Verizon Communications Inc.

over 650,000 incremental passings this year. Meanwhile, the regulatory approval process for our pending acquisition of Frontier is progressing as planned. We're encouraged by Frontier's performance and look forward to closing the transaction to further accelerate our fiber expansion. As we near the closing of Frontier acquisition, we will provide a comprehensive update on our strategy, broadband expansion, and capital allocation considering all stakeholders. We look forward to providing an update in the next few months. With that, I turn it over to Tony to go into the financials in more detail.

Thanks, Hans, and good morning. The first half of the year reaffirms the strength of our business, highlighting the effective execution of our disciplined strategy and significant progress towards achieving our financial goals. As a leading provider of essential connectivity across the U.S., we are committed to offering the best value and delivering the best service and customer experience within the industry. We are focused on driving wireless service revenue and adjusted EBITDA growth and robust free cash flow. The second quarter demonstrated our ability to deliver strong financial results, even in the period of elevated promotional activity and broad economic uncertainty. We remain focused on high quality, profitable growth, recognizing that volume growth is only valuable when aligned with our disciplined financial framework. Our goal is to improve volumes year over year, though we will not do this at the expense of delivering on our three key financial priorities. This past quarter, we achieved strong sales, focusing on high quality customers without overspending for growth. Even with public sector challenges and ongoing consumer postpaid phone churn pressure, we maintained our financial discipline. Within consumer, second quarter postpaid phone gross additions were up sequentially and year over year. Our sales execution remained strong leveraging our attractive value proposition, including the recent launch of the Best Value Guarantee. As expected, we saw the residual effects of our first quarter pricing actions impact our second quarter consumer postpaid phone churn. Additionally, we continue to see elevated competitive promotional activity. As a result, second quarter consumer postpaid phone churn remained consistent with the first quarter at .90%. We have taken a series of actions to address our elevated churn. On June 24th, we launched initiatives designed to improve the customer experience, including leveraging AI for more personalized support. In addition, we continue to enhance our value proposition and build customer loyalty through the best value guarantee. We provide exclusive access to the best events and experiences, and our Refresh app helps customers maximize the value of their plans. Mobility phone net ads, which includes both consumer and business retail postpaid, as well as core prepaid were $16,000 for the second quarter. This represents an improvement of $25,000 from the prior year period. Consumer postpaid phone net losses totaled $51,000 for the second quarter compared to $109,000 net losses in the prior year period as we benefited from strong gross ads. Verizon Business delivered 42,000 phone net ads in the second quarter compared with 135,000 net ads in the prior year period. A significant majority of the year-over-year decline was driven by the public sector business. Though we anticipate public sector pressures to persist in the second half of the year, we expect the impact to subside towards the end of the year. Consistent with our wireline approach, we continue to remain disciplined and not pursue low margin wireless business or overpay for volumes. We remain confident that the team has the tools to execute effectively in the current environment and deliver healthy volumes for the full year 2025. Core prepaid net additions were $50,000 for the quarter, an improvement of $62,000 from the prior year period. This marks four consecutive quarters of positive core prepaid net adds, reflecting the strong execution of the team. The Visible, Total Wireless, and Straight Talk brands continue to perform well and are progressively building a high-quality business. Overall, core prepaid ARPU rose above $32, and we have now reached an inflection point where after four quarters of volume growth, we expect prepaid to positively contribute to wireless service revenue growth for the remainder of the year. Turning to total wireless postpaid upgrades, we saw a 14% increase in the first half of the year as compared to the same period of 2024. This result was driven by a healthy initial uptake of our best value guarantee program, which is an investment in our high quality customer base. As Hans said earlier, we continue to expect upgrade activity to increase by a mid single digit percentage in 2025 as compared to 2024. Moving on to broadband, we delivered 293,000 net additions in the quarter. We are taking broadband share and see strong demand for both our fiber and fixed wireless access offerings, even with seasonal impacts and a softer move environment as compared to prior years. In fixed wireless access, we delivered 278,000 net ads for the quarter, growing the base to more than 5.1 million subscribers. FWA demand remains strong, and we are on track to deliver our goal of 8 to 9 million FWA