Good morning, and welcome to Verizon’s First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode and there will be a question session after the presentation. Today’s conference is being recorded. I would now like to turn the call over to Mr. Brady Connor, Senior Vice President of Investor Relations.

Thanks, Brad. Good morning and welcome to our first quarter 2025 earnings call and customer value update. I'm Brady Connor and on the call with me this morning are Hans Vestberg, our Chairman and Chief Executive Officer; Tony Skiadas, our Chief Financial Officer; and we have our Consumer Group CEO, Sampath, who will provide an update on our consumer strategy. Before we begin, I'd like to draw your attention to our safe harbor statement which can be found at the start of the investor presentation posted on our investor relations website. Information in this presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Discussions of factors that may affect future results is contained in Verizon's filings with the SEC, which are available on our investor relations website. This presentation contains certain non-GAAP financial measures. Reconciliation of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials posted on our website. Discussions and comments related to our 2025 guidance exclude any assumptions regarding the potential effects of the tariff environment, owing to the uncertain and evolving nature of these impacts. Earlier this morning, a detailed overview of our first quarter results was posted to our investor relations website. We also posted supplemental materials relating to today's call on our website. With that, I'll turn it over to Hans.

Thank you, Brady. Good morning, everyone. Let me start by addressing the evolving policy and macroeconomic landscape. We continue to monitor the ongoing developments, and we're confident in our ability to effectively manage our business for our customers and shareholders. In periods of heightened uncertainty, our business has demonstrated remarkable strength, given the importance and the essential nature of our connectivity services, the size and quality of our customer base, and the strength of our balance sheet. Our diverse portfolio of offerings serves all market segments and positions us for success in any economic environment. With our bias for action and position of strength, we expect that we will not only weather the current environment but thrive in it. Now, let me turn to our results. We had an exceptional financial start to the year, delivering strong growth across our key financial metrics. Wireless service revenue was up 2.7%, at the high end of our guided range. Adjusted EBITDA of $12.6 billion was our highest reported result ever, growing 4% and exceeding our guided range. Free cash flow was up over $900 million and enabled continued execution of our capital allocation priorities. Even with the recent declines in consumer confidence, we remain confident in our ability to deliver on our 2025 financial guidance. Our comprehensive portfolio of offerings and strategic moves we’ve made over the last year position us well for a sustainable financial and subscriber growth while also improving the customer experience. These moves include our brand refresh along with continued evolution of our customer-first offerings such as myPlan, myHome, and My Biz Plan, organic and inorganic broadband expansion with the pending acquisition of Frontier, AI Connect and satellite partnerships that enable texting anywhere for free. RootMetrics recently recognized Verizon as the best, fastest, and most reliable 5G network in the US. Our network continues to get even better. On mobility, we're on track to deploy C-Band to 80% to 90% of our planned sites by year end and we are aggressively rolling out 5G advanced features. On Fios expansion, we are ahead of our plan year-to-date to deliver 650,000 incremental passings this year. On fixed wireless access, our multi-dwelling unit solution is expected to gradually ramp over time, along with continued expansion of homes and businesses covered with the ongoing C-Band deployment. Turning to our operational performance, our segmentation strategy focused on delivering targeted offerings is yielding positive results. We delivered a year-over-year improvement in combined postpaid and prepaid phone net adds. We did have a slow start on postpaid phone net adds, largely driven by elevated churn due to recent price increases and pressure from federal government accounts. However, our prepaid net adds of 137,000 were the best since the TracFone acquisition. In broadband, we continue to take share. With fixed wireless access and fiber, we have the most complete offering covering all market segments and we will cover more than 100 million premises over time. Our fixed wireless access product continues to lead our broadened growth and we have great momentum to reach our next milestone of 8 million to 9 million fixed wireless access subscribers by 2028. We're excited to expand our broadened opportunity and continue to scale our mobile and home offerings as we work towards closing the Frontier transaction. The consumer group's multi-year business transformation effort is progressing as planned, and you will hear more about that from Sampath shortly. In the business group, our private networks business continues to scale. We closed more than a dozen deals in the quarter, including private networks for AdventHealth and Nucor. We were named a leader in the Gartner Magic Quadrant for Managed IoT Connectivity Services worldwide and reached an agreement to deliver a turnkey IoT solution for Atlanta Hawks. We have seen accelerated interest in AI Connect and continue to expand our partner ecosystem. Looking ahead, our priorities are clear: a continued focus on growing wireless service revenue, expanding adjusted EBITDA and generating strong free cash flow; accelerating our mobility and broadband growth; scaling private networks; leveraging our existing fiber and edge compute assets to unlock new revenue streams through our AI Connect offerings; focusing on financial discipline, operational excellence, and customer experience; and finally, executing on our capital allocation priorities, investing in the business, supporting and growing our dividend, paying down debt, and eventually engaging in share repurchases. With that, I turn the call over to Tony.

