Verizon Charts Turnaround Path After Frontier Deal, Vows to Tackle Churn and Boost Returns

NEW YORK – Verizon Communications (NYSE: VZ) used its fourth-quarter 2025 earnings call to signal a pivotal strategic shift, framing the coming year as a critical turnaround phase. Following the completion of its Frontier acquisition, the telecom behemoth is now focusing on integrating the assets, aggressively returning cash to shareholders, and tackling persistent customer churn that has dented its performance.

CEO Dan Schulman opened the call by directly confronting a recent network outage. "We fell short of the reliability our customers deserve," he stated, pledging a "relentless" pursuit of network excellence. He positioned Verizon at a "critical inflection point," describing the current strategy as "fundamentally a turnaround story" centered on execution speed, simplified customer experiences, and rebuilding trust.

The financial backbone of this transformation is a stringent cost-cutting program. Schulman detailed plans to generate an "in-year war chest" of $5 billion in operating expense savings through headcount reductions, marketing efficiencies, and real estate consolidation. He was quick to clarify that these savings are not an end in themselves. "No company ever cost-cut its way to greatness," Schulman noted, emphasizing the freed-up capital would be reinvested into growth initiatives.

CFO Tony Skiadas reported solid operational momentum, with Verizon hitting its full-year financial targets. A standout figure was the over 1 million net adds across mobility and broadband in Q4—the company's strongest quarterly performance in six years. Financially, full-year adjusted EBITDA reached $50 billion, with free cash flow hitting $20.1 billion.

However, a significant cloud remains: elevated postpaid phone churn. Skiadas acknowledged that prior pricing actions and fierce competition contributed to the issue but called churn reduction a "pivotal opportunity" for 2026. Investments in customer experience and pushing bundled "converged" packages of wireless and fiber are expected to be key retention tools.

The Frontier acquisition is central to this convergence strategy. Verizon now boasts over 30 million fiber passings and sees a major opportunity to sell wireless services in Frontier's existing markets. The company plans to add 2 million fiber passings this year, targeting 40-50 million medium-term. Integration benefits have also doubled, with Verizon now expecting over $1 billion in run-rate cost synergies by 2028.

Looking ahead, management guided 2026 as a year of "measurable and improved performance," forecasting 750,000 to 1 million postpaid phone net adds and 2% to 3% service revenue growth. Adjusted EPS is projected between $4.90 and $4.95. Capital spending is set to drop significantly to $16-$16.5 billion.

In a clear nod to shareholders, Verizon announced a dividend increase—its 20th consecutive annual raise—and a colossal new $25 billion share repurchase authorization to be executed over three years.

During Q&A, Schulman stressed that future growth would not come from blunt price hikes, linking past increases directly to higher churn. He highlighted convergence as a powerful antidote, noting bundling can reduce churn by 40% in Frontier markets. The company also plans wider deployment of AI to personalize interactions and preempt customer issues.

Market Voices: Analyst & Investor Reactions

Eleanor Vance, Telecom Analyst at Broadside Capital: "The guidance is ambitious but credible. The doubled synergy target from Frontier is a positive surprise, and the capital return program is exceptionally robust. The real test will be executing the churn reduction in a hyper-competitive market."

Marcus Thorne, Portfolio Manager at Steadfast Funds: "Finally, a concrete plan with accountability. The $5 billion cost savings target and the $25 billion buyback are exactly the kind of decisive actions shareholders have been waiting for. This could be the catalyst for a re-rating if they deliver on the subscriber adds."

Rebecca Choi, Retail Investor & Verizon Customer: "A $25 billion buyback while my bill went up and the network dropped my calls last week? They're prioritizing Wall Street over Main Street. 'Relentless improvement' rings hollow until I see it in my service quality and my bill."

David Park, Technology Consultant: "The fiber footprint is now a formidable asset. If they can effectively cross-sell wireless to that base and use AI to improve service, the operational leverage is huge. The market might be underestimating the long-term strategic value of this combined infrastructure."