Okay, great. We're going to get this started. Welcome everybody. We're live on a webcast tonight here from 1095 at our headquarters location. My name is Brady Connor. I'm joined tonight by Hans Vestberg, our Chairman and CEO, and Matt Ellis, our Chief Financial Officer. The event is being webcast, there'll be a replay made available on our website after we're done. First order of business is the safe harbor statement. Thank you, Hans. We're going to make forward-looking statements tonight, which are subject to risks and uncertainties. Please reference Verizon's filings with the FCC, which are available on our website. We've got a great session planned for you tonight. We do ask that you hold your questions to the end. After the prepared presentations, we have ample time for Q&A.
During Q&A, because it's webcast, we ask that you wait for myself or Scott to hand you a mic, and feel free to introduce yourself as you ask the question. With that, let me turn it over to Hans to get us started and we'll have a good session.
Thank you, Brady. Good afternoon, everyone here in the room in New York City and whoever is on the webcast. Today, basically, there are two main objectives. One is, of course, talking about our strategy, connecting Verizon 2.0, that we've been talking about, how they are connected, but also then integrate that into how we now going to have recasted our financials. Matt will have an ample time to go through the recasting because we know that it's extremely important for you guys to understand how it hangs together when you translate from, you can call it Verizon 1.0 to 2.0, the numbers hang together. When we come out in the second quarter, when we're going to report this model for the first time and the 1st of August, you have ample time to analyze, then we come with the first actual figure.
That are the two objectives, but for me, it's also very important to connect the strategy and Verizon 2.0 to why we're doing the recasting. That's why I'm going to spend some time in the beginning here explaining how it hangs together and why it's so important for us doing this at this moment. This slide I have shown before, this is sort of the Verizon strategy fundamentals. This is sort of rebuild the strategy at Verizon. I mean, the first piece is, of course, the network. The network is such an important piece and core part of our overall strategy. There are a couple of things we're doing here that we've been involved for a while.
Of course, we're building the Intelligent Edge Network, that the team is building, where you think about that all the way from the data center to the edge of the network is the commonality. It's commonality of all those elements. At the end of the network, at the edge, you have options for your customers. If the customer wants copper, they want fiber, they want 4G, 5G, Mobile Edge Compute, that's where you make the selection for the customer. That's a huge transformation and a very important. At the same time, of course, we're doing the 5G. We pride ourselves to be first in the world with 5G Home, first in the world with 5G Mobility. We launched this morning a third phone on 5G, an LG phone. Now we have a Motorola phone, a Samsung phone, and a LG phone.
We're really kicking it off here. We have our target for the year, more than 30 markets. The team is fighting every day. That's the target we have, and that's what we're going to deliver. That's sort of the network side, the key fundamentals for the strategy of Verizon. The customer-driven model, that's what we now are re-engineering to. In order for us to take the maximum usage of the network and the investment we have done, we are now changing from a technology-driven structure to a customer-driven structure. It sounds like that's not a big thing. It is a big thing when you have been technology-driven from the beginning and how you do it and what type of things you can unleash in the organization by doing that. Of course, we also do a change when it comes to our brand.
Might not be visible for you, but it's for us a big thing and a fundamental change because we were a house of brands. We're going to a branded house. That means that wherever we are ending up doing businesses, regardless of business we have, trust and innovation are the brand values we want to show up with. That was different before because we had different brand values for the different assets with different names. Diego and the team is working on that. Together with that, of course, our social responsibility business becomes important. Ultimately, that should all lead to a better business and of course, leading us to have the right people and the right talent and the right customers that gives us the right returns.
I think the fourth fundamental in all this is, of course, our financial discipline, the balanced capital allocation, and the cost models that we want to have the most efficient one. I think that part of the transformation we're doing is really supporting that. Ultimately, long-term goal, as you know, target, GDP plus, that is creating strong earnings and cash flow. That's what we want to achieve. If we have this as fundamentals, then what we're doing is, of course, the transformations we're doing. We're doing transformation from a position of strength. Sometimes I get the question, not only from you guys, from others as well, yeah, it's a reorganization. This is far more than a reorganization. That is the conclusion of the strategy we have set.
We build a network for a network as a service, we do that in order to have the best return on investment on the investment we're doing in the industry. That's why we're doing that. Ultimately, it should give the right type of returns and the best return in the industry. That's what we're doing with the network and the Intelligent Edge Network. Straight into how we see the financial modeling going forward. The second part was the process changes we thought doing. Part of the change of doing the Intelligent Edge Network, the go-to-market, we also saw that we can change the processes. We have 10,400 employees that will all have left us by end of this month. The majority already out. We changed the IT model to be very similar to what we have done in a network model, meaning one IT organization.
That means also outsourced, more flexibility, lower cost base at the same time. We did a brand. I talked about the brand, what we're doing there. That is, of course, creating more loyalty and ultimately, we find synergies to take out cost, the same on processes. That's also supporting our long-term target. Of course, the business model going to a much clearer go-to-market should ultimately give us the opportunity to sell much more of our portfolio, as well as doing offerings that we couldn't do before. Suddenly the consumer segment with Ronan, he has everything from the home solution to the mobility solution, and that's how a consumer is buying. We have Tami that can actually go to a large enterprise, having all products from the advertising platform to fiber to 5G, 4G, et cetera. Big transformation in that as well.
Lastly, of course, we have a transformation as we have a fairly new leadership team. You saw them in February, the majority of them, but we also have a lot of new talent coming into the top 300 as we did this transformation as well. All in all, this is supporting where we want to go long-term with a target of GDP plus, as well as strong earnings and cash flow. We do this in a positional strength because we come from a positional strength and we can do this transformation, so we're going to be even stronger in the marketplace and compete even better. It's far wider than a reorg, what we're doing right now, the team is really coming up well and doing a lot of good things. We already right now see a lot of benefits from it.
The voluntary program is of course a benefit. The customer engagement we have, a lot of other things coming into our business side is actually happening. Long-term, you should judge us actually that we continue to actually create the best return on investment and creating the strong earnings and cash flow. This model I haven't shown before. I've talked about it, but just to visualize it, what we mean when we talk about network as a service and how we maximize our capital investments. We have the Intelligent Edge Network in the bottom. We are now having products that can seamlessly go between them. Think about the agreement, for example, with one partner, YouTube TV, that is offered to our Fios customers, our wireless customers, or the consumer mobility, and to the 5G Home. Suddenly, we can actually move a product in between three areas.
