New Verizon CEO Schulman wants Verizon to have a "customer-first culture"
Schulman replaced Hans Vestberg as CEO at Verizon in October and earlier this month he said, "We are going to take bold and fiscally responsible action to redefine Verizon’s trajectory at this critical inflection point for our company. We will rapidly shift to a customer-first culture, one that thrives on delighting our customers."
Another way of looking at this is that Verizon originally thought that the transition to 5G would be led by businesses shifting from 4G LTE to take advantage of faster data speeds. But after losing too many postpaid phone subscribers to rivals like T-Mobile, Verizon realizes that the move to 5G has been led by consumers and Verizon must draw in these subscribers with a customer-friendly approach.
Raymond James expects Verizon to engage in some cost-cutting
Brokerage firm Raymond James says that Verizon is one of the best telecom stocks to invest in. A couple of weeks ago, the St. Petersburg, Florida based firm reiterated its Outperform rating on Verizon with a price target of $47. The stock is currently trading at $40.47, down 1 cent on the day. With an annual dividend of $2.76 per share, Verizon stockholders purchasing the stock at the current price are getting a decent yield of 6.82%,
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Raymond James says that in order for Verizon to pay for the costs of acquiring new subscribers, it will have to engage in some cost cutting measures. Verizon executives are looking to pick the low hanging fruit and by that we mean that the carrier will first cut costs by cutting some legacy expenditures that are "long overdue to be rolled back." The brokerage house expects Verizon to reduce or eliminate programs that have been ineffective such as Mobile Edge Compute (MEC), Internet of Things emphasis, and Private Networks.
Are you optimistic about Verizon's future?
Yes. Verizon still has what it takes to succeed.
56.25%
No. T-Mobile, and soon AT&T, will blow right by them.
43.75%
Mobile Edge Compute, one of the programs that Raymond James says that Verizon will reduce or eliminate spending on, is an interesting program that is branded as Verizon 5G Edge by the carrier. This cloud computing platform moves data processing from centralized data centers to literally the edge of Verizon's 5G network. This moves the processing closer to the devices that use it. As a result, the distance that the data has to travel is greatly reduced helping Verizon achieve ultra-low latency (under 20 milliseconds in many cases). This is important for applications that require near instantaneous response times.
MEC delivers ultra-low latency although the technology is not earning its keep at Verizon. Image credit-Verizon
If Schulman decides to reduce Verizon's focus on this technology, it doesn't indicate a problem with the technology itself. But many businesses have been too slow to make the changes to their physical plant necessary to take advantage of MEC. As a result, Verizon could be spending too much on a project that is not generating enough in revenue to keep spending on. Additionally, when Verizon eliminated 13,000 jobs recently, the 5G Acceleration (5GA) team responsible for Mobile Edge Compute was hit hard with speculation that the layoffs reduced headcount in that group by a whopping 20%-25%.
The carrier is moving away from technology like MEC as it becomes leaner and scrappier
The bottom line is that Verizon appears to be moving away from things like MEC and is moving toward AI-driven customer service and network automation to lower the long-term costs of operating a 5G network. And the $20 billion all-cash acquisition of Frontier is requiring Verizon to take on a heavy debt-load that will necessitate some belt-tightening on the part of the carrier. Schulman's plan is to move Verizon to a "leaner, scrappier" model using AI and fiber that will prioritize customer retention and loyalty.
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Alan, an ardent smartphone enthusiast and a veteran writer at PhoneArena since 2009, has witnessed and chronicled the transformative years of mobile technology. Owning iconic phones from the original iPhone to the iPhone 15 Pro Max, he has seen smartphones evolve into a global phenomenon. Beyond smartphones, Alan has covered the emergence of tablets, smartwatches, and smart speakers.
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