Thanks, Hans, and good morning, everyone. As we reported earlier, the first quarter demonstrated our ability to drive strong financial growth with wireless service revenue growth at the upper end of our guided range. Additionally, we had our best-ever reported adjusted EBITDA result at $12.6 billion, and we delivered an over $900 million improvement in free cash flow from the prior year. We improved our total combined postpaid and core prepaid phone net adds year-over-year. We're taking share in broadband and we continue to innovate with myPlan, myHome, and our new My Biz Plan to deliver best-in-class value across all of our customers. Our consumer postpaid phone net losses of 356,000 reflect the impact of recent pricing actions. We exited the first quarter with positive momentum. Consumer postpaid phone gross adds in March were up mid-single-digits from the prior year, and the performance in April continues to be strong. Additionally, our new three-year price lock and free phone guarantee is resonating in the market. We remain confident in our ability to deliver better consumer postpaid phone net adds year-over-year for the full year. Business phone net adds were $67,000 in the period, impacted by pressure within federal government accounts. We continue to work with customers of all sizes to deliver connectivity solutions that match their needs. Our momentum continued to build in core prepaid where we delivered 137,000 net adds. Our strong execution and investment in Visible, Total Wireless, and Straight Talk is paying off and we continue to expect positive service revenue contribution from core prepaid in the second half of the year. In broadband, our Fios and fixed wireless access offerings are attracting new customers quarter after quarter. We had 339,000 net adds in the period, and we continue to take market share. This is a solid start to the year, and one we expect to build on as we expand our C-Band and Fios availability. Shifting to financials, we delivered strong results with 2.7% wireless service revenue growth. This reflects the benefits of pricing actions, expansion of fixed wireless access subscribers, and continued adoption of perks and premium plans. Adjusted EBITDA of $12.6 billion grew 4% in the quarter, which represents our best quarter of year-over-year growth in nearly four years and demonstrates our sustained and disciplined approach to growth. Adjusted EPS was $1.19 for the quarter, up 3.5% year-over-year. Finally, our free cash flow of $3.6 billion positions us to continue to pay down debt in alignment with our capital allocation priorities and ahead of the anticipated close of the Frontier transaction. In closing, we are pleased with the financial performance we saw in the quarter. As Hans mentioned, we have a lot of experience managing through uncertainty in the broader economy, and we have a product portfolio that allows us to compete effectively in any environment. We remain confident in our ability to deliver on our operational and financial goals for 2025. I will now turn the call back over to Hans.

Thank you, Tony. Now, let's discuss our strategic approach to the consumer market to drive sustainable subscriber and financial growth. It all starts with how we compete and go to market. Our network is the foundation of everything we offer. We have the best and most reliable network, and we continue to extend our network leadership with our ongoing C-Band deployment and broadband expansion with fixed wireless access and fiber, including the pending acquisition of Frontier. Our customer-first connectivity offerings deliver unmatched control, value, and simplicity for all our customer segments. Over the last two years, we have introduced targeted offers for all customer segments across mobility and broadband. As the market leader, we remain committed to introducing new and innovative offerings that meet the evolving needs of our customers. Next is the value-added services, which is one of our key differentiators in the market. We offer add-on perks, including exclusive discounts on some of the top streaming services such as Netflix and Max. Given the size and the quality of our base and the scale of our distribution network, we offer rates that customers cannot find anywhere else and we will continue to expand our product portfolio. Over the past few years, we have dedicated substantial resources to capital to enhance our customer experience through various initiatives, including AI for customer care and personalization. Although the industry, including Verizon, still has room to improve, we have made great progress towards our goal of seamless customer interactions. Lastly, our brand is a pivotal element in our go-to-market strategy. Recognizing its importance, we made a strategic decision to refresh our brand last year. We are committed to further developing and strengthening our brand to drive continued growth and customer engagement. By focusing on these key pillars of our value proposition, we attract new customers, foster loyalty among existing ones, and maximize the long-term value of each customer relationship. This holistic approach ensures that we remain competitive in the marketplace and drive sustainable subscriber and financial growth. Now, let me turn to Sampath, who will provide more details on our consumer transformation journey.