In this case, we decided not to do it ourselves. Remember, we had an OTT platform that we were planning for, we decided not to do it. In some cases, we will do the product ourselves and then platform and the connectivity. In some cases, we only do connectivity. If you think about the MVNOs we have, for example. Again, you use the network, which is our main strategy and where we so far have the best performance on 4G by far in all the measurements you know. Ultimately out there, we have all these customer groups. I've said it before, I'm going to say it again. If I would have another type of customer groups, I would probably build the network differently. Verizon is very unique. We actually serve all customers in the market with technology.
If you then can horizontalize the network and productify that and move it around, you get a lot of efficiencies. Again, you both get efficiencies, but also a potential growth, which we haven't had before. That's the whole idea with the network as service and the Intelligent Edge Network. That ultimately led to how do you then organize yourself? How do you set up an operating model? The operating model is pretty simple. We have the Intelligent Edge Network. We have the Verizon Consumer Group, which is Ronan. Ronan is handling everything from the retail. If it's done at home or mobility, and he's also managing the wholesale wireless, which is going to consumer. That is what he is managing. You have the Verizon Business Group, which is Tami Erwin.
She has basically four sub-segments, large enterprises, small and medium, public sector, and wholesale. That's what she is managing with her team in order to do the best of delivering to our customers. Here is a lot of work. This has been wireline, wireless, and many other segments. Here is a lot of opportunities, both for synergies, but more important, even growth. Ultimate Verizon Media Group that you all know that we have been working with, and define what we want to do. We have our media verticals where Yahoo Finance, Yahoo Sports, Yahoo Entertainment, Yahoo News, et cetera, where we want to be the best on the online over the top. We have increased our spending there in order to do that, and we have gone from seven advertising platforms to one. Internally, we use the advertising platform for our Verizon brand.
Not only that, on the media verticals, they are now present in our Fios offering and will be in other offerings as well. We have also taken the resources in IT and data that was in Verizon Media Group and are now in one organization together with the network and the IT on the core. We get the full synergy. This is the holistic view what we've done. Of course, when you have done all of that, then you also need to report accordingly so you get the right accountability and the right way to follow your business because this is how we allocate money, and this is how we're going to work with our customers. That's why I wanted to get through here to go through how it looks.
You go back three years, nine quarters, and all of that, Matt will walk you through that right now in detail. We'll come back, and you can ask whatever you want to ask about. Matt. Thank you, Hans. Sorry, you don't need that mic.
Hello everyone, thank you for joining us this evening. This has been an exciting time at Verizon as we recently made the transition to Verizon 2.0 effective April 1st. With the release of the financial information under the new structure, our focus is on providing transparency and a clear understanding of the movements within Verizon 2.0. In an effort to be as transparent as possible, we wanted to take time ahead of our second quarter earnings to walk you through the changes you will see in the financial reporting and provide assistance as we go through this transition. Slide 10 shows our reporting structure under Verizon 2.0. We have two reportable segments, consumer and business. The consumer segment encompasses both wireline and wireless products and services, targeting retail customers as well as our wireless wholesale operations.
Our business segment includes wireless and wireline products and services provided across four customer groups, global enterprise, small and medium business, wholesale, and public sector and other. Please note that our telematics business, Verizon Connect, is predominantly a business-to-business service, and as such, it is now managed in our public sector and other customer group, whereas previously it was included in corporate and other. Also, our wholesale revenues will only reflect third-party revenues under the new structure. Under the old structure, wireline wholesale included intercompany sales to Verizon Wireless, and these were eliminated in consolidation. Our third operating segment, media, will continue to be included in consolidated results under corporate and other. Other functional organizations within the new reporting structure, including network and technology, finance and others, will continue to be allocated to the appropriate operating segments based upon applicable drivers.
Within the new reporting structure, the balance sheet and cash flow statement will continue to be presented on a consolidated basis. However, with the shift to a customer-centric model, we will no longer be providing capital expenditures by segment and will only be disclosing such expenditures on a consolidated basis. For the remainder of 2019, we will continue to disclose supplemental schedules for our wireless and wireline businesses to help with the transition to the Verizon 2.0 model. Let's begin the transition from Verizon 1.0 to Verizon 2.0 by sizing the revenue streams. Slide 11 shows the revenue breakdown for 2018 under both the old and new segment reporting. As the chart shows, consumer represented nearly 70% of our consolidated revenue, roughly the same percentage as wireless contributed under the old segmentation.
Business accounted for nearly 25% of the revenue, media 6%, with corporate and other accounting for the remainder. Slide 12 shows that in the first quarter of this year, the components of the business were relatively constant to those shown on the prior slide. Consumer revenues accounted for 69% and business 24%. We expect full year 2019 to show a relatively similar composition of revenues compared to 2018. Slide 13 shows a reconciliation from Verizon 1.0 to Verizon 2.0 for both consumer and business revenue. The waterfall charts show the bridge from wireless revenue to consumer and from wireline to business. The top chart shows wireless, which had $91.7 billion of revenue last year. The addition of consumer wireline brings in $12.8 billion and the subtraction of business wireless removes $14.6 billion, resulting in consumer segment revenues of $89.8 billion.
The bottom chart shows a similar reconciliation from wireline to business revenue. We start with wireline revenue of $29.8 billion, add $14.6 billion of business wireless and $0.9 billion of Verizon Connect, and then subtract $12.8 billion of consumer wireline to ultimately arrive at total business revenue of $31.5 billion in 2018. This slide also shows the new segment margins, with consumer margins slightly below those of wireless and business margins above traditional wireline. These margins reflect the shift in both the higher margin business wireless revenue and the lower margin consumer wireline revenue to the new reporting segments. Consumer margins for 2018 were 44.5% and business margins were 26.7%. Slide 14 highlights the same reconciliation for the first quarter of 2019, which closely resembles the previous slide.
The margins here have a similar impact with the transition to Verizon 2.0 as they did in 2018 and provides a good baseline for moving forward. Before we dive into the respective data points for consumer and business, I'd like to highlight a few characteristics of the two segments relating to wireless trends on slide 15. As you can see, consumer represents a larger portion of total wireless revenue. However, business wireless service revenue grew at a faster rate in 2018. The move to unlimited, for example, weighed on consumer revenue trends in 2017, though as adoption of these plans increased, consumer wireless returned to service revenue growth last year.
