Verizon Bets on Turnaround as Cost Cuts Fund a New Growth Playbook

A critical inflection point

Verizon’s fourth-quarter presentation had the feel of a company trying to redraw its own map. Chief executive Dan Schulman opened not by celebrating numbers, but by acknowledging a recent network outage that cut against the group’s long-cultivated image of reliability. From there, he framed Verizon as a “turnaround story,” insisting that the US wireless incumbent is now “playing to win” after years of ceding share.

For investors, the heart of this new narrative is a deliberate pivot away from what Schulman called “empty price increases” toward volume-driven growth, funded by a sweeping cost overhaul and tighter capital discipline. The numbers on display showed early evidence of that shift — and an unusually explicit promise that the pain in near-term revenue will be the price of a more durable earnings trajectory.

Volumes return to an old giant

On the commercial front, Verizon’s fourth quarter was its strongest in years. Across mobility and broadband, the company booked more than one million net additions, the highest quarterly volume since 2019. In the core postpaid phone category, net adds reached 616,000 — a six‑year high — with 551,000 coming from the consumer unit, itself a five‑year peak.

Management was at pains to emphasise quality over quantity. Schulman described Q4 as “fiscally responsible”, noting that Verizon did not change core base pricing and focused on new-to-Verizon customers, which carry the highest lifetime value. Postpaid churn remained “elevated,” the legacy of earlier price moves and intense competition, but executives cast that as one of the biggest levers for improvement in 2026.

Prepaid is also quietly turning into a growth engine. The carrier delivered its sixth consecutive quarter of positive net adds in core prepaid, adding 109,000 subscribers, while its Visible and Total by Verizon brands have now been scaled into a 2,000‑store physical footprint.

On broadband, Verizon’s twin strategy of fixed wireless access (FWA) and fiber continued to gain traction. The group added 372,000 broadband connections in the quarter, with 319,000 from FWA and 67,000 from Fios Internet, the best fourth quarter for Fios net adds since 2020. FWA net adds accelerated versus the prior quarter, helped by product innovation and footprint expansion.

Frontier reshapes the fiber chessboard

The closing of the Frontier Communications acquisition has turned Verizon into a fiber heavyweight almost overnight. Including the acquired footprint, Verizon now has more than 30 million fiber passings. Frontier itself added 125,000 fiber customers in the fourth quarter, a 29% rise year-on-year, and deployed roughly 1.3 million new passings in 2025, reaching over 9 million.

Schulman cast fiber as central to Verizon’s future. The company has raised its medium‑term target for fiber passings from 35–40 million to 40–50 million, and is planning at least 2 million organic passings this year alone, augmented by partnerships such as Tillman and the acquisition of Starry’s assets to help with multi‑dwelling units.

There is also a clear cross‑sell angle. Management highlighted that Verizon is “significantly underpenetrated” in wireless in Frontier markets, and that bundling broadband and mobility yields a roughly 40% reduction in churn versus stand‑alone mobile. The implication is that the Frontier footprint will be mined not merely for broadband growth but as a convergence engine to stabilise — and ultimately raise — mobile customer lifetime values.

Cost synergies, meanwhile, are tracking ahead of schedule. Verizon now expects more than $1 billion of run‑rate operating cost synergies from the Frontier integration by 2028, double its initial estimate, driven by network integration, contract efficiencies and go‑to‑market savings.

Financials: conservative top line, ambitious bottom line

On the headline numbers, Verizon delivered on every element of its 2025 guidance, including targets that had been raised mid‑year. Wireless service revenue grew 2% for the year. Consolidated adjusted EBITDA came in at $11.9 billion in the fourth quarter and $50 billion for the full year, up 2.5% and positioned, in the company’s telling, to be “industry‑leading.”

Adjusted EPS reached $1.09 in Q4 and $4.71 for 2025, up 2.6%, with growth driven largely by the EBITDA uplift. Free cash flow — the figure that ultimately underpins Verizon’s ability to invest and return capital — rose to $20.1 billion, the highest since 2020 and again flagged as likely top of the sector.

The balance sheet continued its slow repair. Net unsecured debt declined by $3.6 billion year-on-year to $110.1 billion, taking net unsecured leverage to 2.2 times adjusted EBITDA — inside Verizon’s 2.25x target range even before consolidating Frontier. The company also made $1.3 billion of discretionary pension contributions, leaving the pension fully funded at year‑end.

Looking ahead to 2026, management described the year as “transitional” for revenue but transformational for earnings and cash generation. Verizon is guiding:

• to 750,000–1 million postpaid phone net adds, roughly 2–3 times 2025 levels and the highest since 2021;
• to 2–3% combined mobility and broadband service revenue growth, equivalent to about $93 billion in service revenue;
• to flat wireless service revenue, as higher volumes, FWA, fiber, premium mix and “perks” are offset by the lapse of billions of dollars of prior price increases and ongoing promotional amortisation;
• to adjusted EPS of $4.90–$4.95, 4–5% growth and a sharp acceleration from recent years; and
• to free cash flow of at least $21.5 billion, up roughly 7% and the strongest since 2020, even after absorbing Frontier’s near‑term cash flow drag from heavy fiber investment.

