Good morning, everybody, welcome to day two of the TMT Conference. We're delighted you could all join us bright and early this morning, and we're particularly happy to have Matt Ellis here today from Verizon. Thanks for joining us again, Matt. That's me. I wasn't so sure on Friday, but great to have you here. Before we get started, please note for important disclosures, please see the Morgan Stanley research website at www.morganstanley.com/researchdisclosures. If you have any questions, reach out to your Morgan Stanley sales representative. I think you have a safe harbor as well. Yeah. As, draw everyone's attention to our safe harbor disclosure that can be found in our SEC filings and on our, investor relations website. I'm assuming we may discuss a few forward-looking things this morning. Great. Great. Well, maybe we can start with your news and with Verizon's news. we had a lot of changes as of Friday. Yep S o perhaps you could just put that all in context for us and, particularly, you know, your own decisions as well. Yeah. You know, starting with mine, on May 1st, I will step down from the role. It'll be six and a half years in the role, which is I think long enough. I'm gonna just, you know, take some time and recharge batteries and figure out what I wanna do next, but it's been a fantastic, a fantastic journey and a privilege to have the role at a company such as Verizon. The good news is that I get to hand the role off to Tony Skiadas, who's in the audience here with us, Tony and I have worked together for, you know, all 10 years I've been at the company. Every major decision that I've been involved in, Tony's been in the room, part of that as well, so I would expect there'd be good continuity there, and we're gonna spend the next couple of months ensuring a smooth transition as we go forward. On the other changes that we announced back in December, Hans stepped in to take over running Verizon Consumer Group on a short-term basis. As of Friday, we announced that Sampath, who runs our Verizon Business Group, will be moving over to Consumer. Sampath has done work in lots of different areas across the company for many years. I worked with Sampath, when we were in the wireless group together, so he knows that group. He worked for John Stratton for a long time. Those of you who followed the company for a while will remember that name. Sampath knows Verizon Wireless and total business inside out. You've seen the momentum that they've had on the Verizon Business Group side in mobility. You know, Sampath will bring that same operational focus to the consumer side now. That leaves a hole on the business side. Kyle Malady, who had been running network and technology, is gonna move over. Kyle's been involved in lots of our business customer interactions over the past few years. This is a fairly natural step, and as you think about a lot of... I'm sure we'll get into talking about 5G private networks and so on. As our enterprise customers are making those moves, having somebody leading that group who knows the technology and the network side inside out, you know, makes a lot of sense. Joe Russo, who's in Kyle's organization today, is gonna step up to run the network and technology team. Joe's been around the company for over 20 years, and has been involved in the reliability and the performance of the network throughout that time. You know, I think all of those transitions should go by pretty quickly here. Right. I think you also said that, there will be a search for a longer-term CFO. Yeah C an you just update us on the- Yeah ... how we're thinking about that? The, the thinking now, look, I'm, as I say, when I step down, it'll be six and a half years. It'll be the longest tenure of, you know, Verizon CFO. Tony's not gonna break that record. His plans don't have that in mind. You know, he's gonna do the role as far as long as Hans and the board want him to. At the same time, they're also gonna look for a longer term, CFO candidate. We're not sure how long that's gonna take. Getting the right person is the most important thing to Hans as he does that. The great news for the company is they have, you know, a very strong finance team in general, and with Tony in a position to step into the role, and do it for as long as needed. Great. Maybe we can just review the 2023 outlook. Yeah ... The guidance, the strategic priorities. It's always when you get a management change like this, there's always a nervousness that it was there something that caused it from that side of things. Any color there would be great. I can answer that with a one-word answer, no. Yeah. You know, look, in terms of we gave the outlook at the guidance on the earnings call in January. You know, obviously in there we had EBITDA $47 billion-$48 and a half billion, wireless service revenue plus 2.5% to 4.5%, and EPS $4.55-$4.85. That's the trajectory that we see for the business for the year. You know, the start of the year has been, you know, in line with, largely in line with how we expected, obviously a large part of the year still to go. It's really about building on the momentum that we had in the back half of last year on the consumer side. Started to see gross add volumes come back. Still not exactly where we ultimately want them to be, but started to see the momentum come through. At the same time, we took some price increases as well, so that's helping the revenue side. Continuing the strong performance on business wireless and also on FWA, and then seeing, you know, more of the green shoots start to come through on the private network side, and then executing on the cost programs we