On the business side, wireless small and medium business trends tend to follow consumer behavior fairly closely, while enterprise and public sector customers are more likely to be on metered plans rather than unlimited. We also saw an impact from the migration away from device subsidies within the consumer base over the last four years. The subsidy model is still prevalent for business customers, particularly outside of SMB. As a result, ASC 606 accounting changes last year more significantly impacted business wireless revenue, while the effect on consumer wireless revenue was relatively minor. In terms of seasonality, we see a significant jump up in consumer wireless activations in 4Q, driven by holiday gifting and the timing of iconic device releases. In business, net adds are more evenly distributed throughout the year, but can also be impacted by churn from large corporate accounts.
Lastly, the source of service revenue growth reflects the specific trends of each segment. Business segment growth is being driven largely by an increase in the size of the customer base. For consumer service revenue, growth is primarily a result of step-ups to unlimited and migration within unlimited to higher-tiered plans. Additionally, consumer benefits from an increase in the number of connections per account. Now let's take a deeper dive into the consumer segment on slide 16. Total revenue for consumer is split between wireless and wireline, with wireless representing the lion's share. The return to growth in wireless service revenue highlighted on the previous slide was partially offset by continued declines in legacy wireline services, resulting in roughly 3% total growth for the segment in 2018. We expect continued growth in wireless service revenue, driven primarily by an increase in the average revenue per account or ARPA.
The bottom charts show the profitability of the segment and highlight our strong margin performance. As you will recall, the implementation of ASC 606 had a large impact in 2018 due to the deferral of commission expense. Excluding the impact of ASC 606, 2018 margins in our consumer segment were consistent with the healthy levels of 2016 and 2017. Slide 17 reflects the same data, but on a quarterly basis, beginning with the first quarter of last year. We experienced continued year-over-year growth in consumer wireless revenue, with consumer wireline revenue remaining relatively flat as Fios growth was offset by legacy declines. Consumer wireless service revenue has grown at stable low double-digit levels, with first quarter 2019 benefiting from strong customer growth in fourth quarter last year. Quarterly profitability trends are similar to those on the previous annual slide, as you can see in the lower charts.
You should also note that the volume-driven seasonality in fourth quarter margins is consistent with historically reported wireless results. The consumer segment is where the seasonal fluctuations in net adds and profitability are most prevalent, as we typically have higher volumes in the fourth quarter and lower activity levels in the first quarter. This is consistent with historical wireless segment trends. Phone churn remains low as we continue to deliver value to our customers through our mix-and-match unlimited plans and award-winning network. Phone churning consumer is lower than our overall wireless average. We are also seeing customers hold on to their devices for a longer period of time, reducing the upgrade rate. Slide 19 takes a look at the financial trends within our business segment. You can see that our revenue is divided up into four customer groups.
We will report revenues at these levels in our filings going forward, which aligns with our leadership structure within the business segment. Total business revenue grew nearly 5% in 2017. This included the full-year benefit of Telematics acquisitions completed in 2016, as well as the early 2017 acquisition of XO Communications. Excluding the impact of ASC 606, we grew business revenue at low single-digit levels in 2018, driven by mid-single-digit wireless service revenue growth, partially offset by the declines in legacy products and price compression that we have previously discussed in the wireline business. ASC 606 accounting changes benefited reported business segment growth by approximately 50 basis points. As you look deeper into each line of business, global enterprise is predominantly wireline, and therefore experiencing the secular declines we have discussed previously, while small and medium business is growing, driven primarily by wireless services.
Public sector and other is growing modestly, and as I mentioned earlier, now includes Verizon Connect. Wholesale, which includes a portion of the acquisition of XO Communications in 2017, experienced revenue declines in 2018. As a reminder, our business wholesale customer segment now only includes third-party revenues. Business wireless service revenue experienced the majority of the total company impact of ASC 606, which you can see in the 2018 results on the top right. Reported revenue showed a 5.5% decline. However, if you exclude the $1-plus billion impact from the accounting change, wireless service revenue grew 5% in 2018 on a like-to-like basis. Business segment operating income and EBITDA increased year-over-year, both on a reported basis and excluding ASC 606. This was driven by favorable revenue mix and ongoing cost discipline, including the benefits of our $10 billion expense reduction program.
Slide 20 highlights the financial trends over the past five quarters. On a comparison basis, business wireless service revenue percent growth is higher than that of consumer and is being driven by healthy account growth. EBITDA trends for business reflect the high concentration of legacy wireline services. Wireless customers within small and medium business often take advantage of promotions available to consumers, which drives seasonality in the trends. Typically, fourth quarter margin performance for business will exhibit a lesser degree of seasonal variability than consumer. However, fourth quarter of 2018 was also impacted by softness in the wireline business. Similar to the details we presented for consumer, we've included key wireless metrics for our business customers on slide 21. You can see from the chart that our business segment exhibits far less seasonality than our consumer segment.
Churn is slightly higher in business, and it can experience elevated levels of volatility when large customers change carriers. Slide 22 provides an update on the timing of additional disclosures for the weeks and months ahead. Second quarter earnings are scheduled to take place on August 1st and will be under the Verizon 2.0 structure, with required SEC filings following closely behind on August 8th. We will also be providing recast filings at that time, including MD&A, which will support the recast financials that were released today. As mentioned earlier, we will continue to report supplemental wireless and wireline results with a reconciliation back to Verizon 2.0 structure for the remainder of 2019. For 2020 reporting, supplemental information will be provided for wireless and wireline revenue and operating metrics. Profitability will only be provided on a consolidated basis, along with the business and consumer segment levels.
Wireless and wireline EBITDA will continue to be provided within supplemental information throughout 2019. A list of the operating metrics and financial information that will be available is located within the appendix of this presentation and posted on our investor relations website. As I said up front, the intent of the meeting today is to provide transparency around Verizon 2.0 and visibility into the trends of our consumer and business segments. We have put this presentation together to ensure you have as much information as possible to help you digest the changes, and hopefully you'll feel we've accomplished that. With that, I'll turn the meeting back over to Hans.
Thank you, Matt. Before we go to Q&A, just to sum up this, or I think I have one slide here. Just summing it up at the end here. What we try to accomplish, as Matt said, is of course, bringing this all together, all the way from the network transformation, the operating model, and all the things we're doing with how we're going to report in the future. We understand that this is super important for you guys to be able to follow us, where I have to say Matt and team has done a stellar job. We actually implemented this organization the 1st of April, and they have all this thing to recast it already so we can actually have a chance to analyze it before we come to the first actual quarter.
