Verizon today announced its Q4 2021 earnings results through which it provided updates on its i) 5G network roll-out, ii) fixed wireless access (FWA) products, iii) Fios fiber internet business, iv) capital expenditures, with particular detail on C-band, and v) 3.45 GHz spectrum auction results.
Verizon’s 5G Network Update – Q4 2021
5G Phone Adoption
Verizon’s subscriber base using 5G-capable devices rose to ~34% of its customers as of Q4 2021. Furthermore, the majority of these 5G-capable devices are able to receive C-band frequencies (e.g., iPhone 12 and 13).
5G Ultra Wideband (High-Band or mmWave)
Verizon’s 5G Ultra Wideband (high-band or mmWave) mobility service is available in parts of 87 U.S. cities. As such, mmWave 5G represents almost 10% of Verizon’s network traffic in dense urban areas. To enable this high-capacity network, Verizon is deploying small cell infrastructure.
In 2021, Verizon deployed an incremental 15k+ high-band (mmWave) small cell sites. Therefore, at year-end, Verizon has cumulatively deployed a total of ~33k high-band (mmWave) cell sites, using small cell infrastructure.
Fixed Wireless Access (FWA)
Verizon’s 5G Home and 5G Business Internet, which are its fixed wireless access (FWA) products, are currently available in parts of 65 cities and 62 cities, respectively. These products use high-band (mmWave) spectrum to offer average download speeds of 300 megabits per second.
As of Q4 2021, Verizon covers over 2 million households with its high-band (mmWave) 5G Home offering. Additionally, by leveraging C-band 5G spectrum (i.e., mid-band frequencies) and 4G/LTE frequencies, Verizon covers 20+ million households with FWA at year-end 2021.
Furthermore, during the quarter, Verizon had 78k net customer additions across all its FWA broadband services. Indeed, this brings the company’s total FWA subscribers to 223k as of Q4 2021.
Verizon – Total Broadband Net Adds Q4 2021
Verizon Fios Fiber Update – Q4 2021
Fios, Verizon’s brand for its 100% fiber optic broadband service, operates in nine states in the Mid-Atlantic and Northeastern United States. During Q4 2021, revenues for Fios (consumer and business) increased to $3.2bn, up 5.7% year-over-year.
|$ in mm||Q4 2021||Q4 2020||% Change|
For Q4 2021, Fios Internet had net customer additions, in its consumer and business segments, of 55k. Indeed, this represents 40k fewer net customer additions during the quarter, as compared to Q4 2020. Additionally, Fios Internet’s net customer additions were 49k lower than Verizon achieved during Q3 2021.
|in 000s||Q4 2021||Q4 2020||% Change|
|Fios Internet Net Adds||55||95||-42%|
Overall, Fios Internet’s 6.9 million consumer and business customer base is 5.5% higher than a year ago.
|in 000s||Q4 2021||Q4 2020||% Change|
|Fios Internet Connections||6,897||6,537||5.5%|
Finally, Verizon Fios Internet is currently “open for sale” to ~16.5 million households.
Capital Expenditures – 2022 Guidance – C-band In-Focus
For full-year 2022, Verizon expects to have capital spending be in the range of $16.5bn to $17.5bn. In addition to this figure, Verizon will deploy further capital expenditures related to the deployment of its C-band 5G network.
Overall, Verizon intends to spend an incremental $10bn of C-band capital expenditures from 2021 to 2023. Below is a breakdown of Verizon’s C-band spending by year:
- 2021: deployed $2.1bn of C-band capital expenditures in 2021
- 2022: guidance of $5bn to $6bn for C-band capital expenditures in 2022
- 2023: implied $2bn to $3bn of remaining C-band capital expenditures for 2023
Presently, Verizon covers 95+ million points-of-presence (PoPs) with C-band throughout 1.7k cities in the United States. Therefore, Verizon is ‘on track’ to have 5G service on C-band deployed to 100 million customers (PoPs) across the United States by Q1 2022. Further, by 2023, Verizon projects it will reach 175 million PoPs with C-band.
3.45 GHz Spectrum – Verizon’s Auction 110 Results
In January 2022, the Federal Communications Commission (FCC) released the auction results and winning bidder identities for its Auction 110, through which 100 MHz of national average spectrum depth was auctioned between the 3.45 GHz to 3.55 GHz frequencies, which amassed a total of $22.5bn in gross bids.
Notably, Verizon did not acquire any spectrum in the 3.45 GHz auction. Instead, Verizon did not see a significant need to spend in this auction, following its leading position in the C-band auction with $45.5bn of spending. Specifically, in the prior C-band auction, Verizon secured an average of 161 MHz of C-band spectrum depth nationwide.