Good morning, everyone. When I stepped into the role of consumer unit CEO just over two years ago, Hans and I immediately set a course for a multi-year transformation that offers what customers need in today's increasingly dynamic economic environment. We committed to delivering real value to our customers while driving sustained long-term growth. Let me walk you through our transformation journey and the results so far. Beginning in 2023, we revamped our sales engine, moving to a regional model, individual sales incentives, and a stronger focus on local marketing. We also launched myPlan, giving customers more control, value, and simplicity. This allowed us to significantly reduce our perceived price premium while driving higher average revenue per user through perks, insurance, and financial services. In 2024, we relaunched our brand and accelerated myPlan and myHome adoption. We solidified the Verizon model of convergence with the announcement of the Frontier transaction and ramping up our current in-footprint fiber build. This transaction will help enable a long-term goal of offering broadband to over 100 million premises, including fiber passings of 35 to 40 million. We also turned around our prepaid business, which includes the industry's largest portfolio of brands. This was driven by a revamp of our value propositions, expanded exclusive and third-party distribution, and instilling the same operational rigor we introduced in our postpaid business. The core prepaid brands returned to subscriber growth in 2024 and achieved their best results since the TracFone acquisition this quarter. This demonstrates our ability to win across all market segments. Customers are responding to our offers, and we anticipate gaining market share in prepaid this year. As we enter year three, we are doubling down on our customer-first strategy with an increased focus on customer retention with the Verizon Value Guarantee, an industry-leading three-year price lock, free phone guarantee for everyone, and savings you cannot get elsewhere. Before I dive into the Verizon Value Guarantee, let us quickly recap what makes our offering stand out from the competition. Our strategic differentiation centers on creating real customer value through a unique combination of network superiority and customer-first offerings. Our myPlan and myHome offerings have been the key drivers of our transformation. These offerings go beyond basic connectivity to include premium entertainment and adjacent services that deliver significant savings for the customer. Today, you can get eight of the most popular streaming services from Verizon for $50. That is value customers can only get at Verizon. Our portfolio of adjacent services includes industry-leading insurance products for both mobility and the connected home, giving customers even more peace of mind. We offer even more ways to save through our financial service partners and products, including the Verizon Visa card and the open bank high-yield savings account with Santander, both exclusive to Verizon customers. This business is growing at a double-digit rate and bringing in margin-rich service revenue. Finally, we launched the Verizon Access loyalty program, giving customers access to events like the exclusive presale of 100,000 Beyonce concert tickets, NFL, NBA, and NHL games, and lifetime experiences, such as the 140,000 free tickets we gave out to the first Verizon Super Bowl FanFest parties. There is no other plan in the industry like myPlan and myHome, and the beauty of having them build side by side is our ability to offer seamless account linkage and promote joint offers. For converged customers, our retention rates are significantly better than those with just mobility or broadband, validating our convergence strategy. Simply put, we offer the most differentiated value proposition in the industry. With our recently launched offers for both new and existing customers, we are delivering what people want and need on their terms. So now let's turn to what we announced a few weeks ago. We launched a game-changing offer, a three-year price lock and a free phone guarantee with trade-in for new and existing customers. This offer was contemplated in our 2025 guidance and is a key component of our strategy to deliver sustainable growth. The premise of this offer began several quarters ago as emerging consumer trends showed a growing desire for predictability, price control, and value, all things that are particularly relevant in today's economic environment. Customers want peace of mind, and we are giving them just that. The key elements of this offer include a three-year price lock guarantee that covers the network portion of all tiers of myPlan and myHome, and current customers were automatically enrolled on day one. Guaranteed trade-in credit for phones to new and existing customers within their planned tiers. Free satellite text messaging on all plans. Customers should not have to pay for texting, and it's part of the value we provide to our customers. Customers love our perks and the massive savings they deliver. We had over 10 million perks subscriptions at the end of the first quarter. We now anticipate 15 million subscriptions on our platform by the end of this year, an increase of 1 million perks from our prior forecast for year-end 2025. They love getting more value for their money with the Verizon Visa Card and Openbank high-yield savings account. Customers with both mobile and home services get a free monthly perk that will drive customer loyalty. We did not just launch an offer; we set a new standard for customer value, and customers are responding very well. Early indicators in April suggest strong gross add momentum and very good reception from customers, including many new customers attracted to Verizon. We expect the Verizon Value Guarantee to provide many benefits to Verizon. First, growth. We will continue to drive revenue through higher volumes, higher premium mix, perk adoption, and upgrading customers to myPlan. All of that is in addition to revenue benefits from a growing FWA base along with the wholesale business and the momentum with prepaid, which we expect to turn service revenue positive in the second half of the year. Second, better customer retention. In the past, we've made necessary price adjustments, which impacted churn, but we expect trends to improve through the year, and this launch puts us on a path to get back to the lowest churn in the industry over time. Third, we have constructed this offer in a flexible manner to give us continued financial discipline. The price lock applies to myPlan and myHome network plans only. It doesn't apply to perks, discounts, taxes, or fees, and we can still adjust prices on legacy plans or introduce new plans if we see an opportunity in the market. Another important note is that the free phone offer will be tiered by plan and require a device trade-in. Overall, we believe this is just the beginning of how we'll earn lasting customer loyalty and continue to grow the Verizon base, including delivering better consumer postpaid phone net adds in 2025 compared to 2024. We are back to leading the market, not reacting to it, and we are the only carrier with the brand portfolio covering every price point, positioning us for further growth across every segment of the market. The three-year price lock guarantee is the next phase in our consumer transformation, giving consumers the best network, value, and 24/7 support with myPlan and myHome, plus additional peace of mind with the free phone and satellite texting. We want to be people's first choice, providing products, services, and experiences they can't get elsewhere. With that, let me turn back to Hans.