I have to thank them because this is not an easy thing they have done. They have done a great job with Tony and Matt, of course. Coming back to the strategy, it is a focus on the strategy and the network. That's clear. That's what we want to do with our assets we're having and monetizing that better than anybody else in this industry. We are putting in place in this Verizon 2.0 an operating model that is customer-focused, that's going to benefit the shareholders and the customers. There's no debate about that. Our ambition to reach our targets has very much to do with how we structure ourselves and how we support that structure. We believe that 5G is a game change for us.
That's why we have been talking so much about it and outlined what we did in February at the Investor Day, when we believe it's going to hit. You need to be early building that in order to get those revenues that we feel that is going to be a game changer for us. All in all, I think that, and hopefully you feel the same, with this structure and what we're doing are setting ourselves up for sustainable growth given what we have today and what we have in the future. Ultimately, that should drive the long-term shareholder value. That's our commitment, and that's what the whole team is geared around and all this model that we're doing right now. I said, we have worked a lot with our team, and this is for us an extremely important moment in time.
We build for a position of strength. We're doing this transformation in order to be ahead and competing even more with our competition and being even better. With that, I move to Q&A. Remember now the questions, you need to have the microphone because we're live on the webcast so they can hear it, and our friends here will deal with the microphones.
Yeah, this is Brady. We're going to walk around and give everybody a chance. If we don't get to you right up front, we're going to get to you in time. Let's everybody throw up their hand and we'll start picking. Okay, we'll go here, Hodulik, first.
Great. Maybe right in front of me. Maybe just a general question on your view of the wireless market. Verizon over the years has been sort of characterized by increasing margins.
Yeah.
At a pretty steady rate, you're up to 47%. Do you see, although we might not know this in the future, do you think the sort of table is set for continued margin expansion?
Given what you're seeing from a competitive level, from an upgrade level, and that kind of thing.
I think we have two different portions here. First of all, you saw when we reported the first quarter, of course, a softness in equipment market. Nothing strange. At the end of a technology cycle, that's happened at the end of 3G, happened in 4G, a little bit less of that. What I'm really proud of is the team, how they have been working with the service revenue on the wireless side and now in consumer and in business. What we also know that we have roughly 50% of our customers today on unlimited, and the majority of those on Go, which is the lowest level. Of course, we see that I have a lot of confidence in Ronan and team. They continue with a lot of new offerings, working with unlimited, which now is Go, Beyond, and Above, in what you see there.
Then, of course, over time, as Ronan outlined before, they also have the 5G. It's not saying that, hey, you need to wait for 5G to continue to have a good sort of continuation here. You have that. At the same time, we're working with costs, which we have infinities of what we're doing. We have our $10 billion commitment. You have seen what we have done in the last six months. I think that we have ambitions all the time to improve. I think that, again, I have a lot of confidence in Ronan and team, what they're doing right now, because you have seen what they have done since unlimited, when many of you might have been skeptical, and I wasn't even here. How are you going to manage the network? How are you going to manage the profitability?
They show that they can do it. Then they have broadened out. Now they're military, they're veterans, they have kids, they have the different unlimited. Still, it's a lot of runway as you only have 50% of the customers on it. Remember, we became accretive after a while because in the beginning, the ones that the meters that are spending the most went first unlimited. Remember, we came down because from that. Now we're in a different position. Again, the network team is doing a fantastic job. We're digesting this without any problems in the capacity. That's how I see the business going forward. Matt gave some points or guidance, both here in the speech, but also in the first quarter. Again, I'm confident that they're doing a good job.
Again, the equipment side is fairly natural at the end of a cycle. Matt, anything you want to add?
No.
Great. Thanks a lot. On the earnings call, Hans, you talked about Dynamic Spectrum Sharing.
Yes.
The opportunities that it gave you to use some of your existing spectrum. Can you give us a little bit more clarity?
Yes.
Where are you today in terms of timeline, what you're hearing from the vendors?
I think you had an ex parte, you met with the FCC this week.
Yeah.
Just talk about your broader spectrum strategy.
Craig filed that for me, so.
Yeah.
Yes. No, I think that two portions of it. First of all, I said it before, and I'm just going to say it again. I know I repeat myself often. We have all the assets we need today to deploy a 5G network, coverage, and millimeter wave. We have that. We're clear on that. Number two, some things in the software need to be developed, and they will come out in Release 16. That's a Dynamic Spectrum Sharing, which means that agnostically, the spectrum will deal with 4G and 5G. There's no change in the timelines from the vendors. Some vendors a little bit ahead of the others. That's how it works. They are competing in to being first. We want to spur the competition. That is, of course, important.
The second part, which I also alluded to, and it comes back to the ex parte from the discussion with Ajit Pai, is that we're always looking how to best manage our data growth by spectrum, densification, or new softwares that will in all enable intelligent antennas or things like that. Of course, we want as many options in every of these different type of models in order to grow. That's why we talked about C-band. That's an option we have. Remember, we go back to the very prudent and balanced weight of a capital allocation. We always want to look what is the best. Should I densify more? Should I bring in more software? Do I need to change my handset base? That's a ROIC versus, hey, should I have more spectrum?
We're going to continue to be very prudent in our way on capital allocation. I have to say, I sometimes can say that I'm a little bit new to the company, if there's something Verizon is fantastic on, it's this.
Thanks. Did I understand the description properly that you're not going to be breaking out wireless EBITDA in 2020?
That's correct.
We will provide wireless and wireline EBITDA for the remainder of this year in the supplemental disclosure. By the time we get to the end of this year, there'll be four years of EBITDA and revenue and everything else from 2016, 2019 in old structure and new structure. Right now, when we produce both of them, as we will for second quarter and remainder of this year, we're essentially looking at the books two different ways. That requires additional work. We're going to do that for the remainder of this year, but it doesn't make sense for us to keep doing that on a long-term basis. As we go into 2020, we'll continue to provide a revenue breakout between wireless and wireline in the supplemental disclosures. We'll have the KPIs you're used to seeing, whether that be gross adds, net adds, churn, and whatnot.
Can you make a commitment on at least subscribers for some period of time? I mean, you're not giving us wireless CapEx. You're not giving us wireless EBITDA. Can you at least commit to give us subscribers for some foreseeable future?
Yeah. As part of the KPIs, including gross adds and net adds, subscribers will be part of that, churn, all breakthrough metrics.