announced at the end of last year, really getting the flywheel going there, on those items and being in position to have $2 billion-$3 billion cost takeout in the business on an annual basis by 2025. Working across each of those items, and, as we execute there, we'll put ourselves in a position to deliver the financials we stated out for this year and also have good momentum heading into subsequent years. Great. What have you assumed in terms of the macro picture this year and what are you seeing right now? Yeah. Yeah, that's a great question. I think everyone's saying the first two months of this year, the view on the macro picture has continued to change and, you know, up and down, depending on the day of the week, more so than normal. Look, certainly the interest rate environment is something we're all watching closely. You know, I think that where the markets are saying right now versus the beginning of January is probably higher for a little longer. We'll see how that plays out. We feel good about our ability to manage through that. I think the bigger question is around the economy more broadly, right? Both how the consumer plays out and then the impact on the business customer side of our revenue streams. Look, right now the consumer's in good shape overall. Obviously, there's different pockets within there, but we continue to see payment patterns that are very much, you know, in line with what we saw pre-pandemic. The consumer right now is in good shape. I think when you see a lot of the economic reports and prognostications, are we gonna see something in the second half of this year where that picture changes or not? There's different points of view there. We're watching it closely. Haven't seen anything yet, but we'll see how the year plays out. Then on the business side, you know, the jobs reports continue to be strong. That's supporting our both small, medium businesses, but also large enterprise customers. We'll obviously monitor that closely how that plays there and the demand they have for our products and services. It's, you know, every year you feel it's kind a tough thinking about how the broader environment's gonna be for the full year, but this year particularly is one that certainly has a lot for us to keep an eye on. Great. Let's dive into Consumer Group in a little bit more detail, if we could. Help us understand, you know, what they've done on the business side, the sort of learnings that Sampath can bring over to consumer to continue. Yeah the group momentum there. Well I think largely it's around being focused on a few key things rather than trying to do too many things, and then a focus on execution. You know, there's been times where we've got distracted by trying to do too many things at once. I think you'll see Sampath getting very much back to the basics of what made, you know, Verizon Wireless the biggest and best performing carrier in the U.S. We know what that looks like. We know how to do it, and narrow back down those things that we're gonna be very focused on. You know, Hans has spoken of a little bit about getting back to understanding at a more region level some of the marketing and promotional decisions that we make, getting back on a compensation standpoint to some of the models that have been more effective in the past. Those are going back into place, you know, as we speak. As you bring all those things together and just a focus on the detail of running the business on a day-to-day basis, where at times we maybe weren't as focused on that over the past two to three years, I think those will be the biggest changes you see. I would expect over the course of the year as they get momentum behind that will start to show up in the in the results. Great. You talked about the improving gross ads, and you've tweaked some of the handset promotions. You've brought in Welcome Unlimited. Obviously, the C-Band network continues to scale. You know, where are we today in terms of, you know, changing some of the perception, you know, that maybe had led people to choose competitors over Verizon and continuing to move that forward? Yeah. Look, the gross ads, I think we feel good about what we saw in the second half of the year, and building there, keep working on that. Bringing the Welcome plan in was important for us. It gave us the opportunity to advertise at a lower price point, drive foot traffic into the stores, then we challenge our store teams to say, "Hey, if a customer really wants that plan, we'll absolutely sell that plan to them. Let's tell them about all our other plans at the same time." We do a good job of getting customers on our Mix & Match plans and so on as part of that. you know, that will continue to be a focus there, getting the right promotion out there. Not every customer wants a promotion that's got a free handset associated with it. you know, we don't think those are particularly great all the time either. you know, finding the right offer for the right customer is something we'll continue to be very focused on. You mentioned C-Band. You know, we really like what we're seeing from a performance standpoint there. Our customers are liking what they're seeing. We spoke on the earnings call about how in the second half of last year, if you split the country up between those markets where we had C-Band turned on, and those it's not. Remember, although we closed the auction out in two years ago in 2021, and we turned on some of the markets last year. We have 76 of the 406 markets that the spectrum's in it turned on right now. The good news is those 76 markets are the ones where the dense urban areas are. But