Good morning, everybody. Tim Horan, the Oppenheimer Cloud and Communications analyst. My pleasure to be hosting here our 26th Tech, Internet, and Communications Conference. Verizon has been at 25 of those 26 conferences, and I re- greatly, greatly appreciate it. As usual, there's no lack of topics to discuss in the communications aspect of the sector. We have Tony Skiadas this year, the CFO from Verizon, a relatively new CFO, but very, very long-term Verizon employee, and extremely well-respected by everybody internally and externally. I think Tony has to start out with some safe harbor statements, and then we'll get into the fireside chat.
Great. Thanks, Tim, and it's, it's great to be here. Before we get started, need to do the usual housekeeping and draw your attention to Verizon's safe harbor statement and our SEC filings, which are on Verizon's IR website. My comments might include some forward-looking statements that are subject to risks and uncertainties. With that out of the way, Tim, I think we can get going.
That is great, Tony. Could you describe from your perspective and the company's perspective, what's, what's your high-level strategy at this point longer term to, to, to grow the business and, expand into new businesses?
Sure. First off, I think the focus from the team, and we're really aligned on this, is to grow wireless service revenue, EBITDA, and free cash flow. As Hans said on the earnings call a couple of weeks ago, everybody's laser-focused on that, and you saw us deliver strong results in the second quarter. Underneath that, there's three areas and three growth areas that I would point to. First being mobility, second being broadband, and third being new solutions, like private 5G and MEC. When we think about mobility, and we'll start with the consumer side of the business, you know, the focus really is to show improvements on volumes, and we're starting to do that.
Sampath and the team moved the structure to a regional model very recently in July, this is a model we know from years past, and we know how to execute well. Also recently in the consumer business, we launched a new pricing plan called myPlan back in May, we're seeing great traction thus far with our premium mix, we're very pleased with that. The focus is on improving the profile in the consumer business. When I shift over to the B2B side, Kyle and the team have had great momentum with leading market share and another great quarter with 144,000 phone net adds. Continued progress and eight straight quarters of over 125,000, we're really happy with the progress on the B2B side.
When you think about broadband, we mentioned on the call that we have a great pace at 400,000+ broadband net adds, and that's a combination of both Fios and fixed wireless access. Fios continues to grow quarter after quarter, and we're very pleased with our, with our results there. On fixed wireless access, we did 384,000 adds in the quarter. We have now over 2.3 million subs, FWA subs in the base, we're very, very happy with the momentum and, you know, well on our way to the target that we put out there of 4 million-5 million by 2025. That's going well.
When you think about the new products, like private 5G, we, we recently announced a lot of, a lot of new deals with the Cleveland Clinic, the VA, and the NFL, and these are great early wins for us to demonstrate the power of 5G and business customers wanting the reliability and the security of a private 5G network. We're really excited about all those three growth areas, and we see a lot of runway ahead. Lastly, if I can just shift to my priorities as coming into the role.
First and foremost, I have three priorities, and the first one's to narrow the focus on operational performance and execution in the business, and I think you see that with the results in the second quarter. The second one is to deliver the guide, the financial guide that we have for 2023, and as you saw in the second quarter, we're squarely on track with that. The third is to execute on our capital allocation priorities, and those, those four capital allocation priorities remain unchanged. We're very pleased with the progress thus far. We know we have more work to do, and we're excited about the future.
I mean, performance has definitely improved, and I, I, I completely get your focus, and it makes all the sense in the world. I, I did wanna just ask one high-level question. I mean, how are you guys thinking that the business, you know, transforms over the next, kind of, you know, five to 10 years, or, or does it not? Is it really, you know, just a continuation of, of where we're at right now, but how are you thinking at a very high level?
Yeah, at a high level right now, we're focused mainly on the day-to-day execution. As I mentioned up front, you know, Sampath and the team changed the operating structure of the consumer business to be very regionally focused, and this was a model that we ran in Verizon Wireless for many years. We know how to do it, and we know how to execute it well, and it starts with day-to-day execution. Then the second facet of it is the network, and you see what we've done on 5G and the rollout of our 5G Ultra Wideband. That, you know, that exercise is well underway and ahead of schedule, and we're very pleased with the progress on 5G.