If you could just comment on the C-band Alliance proposal on the auction. Is this something that Verizon would be willing to participate in if the FCC approves that? Also, a secondary spectrum question.
I'm thinking on that. Yep.
There's been press reports, I think Scott had a note out today about Dish willing to spend $6 billion. You're willing to let Dish do this deal with Sprint and T-Mobile, and then have that spectrum not be available to you in the future? Thanks.
Good questions. I'm not sure where I'm going to attack them, you see, Ben, I said before, we have made our filings, what we think about it. Again, we want to create optionality for that spectrum as one of the optionalities we have when we look forward on our migration of our subscribers. We have filed that, and we stand by that. There are different filings from different people having different opinions. I'm not going to comment on what the other things. We have said what we think about the process. On the rumors around what's happening around the merger, there are so many rumors. There's a new rumor every day, so I'm not going in to comment if Dish is going to do that or if the founder of Boost is going to buy that.
I think for us, in this moment of time, the most important is to execute on this what I present today. That's the most important we can do. There's a legal process. There are many things that have to be gone through. We are not the one to have an opinion about this right now. That's my view, and our view is, if we execute on this, we're going to be better situated to compete regardless what's going to happen there. We're going to be more ahead. That's what my team and I am really focused on. Do you want to add something, Craig?
No, I think Walter said-
Craig Silliman is our Chief Legal Officer.
It's odd. We have said for a long time, we're interested in getting as much spectrum in the marketplace as possible. Just as we've said for a long time, we want to streamline, build out the portals to build out on the infrastructure side. We have not made any public comment about the specific band plan that's been filed by CBA.
Not the band plan, the auction plan.
The auction plan.
You could help them if you supported it.
We have not made any public comments on that at this time.
Questions.
All right, thanks. The whole point of reorganizing the company this way is that you can approach your customers differently. Let's just use your consumer segment as an example. How are you going to market differently as you approach your consumer customers versus what you've done in the past? How is it going to be apparent to them? As analysts, how do we look at the consumer P&L to figure out if you're doing a good job? Just to use an example, the way you're reporting looks more like cable companies. Cable companies talk about things like household penetration. Are you looking at all households in the U.S. now and trying to think about gaining penetration on that?
It's a very good question. The household thing will be a very big part of it, of course, we have two metrics. One is, of course, that what we're doing with Fios, we have our ambition on the 30 million households with our 5G. Of course, the importance of Ronan and his team is thinking about what is the user interface, the omni-channels, regardless where you buy from us. They feel, the customer feels that, "Hey, I'm a customer of 5G Home and 5G Mobility. It's the same look and feel, or I do Fios, or I do mobility. I get the same feeling." That's what really is going to make it different for the customers. Of course, then we can have our spend money much more efficient on marketing, both less but also more directed to that consumer group.
We're retooling the IT system, the IT system is going to be the consumer insights. All of that is sort of have been totally separated in different models. Ultimately, how I think about it, if I do a better job there, I can keep my loyalty, I can keep up my margins or even improving my margins, I can deliver new services. That's the task that I give Ronan every day to think about, not only think about, I think hopefully execute on. That was my Swedish coming through there. Think about it. Okay.
This event was around Verizon 2.0. Maybe you can just comment on how it's been going so far.
Yeah.
Any positive or negative surprises that have surfaced now two and a half months in, any comments you can share or updates on 5G Home later this year?
I think that there's a lot of things we have already seen. The whole voluntary program, the whole IT outsourcing could not have been done without doing this thing. I think the deals that we started doing with partners like YouTube TV, we're offering that in three different channels. We couldn't have done that before because that was sort of piecemeal. We have seen enormous energy boost inside the company, which you cannot measure. For me, leading a large corporation, that is important stuff. If I get 10% more out of the organization because they believe in the purpose where we're going, that's going to ultimately benefit you in all dimensions. For me, I see a lot of proof points across the company right now around those types of things. I can give you a couple of customer anecdotes.
On the enterprise side, meeting large enterprise, I met a ton of large enterprises recently. I met one of the biggest company in the whole country. We came there, and we actually came as one unit offering 4G, 5G, fiber advertising platforms as we have, and capabilities. The chairman of that company may say that, "Hey, the last three years, you have shown up with six sales guys in this company, and you have no idea who is doing what. Now you come as one unity. We can talk solutions." I've seen that. I've probably met 10, 15 of the largest companies in this country the last three months with my new go-to market. It's our task to execute on it, having the right technology behind and the right solutions.
I have the free sort of access to all large corporation because they want to work with us, given our brand, our distribution, our technology. For me, that's proof points. Ultimately, we need to prove it to you that we also are making it to the shareholders and the financials. To be honest, some of the things that we do on 5G, for example. We have to be in this model because 5G is a shared technology for any of our customer groups. Fiber as well. You cannot say fiber is wireline or wireless. It's for everyone. The whole model was a necessity for us to actually use the assets. These are proof points. On the 5G Home, is that the next question? Yeah. The update of 5G Home is going to resemble what I said before. We have the four cities.
We're not going to expand that. No more base station, no more CPEs. It was limited because of the TF. No evolution on the software, nothing. Still, we are consistent over 300 megabits per second, using seven to 800 with the customers we have today. What is happening right now is the evolution in the industry is that now will come with NR chipsets. The NR chipset has come to phone for smartphones. Next generation is going to be NR chipset for CPEs. They are slotted for the latter part of this year because it's another chipset. Of course, the core content like are focusing mainly on smartphones at the beginning. When that is coming, we're going to launch wherever we have the 5G Mobility, we're going to have a 5G Home. As we build 5G Mobility, we're preparing for 5G Home.
We work with our team, with the cell set up. We work with the new design on the devices and all of that. The team is really working it, and with all the information we have on the millimeter wave and work and design, we're going to be even better prepared when the 5G Home comes based on NR. It's a technology challenge right now because the chipset is not there. Right now, it's slotted for the end of this year.
Thanks. You say you have all the assets that you need. Are there any that are maybe less core to your strategy? You're focusing on the consumer and the business, and you still got sort of the media there. Is that an asset that still is critical to you? Are there any other assets within consumer and business that maybe are less critical at this point?