Thank you, Sampath. In summary, we are on plan with our multiyear consumer transformation. We're offering the most differentiated value proposition, and we are well positioned to drive subscriber and financial growth. I'm incredibly proud of the team's dedication and efforts in transforming the business. I'm confident that the actions we are taking will set the business up for sustainable long-term growth and extend our industry leadership. Now, Brady, we are ready for questions.

Thanks, Hans. Brad, we're ready for the first question.

The first question will come from John Hodulik of UBS. Sir, your line is open.

Hey, thanks, and good morning, guys. Two questions, if I could. Maybe first for Hans on the subject of tariffs. Any additional color you can give us on how tariffs on, I guess, first handsets and then telecom equipment could affect the business? On the handset side, do you expect the promotions to sort of scale with tariffs and what do you expect the impact to be on upgrades? And then on the equipment side, is tariffs on equipment coming into the US mean the budget stays the same and maybe you do less homes passed? Or just how that unfolds? And then secondly, for Sampath, thanks for all the color on the consumer segment and the strategy and thanks for the color on the gross adds leaving the quarter. Can we talk a little bit about churn? I mean, is all the new plans and promotions and offers you have in place, does that help churn in the second quarter or do we have to wait until the second half of the year? And that comment on getting back to industry-leading churn, is that something you expect to achieve by the fourth quarter, by the end of this year, or just more color on how that plays out would be great? Thank you.

Thank you, John. Let me talk about the tariffs. Of course, tariffs are a moving target. But if we take our capital expenditures, it's a very small portion of the $18 billion, which is the midpoint of the guide this year that is exposed to any tariffs. On top of that, we are working with all our suppliers, and we have done so. I mean, during COVID-19, we had no impact at all with the supply chain issues there were because I think my team is the best in the industry to handle that. So that will not change any type of investments we're doing in CapEx or anything. We cannot foresee that. When it comes to handsets, that's also very early to say where the tariff is going to go and what's going to happen. But in general, if the tariff is going to be as high as they say on the handsets, we are not planning to cover that in our work. That's just not going to be possible. So, we will continue to be with financial discipline in whatever promotions we have, but we will not cover any enormous increases on tariffs on handsets. That's ultimately going to hit the consumer in the market. But again, it's too early to say. We don't know where tariffs are going to go. But I think my team is well prepared for handling all of it. And on the consumer side, I think Sampath has talked quite a lot about it. I think that the team has done tremendous work with doing all the new proposals and the new promotions we had all the way from myPlan and myHome and all of that. And now we come to the third leg with the price lock and the phone guarantee. I think we're right in the moment, and we're leading from a very strong financial position. But I'll let Sampath talk a little bit more about churn and where we are there.

Thank you, Hans. Look, we made a decision to price up certain cohorts in December and January, and they were the right trade-offs to make. It helped us lock our revenue for the rest of the year and it was the right thing to do. Look, in Q1, the cohorts that were priced up had higher elasticity than anticipated. The higher churn can be largely attributed and isolated to those cohorts. Because of that, we think churn is transitory; it is abating, and we expect to get back to BAU by the second half of the year. And we've got other levers that we are deploying quite aggressively. The first and the biggest one is the Verizon value guarantee. The three-year price lock and the free phone base is resonating really well, both for our base and for new customers as well. Our second is C-Band expansion. As Joe gets to between 80% and 90% of all macros to be C-Band enabled, you tend to see lower churn when that happens as well. Finally, the Verizon model of convergence. Look, we added 339,000 broadband customers between consumer and business and strong volumes, but the vast majority of those customers are converged, which tends to give a benefit to churn. Lastly, better customer experience and we have a lot of AI-driven customer experience updates in the funnel in the second quarter and the rest of the year. Given all of this, we feel that churn is transitory, abating, and expected to get back to a BAU posture by the second half of the year.

Great. Thanks guys.

Yeah. Thanks, John. Brad, we’re ready for the next question.

The next question will come from Ben Swinburne of Morgan Stanley. Your line is open, sir.

Thank you. Good morning. Maybe just to follow on the conversation with Sampath. Can you talk a little bit about the March and April gross adds improvement and sort of how much that's been tied to specific promotions, including the new three-year price lock? And there was a lot of talk during the first quarter at various conferences about competitive intensity. I didn't hear you guys talk about that as being something that's incrementally more concerning, et cetera. So maybe frame the gross adds commentary, if you can, and sort of the new plans in the context of the competitive environment. And then maybe for Tony, 4% EBITDA growth for the quarter obviously sets you guys up really nicely for the year. I think your business margins were the highest since '21. Anything in the quarter around expenses that we should think about as non-recurring? Or any commentary on how you're feeling about the EBITDA guidance for the year? It seems like you could be trending maybe to the upper end of the range, but I'll let you talk to that, if you will. Thank you.

