Verizon Consumer's Shakeup and the Search for a New Leader

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the two hundred and eighty second episode of the week with Roger, a conversation between analysts about all things telecom, media, and technology by Recon Analytics. I'm Don Kellogg, and with me as always is Roger Entner. How are doing, Roger?

Roger Entner 0m23s

Hey. I'm good. How are you?

Don Kellogg 0m25s

I'm good. So, uh, we got some personnel news coming out of Verizon. Uh, you wanna talk to us about

Roger Entner 0m31s

More drama. So Sampath is out at Verizon per the eight k. He stopped being the consumer CEO on February 4, and he will leave the company officially by the end of the quarter. This follows a story in the Financial Times that the company was looking for a successor for Zampath. Doing a little bit of detective work, one of the things that came out was that Verizon was looking in Europe for a news executive.

Roger Entner 1m9s

And when that news broke, things needed to happen. And so then the decision was made to leave that earlier. One of the things that's really interesting, I did an analysis when Dan took over and I said, like, you know, Samphath is still the heir apparent. And when you're wrong, you have to admit it. And you have to figure out why was the analysis wrong.

Roger Entner 1m32s

And apparently, Dan was a lot less in love with Sam Perth than his predecessor, Hans Westberg, where Sam Perth was clearly the successor. And so it looks like things were in the works all the way since then. One of the telltale signs is the retention bonus was only $4,000,000 Now, 4,000,000 for me and probably for most of our listeners, that's a lot of money. Whereas for an executive of that stature, it's not. Let's say it this way.

Roger Entner 2m4s

And so I should have caught that and I should have done better analysis. I always say like, numbers and facts don't make decisions. People make decisions. And I should have looked more at how Dan makes decisions. And I also described it as a rescue mission because his contract expires at the '27, that is Dan's thing, it will probably take longer than six months to get a new replacement for Sampath, just realistically speaking.

Roger Entner 2m35s

Unless they're picking somebody who is currently on the bench somewhere or at the beach, which I can't imagine. So the extrication will take a lot longer. That also means you have to give that guy or lady, you know, and we have a track record here from Verizon. Ronan Dunn came from Europe. He was the three executive no, four now executive.

Roger Entner 3m1s

In the last five years, Verizon went through four consumer heads. Ronan Dunn was heading that for five years. He came in from Europe, really distinguished executive. He was the last one where you can really say a complete success. He came in from 02, did really, really well here.

Roger Entner 3m22s

We had him on the podcast

Don Kellogg 3m24s

Over Christmas.

Roger Entner 3m25s

For Christmas. Great guy. When he left, Manon Bruyette took over. She came from Canada, Videotron. When I mentioned it to one of my friends in the industry and I said like, yeah, Manon Bruyette is the new executive.

Roger Entner 3m40s

She's like, who? I'm like, oh, she was the CEO of Videotron in Quebec. And his reaction was like, oh, so she ran like Ohio. Right? And so that didn't go well.

Don Kellogg 3m53s

So you're making a scale argument there. Right?

Roger Entner 3m55s

You're making a scale argument as well. Right? Yep. Verizon is a supertanker. It is massively large.

Roger Entner 4m3s

And so you need an executive. And then came Sampath who brought stability to this, but not necessarily fortune. When you look at the numbers, have to say, under Sampath's leadership, this was not a huge success, right? And now we have the fourth one who is a friend of Tan taking over on a temporary basis. So you need to have a new replacement.

Roger Entner 4m25s

It's very, very unlikely that it will be a US telecom executive because they're all conflicted both through non competes and through tradition that you don't go to the other team at that level.

Don Kellogg 4m40s

What about somebody internal? Right? So, like, Zen Path was head of the business group before he was head of the consumer group. Verizon historically has done a lot of promotion from within. What do you think about that trajectory?

Roger Entner 4m52s

If it would have been an internal candidate, that would have happened already now. Then the internal candidate would have taken over already.

Don Kellogg 4m59s

Well, I mean, the the person that is taking over is internal, although only ten weeks in.

Roger Entner 5m4s

Yeah. But he's a caretaker. He same generation as Dan, and Dan is working hard at this. But the white elephant in the room is Dan is 67. That is beyond the retirement age for normal CEOs.

Roger Entner 5m19s

And that's when he starts, right? But when you look at all the search that it will take, in all likelihood, he will stay longer than until the '27. Simply because I don't think the new consumer head, who is then going to most likely be a successor, needs to have some run rate. Right? You can't hand over the keys here to a new guy.

Roger Entner 5m43s

And Alfonso Villanueva came in with Dan. He's trusted by Dan. And he's very officially called interim CEO. So you know this is a temporary assignment. So now, how long do you want to test drive that new consumer CEO if he has the mettle to do this?

