Verizon CEO: Fiber build out is paying off for more than 5G

Verizon sign MWCLA19
Verizon's fiber build is paying dividends beyond enabling its 5G services. (Monica Alleven/FierceWireless)

While Verizon's fiber build has been foundational for 5G, CEO Hans Vestberg said multi-use fiber is key to increasing business services revenues.  

Speaking during his company's fourth quarter earnings call Thursday morning, Vestberg said his company had a couple of years left on its fiber build out. Verizon is adding fiber to more than 60 markets outside of its ILEC footprint.

RELATED: Verizon's Hicks: One Fiber to rule them all

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Verizon's One Fiber project, which has been ongoing for several years, combined all of the telco's fiber needs and planning into one project. It also allows Verizon to plot out its fiber uses cases and purchasing plans across all of its sectors.

In addition to densification of the wireless network and enabling wireline access, having fiber deep is key for supporting radio access networks (RAN) as well as provisioning an increasing number of small cells.

With the addition of three cities announced on Thursday, Verizon is now up to 34 cities for its 5G services. While Vestberg acknowledged that fiber played a key role in serving its cell sites, he said on the earnings call that fiber has more use cases ahead of it, specifically for business services.

"I think this is one of the most critical assets in a network today – in today's world, especially as we build Verizon Intelligent Edge Network and you want actually to start delivering the 5G experience that we're expecting," said Vestberg, according to a Seeking Alpha transcript. "And I can tell you during 2019, I met so many large corporations that we now can actually work with, because our offering is so strong when it comes to fiber and 5G. But we need to put that structure in place for the Verizon business group in order for them to actually both execute on the revenue side, but also on the cost side, and that's really what we're focused on."

Verizon first announced its Intelligent Edge Network three years ago as a means to move away from its TDM networking to a more simplified Ethernet-based network. The shift will also give Verizon a single management platform, while also lowering its carbon footprint by using less power and space.

RELATED: Verizon CTO Malady: Fiber build-out continues at fast clip

Due largely to its 5G and fiber build outs, Verizon's capex last year was $17.9 billion, and expects to spend between $17 billion to $18 billion this year. On the other hand, AT&T has mostly pulled back on its fiber deployments.

Verizon chief financial officer Matt Ellis said on the earnings conference call that his company has started to monetize its fiber because it's multi-use. In the first quarter of 2019, Ellis said the majority of Verizon's new cell sites were going up on third-party fiber. In the fourth quarter, a significant number of the cell sites were going up on Verizon's own fiber.

"And then as we continue to go, we'll add other monetization opportunities over the course of the next couple of years." Elllis said. "So I'd say we're already starting to see the benefits of the fiber build in our income statement."

Verizon saw the fiber writing on the wall two years ago when it signed a $1.1 billion, three-year fiber and hardware purchase agreement with Corning to build a next-generation fiber platform to support 4G LTE, 5G, gigabit backhaul for 5G networks and fiber-to-the premise deployments to residential and business customers.

Also in 2017, Verizon also announced a $300 million fiber deal with Prsymian Group to provide additional fiber for its wireline and wireless broadband services.

"The interesting thing is that since we launched the Verizon Intelligent Edge Network, we have constantly found a lot of efficiency in our capex build and that of course is giving us possibilities to continue to do more and more," Vestberg said on Thursday's earnings call. "I think that our technology department has no constraints on what they need to do in 2020. This is what they have plans for in order for us to continue to fortify our 4G network, to continue with strong additions in 5G as well as continue with our fiber build."

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