Sowmyanarayan Sampath (Sampath)
Executive Vice President and Chief Executive Officer, Verizon Consumer Group at Verizon Communications
Joe, thank you. Very good morning to all of you. There are two things that Joe spoke about that really excites me. The first one is America's best wireless network continues to get bigger and even better. And the second one is our ability to offer broadband to 100 million homes and businesses over a period of time. So with that, let me get into how we go about this.
Verizon is in a very unique position right now because we have two engines of growth: Mobility and broadband. Both these segments, both these businesses have secular tailwinds. There's huge demand for both of the products. And more importantly, Verizon has a good position and a lot of opportunity to grow in front of it.
Let's start with mobility. Look, in mobility, we are number one, if you look at our share position, our total revenue. And it starts with our postpaid business. We are seeing continued momentum in our postpaid business. With this quarter, we would have had seven quarters of consecutive year-on-year postpaid phone gross add momentum that we have in the business. And why did that happen? Some of it has to do with our sales engine that we've gone and re-engineered. Get back to the local market structure, local sales incentives, local marketing. And then second is myPlan. myPlan, as I say, is on plan. Customers love it. They like the structure of it. They like the ability to get access to unique offerings. And it's truly differentiated in the market. And you saw us, we had a strong quarter, 81,004 net adds in the space. We will be postpaid phone net add-positive with second number, without second number this year as well as promised in our plan to do that.
Next, we turn our attention to our value business, or prepaid. And we bought TracFone, we've integrated TracFone, and we had really strong momentum in our business. We had 80,000 net add-positive in our business, the best in many quarters. And a lot of that comes down to our core performance of our brands. We saw almost all our brands have very strong performance and momentum in the space. Two, our exclusive distribution with Total Wireless has scaled up really well and you can see those stores everywhere. And third is our unique distribution position that we have within Walmart. And you're going to see continued progress and continued momentum in our value business going forward.
That brings me to our third topic, which is churn. Now that we have our postpaid engine working well, our value turnaround in progress, I can turn my attention to the churn. There is nothing structurally that prevents Verizon from being an industry leader in retention and lower churn. We've been in that position before, we know how it feels, and more importantly, we know how we get there. In short term, we made some trade-offs, some strategic trade-offs that Hans and I feel very good about, to drive shareholder value. We had some pricing actions that do drive some churn in the space. But on balance, we feel very good about how we executed those. And often, churn is way less than some of our business cases had come in.
The second is we are very disciplined about our retention spend. You see that in our upgrade numbers. We -- it has to be demand-led. Customers have to want it. And we link our retention promotions to the plans and the price plans that they have there. But over a period of time, you should expect lower churn from us from couple of things. The first one is better experience. We are using AI significantly both at stores, at our call centers. Second is myPlan and perks. As more and more of our base gets into the myPlan construct and takes more perks, that helps with churn. Third is myAccess or Verizon Access, our loyalty program which I'll cover in a bit, that will give us traction in that. And then the last one, which is probably the biggest lever is going to be more mobile plus home customers. When those two customers come together, we see huge reduction in churn. And that's going to apply to a larger base as we expand our broadband offering more piece. The fourth is margin-accretive add-on services. In form of perks, in form of adjacent services, it's a continuous growth and it's being very innovative every time we do that.
We are taking the same approach we have to mobility to our broadband space. It first starts with momentum in sales. You saw that this quarter, strong momentum in sales on Fios and FWA. Similar tactics, similar promotions. But the construct is that same momentum we have and the same energy we bring to our broadband business as well. myHome has been a very successful launch. A lot of our base tends to like the perks. They are taking on our new customers when they come on board, they take on perks, and they like the ability to share their perks between mobile and home. And also sustained growth in ARPU. Look, when you build a long-term sustainable subscription business like we've done, you have to balance P&Q. Over a period of time, I've spoken about this 80-20 contribution to service revenue because that's the big measure we measure ourselves on is service revenue. I think with a positive phone net add trajectory, strong FWA and Fios performance, we are on track to get to that 80-20 mix over a period of time.
Now we are in a very unique position. I think the only company, the only carrier who has a scaled position in both FWA and in the fiber business. And both these are top products. And when you combine them together, you get access to 100 million homes and businesses in the country. No other carrier offers that amount of coverage and depth that we offer in terms of serving our customers. Let's dig into each of these one by one.
The first is FWA. Joe just spoke about moving from 60 million to 90 million homes and businesses covered. But what's interesting about the FWA base is it's a quality prime customer base. Our FICO score on FWA is north of 700. So it's a really strong customer base that does. And the reason is it's a high-price value equation. There's a huge segment of the market who love that. And because of that, you see very high NPS scores. I mean, think about it. You could finish this, you could go to a store in five minutes, buy it, and in 10 minutes after that, you could be in your apartment connected with the 5G Verizon FWA product. It's a huge competitive advantage. High NPS is a competitive advantage. Our pricing construct is a competitive advantage. We do not like promotions that roll off. You get a customer on one price point, and in two years, the price changes. It annoys customer. And that's one of the reasons why it's a huge competitive advantage for us because we continue to lead with that.
And then you have fiber. Joe spoke about 20 years. He's been working a little longer than 20 years in the fiber business. Look, we are the OG fiber players. Some people think it's a new thing. We've been in this thing for 20-plus years. And every year, we find that the new cohorts that we bring on have better penetration than some of our older cohorts even, because we get better. Joe gets better with the build, we get better with selling it, with targeting it, using digital to bear in those pieces to do that. But what's interesting is it's a white-glove experience. Very, very high NPS scores that we have, very low churn. And most, a majority of our customers who come in take 1 gig-plus plan. Again, that's a competitive advantage around high NPS, high customer satisfaction.