Roger Entner 6m2s

You know, I still think it's a rescue mission. I just think the rescue mission gets a lot longer in tenure and in time. So that would be my expectation here. Yeah, it's going to be really, really interesting. Also, the timing is kind of a huge gift for T Mobile.

Roger Entner 6m19s

On Wednesday, they will have their Capital Markets Day. We'll see how T Mobile will play it. If they want to play it classy, you know, they just can say, hey, look at the consistency here. On the other hand, look at the massive amount of leadership change we also had at T Mobile. It's a lot bigger than what is reported.

Roger Entner 6m39s

Look at the significant layoffs that have also not been reported. They are also laying off a lot of consumers, consumer facing employees, because they are pushing through the tea life application and they think that it will save them on store people. What we are seeing in our numbers is that since they rolled out T Life, the scores have gone down. Nothing else changed. T Mobile's satisfaction scores have gone down.

Roger Entner 7m8s

We'll see if it's a coincidence or causality. I hope for them it's coincidence. I think it's causality.

Don Kellogg 7m14s

Well, I mean, I think what they're trying to do with T Life is very ambitious in the sense they're trying to take a lot of things that you typically had to call care for things like are going to a store for things like upgrading your plan and trying to enable people to use on the app.

Roger Entner 7m27s

Yes. And people hate it.

Don Kellogg 7m29s

And there are growing pains is how I would characterize it.

Roger Entner 7m32s

Yeah. And we see the growing pains very clearly in our numbers. Right. We'll see if the competition will be able to take advantage of that dissatisfaction because not everybody wants to do their upgrades on that device, even if they go into the store. I'm in tech.

Roger Entner 7m49s

Right? I'm here. I would hate to do this all on my phone, regardless of how easy it is. Simply, I bristle at this, you make me too. Right?

Roger Entner 7m59s

And so I would not be a very good Ford Model T customer where Henry Ford said you can have the Ford Model T in every color you want as long as it's black. Not my kind of guy. But I expect that T Mobile will not be able to help itself and will probably dunk on Verizon. It will be fun. I'll be there.

Roger Entner 8m19s

We'll see if they go for the high road or the low road. But yeah. And then who would have thunk? AT&T is now the haven of stability in that whole thing from a leadership perspective. I thought it was very, very good that Jeff McAlfresh was on the earnings call.

Roger Entner 8m38s

You know, he wasn't in a while. And so when we look at the AT&T leadership team, I would expect not much to well, who knows? Right? But at least at the very top, I would expect John Stankey to stay around at least until they have moved into the new campus. That would be my expectation.

Don Kellogg 8m57s

Right. So this is AT&T moving their headquarters out of Downtown Dallas into, I believe, it's Plano. Correct?

Roger Entner 9m3s

Yes. It's the old EDS headquarters. They're gonna tear all of that down and build it new and probably will be called after John Stankey. That would be my expectation because since John has taken over, things at AT&T have certainly moved in the right direction. And the contrast against his predecessor couldn't be Stalker.

Roger Entner 9m25s

So they will probably name it after him because the old tower was called the Ed Whittaker Tower, and, you know, they're probably not gonna rename it.

Don Kellogg 9m34s

Well, that was after they moved from San Antonio to Dallas. Right?

Roger Entner 9m37s

Yeah. And from what I heard, it's like when that happened, Ed Bittiger called it the saddest day of his life because he loves San Antonio and he really hated Dallas. And when they moved it away from there, by his handpicked successor, he's like, You hated that one. And then they named the tower after him. Funny, right?

Roger Entner 9m56s

Anyway, insult to injury. But anyway, so I think either John will name it after him, probably not. The board will name it after him or his successor will name it after him. And he would deserve it for the way he has turned around the company. And So it will be very, very interesting of what's going on.

Roger Entner 10m14s

It's a fascinating industry.

Don Kellogg 10m16s

We're entering that kind of roll up to the q one where, you know, folks change how they do reporting and all their numbers, and we already know that AT&T says already said they're gonna change some reporting.

Roger Entner 10m28s

And they have. They show a lot more convergence, and we're doing a ton of stuff on convergence. I hinted at it at a investor call I did with Mike Rollins from Citibank of what we're seeing in but that's a topic for another day.

Don Kellogg 10m44s

Right. My point is everybody's getting ready for q one. What does the new world look like? Blah blah blah. So we'll see.

Roger Entner 10m51s

You know, when you think this industry will might become boring, god, it's more exciting than ever. When I said, like, at the end of the year that 2026 will be epic, it's gonna be much more than epic. It will be legendary epic. I couldn't be more excited to be in this industry than today. It's more riveting than ever.

Roger Entner 11m11s

And we went through the times of John Ledger disrupting this industry. It's at least as exciting as that.

Don Kellogg 11m18s

Alright. Well, we'll, uh, we'll talk to you next week.

Roger Entner 11m22s

Talk to you next week.