You saw what we did on 4G over the last decade-plus, and the quality and the reliability of the network that we have, and we expect to do the same with our 5G Ultra Wideband network. You know, the focus is on operational execution.
Perfect. Can you just go into regional model? What are the benefits there? Yes.
Yeah, sure. One of the things that, you know, we saw is we need to be closer to the customer, you know, with more local execution. The network team is also aligned under that construct as well. When Kyle was in his former job, he already had set that up as well. This was a model that we ran in Verizon Wireless, a similar model for, for many, many years. We've executed it well. The team knows how to execute against this model. We'll also be able to, you know, do offers more, more local, and you won't see a lot of this, national offer things that we've done in the past.
We're gonna be a lot more segmented and surgical in our offers and promotions and retentions and thing like that, and things like that, and I think you saw that come through in the second quarter as well.
Got it. It makes, it makes perfect sense. I guess particularly for fixed wireless, you can customize that a lot more locally, I'm, I'm guessing.
Absolutely, you know, as we get access to the remaining C-band, you know, we would see additional improvements, not only from, you know, a bandwidth perspective when you think about the additional spectrum depth, but also, you know, the customer experience with the bundle with fixed wireless access, and having access to another 330 markets when we get the additional spectrum. It's a tremendous opportunity for us.
How much does it increase your overall 5G spectrum deployed, when you turn on the remaining C-band?
Right now, you know, our, our, our pace is ahead of schedule. We said we'd get to 250 million POPs next year, and we're well on track with that. We're not gonna really continue to talk about POPs. We're, we're more focused on, you know, the, the reliability and the coverage in the network. As we get, you know, access to the additional spectrum, which we hope is real soon, and that's pacing ahead of schedule, we look forward to the average spectrum depth increasing from, you know, average of 60 or 100 megahertz to an average of 161.
There's this massive spectrum depth increase, and then having the full complement of the spectrum, so having all 406 markets, and having the ability to start to start scaling, and you'll see us turning them up. You've seen announcements as we've turned up markets, and you'll continue to see announcements as we turn up markets, when we get the remaining C-band spectrum, which will hopefully be real soon.
I, I, I thought that was kind of scheduled for the end of the year. It sounds like it maybe comes before that?
Yeah, we're hopeful that. You know, so far the spectrum clearing's been going ahead of schedule. As we mentioned on the call, we still have, you know, another $4.5 billion obligation to the satellite companies to clear the remaining spectrum. We're hopeful that we, we get it a little bit early, but, you know, as soon as, you know, we hear, I'm sure everybody will everybody will know, and you will hear from us as well.
Great. So you're basically almost doubling the amount of spectrum on 5G at, at the sub-6 GHz. I know you have a lot of millimeter spectrum, and you're massively improving coverage. Can you talk about your experience in, in terms of flow share and ability to kind of generate, you know, other new revenues in areas where you have already deployed the 5G?
Yeah, as I mentioned, you know, fixed wireless access has had great results. You know, from starting a business from scratch, we're already at 2.3 million subs. We said we're at a good pace at roughly 400,000, we continue to grow the base. You know, we're well on our way to the target that we put out there, 4 million-5 million. You can do the math, you can see that, you know, we're, we're, we're well pacing in that direction and, and, and ahead of schedule there. We're not gonna put out a new target at this point. The other thing I would point out is, you know, our engineers, you know, engineer the network well out in advance of that.
They did that with 4G over the years, and we have the best engineering team in the business. They, you know, they'll, they'll continue to engineer the network well in advance of the demand. As we continue to turn markets on, you know, you'll continue to see us go after it, and where we see demand for both mobility and for FWA, and we've had great progress when we have a bundle of customers in, in, in the early markets, when you look at retention and, and, and churn. The churn statistics are great when we have a bundled customer on, on C-band, and the experience is fantastic.
