Hans Vestberg
Chairman and Chief Executive Officer at Verizon Communications
Thank you, Brady, and good morning, everyone. On today's earnings call, I will focus on our strategy, guidance, expectation for the business and why I'm so excited about the opportunities for the year ahead. Let me start by saying that we delivered against all our revised financial targets provided in July, including 8.6% wireless service revenue growth, $47.9 billion of adjusted EBITDA and adjusted earnings per share of $5.18. I'm pleased that the momentum build during the third quarter continued into the fourth quarter. Last quarter, we set expectation of a positive consumer phone net adds in the fourth quarter and we delivered against that expectation. Although we have more work to do, I'm encouraged by the improvement and expect to build on the momentum in 2023.
The improvement in the consumer performance was complemented by yet another strong mobility quarter in Verizon Business Group as well as continued success in Fixed Wireless Access with net adds up sequentially in both Consumer and Business. Together with Fios result, we added 416,000 broadband subscribers in the quarter, our best total broadband performance in over a decade, and approximately 1.3 million total broadband net adds for the year.
Regarding our guidance, we have positioned ourselves to improve on our performance in 2023 and expect to build good underlying operational momentum, although that will be offset by the impacts of the non-cash factors such as promo amortization in our revenue growth and adjusted EBITDA. Additionally, we are seeing some impact of high interest rates. At the same time, we expect our capital spending to reduce significantly in 2023 as we reach the end of our incremental C-Band spending, which will be a tailwind for free cash flow. We are striving to make further improvement and take even more action that will ultimately lead to better performance than the guidance we have outlined today. Matt will discuss the guidance in more detail later in the call.
The industry entered 2023 with continued macroeconomic uncertainty as elevated inflation and interest rates impact the broader economy. Still, demand for our services remains strong, given the growing importance of mobility and broadband to both consumers and businesses. The combination of our network reliability, diverse portfolio of products and services and the industry's strongest customer base provides us the flexibility to meet the changing customer needs even in difficult economic environment. We measure our success in maximizing value across stakeholders by our ability to grow service revenue, EBITDA and cash flow. Taking these three metrics together is how we hold ourselves accountable. We're well-positioned to improve our performance and accelerate growth on a go-forward basis with network quality as the foundation for our strategy and growth. We expect the wireless mobility and nationwide broadband will be the most significant contributors to Verizon's growth for the next several years.
In 2022, we made important progress in each of these businesses. Our growth in these areas will be driven by expanding our network advantage using our C-Band spectrum, which we expect will strengthen our network leadership in the coming years. We're taking a balanced approach on how we run our business. Adding the right customers and generating ongoing profits from them is how we maximize value. We remain focused on our cost-reduction and efficiency actions, while also maximizing our return on invested capital via better monetizing our assets to put us on track to improve free cash flow going forward. We are proud of being the strongest in the industry in terms of generating cash and we want to preserve that, while also continuing to strengthen our balance sheet. We are executing with discipline and we'll continue driving a strategy, which produces sustainable long-term growth and profitability.
As connectivity plays an increasingly important role for consumers and businesses, it is the quality of the connectivity that matters the most. Not all networks are [Indecipherable] to take that and build the same, nor have the same quality. We have seen these differences in the past and expect that 5G will be no different. Our engineers have the best track record for designing and building networks that produce the best experience. Our network will continue to evolve with a relentless commitment to quality and reliability, adding capacity where needed and filling service gaps where they exist even as capital intensity declines in the coming years.
In the shift to 5G, we've been rapidly building out our C-Band spectrum with the most aggressive deployment plan in our company's history. We're tracking to 200 million POPs this quarter and are well ahead of schedule to reach our 250 million POPs targeted by year end 2024. C-Band propagation is very similar to that of AWS and PCS spectrum, which covers more than 300 million POPs today. This gives us a clear path to scale C-Band quickly and efficiently, including in the 330 markets where we expect to gain complete access to the C-Band spectrum later this year. Due to the timing of spectrum availability our deployment strategy targets the highest user areas first, with the capability to deliver the most distinguished experienced in places where the majority of our customers consume mobile services. As additional spectrum is cleared, we will have access to many new markets. As with prior generations of wireless technology, customers in all areas can expect to receive the best network experience.
And where we have built out the C-Band, we're only getting started. Early deployments have limited to 60 megahertz or 100 megahertz in some early clearance markets, consumer performance in these market has been encouraging as is evidenced by better retention, more favorable gross add trends and higher premium uptake. In addition, the majority of our consumer fixed wireless net adds are on C-Band. With the final tranche of spectrum expected to be available in late 2023, we can deploy an average of 161 megahertz and up to 200 megahertz in certain markets across the entire continental U.S. When we turn on the full breadth of spectrum, we expect peak download speeds to reach 2.4 gigabits per second, up from the 900 megabits per second we see with 60 megahertz deployed, all while supporting far more uses and applications. At the same time, we're also deploying our 5G standalone core. So by the end of the year, you should see a network with incredible speeds, both downlink and uplink and positioned to deliver 5G capabilities such as network slicing, voice over 5G and/or among others.
We believe our network will allow us to maintain our premium position with our wireless mobility customers and provide reliable fixed wireless access services to consumers and businesses across the country. This is an example how we can monetize our multipurpose network by scaling several revenue stream on the same infrastructure to enhance our return on investment. We're adding far more capacity to our network than the peak usage increase we're expecting in fixed wireless markets. We continue to expect that we'll have 4 million to 5 million fixed wireless subscribers by the end of 2025 and those subscribers will be enabled by our current build and capital plans.