So over a period of time, with 100 million premises covered, we have a differentiated offering, we have an offering that is tiered, we have an offer that is segmented, FWA and fiber. And customers will choose. At the end of the day, we want customers to choose what's right for them. And we're going to be very transparent on what the pricing is and what a value prop is to grow that.
And talking of value prop, I want to spend some time talking about the Verizon model of convergence. The Verizon model of convergence is margin-accretive, it is revenue-accretive, and has very attractive ROIC. And at the end of the day, it is demand-led. I do not believe in giving away one product to sell the other or giving away one product to hold on to the other. We think we have the best wireless network, we have the best broadband offering, customers want it, and they are willing to pay a very fair price for it. We do have some advantages for customers when they take both of those products together. But at the end of the day, it is demand-led because customers want to buy the best from both of us to do that.
Now, let me talk a little bit about how this convergence comes to life. How convergence comes to life. The first one, as you see on the page, is myHome and myPlan. We launched both, and it's not a coincidence that both the offerings look very similar. You buy a base connectivity, then you have access to these really unique perks. I mean, it's becoming a pretty big business for us and customers can share perks across both those plans. The second is our app, My Verizon app. We have a single app now for mobility and home. So once you get a mobility customer, they see a home piece and they can try out the home and they can buy the home and then vice versa to do that. And also home Wi-Fi, can control everything in a single app and it does very well.
The third thing is transparent pricing. It is very clear to customers what their savings are. And we're going to keep innovating in this space, because at the end of the day, customers want the best product, but they also want clear pricing upfront. And we do that every single time with our constructs that we have there. Fourth is distribution. We have a large distribution of stores and a digital footprint. And you can see over a period of time, we are able to distribute our Fios offering through our store network as well. And that's a huge upside to the business case.
So you see that we are building the Verizon model of convergence, which is demand-led and it accretive to us. But where does the value come for Verizon and its shareholders? Two big buckets. Revenue. The first one is we will see penetration well north of 40% in our business. And as I said, every new cohort that we bring in actually gets to that a little faster than the previous cohort we do that space. And once we do that, once we acquire Frontier, and when we close on Frontier, we will have that as well. And then as Joe builds out new networks, we will see similar penetration levels as we do that.
The second is in some of our big markets, where we have fiber, our wireless market share is 500 basis points, or 5% better than if we don't have fiber. So we can cross-sell mobility to our Frontier base when we close it to our new cohorts of fiber that are coming in, but also customers who have access to fiber but don't have fiber today, we'll be able to cross-sell them. So two revenue upsides opportunity for us as we build out our converged offering.
The second is churn. A couple of data points. We see a 50% reduction in mobility churn when we bundle with fiber. And that's a huge lever for us even broader, longer-term on how we take churn down in space. The second is our fiber churn, which is already world-class, one of the best in the world, will go down another 40% when we bundle mobility and fiber. That's a very unique position for us. And we see churn benefits on FWA as well. So what we are essentially building here is one of the world's best franchises for broadband with FWA as well as with fiber with best-in-class metrics. But more importantly, it's demand-led, and that's the Verizon model of convergence.
Talking about demand-led, a lot of the reason it's demand-led actually comes from our unique value prop. Let me start with this. The bottom of layer is our connectivity layer. Best network. Joe always says we will be the most reliable network. That's where our value comes from. It's the same network we have for broadband, for postpaid, through myPlan, and our prepaid value brands as well. And we keep tiering these. We have segments that go after it. And over a period of time, we'll have new sources of revenue. Let me touch on two of these.
The first is network slicing. It's a new currency. It's something that we should talk a little more about soon. And that will have upside opportunity for us. Second is satellite connectivity. That's another new form of connectivity and then new ways to monetize our overall connectivity network. Then on top of that, you get to our entertainment and adjacent services. We call them perks because you have to be a Verizon customer to get them. That's the perk you get for being a Verizon customer. And we right now have 7 million perk subscriptions on our network. And then guess what, they're going to double by 2025. So we have a large revenue stream that customers find very compelling. It reduces churn for us, and is very margin-rich for us. So it covers a lot of pieces for us. And we're not stopping still. We're going to keep innovating. But to be on our network, to be part of our perks, it's going to have to be compelling, it's going to have to be exclusive to Verizon, and something our customers want, and they can save money with it.
On top, we have our loyalty program. Verizon Access, or if you are a customer, it's just myAccess because it's your access, because it gives you access to two things. One is always on deals with some of the best premium brands out there, but second is once in a lifetime. My kids call it bucket list-type opportunities they have. For example, you can skydive with the Broncos, or you can go to London to watch the Jacksonville Jaguars, or you can actually toss a coin for the opening game. These are once-in-a-lifetime events for NFL, NHL, NBA, and some of the best musical acts out there. I don't know if you can get score tickets for Taylor Swift, but definitely check in on the Verizon myAccess plan to do that.
As I wrap up, I want to leave you with two thoughts. The first is we at Verizon right now have two engines for growth. Two engines that have secular growth in front of them, two engines that have tailwinds, and where we have unique market position, but huge opportunity as well. You're going to see us do the Verizon model of convergence, which is demand-led, which is give customers choice, give -- be transparent about pricing, and offer them a huge set of services on top of that. We're going to deepen our relationship with our customers and extract value for them and for ourselves in the process.
The second is over the last seven quarters, you've seen our vision and execution on the business. You're going to give a lot of confidence you're going to get from that, that we will execute on that for our mobility business, our broadband business, and the Verizon converge business.
With that, I'm going to pass it over to Tony to talk about two things: 3Q update, and more importantly, capital allocation. Tony, take it away.