Intriguingly for a capital‑intensive business, Verizon chose not to guide on EBITDA but did say adjusted EBITDA will grow faster than EPS, implying robust operating leverage once Frontier‑related interest expense (about $1 billion) and depreciation and amortisation (about $1.5 billion) are taken into account.

A $5 billion war chest from cost

Beneath these numbers lies an aggressive cost agenda. Schulman spoke plainly of “rightsizing” the organisation, having removed “pockets of underperformance” and “redundant structures” and cut 13,000 roles in the fourth quarter alone, 80% of which were already off payroll by year‑end.

Across 2026, Verizon expects to deliver $5 billion of operating expense savings, much of it from headcount but also from marketing efficiencies, real estate rationalisation, contract renegotiations and the decommissioning of legacy platforms, including copper networks, business wireline and other low‑margin or loss‑making lines. Schulman was blunt: businesses that collectively lose $1–1.5 billion of margin a year will be sunset, retired or divested rather than propped up with fresh capital.

Management described this as the first “wave” of efficiencies. A second wave will focus on stripping complexity out of products and processes, both to cut internal costs and to make the customer journey less friction‑filled. A third wave will involve automating what remains, with an explicit ambition to make Verizon an “AI‑first company”.

CapEx discipline without network retreat

On capital investment, Verizon is pulling back in absolute terms but insists it is not sacrificing network quality. Group CapEx was $17 billion in 2025, as the company completed its C‑Band and Fios build targets. About 90% of planned C‑Band sites are now built, covering some 300 million POPs, and remaining 2026 C‑Band work is concentrated in lower‑cost small cells.

For 2026, Verizon and Frontier together will spend $16–16.5 billion on CapEx, a combined reduction of roughly $4 billion versus their 2025 outlays. Chief financial officer Tony Skiadas stressed that this envelope is “sufficient to address all of the growth initiatives” in mobility and broadband, and that the cuts are coming from non-core and legacy areas rather than from the network crown jewels.

Schulman echoed that view in more colourful terms, describing $16 billion as “a tremendous amount of money” and suggesting that even that level might prove more than the business ultimately needs. Projects with long payback periods will face a higher bar, and investments will be “aggressively rationalized” outside of the key areas of mobile and broadband.

At the same time, Verizon is planning to keep its fiber build pace at a minimum of 2 million new passings in 2026, matching or exceeding the combined 2025 pace of Verizon and Frontier, and to continue scaling through partnerships.

Culture and AI as strategic levers

Beyond the balance sheet, Schulman’s remarks repeatedly returned to culture. He talked about creating “a new Verizon” that is “more efficient, more agile, more outcomes‑oriented,” and insisted that the internal mindset has shifted from being a “hunting ground where our competitors take our share” to “playing to win.”

Central to this cultural reset is a heavy bet on AI. Verizon plans to use AI to simplify offers, personalize customer interactions, cut churn with predictive models and streamline operations. Over time, Schulman envisions “every individual customer” having a tailored proposition. The company is also eyeing external AI‑related revenue by leveraging its fiber footprint and distributed network facilities to support hyperscalers and enterprise customers seeking low‑latency infrastructure for AI workloads.

These internal and external AI strategies are meant to reinforce one another: efficiency gains to fund investment in customer experience, and new enterprise use‑cases to monetise the same network assets.

Capital allocation: a richer diet for shareholders

If the operational narrative is about disciplined expansion, the capital allocation story is more overtly shareholder‑friendly. Verizon’s framework remains anchored on four priorities: investing in the business, sustaining the dividend, maintaining a strong balance sheet and returning cash beyond the dividend.

On the dividend, Schulman described the company’s commitment as “ironclad.” The board has brought forward its annual increase, declaring a May payout that lifts the annual dividend by $0.07 per share, or 2.5%, marking the twentieth consecutive annual rise.

On leverage, Verizon expects its net unsecured leverage ratio to tick up by roughly 0.25 turns with Frontier’s EBITDA included, but still aims to be back within its 2.0–2.25x target range by 2027, supported by rising free cash flow and continued debt paydown.

Most strikingly, the board has authorised up to $25 billion of share repurchases over the next three years, with at least $3 billion planned for 2026. Against a backdrop of elevated capital needs, that is a strong signal of confidence in Verizon’s cash generation and its view that the shares are undervalued relative to the company’s prospective growth.

Schulman framed this as part of a broader commitment to “significantly increase” total capital returns over the next three years, as free cash flow rises and cost savings compound.

Playing for sustainable growth

For a telecoms group long accused of prioritising short‑term financial engineering over sustainable growth, Verizon’s latest earnings presentation hinted at a different philosophy: accept a year of flattish wireless service revenue, step away from reflexive price hikes and instead use a $5 billion cost‑cutting “war chest” to fund higher volumes, richer convergence bundles and a cleaner customer experience.

The risks are plain. The 2026 revenue outlook is deliberately conservative, churn remains elevated today, and the capital returns plan depends on executing a multi‑year transformation while integrating Frontier without operational slips. But if Schulman can deliver on the promise of structurally lower costs, steadier ARPUs, rising volumes and disciplined capital deployment, Verizon’s 2025 results may be remembered less for what they were and more for where they marked the start of a different curve.