In general, as a leader of a company like this, you always look into the assets that you have and are they right or wrong, and should you do something, and sometimes you shut them down, you don't dispose them in the market. I think that work we're constantly doing. If I look in my portfolio right now, I think we have done a really decent job with the Verizon Media Group. We know where to focus. We have them in a good spot. They know what to execute on, and we have high ambitions. We have high ambition in certain segments. It's not a super content strategy. Online, we want to be best in Yahoo Finance, Yahoo Sports, et cetera. That's where we want to have our footwork and our engagement with our customers. Then we have one advertising platform. That's what we're leveraging right now.
It's not nothing like, "Hey, I want to get rid of that asset." No. It's a normal pruning we just need to continue to do. I think we did a lot of pruning in 2017 and 2018, when we shut down our OTT platform, a couple of other things. We also decided to reset a little bit the plan for the so-called Oath, which is now Verizon Media Group, which you all know what happened in the fourth quarter. I think we are never in a perfect place, but we are what the asset we need. We're going to continue with pruning, and if there's something that is not performing, then they're not performing, and then you take the action.
With the new business segments, how are you handling the capital allocation process between these? I can certainly see scenarios where Ronan and Tami have different ideas of whether, build that residential neighborhood for 5G or that office park, and who's making those decisions on those allocations?
Yes. Let me start, because Matt and I have been doing this together, and actually when I started at the firm, we started with a totally new capital allocation model because we knew that we were changing the network. You need to change the capital allocation. Think about it that you have an engine in the middle, which is the Intelligent Edge Network. Of course, that's a dimensioning that much Kyle is doing together with Matt and me taking decisions. On the front end, on the access, that's where Ronan and Tami are dimensioning what type of coverage, what type of capacity they need, where they need it, and what type. They are doing that from a customer side. That model, we basically already started with last year, and now we're fortifying it.
What you have seen in 2018 was that we actually got ahead of our plan because we're so efficient. Sometimes I get the question from you guys, why don't you spend all the money you guided for? We did that and more, but it's just that efficiency is in a whole new capital allocation model that we built. It's so much better than what I had before. The whole Verizon 2.0 is built on a new capital allocation model. Matt is part of the design team, working with daily. We had the capital allocation meeting today. You shouldn't report on that, but you should tell them what they have done.
Yeah. If you think about it's really a case of, as Hans talked about previously, you've got a much more multipurpose assets today than historically when a wireless and wireline asset is very separate what you did with them. As you bring that multipurpose asset base together, the challenge that we have as we determine where to spend the money is what's going to provide us the best rate of return? That rate of return is going to come from more than one revenue stream. Just as you think about 5G, we talked about it's a network that's going to have multiple revenue streams, which is different from how you've seen us with the network builds in the past. That's changed how we do the capital allocation model.
We look holistically at what revenues are the different parts of the business going to get off a multipurpose asset, and then we decide where best to spend the money. But as Hans said, within that, the efficiency we've seen as well meant that we're doing everything we want, but at a slower capital intensity that those activities would have cost us previously. As we go forward, we're looking at the spend across the totality of the company, not this is wireless, this is wireline. It's managing the totality and then figuring out what's going to get us the best return, continuing with a very disciplined capital allocation model as we go.
A new model also, maybe you want to comment on that, Matt Ellis. It's much more dynamic. Before we were more static yearly. Now we're basically on a monthly. We can change if we see that we need to change, ramp up, or we see a vendor doing better than another, or we see a segment of the market we need to do more in. We get a lot of new enterprise business. We have that flexibility in our dynamic model, given whatever guidance we're giving you. We're also much more dynamic.
I think the word I'd use to describe is agile. As you think about as we come into the year, historically, we would've set up a process. We gave people their capital, they go execute against that, irrespective of what may be going on in the marketplace. As Hans Vestberg said, we changed the model a couple of years ago. We actually have set it up now where we adjust the capital plan during the year more frequently based on what we're seeing, where we're seeing the needs of the network. I think you're seeing the benefits of that show up in the results.
Thanks. It seems like you're trying to get down to one company, one wireline, wireless, integrated network, integrated organization, completely. The key to that seems to be your fiber rollout. Once you get the fiber out there, you can do small cells. You can use that same fiber for all sorts of different assets. A lot of studies historically would say you could replace 5% of access lines a year with fiber, and you guys are talking about doing it in, I think, a five-year period over half the country. Can you update us on the pace of that and what enables you to do this? What's an incredible civil engineering project, because we've been trying to roll out fiber for 20 years. We're still not covering half the country.
Again, the fiber is a multipurpose used for different customer groups. As we said from the beginning, that's going to different types of customers. We have been, for the last two years, building fiber. I think we're now reaching all the capacity levels that we want to deploy. We deploy roughly 1,000 route miles a month right now. We are aiming for some 60 cities that we have said before. That is ongoing. Of course, that's an important piece of the whole strategy. Again, it's an important piece in the Intelligent Edge Network we're building. It's a little bit different, of course, here in the Northeast. We have already a lot of fiber based on the Fios. That's a separate strategy, and we're doing there. Now we're talking about the rest of the country where we're building right now.
Again, there's an anchor tenant, which is the wireless network, which needed for all the cells. Then, of course, it's an enterprise, it's a small and medium companies, and it's a wholesale all the time. Suddenly you have four different customers on the same fiber that you're laying down. We always look into the economics here or the scale. Is it better to rent or lease or build it yourself? So far, in many of the cases, we find it's best for us and for our shareholders to build it ourselves because it's a better return on investment.
Matt, add on to that, just really as you think at the start of your question there. It's not one company. It is more than one company. You think about the way we go to market, the different products, and also within the networks. Even though there's some of the activity going on that's providing significant efficiency, there are continued different networks for different customer groups, and you should continue to expect us to see those as we go forward.
Yeah.
Thanks, Brady. It's Jeff from the Nomura Instinet . I have a shorter-term question and a longer-term one. The shorter-term one is, I'm wondering if you are seeing any different pricing dynamics in the market ahead of the Sprint and T-Mobile merger, if anybody's behaving any differently. Then the longer-term one is really, the 5G one that you see in the press every day, et cetera. How's it going?
Yeah.
How's the rollout, and do you think you'll be able to get us to spend more to upgrade our plans?
There's a risk when you come out from the 5G governance meeting yesterday or the day before yesterday, and you're meeting you guys. I just need to separate the questions here. I calm down before I answer that. The first question about do I see any difference in the market, I think it's been competitive all the time through this process. There are flavors every week what different carriers are doing. I would ask Ronan because they are sitting tactical every day, Ronan wouldn't say that anything different this week than four months ago. It's always competitive market things out there. As Ronan and Matt said after the first quarter, when there's less equipment transformation upgrades because no detectors are, of course, it's very competitive. I can at least say anything different, maybe Ronan should answer it, and he's not here.