Thank you, Ben. I'll start and then I'm going to hand it over to Sampath and Tony. But on the competitive environment, I think we have seen that for quite a while. I mean, it is a competitive market. We perform well in that market. I think our propositions that we have had in the market has really resonated with our customers, both on the business side and on the consumers and then adding also both the wireless business and the broadband business. I mean, the broadband business continued to gain share in this quarter. We have done well now for several quarters. Now we turned around the prepaid business as well, which I'm very proud of what the team has done. I think we're competing well. But of course, it's going to be competitive. It's a great product and it's a great market, but there's nothing new when it comes to that. I would ask Sampath to comment on the momentum that we have gained in March and April. But on the finance, before I move it over to Tony, what you saw in this quarter is that how hard we worked with efficiency because we have leverage right now, we grow 2.7%, and we have 4% bottom line. Our expenses, if you take it by the hands, the cost is down compared to last year. So we're coming down in expenses. The team is doing a great job here. On the Verizon business group, they have been on the journey for years right now with the headwind of wireline to take down costs while at the same time, building AI connect, fiber, broadband business, wireless business. Now you start seeing that they turn around, this is the second quarter of year-over-year growth. I know that Kyle and the team are committed to continue that work. So, I will start with Sampath talk about the momentum in March and April, and then we'll go over to Tony talk a little bit more about leverage.

Thanks, Hans. Look, it's always a competitive market. We pulse in and out promotions as we see volumes in the market. When we have an opportunity to go for volumes, we go for it. Look, we have our playbook. We like our playbook. It's an aggressive playbook, but it's also a playbook that lets us win. In March, we started seeing mid-single-digit growth in gross adds, and the last two weeks of March were very good and strong for us. As we came into April, we launched the Verizon Value Guarantee, and we are seeing double-digit growth in gross adds. I think that's largely because how well the offer is resonating both for base as well as new customers coming into the category. So, we have good momentum coming out of March and currently in April right now. This gives us comfort that, in 2025, we'll have better phone net adds than in 2024. Because in the back half of the year, we see churn coming back to a BAU posture, and continued momentum on gross adds, the combination of those two is what gives us comfort that we will have a good phone net add year in 2025.

Okay. Good morning, Ben. So on the EBITDA in your question, look, we're off to a great start, and we're very confident in the EBITDA guide. It starts with the strong service revenue growth that Hans mentioned at 2.7% and very healthy customer economics when you look at that versus the amortization as well. As Hans mentioned, we continue to focus on the cost transformation work and always working to make the business more efficient, whether it’s customer care, managed services work that Kyle and Sampath are doing day in and day out or the network decommissioning as well. We also completed our voluntary separation program, and we expect to see the full run rate benefit of that for the balance of the year. We've said many times, volumes are important, but we're going to drive volumes and be very disciplined in support of our service revenue, EBITDA, and free cash flow guidance, and that has not changed at all. On your question on business margins, look, Hans mentioned this earlier; the team is doing a great job in growing the wireless portfolio. If you think about the mix of business shifting more wireless now, Kyle and the team have been growing both mobility and FWA for many quarters now, so that mix shift is skewing more wireless. As that skews more wireless, that brings more margin with it. We're also seeing early contribution from private 5G networks and also AI Connect, where we saw improvements in the fourth quarter. On the cost side, the team continues to take costs out, being very disciplined at the deal desk, particularly on business wireline, and also doing the work around HCL with managed services and also the network decommissions as well. We're pleased with the start of the year. The goal is to grow the business margins for the full year, and we're off to a great start.

Thank you, everybody.

Yeah. Thanks, Ben. Brad, we're ready for the next question.

The next question comes from Jim Schneider of Goldman Sachs. Please go ahead, sir.

Good morning. Thanks for taking my question. Maybe first off, on the consumer side, maybe Sampath or Hans, you could talk to the broad sort of behavior you're seeing from consumers from March into April. Are you seeing any kind of significant change in consumer behavior, trade downs, more reticence to upgrade phones? Or actually are you seeing potentially consumers react to the potential for tariffs and actually pulling forward some upgrades into the month of April? I mean, maybe how are you thinking about that, the impact of the sort of knock-on impact of tariffs on consumer behavior, anything you're seeing in terms of the deterioration of consumer health, credit metrics or whatnot? And then maybe as a second question, can you maybe just sort of talk about following on the business EBITDA question, I mean that really sticks out to me as the best growth you've seen in quite some time. Can you maybe talk about the cost metrics underlying that? Are those structural in nature due to the HCL arrangement or are there any one-time effects that we should think about? And do you think business EBITDA growth is sustainable from here? Thank you.

Thank you. When it comes to consumer behavior, I mean, in general, we haven't seen any major consumer shifts in behavior, even though we read the same articles as everybody else that consumer sentiment is coming down. Of course, we have a product; the mobility and broadband, are so essential for our consumers and for our business customers because it's just relevant. So we haven't seen that. And Tony can talk a little about the payments as well, but they have continued very intact, no deterioration on payments. Speculation regarding any growth in handsets due to worries about tariffs has resulted in a somewhat uptick, but I think it comes more from our offering that we started with a new three-year price lock in as well as that we had any phone guarantee trade-in. I think that has driven a little bit more handsets for us, not per se. But maybe Sampath and Tony will talk a little bit, and Tony will talk about the margin as well. So let's start with Sampath about the momentum there.