obviously, it still means you've got areas of the country that have it and areas that don't. We saw a difference in the gross ad performance, we saw a difference in the churn performance in the markets that had it in the second half of the year versus markets that don't. As we continue to roll out more cell sites in those markets, and then we get to the end of the year when we get all of the spectrum, we're encouraged about the fact that we see that better performance where it is. You know, we're at approximately 200 million points of presence covered by C-Band today. That, you know, we came out of the auction, I think it was this week two years ago. That's an incredible work that the team has done to get to that point, and of course, they're adding every single day. We also saw in the RootMetrics of the second half of last year. When you look at the urban markets within there, we won more markets in the second half of the year than the first half of the year, wins or ties. Then the overall, our performance, our metrics within there improved significantly from first half of the year to second half of the year. Those metro markets are where we got the C-Band. We're getting better network performance, and we're seeing improvement in the gross ad and the churn side of the equation where we have that as well. The challenge now is to continue to build it out as quickly as possible, and I think the work the team's done over the past couple of years shows that they're very much up to the task there to do that. You know, we feel good about the opportunities that will give the commercial teams as we do that going forward. You know, now it's time just to keep on executing and prove that that differentiation still exists from a network quality standpoint that allows us to offer the highest quality service to our customers, and, you know, that then drives the commercial side and financials. Great. I think you mentioned the financial guidance and I know service revenues is a key focus for you, but, you know, the investment community is always focused on the KPIs and focused on the net adds. Yeah. How do you think about balancing the volume and the, you know, the price? Yeah. We use the right word balance, because ultimately we drive volumes because it drives financials. The volumes have to be driven the right way, right? Volumes matter, but it has to be done the right way. We're focused on bringing volumes on that drive revenue. You know, it's not just phones. You think about what we've done with FWA. We had over 1 million net adds last year, right? That is customers we're billing this year to add to the revenue. As we think about phones, though, I mean, it is getting the right balance, bringing customers on, retaining customers, at the right price, so we have the opportunity to grow revenue over the long haul. Certainly, you know, a level of volume performance is important to drive the financial goals that we have for the business. The goal is to have better numbers in 2023 than 2022 on? That is definitely the goal. Great. One element of that is using TracFone as a source of migration. Yes. Can you help us with where you stand in that process? Yeah. Yeah. An important piece as you think about the post-paid gross adds. Obviously, there's customers new to the industry and switchers, but there's also moving customers from prepaid to postpaid. You know, some of our competitors were able to, you know, had their own pool of prepaid customers to move. We've historically not had owned our own prepaid customers to a large degree. We've relied on wholesale relationships with TracFone being the largest one. You know, owning those customers and as those customers are ready to move from prepaid to postpaid, we can keep them within the family is an opportunity that we didn't have in the past that we have now. You know, I'd say the, the integration of TracFone has a little more work to do, little bit more than we initially anticipated. Obviously, some of the things going on with consumer over the past 12 months or so had a carryover to the TracFone integration. The team in the value segment today has a plan. They're executing in 2023, and they'll be in good, I think good place as the year goes on. You'll see better performance in the second half of the year than the first half of the year in the value segment. Great. you mentioned fixed wireless, 1 million adds. I think one of the things that's striking is you and T-Mobile have only been marketing to quite a small subset of the country. Just remind us on where you've actually got those customers, where your footprint is today, and you're open for sale? Yeah ... and the plans for that. Yeah. Right now we're selling in both. We've got 4G fixed wireless access, where we have capacity in different parts of the country. You've got C-Band, where we've got the C-Band deployed, which is largely urban and some suburban areas. You know, we are actively marketing the C-Band fixed wireless access wherever we have C-Band turned on. We're seeing is on the consumer side especially good progress there with the C-Band service. You know, it's really good to have seen the momentum last year. We increased volume sequentially every quarter, and the team's focused on continuing that trend this year. Of course, every time we put up an additional C-Band cell site, we're opening up more premises for sale as well. you know, I would expect to see continued good performance this year as we go forward. Back to your comments on C-Band, you're only doing this with 60 megahertz, but that will almost triple. Yeah. We have on average 160 megahertz across the