I don't see it. On the 5G, how's it going? I think we as an executive team, we meet extremely frequently and review where we're all with 5G. The only thing I can say, what we have said earlier, meaning that 30 cities by year-end, coming back with 5G Home, 30 cities on the 5G Mobility, the 5G Home, launching our first 5G Mobile Edge Compute by year-end. We're not changing that. We are chasing every piece of the supply chain. Remember, it's all the way from getting the permits, the power, the installation, the fiber, the ecosystem, everything. It's a big transformation we're doing, and we're basically leading the world here.
Of course, the guys are testing, and you saw it on our launch on 5G Mobility in Chicago and Minneapolis, is that the first phone that came out with a Motorola, yeah, we got peak rates of 600, 700 megabits per second. Two weeks later, with a couple of software drops, the Samsung was doing 1.2, 1.4. It's an enormous improvement we're seeing. Of course, we want to see that robust, then you can roll it out. Again, we are pushing the envelope for the whole supply chain, including the vendor's capability to produce equipment, and we will continue to do that and secure our part and our portion of whatever is coming out. I think that our supply chain has done a great job.
It's a work all the way from the handset, the chipset, the network, then the municipalities and our own software team here. It's a big work, I can only say that I see a great work in my team, and this is super important for us.
Great. Just a clarification and then a question. Just in terms of the clarification, do you see a lot of transfers between business and consumer wireless customers in any given period or year that we should be mindful of as we look at now the new segmentation? Then just a higher-level question. If you could delve further into the wholesale wireless business, and maybe size it in terms of units, and talk about the strategy that you have, whether it's with the cable MVNOs or prepaid or connected cars, and just give us a sense of what's happening in that segment. Thanks.
Yeah, I'll take the first one. I think.
You take the second as well.
If you like. On the wireless, between business and consumer, you shouldn't see people bouncing around backwards and forwards. Let me give you an example. Depending on the company that you work at, sometimes an employer will give an employee a phone that's paid for by the employer. Others, in addition to that, the employer may negotiate a discount with us, and the employee can go and set up their own account, but take advantage of that discount. Those lines that the corporation is paying, the employer is paying for, will show up in the business segment. If you are able to go into one of our stores, get an account in your name, take advantage of the discount because of the company you work for, that is still what we refer to as employee liable. It's you as the individual are liable for it.
We're treating you as a, even though you're getting a discount because of your employer, that's a retail relationship with you in a consumer fashion. Depending on who's paying for the handset will determine, do we treat you as a consumer or part of business. Make sense?
On the MVNO-like or business that we have, I can only say that, as I said at the first quarter, very happy with our engagement with both the cable companies that are using our network, as well as the prepaid that are using. That's quite a big business in general, because there's quite a lot of subscribers on our network. Again, we build a network and service. This is playing ultimately into how we want to use our investment and seeing that our shareholders get the best return on investment. That's fine. On the IoT side, we see that picking up. There's so many technology choices to be done. We just launched our Narrowband IoT technology, which is of course great because you use much less of it, and you get better throughput, and you have still a lot on all technologies on IoT.
Clearly, we see that as being another way of monetizing the network. In some case, of course, that connectivity goes together with our telematics business, which is our Verizon Connect business. I think that, yes, we see good uses of the network, and we balance that in our investments. Again, the model we have is really catered for actually managing that. As I said before, we're happy with all those engagements. Hopefully my MVNO customers are happy as well.
Hans, what's the long-term view on Fios? What's the strategy around that as we look out over the next three to five years? I guess from that, the new reporting structure, any change to your view on what you're going to provide from a guidance perspective?
On the Fios, of course, we still have areas where we continue to roll out Fios, but not at the pace that we've done before. We have come pretty far in the franchise. There are areas where we're doing more. Over time, I always said that, but it's not the initial focus. Of course, ultimately, we want to give optionality to our customers, how they want to have their internet connection and what they want to have in internet connection all the time. Of course, outside the Fios footprint, we are now working with the 5G Home, then we basically tell our customers, "Do you want YouTube TV? We include this with the thing you sign on, but it's your choice." We want to give them choices all the time.
I think that's what we should be able to do as a company for our consumers, give the choices. We see certain trends in the market that you see as well, the so-called bundles are less attractive nowadays. We just need to follow our customers and give the optionality, both for over-the-top TV, as well as having the traditional TV. We're going to offer it all to our customers. That's the most important for us. We are going to be able to give optionality to our customer over time.
Yeah. Your second question around guidance. Historically, our guidance has been at the consolidated level. The transition from 1.0 to 2.0 really won't change that. At this point in time, we have no plans to change the guidance focusing kind of typically on revenue, EPS, and CapEx levels.
Go Andrew next.
Can you talk about your emergency services exposure in the business wireless side, and what the new go to market gives you in terms of ability to defend against FirstNet? That's one question. Then the second one, you talked about second generation modems for 5G Home. I guess they bring HPUE. You've got millimeter wave repeaters potentially coming down the track. Where can you get to in terms of self-install for 5G Home?
I'm not sure I heard the first question. If you did, you can answer.
No, I'm not quite sure I caught it.
Well, the business line is-
I think it's Tom around first, then.
Yeah. No, it's emergency services exposure in business wireless.
Okay. I just thought with the second, because I remember that one. No, I didn't remember that one. That was the 5G Home question, the second one. Should you take the first one on first responder? In general, we have a good position on first responder.
Yeah.
We are developing new products for our customers, and we have a good market share with them. We are continuing to fortify our products and our solutions so our customers. Ultimately, it's all about the most reliable network when you're a first responder. I think that we are proven to have that, and we have a high loyalty with our customers and our first responders. We're not giving that market up. Of course, competition is always there, but we're not giving that up. The whole new structure that we have is also giving a much better way for us to serve that market with much more new products in TAMI shops. I think, of course, it's competition and others will get the assets, but that doesn't mean that we are bending. No, we're going to take the fight to them.
That's our market today, and we're not giving that away.
Yeah. First of all, as Hans said, we have great relationships in the first responder space, a great history with them, and we're obviously very appreciative for all of the efforts and everything they do. If you think about it today, again, you have wireless-type products we brought to them, wireline products that we brought to them. This gives us the ability to bring holistic solutions into that particular customer, and I can't think of a customer set that you'd want to bring a more holistic solution to, given the work that they do for all of us. I think we will continue to compete very effectively in that space.