Look, we have good momentum in our business, and March and April were very strong, with April having double-digit growth there. We're seeing good premium mix, meaning a portion of our base new customers that is taking our premium plans has actually grown higher. So that suggests that our value proposition is resonating well and customers like what we offer. In terms of upgrades, Q1 was a bit soft, and we didn't chase volumes where there was no demand. We didn't think it made sense for us to chase volumes there. For the whole year, I think we're still committing to a mid-single-digit growth in overall upgrades. There will be some volatility quarter-to-quarter as that works through. As we come into April, there will be some pent-up demand mostly from the Verizon Value Guarantee. Customers really like that, so they're going to take some advantage of that. Overall, for the year, we still think mid-single-digit growth for upgrades holds. Tony?

Yeah, sure. And good morning, Jim. So on the customer payment trends, look, Hans said this in the prepared remarks; the business is very resilient, and the demand and priority for connectivity is still high, and the payment trends we see are still very stable in both consumer and business and very much at normal historical levels. The ageings and the quality of the receivables continue to be very strong. The bad debt we see, and as you know, we have a very high-quality customer base. The bad debt that we do see trends with volume growth, and you see the gross add growth. But as always, we're going to continue to monitor the trends very closely, but no change in trends there.

And then on the Verizon business group's performance, I think that they are now into year-over-year improvements and the focus for Kyle and the team together with Tony is to continue to drive year-over-year improvements, which can be a little bit up and down. But definitely, the focus and the target is clear for us: continue to grow our Verizon business bottom line. They have proven it in two quarters right now. So, we're pleased with what we're seeing right now.

Thank you.

Yeah. Great. Thanks, Jim. Brad, we are ready for the next question.

The next question comes from Michael Rollins of Citi. Your line is open, sir.

Thanks and good morning. So as you're looking to still target better consumer phone net adds in '25 over '24, can you give us an update on how you're seeing postpaid phone industry growth and the volumes you're expecting for the year, and how important that is relative to your target for your own volume? Within that, are you seeing any impacts from changes in immigration policy? And do you have a better sense of how to frame the potential sensitivities to the forward operating prospects? And then just one more, if I could. You mentioned some impact from the federal government on business postpaid phone net adds. I'm just curious if there's additional impacts that you could see as you move through this year, whether it's on the wireless side or on the business wireline side? Thanks.

Let me start. First of all, I'm going to let Sampath comment on the postpaid market. But I would say, on the immigration, we don't have any impact of that, and that's not something that we have seen anything from. When it comes to the federal government, what we comment on in the quarter was wireless, where we had a little bit of reductions in wireless as we saw some impact of the new government and their efficiency work. But all in all, all other things in wireless, when it comes to large enterprises and SMBs, remain strong and continue to take share. I'm pleased with what I see. So that's where it is. But, Sampath, talk about the postpaid market business and consumer.

Look, earlier in the year, we had estimated that the market is likely to grow between 8 million and 8.5 million postpaid phones, both for the consumer and the business segment. Sitting where we are right now, we think that number holds. Remember that more than 50% of that is pre to postpaid migration, i.e., customers who are on prepaid plans migrating to postpaid. This is not a segment Verizon typically plays in directly. We play through our partners, but directly we do not play in that space. So, that segment could have some impact, but very little impact to Verizon. The second is, on the prepaid side, immigration could impact the lower end of prepaid. That's also not a segment where Verizon has a high level of participation. Despite lower immigration in the last three quarters, we're actually seeing our best performance in a very long time. We are gaining on the higher end of prepaid, which is why we are seeing strong performance despite low immigration.

Great. Thanks, Mike. Brad, we are ready for the next question.

The next question comes from Sebastiano Petti of JPMorgan. Your line is open, sir.

Thank you for bringing me back into the queue. I have a quick question regarding EBITDA in the first quarter and how we should assess that. It seems that the SG&A expenses in the consumer sector were not necessarily low, but was there any cost savings or reduction in spending related to SG&A that might increase again in the second quarter and beyond, especially considering the price guarantee and the potential for increased advertising and marketing efforts? This is just a housekeeping question. Additionally, as you consider the broader multiyear convergence strategy, there is some fiber accessible in the market and others seeking potential partnerships. From a broader perspective, do you think it would be beneficial to partner with more fiber providers to enhance the Fiber-to-the-Home initiative or your fiber location expansion? Alternatively, should you consider accelerating your fiber footprint development even if it impacts leverage and free cash flow temporarily before the Frontier deal closes? Thank you.