country between 140 and 200, depending on the market. The first 46 markets that we turned on January last year, we did 60 megahertz. That was what was initially available. We go from 60 to 160 when we get the rest of that spectrum later this year. We don't have to go visit the cell site, right? That radio that we put up that's delivering 60 megahertz of spectrum today can be with flip of a switch, will become 160. The performance will improve even more so than it already has, and we're excited that we've never turned on that type of bandwidth in low and mid-band spectrum before. It's a tremendous amount of capacity to bring into the market, and customers are starting to see the value that the experience they can get with that. There are critics of fixed wireless who suggest that it's sort of a short window of opportunity here and that, you know, rising usage will ultimately curtail the product. You know, how do you think about that? Yeah. We've had critics of fixed wireless since the day we started talking about it, right? It's like, "It's a niche case product. It won't be able to work at scale. It's only for customers who don't have a, you know, either they only have a, you know, they don't have access to anything apart from DSL in a rural area or on the business side, a food truck that doesn't, you know, all those types of things." You know, every single time that those arguments have been put out, we've knocked them down, right? It operates at scale. We've got over 1 million customers and growing. It's not just customers who were underserved before. We're taking customers from existing providers. You know, I hear that people say we're gonna run up against the wall here, but, they're arguing with the best engineering team in the industry when they make those claims. We feel very good about the runway we have, with fixed wireless on 5G technology with the amount of spectrum we have that we'll have in place by the end of this year. You know, there is, there's still significant opportunity there, and we'll have great service for fixed wireless customers and mobility customers at the same time. Great. You still continue to push Fios along another, what was it? 550,000 homes last year. Yep. Is that the sort of pacing we should think about there? Yeah. I expect we'll do roughly half a million- Yeah premises open for sale on an annual basis for, you know, a few years going forward here. Did say 550,000 last year. Now have over 17 million premises on Fios available, you know, across 7 million Fios Internet customers. It's been a very good business. You know, we added 200,000 internet net adds last year, and obviously we have a relatively small footprint compared to some others in the wired broadband space. We show that you can continue to add customers there. You know, it's a great product where we have it available. The great thing is we do that roughly half a million premises a year. You get the open for sale opportunity, but you're also getting the benefit of retiring copper network as well. That's a significant part of the equation for us, too, as we continue that work. There's still runway on the Fios side of the business as well within the existing footprint. Talk about the cable companies and the MVNO relationship for a minute. Yeah. You have extensive MVNOs with Comcast and Charter. They have started to get really aggressive in terms of their initial bundle pricing. A couple of questions. One, what's the impact of those bundles, and how do you respond to that? Two, an MVNO customer from them, how does the economics of that compare to a traditional postpaid customer? Yeah. You know, as you say, getting more competitive there. You know, if you think about it, we've been competing with them for over 15 years now. You know, when we launched Fios. Yeah We've been, you know, go competing with them. We know what that looks like. We know that customers don't particularly like these deals where, you know, here's an initial headline price, and after 12 or 24 months, you move back to rack rates, right? We've competed against that for a long time. We've shown that we can do it successfully. You know, there's certainly, you know, all of us see a value in a, in a combined customer. We know there's some churn benefits there as well. As you think about your, whether it's promotional base pricing decision, you know, that improvement in churn factors into what you can do. They're probably looking at that as well. I would imagine that the same thing they've seen for years when customers hit that mark where they go from promo rate to rack rate, there's friction. I would imagine that same thing will come through here. We've been competing against, you know, that competitive pricing from them in different spaces for a while, and I'm sure we'll continue to do so successfully. On the economics, I know we get this question all the time. You know, we're certainly not gonna talk about the economics of any particular deal we have with any of our customers, whether. One last chance. I know. Look, you're right. If you think about it, obviously the value to us of, you know, the amount of revenue we get for a customer that they have versus a postpaid customer we have, the postpaid revenue we have directly with the customer is gonna be higher than what we receive for a customer that they have. There's a whole bunch of costs we don't have as well when they're doing that. We're not doing the billing collections. We don't have the upfront promotion costs. We're not running customer care, et cetera. You know, we certainly would love to have all our customers be postpaid customers. If people