I bet. Can you talk about the ability to go to kind of the 5G standalone and maybe some of the, you know, what's that mean for the network and maybe some new use cases there?
Sure. You know, from a 5G standalone core, you know, we certainly have made a lot of progress there. When you think about network slicing, that, that's a great example. You know, having a slice of network, a dedicated slice, you know, we see a lot of opportunity there. If you think about gaming, for example, multiplayer gaming, that, that might be one use case that will require a tremendous amount of bandwidth. Then when you think about private, or FWA, for example, for an enterprise, they may want a specific slice of the network, for, for throughput or latency de, requirements or, or security that, you know, our network can deliver.
We see a lot of opportunity there with 5G standalone, and, you know, we, we think that, you know, the team continues to deploy, and, we have a lot of customers on our 5G core, and we'll continue to increase as time goes on here. We're really excited about the opportunities.
Standalone, where, where are you with, with the, with the deployment of that? Are you halfway there, or, you know, what, what's the timeline of that, when that gets fully deployed?
Yeah, we have a lot of our 4G customers on the core, and now we're shifting to 5G, and that's, that's happening right now. We expect to add additional. You know, I would say we have millions of customers on the core now, and we expect to continue to deploy further and further into the network. I'm not gonna get into a specific timeline. We continue to deploy, you know, throughout this year and into next year. The team is making tremendous progress. I think you've seen the progress with the network in a very, very short period of time with the accelerated spend that we did over the past year, and the team's well ahead of schedule.
Great. Just customers, not on the fixed wireless side, but on the mobile side, you know, what, how much of an improvement in the experience are they witnessing from the combination of 5G and standalone?
Yeah, look, they, they, they experience the bandwidth right away. You know, clearly there's a lot more bandwidth, and as we get the additional spectrum, there is, you know, additional spectrum depth available for them, and, you know, they're very pleased. We see a lot of great results from a churn standpoint. You know, the churn metrics are much, much better on C-band, and we've been very pleased so far in the early markets. The 76 markets that we have so far, the early returns on churn are very, are very, very pleasing at this point.
Where are you with the millimeter deployments, you know, at this point? Kind of what type of regions are you deploying in, and, you know, could that maybe help, you to increase your fixed wireless subscribers longer term?
Sure. We see, we see, millimeter wave as a, as a complement to C-band, and, and you see us in, in, in stadiums and, and in large venues where there, where there's a lot of people. You know, we, we, we were at the Super Bowl, and, we, we demonstrated the power of, of our ultra wide band millimeter wave network at the Super Bowl, and, we saw great, great experience, especially when the, when the Wi-Fi went down, in the stadium. You know, we're, we're very pleased, and, you know, we also see, you know, some of the work we're doing around, MDUs as well. We, we trialed a, point-to-multipoint, you know, solution for MDUs, and we see a lot of opportunity there as well to, to use millimeter waves.
We're, we're very excited, and it'll complement the work we're doing with C-band.
I know you had a, a new router out, well, maybe more than a few months ago now, that kind of has your complete range of spectrum at this point. Can you talk about how much of an improvement that, that has been, you know, for, for customers? I guess specific for multi-dwelling units, does it penetrate walls and windows at this point, the, the, the full range of spectrum?
Yeah, the new device is working well. I mean, it's plug and play, as long as you don't put the, the laundry on it or anything. It works well, and, you know, we'll help you plug it in if you want, but it's fairly simplistic, and, you know, you're up and running in a few minutes. Customers are very pleased, and we're seeing, you know, great feedback from customers. With the, you know, the option that I talked about with MDUs, that's still in trial, so we'll have to see how that shakes out, but we're very interested in how that might work by, you know, by beaming in millimeter waves. It's very promising.
You know, fascinating stuff. You, you've had a few different pricing moves here lately, you know, quite a few. You know, can you, you, you talk about the goal here, and do you think it might impact subscribers negatively, you know, or, or, or positively? Is this kind of a change in philosophy where we can kind of continue increasing prices on a regular basis?
