Verizon has been struggling to turn the ship around and get back on a solid growth track for the last decade. The good news is they are beginning to show some positive movement. The problem is there is still a long way to go. The bottom line is companies like Verizon and AT&T could be necessary for the new world we are creating today with 5G, AI, IoT and more. However, that fact does not mean they will automatically be a strong growth company. So, let’s take a closer look at what Verizon will look like going forward.
First, let me say I have admired Verizon and AT&T as leaders in the telephone, wireless and internet space for decades. I have followed them closely over that timeframe and have seen plenty of both good and bad moves.
While they both remain a powerful and important slice of the communications pie going forward, the problem is they have been struggling to find solid growth over the past decade.
Another area of concern is at Verizon, there seems to be quite a bit of executive departures and movement.
Long-term, historical perspective on Verizon, AT&T and T-Mobile US
So, let’s pull the camera back and can get a longer-term, historical perspective on the entire wireless and telecommunications sector.
You see, the trouble is not just coming from Verizon. In fact, AT&T and T-Mobile US have all struggled as well at different times.
Fortunately, it seems T-Mobile US has recovered. However, both Verizon and AT&T have not yet done so. They may be on the right path, but there is still much distance to cover.
Communications technology is advancing at breakneck speed with 5G wireless and fiber. Plus, competition is burgeoning as well. So, the industry remains strong, but is changing. That is one reason why without a fresh, new approach focused on growth, Verizon will keep struggling with yesterday’s strategy.
The good news is, the wireless industry has now moved solidly to the next level called 5G. This is growth opportunity. Plus, fiber plays an increasingly important role as well.
Verizon and AT&T investing tens of billions of dollars upgrading to 5G
Verizon and AT&T offer both wireless and wire line services, while T-Mobile US focuses on the wireless side.
The carriers are investing near $20 billion each per year to upgrade to 5G. However, increased revenues have not kept pace with that investment. Yet, in order to keep up with competitors, they must continue to invest and upgrade.
In addition, new technologies like Chatbot, ChatGPT, GPT-4 are creating another, new and strong growth opportunity. As Microsoft with ChatGPT, Google with Bard and others enter this space, this could be a new growth sector for both wireless and wire line growth.
While every wireless and telecom carrier needs to invest in new technology because the competition is, there is not as much in the way of earnings. Not yet anyway.
5G is the next growth opportunity for Verizon, AT&T and T-Mobile
Another issue is Verizon has been confusing in the world of 5G. When investors and users think of 5G, they think of it as a wireless service to be used when they are out and about. They think of it as a faster wireless signal on their smartphones and tablets. Just like when we moved to 2G, 3G and 4G.
That is what competitors like T-Mobile US and AT&T are focused on.
However, Verizon has confused the issue. They are focused on two 5G avenues. One is on the wireless network for mobile customers. The other is a broadband service called 5G Home. When they discuss advancements and progress, many times the marketplace is not sure which they are more focused on.
The problem is with all this talk around 5G, Verizon has not been as clear as they should be for their customers and investors.
Looking backwards, Verizon has always been a solid competitor, even a leader in wireless, telecom and Internet. Even pay TV to a lesser extent.
Looking forward, they seem to have lost their mojo. They seem to be wondering around in circles, without a clear direction.
The good news is while this industry is a work in progress, it seems AT&T and T-Mobile US are starting to move in the same direction as Verizon with 5G Home type services. At the same time Verizon is expanding their 5G wireless footprint.
So, finally it looks like both sides seem to be coming together, back onto a similar growth path.
Verizon has been struggling to find growth like they had in the past
The last, real, solid and rapid growth period for Verizon was two CEOs ago. Ivan Seidenberg did a great job when the telecom revolution was new.
Lowell McAdam, the next CEO had one helluva time putting the company back on a solid growth curve. Fortunately, even though growth was slow, the financial performance was still solid.
To find growth once again, McAdam decided on a new growth track. However, acquiring AOL and Yahoo proved to be big mistakes. The problem with those acquisitions were these were leaders of the past, not going forward. They had seen their best days. These leaders of yesteryear simply could not jump-start Verizon.
Verizon needs to start their next growth curve
Don’t get me wrong, Verizon is not going away. They are an important company in the communications industry. They have a large customer base who uses their 5G wireless and fiber services.
However, rapid growth is another story. They need to reboot their efforts to try and achieve the same level of growth as competitors see.
So, the next question is what can we expect next from Verizon?
Verizon and AT&T took wrong path with AOL, Yahoo, WarnerMedia, CNN
Verizon is not alone. They were not the only company to make this mistake. AT&T acquired Warner Brothers Studio and CNN which they turned into WarnerMedia.
In order to keep investors happy, companies need to reward investors with growth. Before 5G, both Verizon and AT&T saw growth was slowing in the space they were in. They had to develop a new growth strategy to keep investors happy.
So, this was a big gamble for both Verizon and AT&T, and they both failed.
Finally, after shedding this new direction in the last couple years, both Verizon and AT&T started focusing on their core, instead of trying to expand into new and different areas.
Fortunately, 5G was coming on strong and now they are both focused on this area for growth.
Now, 5G is continuing to expand to other industries like retail, healthcare, automotive and more. Now, chatbot AI technology is another growth opportunity along with IoT, cloud and more.
AT&T recovering faster than Verizon in weak economy
As we are stuck in this weak economy, it seems that so far, the recovery of AT&T has been stronger and faster compared to Verizon. At the same time, T-Mobile US, which was dying on the vine a decade ago, has roared back to life.
All of that being said, Verizon, under CEO Hans Vestberg, needs to recover. Recently their performance is getting better, and that’s good news. However, the pace of needs to accelerate.
Verizon remains an important communications company. They do have growth potential. They must just discover the secret sauce to release this potential.
