000 premises with fiber by 2024, while Frontier has set a goal of reaching 10 million locations by the end of 2026. Also, in 2025 Verizon is targeting an expansion of our Fios build up to 650,000 premises.
Speaking to investors during Verizon's third-quarter earnings call, Joe Russo, EVP and president of Global Networks and Technology (GN&T) at Verizon, who has been involved with Fios since its inception, said that Verizon could scale its fiber passings even further through the Frontier acquisition.
“Post close, I see that pace growing to 1 million plus prems per year,” he said. “But what excites me more than anything, after 20 years of doing this, is our business case on Fios is improving.”
Tightening installation costs
As Verizon looks to expand its last-mile FTTH network, the service provider remains confident that it can achieve higher and faster penetration rates than it saw in earlier builds.
The provider is also finding what Russo calls “new and creative ways to bring down the cost of deploying fiber.”
He said that the process is relegated to three main elements.
First, Verizon is working with fiber cabling partners like Corning and CommScope, which are developing products that achieve two main outcomes: reducing the amount of fiber it has to deploy to serve homes and techniques and technologies that ease installation.
Verizon can also take advantage of over two decades of improvements to systems and tools for building, designing, and operating the network.
Russo said, “We're seeing great benefits from those system and tool enhancements in the reduction of rework and efficiency of our build and network operation.”
Finally, the telco has developed processes to remove legacy costs from the network without deploying fiber to the entire wire center.
“I can use other techniques to move customers to new technologies and remove legacy equipment without deploying fiber across an entire footprint,” Russo said.
Bundling opportunities abound
While expanding the consumer fiber network is undoubtedly Verizon's key priority in acquiring Frontier, the service provider also sees opportunities for service bundles and future converged services.
For its part, Frontier operates only wireline networks and lacks a wireless component. One of the first areas where Verizon sees an opportunity to grow revenue share is by bundling wireless with fiber broadband.
Sowmyanarayan Sampath, EVP and CEO of Verizon Consumer Group, said wireless penetration is higher in markets where it offers fiber broadband today. “In some of our big markets where we have fiber, our wireless market share is 500 basis points or 5% better than if we don't have fiber,” he said.
He added that Verizon can upsell Frontier fiber customers' wireless service. “We can cross-sell mobility to our Frontier base when we close it, to our new cohorts of fiber that are coming in, but also to customers who have access to fiber but don't have fiber today; we'll be able to cross-sell them,” Sampath said. “So, we have two revenue upside opportunities as we build our converged offering.”
It can reduce wireless churn by offering more mobility and fiber service bundles. “We see a 50% reduction in mobility churn when we bundle with fiber,” Sampath said. “And that's a huge lever for us, even broader, longer-term on how we take churn down in the space.”
Likewise, Sampath added that it can reduce fiber churn by “another 40% when we bundle mobility and fiber.”
Fios, FWA gains
Broadband, which includes Fios and Fixed Wireless Access (FWA), was Verizon's key contributor to growth in the third quarter.
During the quarter, Verizon added 389,000 net adds of broadband subscribers, reflecting the ninth consecutive quarter with more than 375,000 broadband net additions.
Verizon’s consumer unit reported 209,000 fixed wireless net additions and 39,000 Fios Internet net additions in the third quarter of 2024. Consumer Fios revenue was $2.9 billion in the third quarter of 2024.
“If you think about broadband, we have almost 12 million subscribers in our base, and Fios and FWA are both growing,” said Tony Skiadis, CFO of Verizon.
FWA was a clear start in Verizon’s broadband portfolio. The telco added 363,000 fixed wireless net additions during the quarter. At the end of the third quarter of 2024, the company had a nearly 4.2 million fixed wireless subscribers base. The company said it reached its fixed wireless subscriber target 15 months ahead of schedule.
Total Verizon Consumer revenue in the third quarter of 2024 was $25.4 billion, an increase of 0.4 percent year over year, as gains in service revenue were partially offset by declines in wireless equipment revenue.
From an overall financial standpoint, third-quarter total operating revenue was $33.3 billion, which was flat compared to third-quarter 2023.
Consolidated net income for the third quarter of $3.4 billion, down from consolidated net income of $4.9 billion in the third quarter of 2023. Verizon said this decrease was primarily driven by severance charges of $1.7 billion related to separations under the company's voluntary separation program for select U.S.-based management employees and other headcount reduction initiatives.
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Sean Buckley
Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.