Our mobility and broadband plans are supported by our deep fiber position and ongoing fiber investments. Approximately 50% of our sites are now served by our own fiber, up from 45% last year. We believe we are the only provider serving the level of its wireless network with its own fiber. This supports superior quality of services and end-to-end owners' economics. That means better reliability and higher margins and look for us to continue to expand the percentage of sites on our own fiber. We also expanded our Fios footprint by over 550,000 locations in 2022, extending our Fios open for sale to more than 17 million locations. You can expect continued fiber expansion in the years ahead.
In summary, network quality is the foundation for our strategy and growth and all of the moves we're making are focused on ensuring we continue our network leadership in the future. As I mentioned earlier, Verizon's success should be measured against three important metrics: service revenue, EBITDA and free cash flow.
Let me now cover each of these in detail and tell you why I'm so confident in our ability to deliver against all three of these benchmarks. We expect that our network differentiation will be the cornerstone of our service revenue growth and that it will allow us to continue to attract the highest quality customer base in the industry and maintain our market-leading share of the B2B market. Our fixed wireless access is also expected to contribute more meaningfully to service revenue as we enter the year growing rapidly with a base of more than 1.4 million subscribers. 2022 demonstrated to us that we need to be even more agile and responsive in the consumer market. This is one of the reasons I assumed leadership of the business late last year. We're moving into 2023 with momentum and expectation for improved performance based on recent actions and planning initiatives.
After integrating TracFone over the last year, we now have full complement of offerings from entry-level prepaid all the way up to premium unlimited postpaid plans for the first time in our history. This will enable us to better attract new customers, while also retaining customers through their mobile journey. You have already seen us take a more segmented approach to the market through the Welcome Unlimited and One Unlimited plans in postpaid and the launch of Total by Verizon in prepaid. We're already seeing the benefits from these actions. In 2023, our plans will continue to evolve as we look for the best ways to cater to our customers, whether through network experience, content or other product offerings. Each new offering gives us an opportunity to engage with the prospective customers and ensure they receive the plan that best fits their needs.
We remain disciplined around our core pricing and continue to perform well with our premium customers on retention and step-up activity. As we move into 2023, we're taking a more localized approach with our network and go-to-market strategy, providing greater autonomy to the teams on the frontline and speeding up the pace of decision-making. This will allow us to compete more effectively across geographies, particularly where dynamics may differ by individual market. Finally, we continue to revise our sales compensation structure, ensuring we have the right incentives in place to drive sales growth. The customers we have and continue to attract represent the highest quality customer base in the industry. Based on our customer payment patterns, which are at or better than pre-pandemic levels, and the low delinquency rates in our secure device payment plan portfolios, we continue to see only a limited impact from the macroeconomic environment on our customers. While we're watching this closely, we have a lot of confidence in the resilience of our customer base.
Scaling of new business such as private 5G networks and Edge computing will also be a strategic focus in 2023. Our funnel is strong and we're making the appropriate investments to ensure such services provide a meaningful contribution to fuel the growth in the years ahead, which differentiates us in the industry. You can expect Verizon to compete, but I want to underline again that we will not sacrifice financial for volumes. We continue to focus on improving our cost of acquisition and retention and believe current promotional incentives are not sustainable for the industry in the long run. Although we have participated to some extent in this dynamic, expect us to pursue more ways to move away from the aggressive handset subsidies with offers like Welcome Unlimited plan, which offers attractive headline pricing for customers, while reducing device subsidies. We manage the business for profitability and such actions drive healthy lifetime value for the business.
Moving to business wireline, we're taking several actions to reduce the financial impact of the unit and are scaling back on pursuing low-margin revenue in order to again drive improved profitability. While this may result in missing out some revenue, it is the right move and one that will lead to higher margin and cash flow over time. At the same time, we are focused on further improving the cost structure through greater efficiencies. You may recall that we embarked on a new cost-cutting initiative late last year. The component of this initiative is the formation of Verizon Global Services. This organization is accelerating efforts to drive cross-functional efficiencies enabling us to reinvest savings in network superiority and customer growth, while contributing to long-term profitability. Additional opportunity exists in sourcing, sales and marketing and corporate system among others. The heavy lifting is now underway as we execute against our goal to deliver $2 billion to $3 billion of run rate savings by 2025.
So our EBITDA strategy is clear: grow profitable volumes in both consumer and business based on our increasingly differentiated network and manage our expenses the way you would expect us to do. By growing service revenue and EBITDA, we believe that we will be able to provide our shareholders with increasingly healthy free cash flow, which will support the strength of our balance sheet and fund our dividend growth. Our current streak of raising the dividend 16 years in a row is unmatched in the industry and we intend to be able to continue that trend. Because our mobility and fixed wireless access products leverage the same infrastructure, they provide a capital-efficient path to future cash flow growth. We believe that we will become increasingly efficient with our capital, using less capital to generate every dollar of revenue for years to come. That's what enables us to produce expanding cash flow that we can both reinvest in our business and return to our shareholders. And, as you know, we're doing all of this as our capital spending budget is expected to decline from $23.1 billion in 2022 to under $19 billion at the midpoint of our guidance range this year, a reduction of nearly 20% year-over-year. In 2024, we expect our capex to be around $17 billion, which we expect to represent the lowest capital intensity in over a decade and among the lowest in the industry. We expect we will deliver a best-in-class network experience, while reducing our 2022 capex leverage [Phonetic] by more than $5 billion over the next couple of years.
With that, I turn it over to Matt to discuss guidance.