Sure. You know, we've, we've seen a lot of, you know, targeted price ups, I would say. We, we, we'll monetize the base where we can, and, you know, we've kept the churn, particularly this year, at a manageable level. We're very pleased with the progress. We learned some of the lessons from last year as well with some of the large price ups we did midyear last year, and we're lapping those now. We saw good ARPA growth in the, in the quarter, and we would expect continued sequential ARPA growth. A few things I'd point to, I, I mentioned earlier myPlan. This is a great product for us. You know, it gives the customer a lot of flexibility to choose their network and to choose their perks.
We've seen great adoption thus far. It also gives us the flexibility to evolve the platform as well over time, to add perks and change offers in and out. We've been very pleased. The premium mix so far on acquisition is roughly 70%, which is running ahead of our expectations, so we've been very pleased. It's still early days with myPlan, but we're very, very pleased with how it's going. When you think about some of the other changes we've made, we made changes to our legacy unlimited plans earlier back in April, and more recently with FWA and our device protection plans. These things are driving incremental revenue, and, you know, obviously we're watching the churn as well, and these things were contemplated in our plans.
As we said on the call a couple of weeks ago, we're gonna take a very segmented and a very disciplined approach here, and making sure the pricing, you know, reflects what the customer expects and the value proposition, and making sure that stays in check here. We've been very pleased thus far, and we think it'll be a helpful tailwind to, to service revenue in the back half of the year.
Do you think some of your other legacy plans, there's room to improve pricing there also?
Yes, most recently, we did a pricing change about a week or so ago now on our most recent 2019 legacy Mix and Match plans, and that's going into effect shortly here. You know, that's in play, and that'll also be a tailwind both in the back half of the year, as well as setting us up well for next year. As I said, we're gonna be very, very disciplined.
The other thing I would point out is, like, on FWA, for example, you know, we have 2.3 million subs in the base at this point. We felt it was the right time to take a look at pricing and remove what I'll call the introductory part of the pricing. Move to something that reflects the value for what folks are getting. It's a great product. We felt it was the right time to change the pricing there. Obviously, we're gonna continue to monitor the market conditions and see where things go. We're very comfortable with the changes we've made. It'll provide a good, a good tailwind and continue on our trajectory of service revenue growth for the balance of the year.
Can you describe the price changes last week?
Yeah, there were changes both on the single line and multi-line for the legacy Mix and Match. I believe they were $3 and $5. Those will be effective, I think, in early September, if I recall correctly. It's coming soon, and they're already out there in the market.
Got it. That's, that's really, really helpful. Back to the fixed wireless, can you talk about what coverage you're at now in, in terms of how many homes you're marketing to, and maybe, you know, where you could be in a couple of years?
Yeah, we said we'd, you know, we'd be at about 50 million overall, and we're not going to give new, new targets on that. But as you can imagine, you know, as I said up front, the network team stays out in front of the demand, and as we, as we see demand, you know, the team is, is building as quickly as they can, and, you know, with the coverage and the reliability and the performance that our customers expect from us. And you see the progress we've made. We have 2.3 million subs. We said our target was 4 million-5 million, and clearly we think there's room beyond that.
The team is, is engineering the network, well beyond that, and, you know, we'll see where it goes. We're happy with the pace that we have. We said, you know, about 400,000 or so was a healthy pace for us on broadband, and, and the lion's share of that being, you know, fixed wireless access. As we get the, the additional markets here, you know, it's 330 markets on top of the 76, that we already have. That really opens it up for us, and also opens up the spectrum depth as well to continue to improve the customer experience.
I mean, is there any reason why you wouldn't be marketing to all your 5G areas in, in a, in a couple of years? You know, even in dense areas, you have the millimeter you can deploy. Yeah, just, you know, just conceptually, if we're sitting here five years from now, why aren't, why aren't you marketing this to wherever you have 5G?
