Verizon will set its sights on continued network investments and shareholder returns in 2016 and may even turn an eye to Yahoo, CFO Fran Shammo said Monday at UBS’s Global Media and Communications Conference.
According to Shammo, Verizon will carry its four main focuses from 2015 – network and platform investments, spectrum, shareholder returns and cleaning up its balance sheet – will carry over into the new year.
“As we look into ‘16 our priorities really don’t change,” Shammo said. “We do believe that the network is still the key ingredient to a very strong brand.”
Shammo said Verizon’s capital expenditures will remain around $17.5 billion in 2016, with the majority of wireless spending going to network densification.
“The majority of that wireless spend right now is on small cells…to stay ahead of that demand that we see is there,” Shammo said. “You have to stay ahead of that demand or you’re going to get congestion in your network.”
Shammo said the company will also look to participate in the upcoming FCC incentive auction but won’t feel pressured to overspend on the 600 MHz band offerings.
“I think you have to put the auction in perspective,” Shammo said. “AWS-3 spectrum was something everyone needed for densification…600 is good spectrum, there are places I could use it, but there are many places I can’t. All spectrum is not created equal. It depends what carrier you are, where it fits in your portfolio.”
In some cases, Shammo said it’s possible to more cost effectively expand network capacity through small cell densification but stressed the carrier has plenty of available spectrum in its portfolio. According to Shammo, Verizon only uses 40 percent of its spectrum assets to provide the LTE coverage that accounts for 80 percent of network traffic. The other 60 percent of spectrum assets, he said, can be shifted to create additional capacity down the line.
“The notion that Verizon is spectrum short is just false,” he said. “We have the capacity to continue to grow our network at a very efficient cost basis.”
Additionally, Shammo said Verizon is working with the FCC on tests to prove that use of unlicensed spectrum (LTE-U) will not interfere with Wi-Fi, and said he believes the utilization of unlicensed spectrum will be “critical” for all carriers in the future.
Shammo said Verizon will also continue to invest in new network platforms, like HUM and Go90.
According to Shammo, the company is ramping up advertising for Go90 as Verizon works through the platform’s startup issues, such as fixing an issue with the Go90 search engine. Though the product is still new, Shammo said viewers so far have been drawn to the platform’s exclusive content and said the clipping and sharing feature is starting to take hold on social media.
Verizon will move toward monetizing Go90 in 2016, Shammo said, through three different models including a monthly subscription data plan, sponsored data and pay-per-view pieces. Premium content may also be included, he said.
As for the possibility Yahoo becoming a new piece of Verizon’s portfolio, Shammo said the carrier may consider it once the sale situation becomes more clear.
“We look at everything across the spectrum and if we see that it makes a fit and it works for our shareholders, then we’ll take a look but it’s way too premature,” Shammo said.
Similarly, Shammo downplayed the recent changes to Verizon’s wireless business. In October, it was revealed the carrier would cut jobs and reduce its number of regional offices from 20 to six as part of a restructuring plan.
According to Shammo, the slimdown is something the company does on a “regular basis.” The new structure, he said, will replace an old system that “just didn’t make sense for us anymore” and will allow the business to “be more cohesive and less bureaucratic.”
