Verizon CEO predicts headwinds, hilarity and growth in 2009
In a speech at an investor conference this morning, Verizon Chief Executive Officer Ivan Seidenberg predicted growth in 2009 despite “headwinds” from the general economy and Verizon’s pension expenses.
That assessment comes just two days after Bernstein Research analyst Craig Moffet predicted 2% growth for Verizon this year and 1% growth for AT&T.
The enterprise market – which some analysts have predicted could be harshest this year -- should be flat to slightly down in the first half of 2009, Seidenberg said, adding that because enterprises only contribute about 12% of Verizon’s total revenue, “I’m not sure that’s going to have that much effect on us.”
In the consumer wireless space, Verizon will grow largely through taking share from others, Seidenberg said. (It’s not clear how much of that growth will come from taking share from Alltel, which Verizon expects to acquire this week.) “I don’t know how much growth is out there, but we’ll get a disproportionate share of it,” he said. “And we’ll get a disproportionate share of switchers and changers.”
Seidenberg also vowed to exercise greater care in balancing investment with shareholder returns.
“One of the great things about getting old is you get to make the same mistakes over and over again,” Seidenberg said. But when it comes to investing capital at the expense of shareholder value, “I’m not making that one again.”
Verizon will make acquisitions that make sense but will also be mindful of its dividend levels.
“In the past, I might have put investors in the position where it was either/or,” he said. “I won’t do that again.”
However, Seidenberg was quick to point out the returns currently being enjoyed from Verizon’s investment in deploying fiber to the home. “We’re now at the point where there’s enough critical mass in our broadband strategy that we’re able to offset access line losses,” he said. Though the company’s DSL subscriber growth dropped precipitously last year, he said today, “Once we go into an area with FiOS, we win back the household.”
“We have much less exposure to the [legacy] landline business than people realize – very little,” Seidenberg said, pointing to expectations that Verizon’s fiber network will pass 15 million homes this year and 18 million next year. “The non-FiOS households in our footprint are not large.”
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