Yeah, I mean, we've said previously, look, we, we, we could see a penetration rate of roughly 20% or, or thereabouts. You know, there's, there's work to be done there. The, the network is still being built out, so that's the first step. The team's done a great job in doing that. You know, where we see, where we see the demand, we're, we're going to get after it. You know, you'll, you'll see us lighting up markets, and you'll, you'll see press releases and, and the like as soon as we do. We won't be shy about that. You know, we're very pleased with the performance, and we do see a lot of runway with FWA.
Would that be 20% of, like, homes you're marketing to, or 20% of the homes that are existing customers?
I, I would, I would use the 50 million as, as the baseline for now and, you know, go from there.
20% of the 50%?
Yeah, 20% of the 50 million that we said.
Got it. Got it. Yeah, that, that's, I, I guess back to that, is there any reason why that 50 million wouldn't kind of move to wherever you have 5G coverage longer term?
Tim, it'll move over time. I don't have a new target for you, so I'm not gonna.
Yeah
I'm not going to get into it.
No, no.
I mean, yeah, the answer is yes, it, it could, and it should.
Great. Great, great. You know, back to the, the $1 trillion question, which is free cash flow and free cash flow growth at this point. It sounds like you're laser-focused on it, increasing prices. And I guess maybe just before we touch on that, there are- I think two weekends ago, there was a list of the top 10 companies that can benefit from AI. I've been spending my weekends, frankly, entirely reading about AI, and I think you were, like, seventh on the list. Can you talk about, are, are you starting to think about using AI to improve your own productivity and where you are in that path and what the potential could ultimately be?
Yeah, sure. The answer to your question is yeah. I mean, it, it, it certainly can improve productivity, and it's part of our, you know, as we said, that we're gonna have a cost reduction program to take $2 billion to $3 billion out by 2025. We see AI being a part of that. You know, a couple of, maybe two or three examples that I, that I can think of, you know, in the network, we use AI to analyze literally billions of data points to help us optimize the network, and make better decisions in the network. We think that's, that, that's huge for us.
When we think about our employees and the work we do in customer care and empowering our employees to serve our customers much more efficiently and more effectively, the first time around, that's extremely important, and we see AI playing a role there, and it already is. Then on myPlan, that we launched back in May, you know, we AI can, can provide recommendations for the customer, helps them decide quicker, and also, you know, helps us monetize as well. You know, those are three, you know, pretty simplistic use cases for AI that we see out of the gate that are already in play for us and will help us contribute to, you know, removing costs from the business and becoming much, much more efficient.
Absolutely. I mean, it seems like a huge opportunity. You know, particularly, I mean, you have a huge amount of stores, but if you can get better, more digital interactivity with customers and be more proactive with them and, you know, just having better websites and chatbots, which will come with AI, I mean, do, do you see that as a major kind of driver where customers can become much more self-provisioning?
We think so. We, you know, we have a lot of data. We, you know, and we're gonna use it responsibly. We see a lot of use cases coming, and, you know, the ones that are in play right now are, are working well, and, and we'll continue to get more efficient, and this is a, a lever that we can pull to continue to, to become more efficient and take cost out of the business.
Then the other big area of cost or, you know, handset subsidies, I know that you and a lot of the industry has moved from two years to three years subsidies. Can, can you talk about what type of impact that had on your free cash flow, and are there other ways to improve free cash flow or, you know, on, on the subsidy side?
Yeah, we mentioned on, on, on the call a couple weeks ago that, you know, the revenue impact from the promotion amortization that hits the P&L has been decelerating in, in, in recent quarters. That's really a function of our discipline around the promos and the retention. We think that that's going well. We've been extremely disciplined. We said we're not gonna chase, you know, volumes. You know, we're gonna be very disciplined about around volumes that drive, you know, profitable revenue growth. That's a focus of the team, and, and, and, and the team's aligned on that. You know, we know how to do this. You know, we'll save, y ou know, if we need to be more competitive in certain markets, you know, then Sampath has the ability to do that.
You know, between the price ups and the work we've done, we are gonna be, you know, we'll be able to do that, but we're gonna be very disciplined along the way. You know, volumes are important, but we have to do it the right way and be very disciplined in, in our approach, and I think you saw that in the second quarter, you know, in the results.
