Lowell McAdam, Verizon Communications chairman and CEO, proclaimed a bright future ahead with a new mobile video service as well as IoT activities, but admitted that earnings in 2016 may be no better than in 2015.
McAdam (pictured), who was speaking at Goldman Sachs’ annual Communacopia Conference, spent time extolling Go90, the mobile-first, advertising-driven video service targeted at millennials that the operator recently soft launched.
“Yes, we have about 25,000 customers on it now. We’ve grown the beta testing over time. We’ve gone out with invitations to about five million of the Verizon Wireless customers and we will be adding them onto the platform this month and we expect to go live with it at the end of September,” he said.
Later during his conversation with Goldman analyst Brett Feldman, the Verizon chief switched to the subject of profitability. “So I see a plateauing, if you will, between 2015 and 2016 and then I see 2017 we move back into the growth trajectory.”
Profitability was impacted by a number of factors, including the changing way subscribers pay for handsets, a shift in wireline financial comparisons following the expected first-half 2016 sale of operations to Frontier Communications, and its push into new areas such as mobile video and IoT.
He then referred to a decision made by former Verizon CEO Ivan Seidenberg some years ago: “So it’s a little bit — in chatting with the team — it’s a little bit of our FiOS moment, if you think about it. When Ivan said you know we’ve got to shift the framework of this business off of copper and onto fiber, we are shifting the framework of this business more onto digital media than our traditional services, so that’s why the frameworks change and the comparables are going to be a little difficult for us in 2016.”
McAdam also talked up IoT’s contribution. In the first half of the year, Verizon had seen around $320 million of revenue from that area, which for Verizon is “not a big deal”.
“But we are generating by far the largest amount of revenue from Internet of Things of any company in the US,” he claimed. And future projections from the likes of Cisco show how IoT will be making a bigger contribution over time. “So I think it will be a meaningful line item on the budgets and our results for investors to look at in 2017,” he said.