Verizon 5G Ultra Wideband expected to cover 175 million people by end of year

Verizon Communications Inc. unveiled an accelerated timeline for the rollout of its 5G Ultra Wideband network, now expected to cover 175 million people by year-end 2022.

The Ultra Wideband service relies on a combination of mid-band spectrum, known as C-band, and high-band spectrum, known as millimeter-wave. Mid-band spectrum is considered essential for 5G delivery, balancing speed and range.

At its 2022 Investor Day on March 3, Verizon outlined its multiple paths to growth, including 5G Mobility, nationwide broadband, mobile edge computing and business solutions.

Verizon is especially bullish about the expansion of its fixed wireless offering, projecting more than 150,000 net additions for fixed wireless access alone in the first quarter of 2022. It further expects 4 million to 5 million total fixed wireless subscribers by year-end 2025.

While fiber tops fixed wireless in terms of reliability, the difference between fiber and wireless performance will become decreasingly significant as wireless speeds reach 100 Mbps and above, Jeff Moore, principal of Wave7 Research, a wireless research company, previously told S&P Global Market Intelligence.

Verizon's 5G Ultra Wideband network offers typical download speeds of 90 Mbps to 170 Mbps and typical upload speeds of 15 Mbps to 30 Mbps. By comparison, fiber speeds generally range from 250 Mbps to 1000 Mbps, according to broadband comparison site BroadbandNow.

"Fiber is inherently a stronger technology, but as time goes by, this will matter less and less," Moore said.

Beyond fixed wireless, one of Verizon's newly announced offerings is its +play content hub, a direct-to-consumer platform allowing Verizon customers to discover, purchase and manage subscriptions across entertainment, audio, gaming, fitness, lifestyle and more in one place.

Verizon also anticipates that collaboration with Meta Platforms Inc. will couple its 5G Ultra Wideband network and edge computing capabilities with Meta's technologies for expanded interconnectedness in digital spaces.

Verizon expects to generate service and other revenue growth of approximately 3% in 2022, excluding the net impact of the sale of Verizon Media and the company's ownership of TracFone. It also projects growth of 3% in 2023 and 4% in 2024 and beyond. Coupled with anticipated reduced capital intensity in 2024 following the conclusion of the initial C-band build, the company expects faster growth in free cash flow and a resulting step down in leverage.

CFO Matt Ellis stated that Verizon will consider share buybacks when the company reaches a 2.25x net unsecured debt/adjusted EBITDA leverage ratio, slightly above its long-term target range of 1.75x-2.0x.

"Our capital allocation priorities are unchanged: investment in the business, commitment to the dividend, a strong balance sheet and share repurchases, in that order," Ellis said.