Absolutely, it, it is always the, the dilemma, right? How do you balance-
Absolutely
subscriber growth, you know, with profitability you're, you seem to be walking that, that line pretty well. I mean, do you think subscriber adds, you know, can improve the next 2 years along with profitability improving?
Yeah, look, the, the focus on the consumer business is to continue to improve the, the, the profile here. We had, we had good momentum on gross ads in, in the quarter, also in the first quarter as well. We're gonna continue to show improvements, and that's the focus of Sampath and the team, and, and, and everyone's aligned on that. I'm not gonna call, you know, what, what we're gonna be, whether, you know, it's gonna turn positive now or later. The focus clearly is to, to improve volumes, and, but do it in a very responsible way. We've had a long track record of being an and company, and, you know, we need to get our way back there, and, we're slowly getting back there.
We still have work to do, and on the business side, the momentum's been great. You know, Kyle and the team have been doing a wonderful job, and, you know, we, we expect that momentum to continue as well.
Great color. Down to the key item of free cash flow, yeah, I know you hit on some of the priorities. I mean, one of my priorities for you is really, you know, de-leveraging, you know, can you talk about how much free cash flow you can generate this year, you know, how do you see that growing over the next, you know, you know, five years an- annually? You know, not year by year, just, you know, how, how does it grow? How much can it grow?
We are pleased with the cash flow generation of the business. As you mentioned, we had $5.6 billion of free cash flow in the quarter. We said we on the call, we have line of sight to $17 billion+ of free cash flow for 2023. You know, we did give some color on that on the call. I'm not gonna get into the future in terms of, you know, guiding for next year or beyond. As I said earlier, you know, we have four capital allocation priorities. The first one is to invest in the business, and I think you see us doing that with our C-band deployment and the work we're doing there.
The second priority is our commitment to the dividend, and the goal there is to put the board in a position to increase the dividend for the 17th now consecutive year. The third priority is a strong balance sheet and improving the balance sheet, and I think you saw right after earnings, we did a debt tender, and that closed yesterday, and that was very successful. We took $2.4 billion off the debt stack. You'll see us continue to focus on de-leveraging towards our stated target of 1.75x-2x leverage. When we satisfy those three priorities, we said we would do buybacks, and we would consider share buybacks when the leverage metric got to 2.25.
We're making progress against that, but the clearly, the focus is to continue to improve the balance sheet, and, I think you saw that we're executing on all those priorities, out of the gate here, and, I'm very pleased with the progress. We had strong cash at the end of the quarter, and, you know, we took, we took the opportunity to start taking some debt down.
Can you talk about, you know, 2024, 2025, how, how much debt can you take down per year, do you, do you think? You know, some kind of range.
I'm not, I'm not gonna guide on 2024. I think it was a big deal to guide on 2023. I think what I would say to you is when you think about the piece parts, for a minute, you know, the goal is to improve EBITDA, so it starts there. We said CapEx would be at a BAU level going forward. I think you saw that in the second quarter, and that's gonna be the case for the balance of this year and into next year. You know, Hans, on the call, said, you know, look for us to be in the $17 billion-$17.5 billion CapEx spend for next year. We haven't decided completely yet, but that's a reasonable range.
If you think about those two things, I mean, that's where you start. We have to also think about, while it's not in free cash flow, we still have a spectrum payment, payments for the satellite companies that we have to deal with for the C-band. That'll be behind us after this year. Then we have to see where we come out on interest rates and taxes, and, you know, we had some headwinds there, particularly on capitalized interest and things like that. We'll see where that comes out, but those are the piece parts that you can start to think through. Then, you know, as we have excess cash, the priority will be to continue to de-lever.
Great color. I do have to ask you on the lead issue, maybe it's subsiding here a little bit, but, you know, I saw there was a test up in Wappingers Falls, that there really wasn't any lead. Even though I think the Wall Street Journal said there was. Have you tested many other sites the Wall Street Journal has tested, and have you found any, you know, lead contamination yourselves?