want to offer a wholesale service, we're more than happy to do that on our network and increase the monetization of the investment we've made in the network. You know, it's I think for us and the cable companies, it's a win-win, and if they're gonna have that traffic, I'd rather it be on our network than somebody else's. Great. If, if we turn to the business, for a couple of minutes here, I think one of the tricky things for investors is thinking about 5G monetization. Yep in the B2B segment, because that was certainly one of the. Yeah areas of interest, private networks. Yeah ...Mobile edge compute, all of that. As a CFO, I'm sure you've been looking for the business plans, been looking for the monetization. It seems like we've gone from excitement to just it'll never amount to anything. You know, how should we think about it beyond sort of 23? Are we going to start to see some green shoots here in the- Yeah. Next year or two. I've never moved to the camp that says it will never amount to anything. I'm still very excited about the opportunities. I think right at the back end of last year, we really started to see a little bit of a shift in the amount of deals that we were getting through with some of our larger enterprise customers. Now it's still a, you know, a small number and not as high as I'd like it to be. For private networks. Yeah. The pace of adoption, you know, is something that's probably gonna take a little longer than we'd like. In terms of the scale of the opportunity, still very much believe there is something significant there. For me, the question is more of when, not if. It's absolutely gonna be there. The good news is that some of the customers that we've had, we've been live with the product at their premises, for a little while now. We're seeing a validation of their initial use cases that they use to justify making the investment on their end. In addition to the validation of those use cases, they're going, "Well, yeah, it did these things we wanted, but now that we've seen it in action, we can use it for this and this and this." Right? They're expanding the number of use cases. You know, I'm excited that we're starting to get some more deals done as we get those rolled out and our customers start using it in the real-world applications. We're seeing nothing but good things there. I'd say the pace of adoption has not been as fast as, you know, I could have hoped, but I'm still very encouraged by what we're seeing. You know, that's based off the feedback we're getting from enterprise customers. Great. One of the key elements of your 2023 guidance was CapEx coming down. Yes. You set out this three-year plan. Yep ...5G deployment. Just give us a sense of, you know, how things have played out. You've had cost. Yeah your ability to sustain the capital intensity. Yeah at these low levels for the next few years. Yeah. We've had some obviously inflation in the CapEx side, but the team's done a good job of increasing the efficiency within the capital budget too. We're still able to get the same amount done even with the inflation in there. You know, two years ago, when we came out of the C-Band auction, we said we were gonna have an incremental $10 billion over 2021 through 2023. We didn't know exactly how fast we would be able to spend it. If you recall, I said this is the first time the network team's been told they don't have to come for permission to spend quickly. They have to come to have some permission to spend slowly. They've lived up to the challenge. We had over $8 billion of the 10 spent between 2021 and 2022. We got about 1.75 of that $10 billion that we'll spend, you know, this year and obviously in the first part of this year, that will largely be done. Last year was our heaviest ever CapEx year, a little over $23 billion. Don't expect to be at that number again. We said we expect to be at a BAU run rate of approximately $17 billion after this year. This year is essentially around 17 plus that remaining C-Band number. You know, the good news is, because we're no longer spending as much on 4G capacity, 'cause where we've got C-Band now, it's carrying the capacity growth. And our One Fiber build is, you know, we've completed a lot of the metro rings there. By the end of this year, we'll be largely complete. There's plenty of space for us to put in, to the capital envelope, continuing to roll out C-Band, but at a BAU number. You know, that's gonna be a, a nice tailwind to the cash flow side of the equation this year. Great. I get just maybe just to tie it up, how does the board think about use of that free cash flow and leverage and- Yeah ...buybacks? Yeah. Continuing to invest in the business and the support we've had from the board to buy the spectrum, we need to be successful and then to deploy it, continue to do that. I think we've got line of sight to a run rate number there that's very strong. The dividend continues to be important. We've got the longest streak of annual increases in the U.S. industry there and look to continue to do that. De-leveraging the balance sheet in line with the targets we've given. Once we've done that, you know, we believe that any excess cash that's around, we would be in a position to return to our shareholders. You know, that capital allocation model has served us well. We have good line of sight to be able to execute across all of the priorities within that, and look forward to the team doing that. Great. Well, Matt, we really appreciate you joining us today, and we wish you the very best for your future endeavors. Look forward to hearing from you. Thank you, Simon. Great. Appreciate it.