Thank you. I think I can start with the fiber, and I will leave it to Tony to talk about EBITDA and the cost savings. On the fiber, we're already ramping up right now our fiber deployment, and that's contemplated in our CapEx from 450,000 OFS to 650,000. So, that's ongoing. Our focus right now is, of course, to close Frontier. When we have Frontier closed, we have said initially, as we didn't have all the data, that plus $1 million OFS a year should be what we're targeting and plus means plus. We haven't defined in that; we need to get closer to the closing to give you an update. So we are very focused on that and see that we're doing the right thing. On convergence, the only thing I would say, first of all, I think we have owner’s economics on everything in broadband and mobility, which means that we have a great position on convergence. A big portion, I would say, the majority, if you take the majority of all the customers coming in on broadband this quarter, they converged. So it's actually working for us. So maybe, Sampath, you can comment on that first, and then we'll go to Tony on the EBITDA.

Hans, we saw 339,000 broadband net adds, both for the business and consumer side, spread over FWA and Fios. The vast majority of them were in a converged offering, which has significantly better churn. We expect continued improvement as our converged position improves every single day. Look, for volume, we're doing extremely well. We are taking share every single quarter in the market. We are growing on volume and price. That is the perfect thing to build a long-term sustainable business in the broadband space.

Yeah. Hey, Sebastiano. On your question on EBITDA, look, we started out of the gate very strong with 4% growth. We were very disciplined in our approach. We didn't chase volumes in the first quarter as we knew we had the Verizon Value Guarantee launching in early April. We launched it from a position of financial strength, and that was very important. If you look across the margin profiles, this is a team sport. We guide at the consolidated level too. We had very strong cash flow in the quarter as well. I'm proud of the cash flow result, having $900 million of free cash flow improvement and a lot of on the operating cash flow side. So we are very confident in the EBITDA growth and the start to the year.

Thank you.

Yeah. Great. Sebastiano, thanks. Brad, we’re ready for the next question.

The next question comes from Craig Moffett of Moffett Nathanson. Please go ahead, sir.

Good morning. You mentioned conversion, which ties into my previous question. I’d like to shift the conversation to the potential renegotiation of your MVNO agreement with the cable operators. Can you discuss how your relationship with them as customers has been changing? What are your expectations for the renegotiation this year? Do you see the cable operators as part of your convergence solution since they offer Verizon wireless service, or do you view them as competitors in convergence?

Thank you, Craig. You know that we cannot deep dive into our MVNO relationship, but I will try to do my best here. Number one, our strategy is to build a network once and have as many profitable connections on top of it. That's also where our MVNO partners are playing a role. I would say we have a very good relationship with our MVNO partners and any business-to-business relationship. So we continue to have a good conversation with them and offering them service on the best network in the United States. This is an accretive business for us, and it is important in our overall strategy. Hopefully, our partners and customers on the MVNO side feel the same, but that's at least what I believe.

Yeah. Thanks, Craig. Brad, we’re ready for the next question.

The next question comes from Kannan Venkateshwar of Barclays. Your line is open.

Thank you. To start with fiber, I want to clarify the framework we're using regarding the goal of 35 million to 40 million. What does that mean? Additionally, there are some spectrum bands that may be available for auction this year and possibly over the next few years. I would like an update on your spectrum position and your thoughts on the bands coming up this year and in the future. Thank you.

Thank you, Ken. I hope that you're not using a Verizon line because it was a little bit wobbling. Anyhow, I think I heard your question. The first one was around the long-term plan of 35 million to 40 million fiber coverings. Yeah, that's the long-term plan we have. We did that communication when we just made the offer to acquire Frontier. We are, of course, in the planning stage right now and of course, working through the regulatory approvals. As soon as we get more clarity and closer to the closing of Frontier, we will provide more updates on timing, etc. Everything with the Frontier transaction is going as planned. Our plan is to close it in the first quarter. So that is going according to plan, but we are in the planning stage right now, as we have not that acquired entity in our hands. However, we will provide updates closer to the closing. But that was a long-term number we gave when we made the acquisition. Regarding spectrum, I think we have a really good position on spectrum. I think the C-Band and millimeter wave positions that we have are really yielding. We previously noted that when we deploy C-Band, we have lower churn, better step-ups, and we are creating fixed wireless access opportunities; it truly makes a difference for us. The secondhand market for spectrum is always coming in and out; we always evaluate if it makes sense for us to buy it. It's a buy versus build decision, but I don't see any major secondhand market spectrum coming up. I think it's more important long-term for the US government for the competitiveness of the US to actually keep bringing out spectrum all the time to allow carriers to continue to grow. I think we all are aligned on that in the industry, and it's going to be important. However, that's not a short-term issue, nor even a medium for us. But over the long term, the US needs to come up with spectrum to continue to compete, especially with 5G-Advanced and 6G coming later on.

Yeah. Thanks, Ken. Brad, we are ready for the next question.

The next question comes from Sam McHugh of BNP. Your line is open.