First, maybe I'll Tim, I'll pick up where we left off on the earnings call. We said, "You know, look, we're, we're gonna take this seriously. We're gonna do a very methodical, fact-based, science-based approach." We're proactively working with the EPA on this. We also gave some stats as well. We said about 540,000 route miles in the network, half of it aerial and a very small percentage of lead. We did say maybe just a couple of updates here. We did say we had work to do on the former XO and the former MCI networks. On the former XO network, we did that review, and that review is complete. It doesn't change the numbers and the stats that we shared previously, so that was good.
We're still working through the MCI piece of that, so that work is ongoing. As you mentioned, we saw the same reports out of New York State, that they did their own testing with their Department of Environmental Protection, and they found no evidence of, of elevated lead in, in the area, and they reopened the park. That was, that was very encouraging. You know, we're gonna continue to, you know, do our work and our testing, and that's ongoing, and we said that would take several weeks, and that work is well underway. We, we know everybody wants wants more information here, and as soon as we have it, you know, and as soon as we have something to share, we'll certainly share it with everybody.
Other than that one site in New York, did New York State test any other sites that I missed maybe?
I, I, I'm not aware that they have, Tim. I mean, you know, we're testing the sites that were identified by the media, so we're, we're doing our independent testing there. But I'm not aware of New York doing anything else at this point.
Great. I have about 20, well, I have about 50 questions here I'm gonna try to get through, through some of them from our customers. Do you have any interest in USc ellular? It looks like it might be for sale.
We saw the same news you did on Friday. As we always do, we don't, we don't comment on any of that, and it would not be appropriate for me to comment on it, one way or the other.
Great. I, I know we touched on this a little bit, but can you talk about the, the private, well, sorry, private wireless market opportunity? Do, do you have a, a sense of what that TAM might look like, how important it might be, you know, over the long term?
Yeah, it, it, it is extremely important to us. We, we have some early wins with the NFL and the coach-to-coach communication there. That, that, that was fantastic, and the Cleveland Clinic. We have some wins under our belt now, and I think we're starting to demonstrate. It starts as, as, as a Wi-Fi type replacement, and then we see further, you know, opportunity with, with robotics and automation and other areas down the road. And we think customers will, you know, demand a, a, a secure and reliable network like ours, and, and we're very pleased with the early wins. We do see it as a, as a growing market for us, and we're very excited about it.
Great. Another question here, handset upgrades have been relatively light. Is there any structural reason why, you know, why this has occurred? Are phones lasting longer? Can you replace the batteries easier or the screens or? You know, just any thoughts why you think, and well, how long will this continue, or is it the new norm?
Yeah, you're absolutely right. Upgrades are, were down, and we said on the call that, for us, they were down 34% year over year and 38% in our consumer business. Maybe just a few thoughts on this. You know, first, customers by choice are hanging on to their phones, longer. It's their choice, and we do see the elongation of the, of the upgrade cycle. We think some of that could be attributed to moving to device payment plans, so we moved to 36-month device payment plans. Last year, we went from 30 to 36, so that could be a, a, a, a function of it.
I also think that, you know, we ourselves are being very disciplined on, promotional and, and retention spend, and we're, we're moving away from the, you know, the one-size-fits-all national offer. I think that's extremely important. As we think about looking ahead, and maybe I can give a very small bit of commentary there, you know, it, it would be reasonable to expect that, at least the beginning part of the third quarter, that the upgrade rate will remain at a lower level.
We'll have to see as we get into the September timeframe and the device refresh cycle, what that looks like and where it goes from here, but that would be my only color, color at this point, you know, heading into the, you know, the back end of the third quarter, and we'll see what happens, you know, in the fall and where it goes.
Yeah, like I said, about 50 more questions from the audience. I'll try to a- ask one here. I, I guess one of your competitors said your cable wholesale revenues are not growing. I think Mike Sievert said it on their T-Mobile call. Can you... Do you have any comment about that?