Excuse me, when I was thinking answering the first question, I forgot the second question.
It's all right. What does technology in terms of HPUE on second-gen modems, millimeter wave repeaters, and so on, help you get to in terms of self-install rates.
Yeah. No. I think we're completely for, we call it self-setup because it should not mean install, it should be easy. We're pretty far on that. As I said, I had a North Star from the beginning in the whole 5G Home, and that's basically you can order the equipment, you install it yourself, you choose what type of application you want to have on top of it, and you should be able to do that. That's our model. I can tell you, as we had our five-year review earlier this week, the team is working on that every day. I wouldn't say that I'm 100% through it, or we are 100% through it, but I see a good progress with the team to actually solve these type of things.
Again, with all the knowledge we have acquired, the customer experience that we already had with the four cities, the technology we know how it works, the equipment that we need, we're testing that every day. Swearing in the middle there. We're on a webcast and could be transcripts, apparently. No, I feel good about it. I feel good about what the team is doing, and I was really happy yesterday or the day before yesterday. That was a Sunday maybe, but anyhow.
Okay
when they talked about it. We have a lot of things, self-setup is a North Star.
We've gone through a bunch of questions. We want to make sure that we don't leave any unanswered or give you guys a chance. I don't want to do last call for questions, but let's do last call for questions here. All right, Walt. Back to Walt over here.
CapEx on a combined basis, since you're combining the EBITDA now, I think your run rate's 16%-16.5%. Is that the kind of long-term run rate, or after we get this fiber push in the next couple of years, is there a long-term CapEx as a percent of service revenue?
Last year we did $16.7 billion, which was at the low end of what we've done. This year, we guided $17.0 billion-$18.0 billion. If you actually look at the ends of that range with our revenue guide at the start of the year, it will put you at the high and low of our capital intensity over the past five years. If you think about everything that's in that 2017 to 2018 guide this year, obviously 5G and the rollout that we're spending there, the fiber build-out, the Intelligent Edge Network, yet the capital intensity of the business stays consistent. That's been the story over a number of years now. What we're spending on evolves over time, obviously, whether that's 3G to 4G files changing over, 4G from a coverage to 4G as a capacity, moving into densification.
The spend has constantly evolved, but the actual level of capital intensity has remained very consistent. We're confident as we go forward here with all the things we've discussed, rolling out 5G, the fiber spend, and so on, that you should expect a continuation of a fairly consistent capital intensity. Hans and I have said if we see the opportunity to accelerate capital, and I use the word accelerate deliberately, the ability to accelerate capital to bring forward revenue streams, we'd be certainly open to doing so if there's a return there on doing that. As we look at it today, the ability to go faster, we don't have line of sight to, but you should expect a consistency in the capital spend from us.
Got you. Just on the upgrade rates, are you also similar consistency on device upgrade rate? Because that's obviously an impact on working capital. Are they continuing to decline? Do they bottom at some point looking for an inversion? Again, that's a kind of a loaded question.
Yeah. We've mentioned earlier where we are in the cycle on 4G, we're obviously seeing that in the upgrade rate. You've really got two offsetting factors there as you think about working capital. On the one hand, upgrade rate's been going down. On the other hand, the average cost per device has been going up. As we completed the transition with the consumer base to device payment, we've actually reached a fairly level on working capital. As we go through a 5G upgrade cycle, we could see an uptick there. That's why you may see a sharp as increase in working capital, but you've also got the asset-backed financing separate from our unsecured financing because we see those two things very different.
Next year. I think it will depend on how quickly customers decide that they are going to adopt the 5G devices. We'll start to see some of that this year, and we look forward to, as more devices come to market, as we bring more markets and turn them on the 5G network, that we'll see customer excitement around moving on to the 5G network. On the CapEx side, maybe something that I said before, but it's so important. First of all, we're doing a virtualization on the network as well, which of course, bringing efficiency in how you deploy the network from a cost point of view. The other is that it's a very big difference between our 4G deployment and 5G deployment.
I was on the other side on the fence on 4G, but that was basically ripping out all the CDMA, or at least not using it, and then putting on totally new hardware and a totally new radio and antenna. This case, and then the last couple of years, whatever we have bought is 5G compatible, so it's much more a software. Of course, if you have another frequency, you need another antenna. We're much more prepared, and that's why sometimes you ask questions about how much are we spending on 5G. We started years ago thinking about 5G with all the fiber investments, preparing the base plans, and all of that. It's a long journey when you are doing this. It's very different from the 3G to 4G in Verizon, because that was another situation.
All right, we're going to end the question period with Doug here.
Okay, that's tough.
Yeah. No pressure.
I was intrigued by the capital allocation model. I'm just curious if you're charging different products different rate of return hurdles, how 5G revenue outlook, sort of midterm, longer term, is influencing those decisions. Ultimately, as you get within your leverage target range, does your return on capital requirements change as you start to think about potentially being in an excess capital position, even though there's always more stuff you're looking at?
Very good question. Yeah. I'll answer the last question very quickly. No. Our return on capital requirements don't change. As we think about different projects, we have a fairly similar capital requirement. If you're off on new businesses or so on, we may have a different hurdle there. As you think about things like 5G, obviously the time period for that return is going to be different than something that has a much more immediate revenue stream. Yep. In general, we have a very disciplined approach to the return we require, and that doesn't fluctuate. As the balance sheet gets to where we say we want to get it to, that doesn't change from that point forward how we think about the return. When we're investing money, we're investing our shareholders' equity.
We have to have the confidence that we believe we're going to get a good return on that. That doesn't change. Okay.
All right.
Yep. Hans, back to you.
No, I will be very brief. Thank you very much for coming. This is an important event for all of us. We are transforming and going to a new model that we're going to report in. Hopefully we're giving you enough details and time to digest. Of course, our IR team will be here to answer your questions not today, maybe tomorrow, and the week after that. 1st of August, we're going to report on this structure. As Matt said, we also have the old structure, we have the new structure, hopefully you have enough time to digest that.
I also wanted to connect it to this is a larger transformation we're doing, this is how we create accountability and actually how we want to operate as a company, that's why the reporting has to follow that too, for all laws and rules and how you drive a company. Hopefully, you understand that, the importance of it. Once again, for the ones on the audio and the people in this room, thank you very much for coming. We're soon going to meet you somewhere again. Thank you.