Thank you. I have two quick questions. First, regarding the tariffs, you seemed fairly relaxed, so I'm curious about why you included a caveat in the guidance. How might tariffs potentially affect us? Secondly, concerning broadband, there's plenty of discussion about market weakness in wireless. What trends are you noticing in broadband? Are you experiencing higher churn, which could explain the weaker subscriber numbers, or is it more related to gross additions and overall market growth? Thank you.

On the tariffs, I mean, I don't think anybody is relaxed on tariffs, given the volatility of where tariffs are going. I just conclude that if I take the midpoint, or $18 billion guide on capital expenditures this year, it's a very small portion that is exposed to tariffs. We are a US-based company, investing in the US. Fiber is US-centric; everything we do with labor and product is fiber-based. Wireless equipment, of course, we’re importing, but a smaller portion of the total $18 billion. That's why I'm saying that we're going to handle this issue. We handled it before with our suppliers and our strategic suppliers, and I don't see that we will not handle it this time. That's why I'm talking about that. What I mentioned on handsets still remains. If we're going to see those types of increases on handsets that we've heard, we are not planning to absorb those; we would need to pass that on to the customers. That's the only way to do it because that's a substantial amount of money. On broadband, we continue to see very good performance there. Our Fios is doing exceptionally well. The churn is extremely low. On the Fixed Wireless Access, we have good gross adds because it's an appealing product. Our churn is higher than on Fios because that product is in early stages compared to Fios that has been around for over 20 years. However, we are witnessing improvements quarter by quarter. We are seeing the acceleration here as well. Maybe Sampath can add something about what we see on the usage and the step-ups.

What we are seeing is that it's a normal market in broadband. It is competitive. But what's intriguing for us is because of our segmentation approach on Fixed Wireless Access and Fios: on Fixed Wireless Access, we lead with value for money; we lead with convenience; and on Fios, we lead with just incredible reliability and performance. That segmentation strategy is working well, and we are growing on both sides. That's why we had a very strong quarter with 339,000 broadband net adds for both consumer and business. In terms of churn, Fios had its best churn in a very, very long time this quarter, which goes back to the strong NPS, customer satisfaction, and reliability of the fiber plant. On FWA, we are seeing sequential improvement in churn, which is essential for us as the product grows and customers get comfortable with the plan. In terms of ARPU, we are witnessing good ARPU growth across both Fios and our Fixed Wireless Access products. Two things are happening: we are achieving better price realization and a better premium mix in terms of higher-end plans on Fixed Wireless Access and 1-gig-plus plans on Fios. The combination of those two is yielding good ARPU growth in this market. Overall, it's a very positive market for us.

Yeah. Thanks, Sam. Brad, we have time for one last question, please.

The final question for today will come from Bryan Kraft of Deutsche Bank. Your line is open, sir.

Good morning. Thank you. I had two if I could. First is a follow-up question on the March and April gross add strength. I think early in 1Q, industry volumes were pretty soft. So just wondering if part of the March and April strength has been from a pickup in those industry volumes or if it's more market share taken driven by your new offers? The second question I had relates to your MDU solution for fixed wireless. I was wondering if you could talk about the breadth of that launch. Maybe comment on what some of the markets are that you've launched in, how available the product is in those markets? Any comment on homes available? Also, how is the product performing? What kinds of speeds and reliability you're seeing? Lastly, can you talk about what's involved in expanding that service's availability from here? What are the gating factors to doing that? Thank you.

On the first question about the momentum we are seeing in March and April, I think what we see, that's because of our offerings. I mean, I don't see anything else; the industry is coming back or not. I believe this is related to us; how we perform. Remember, this is a plan that Sampath and his team, together with our CMO, have had for a long time to take the next step with our offerings, and it resonates with our customers because we have learned that our customers want control, predictability about the offerings, they want the simplicity of the offers, and they want the value. We're hitting on all three of them. So I think that maybe Sampath can comment after this, but I can talk about the MDU. Yes, we have launched the MDU solution in more than 15 markets. In the beginning, you start with certain high rises. Of course, this is part of the Fios work. You need to see that the landlords in every household accept our solution, and then you can sell it into the whole household. We work in parallel with both a technical solution as well as seeing that we are opening up more and more MDUs. That roll-out is ongoing throughout the year. It's mainly for the consumer side, opening up various solutions across the two products, but it allows options for our customers to choose different speed tiers as we introduced with Fixed Wireless Access. So we feel good about the solution and the technology, and this is simply adding opportunities for us to grow our broadband.

In March and April, we started seeing mid-single-digit growth in gross adds in March, and the last two weeks of March were very good and strong for us. As we came into April, we launched the Verizon Value Guarantee, and we are seeing double-digit growth in gross adds. I think that's largely because how well the offer is resonating both for base and for new customers coming into the category. So we have good momentum coming out of March and currently in April right now. This gives us comfort that, in 2025, we'll have better phone net adds than in 2024. Because in the back half of the year, we see churn coming back to a BAU posture and continued momentum on gross adds; that combination is what gives us confidence that we'll have a strong year for phone net adds in 2025.