Yeah, look, as you know, we don't, you know, we, we don't talk about any of the economic terms of our commercial arrangement, and that includes the, the MVNO deal. I, I can't comment on what he said. I'm not sure how he, he knows that. I, I, you know, as we said, we're very happy with the relationship that we have with the cable companies. It's consistent with our strategy to monetize the network, and, you see that, and, and we said, you know, as Network as a Service was, was an important strategy for us. You know, it's profitable business, it's important business to us, but we're not gonna get into any of the economic terms on the call here.
Got it. In, in your new myPlan, I, I think there's about 12 different options that people can add on. I don't have the exact number, and it's probably changing over time, expanding. You know, how are they being received now, and are you marketing them aggressively? Is it a good do you think it'll be a good retention tool or a good ARPU tool? You know, maybe what are some of the most popular ones?
Yeah, so look, we, you know, we're, we're very pleased with this said upfront, you know, we have 70% premium mix on acquisition, so that, you know, first and foremost, that's very encouraging. As with any new plan, it's still ramping up. We, we launched it in May. There was a lot of work done to get it, to get it going, and, obviously, in the field and for the customer, it's a change. You could also keep your legacy Mix and Match plans as well, so we're not, you know, force migrating anybody. It's very, very flexible. Some of the perks like Disney, the obvious ones are, are very, very popular for us, including +play as well, and we'll see where it goes.
Clearly, you know, there's opportunity to continue to monetize the base, and, and we've been very pleased so far, with the results, and, and we'll keep folks updated as time goes on. Obviously, it's still very, very early. You know, we're about two months, a little over two months in. We're very pleased with the early returns on, on myPlan.
The 70%, how did that compare to previous plans that you had?
Yeah, I'm not gonna get into specifics, but, you know, we're, we're very pleased with the, with the early, with the early, numbers there.
Got it. I do have a question here just on market share losses to cable. Do you think you're mostly seeing that on the prepaid side, or are you seeing that, you know, on, on, on the postpaid side? Do, do you think cable will accelerate, the number of subscribers that, that, you know, they add? I mean, Charter's been, Charter's been pretty successful with their bundles. Do you think Comcast will do something similar?
Yeah, I guess they've been successful with free lines, and we'll see how that goes in year two, so, when the customer gets the surprise in year two. You know, I, I'm not gonna comment too much on what they're doing. You know, we're, we're focused on what we need to do from an operational standpoint, but, you know, we, we've seen the movie on free lines and know, know how that goes.
Well, can you expand on that a little bit? you know, what you've seen historically, you know, when free lines kind of come up. I mean, they claim it's, you know, people are using the lines they're not gonna churn off. obviously, you know, you've had a lot more experience with this and seen a lot of.
Well, well, well, when the customer gets the bill in month 13, you know, that, you know, we'll see, we'll see where it goes. That's my comment on it.
Mm-hmm, mm-hmm. No. That's, that's a very, very fair point. Well, I think we're just about out of time. Is there any other comments you wanted that we didn't talk about, Tony, that we should have? Sorry.
No, I think, Tim, you, you, you touched it all. Look, you know, we're very, very focused on, you know, driving improvements in the business, and I think you saw that in the second quarter. The team's laser focused on, you know, driving service revenue, EBITDA and cash flow growth. You know, we continue to be focused on improving the operations of the business, and we're excited about the future with, with 5G.
Yeah, Tony, I'd have to say, you guys seem more, well, the focus is really, really great, and it comes across, and we're starting seeing the results, and clearly the results are, are, are gonna be getting better here. We really look forward to the major, major upgrade on the 5G network. You know, it seems like you can add an awful lot more fixed wireless customers if you want. It sounds like you want to. I know this is not the forum to be updating, updating guidance, but that kind of clearly came across fairly, fairly loud and clear. The profitable growth came across fairly loud and clear.
I think, you know, personally, as you de-leverage, you know, I, I think that will flow through to the stock price once people get kind of comfortable with that. I think it is a bit of an overhang right now, for what it's worth.
Great. Well, thank you very much.
Thank you, Tony. Thanks, guys. Have a great day. Talk soon.
Thank you.
Bye-bye.