“This is our peak year” for network investment
Verizon ( VZ ) doesn’t plan to moderate investments in network infrastructure, even as the recession looms.
“I think for the last six, seven years we’ve been planning exactly how we’re going to invest in the network,” Verizon CEO Hans Vestberg told Yahoo Finance Live (video above). “This is our peak year. We’re going to do somewhere around $22 billion in capex, that’s our guidance. And one part is our business as usual, and the other part is that the new spectrum that we bought last year is actually going to execution right now, and we’re doing it as quickly as we can.”[ads1];
To help offset the increase in capital spending as Verizon continues to invest heavily in its network infrastructure, the company announced select price increases this year, which vary across subscription plans.
These service charge adjustments came as consumers continue to juggle higher prices with continued inflation near 40-year highs.
Verizon shares fell more than 4% on Friday after the company reported a decline in subscribers. Vestberg noted that the drop in subscribers was expected after the price changes were rolled out and maintained that it should ease over time.
“We made a conscious decision in the second quarter to make price adjustments in certain consumer segments,” Vestberg said. “I think it was important for us to do that as well because our industry has never done price adjustments in wireless, so this was the time to do it.”
Verizon’s calculated decision to raise some fees for customers it knows some subscribers may balk at higher rates is not unusual in the industry as telecommunications giants spend to compete on latency and network reliability.
On Thursday, AT&T CFO Pascal Desroches told Yahoo Finance that the company plans to invest in its network. Desroches also expressed confidence in AT&T’s ability to continue spending to improve network speed and reliability in the event of an economic downturn.
Despite the current risk of a recession caused by the Federal Reserve, communications service executives share the expectation that their core product is resilient.
– We all read what is happening in the macro economy with higher inflation and rising interest rates, so it is a bit mixed, said Vestberg. “But obviously we’re in the basic product. Everyone needs mobility, everyone needs to be connected.”
Brad Smith is an anchor on Yahoo Finance. Follow him on Twitter @thebradsmith.
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