Look, it wasn't long ago that you
actually owned some of these assets. Why go back in to wireline?
Why are we seeing this convergence again?
Thank you for having me. First of all, I think this is a very
straight into our core strategy. We are sort of in mobility and broadband
serve basically all types of customers in these market consumers and these
large enterprises and governments. This is us extending the offerings and
optionality for the customers will have. So this is a really good decision by us
to do with an economical right. And on top of that, as you mentioned,
yes, we owned these assets before, but they weren't told the different type of
assets. There was a basically a copper based
business. Nowadays, Frontier is
more than 50% of the revenue is fiber and more than way more than 50% of the
things coming from fiber. So a large transformation have been done
and it fits in straight to our strategy over Operation Hines.
Good morning. It's Ed in San Francisco.
Frontier's trading at $35 a share ish below the $38.50 per share offer.
What does that tell you about the market's reaction to the offer and what
you think might happen next? I don't.
Tell me so much is so early and these are 2 hours of trading.
I think first of all, we feel really good about this deal
from a from also from closing it and seeing that this is a possible
transaction from many angles, because given that we believe it's going to take
18 months and all all the regulatory bodies, of course, will it be a thorough
job? But this is improvements for customers
because you're going to get more choice. And not only that, we're going to bring
our mobility broadband to these customers.
At the same time, we also have the offerings that we have on our broadband
today, which is everything from streaming services, other services that
we have on insurance, etc.. So we're going to bring a lot of new
opportunities for the customer base of Frontier.
So I'm really positive on this acquisition.
Can you tell us a little bit about the future as well?
The short term is the convergence trade is wireless wireline content, but then
there's a I, then we're talking about the Internet of Things as we've been
talking about for years. Hands.
Where does that come into play? It come definitely into play in these
assets. I mean, that's how we expect these to
take in. They take 18 months.
We're already right now have a sort of a prepared network with a lot of compute
and storage at the edge of the network. We decided already some six years ago
into fiber ice, all our transport. So we are really prepared of it.
The frontier as it is just coming in, that's an extension of that.
And we can meet even more customers to have a processing storage at the edge of
the network with the fiber ized transport.
So this is really also another advantage we're getting with the even more assets
in the ground and of course, serving consumers with home broadband, together
with our mobile and home offering, is of course a strength in the overall
acquisition where we're doing hands. We have a question from an audience
member on Bloomberg Technology who notes the 2015 sale of wireline assets.
But I think the question that he and many others have is what's changed
around the economics in this deal. You said the economics work, but give me
specifics on what's different, particularly for fiber in 2024.
So so if you look at a deal right now at closing, we believe that's going to be
accretive on growth, revenue growth and EBITA on day one.
So that's really good economics. And then it's going to take some 12
months and EPS and cash flow will be accretive as well.
And the reason it takes 12 months and there are some integration costs coming
up in the beginning. So definitely a very economical sound
basis for us. But I said the assets we sold that
previously was of course in a totally different standard.
The Frontier Team has put in billions and billions of dollars to fiber ice,
the network to be the next generation. And many of the metrics that they have,
you know, churn, penetration, etc. are fairly similar to files and fiber
uses. Of course, the best fiber network in the
in the states. So there's a lot of similarities on that
and that we can offer to our customers. And some analysts were a little bit
surprised by the timing and the fact that you're going all in on convergence
now, a bold step, some call it, because of your leverage and your commitment to
reducing reducing your debt. Why do this now?
Are you worried about leverage? No, I think, first of all, we have very
strong balance sheet. And as we said this morning at closing,
this will be maybe 0.2 0.30 on our leverage, which is very, very low.
We still are committed to our capital location number one, invest in the
business. And that's what we're doing today.
Number two, committed to the dividend. And you might have seen yesterday we
came out with our dividend, which was for the eight.
Consecutive year we increased our dividend and that is to pay down our
debt. We have been paying down our debt since
we bought the C-BAND. We still have some 18 months here that
we are going to continue to pay down the debt.
So we're going to be in a really good position balance wise when when this
deal is coming to fruition. Hans, what opportunity is there for you
in data center interconnects? DCI In the context of I look at what
like lumens done with Microsoft, for example.
I think that the difference here is that we have so many assets in the ground
when it comes to fiber and central offices.
Many of these central offices, of course, have compute storage power, etc.
and many of the A.I. solutions, when there's a real product,
they actually need to be way closer to the users, the corporations, etc..
And that's means that because the transport cost and many other things, it
will be hosted at the edge of the network.
That's how we built the Verizon Intelligent Edge Network in 2018 when we
started with the journey, which we now always use adding frontier to it.
So I see a great opportunity for us on the B2B side with this footprint to
serve customers that want to host A.I. at the close to them a secure, lower
transport cost, etc.. You're just announcing one deal and you
know, we always love to push forward hands.
Are you going to continue to be acquisitive when it comes to
convergence? I think, first of all, we are really
happy with assets we have and now we're adding frontier.
I don't think we need much more. We going to be big as a wireless.
We're going to be clearly the ones having the largest broadband offering
with fixed wireless access and fiber in the market.
We have the largest distribution and the customers.
So we're going to be in a really good position to see that we execute for our
customers, but also for our shareholders.
So I'm really happy with the assets we're we're going to have and we have
today. When it comes to convergence, I think
what is important in convergence, we will have the
scalable economy for both. We will have the ownerships for the
wireless network and the fiber networks and fixed wireless access.
If customers want to make the convergence, we will have the economics
for doing it. I don't believe it's going to be sort of
you. You discount one product for customer
taking both. That's all really.
It's two great products and we all know mobility and broadband is essential for
society and everyone needs individual corporation, a private person or a or a
corporation. You need these services that are even
more important today than were five years ago.
And Verizon is number one in basically every segment of that.
And this is just fortifying. And so, yeah, we're going to see
convergence, but it's not like we're going to discount products.
They're great to products that we're going to offer to our customers if they
want to join. We have improvements on share.
And of course, if customers both have mobility and broadband with us.
And so we're going to see how this plays out in the market.
But clearly, we're going to be best positioned in the market when it comes
to convergence.