subscribers by 2028. Fios internet net ads for the second quarter were 32,000, versus 28,000 in the prior year period. Fios provides customers with industry-leading connectivity and delivers high customer satisfaction reflected in both robust ARPU and consistently low churn rates. We are expanding our Fios footprint and remain on track to deliver 650,000 new passings in 2025. As we talk about fiber, let me provide a brief update on the pending Frontier transaction. The team is working through the necessary steps to complete the acquisition, and we remain on track for an early 2026 close. We have received regulatory approvals from eight states, as well as the FCC and DOJ, and are productively engaged with the remaining state regulatory agencies. Based on Frontier's publicly reported results, the company continues to form extremely well and remains on track with their fiber expansion goals. Our integration planning efforts are well underway and we anticipate a smooth transition upon the deal closing. We are looking forward to having Frontier's assets serve as an important catalyst for our fiber expansion and broadband growth acceleration. Turning to our financial results, we delivered another strong quarter. Second quarter consolidated revenue reached $34.5 billion, up 5.2% year over year. This result was driven by solid wireless service revenue and a more than 25% increase in wireless equipment revenue. Service and other revenue rose 1.6%. Total wireless service revenue reached $20.9 billion in the second quarter, a 2.2% increase year over year. Growth was driven by consumer ARPA, which rose 2.3% year over year. We realized benefits from recent pricing actions, expansion of fixed wireless access, and increased revenue from perks and other adjacent services. Our robust perk offerings continue to grow at a steady pace, keeping us on track to achieve our goal of 15 million perks by year end and providing a healthy contribution to service revenue. In addition, prepaid revenue has reached a turning point and was flat in the second quarter compared to the prior year period. We expect prepaid to positively contribute to wireless service revenue growth in the second half of the year. Overall, we are well positioned for continued service revenue growth with healthy underlying customer economics. Consolidated adjusted EBIT in the quarter was $12.8 billion, which is the highest we have ever reported and an increase of 4.1% compared to the prior year period. Wireless service revenue growth, coupled with the benefits from cost savings initiatives, more than offset the impact from the elevated upgrade activity. Through the first half of 2025, both wireless service revenue and adjusted EBITDA are up nearly $1 billion from the prior year, reflecting strong operating leverage. Within that result, the business segment EBITDA has now grown for three consecutive quarters on a year-over-year basis. From a cost perspective, our voluntary separation program is now complete, generating substantial savings. In addition, we're actively pursuing opportunities within our legacy businesses. These include copper decommissioning and savings from the managed services initiative within our business segment, among other cost efficiency programs. Adjusted EPS was $1.22 in the quarter, up 6.1% year over year, primarily due to the strength in adjusted EBITDA. Turning to our cash flow summary, cash flow from operating activities for the first half of the year was $16.8 billion, up more than 1% compared with the same period a year ago. CapEx for the first half of 2025 came in at $8 billion, compared to $8.1 billion in the prior year period. We continue to realize efficiencies in our C-band deployment and Fios expansion, enabling us to effectively meet or exceed our network goals well within our capital budget. For the first half of the year, the net effect of cash flow from operations and CapEx resulted in free cash flow of $8.8 billion, an increase of 3.6% compared to the same period a year ago. Net unsecured debt at the end of the quarter was $116 billion, a $6.9 billion improvement year-over-year. In the first half of the year, our debt reduction was offset by non-cash mark-to-market adjustments. Our net unsecured debt to consolidated adjusted EBITDA ratio was 2.3 times at the end of the quarter, a 0.2 times improvement year-over-year and in line with the prior quarter. We continue to make progress towards our long-term leverage target ahead of the closing of the Frontier transaction. Our balance sheet remains a significant strength of our organization. Notably, we have under $700 million in unsecured debt maturities remaining in 2025. We will continue to focus on reducing debt ahead of completing the Frontier transaction. As Hans mentioned earlier, our capital allocation framework remains unchanged. We will continue to strategically invest in the business enhancing our mobile and broadband networks, support a healthy and growing dividend, and paying down debt towards our long-term leverage target. As we've mentioned previously, we will consider buybacks once we reach our leverage target. Our strong operational execution in the first half of the year, coupled with favorable tax reform, gives us the confidence to increase our guidance for the full year. Given the strong adjusted EBITDA performance in the first half of the year, we are increasing our full-year guidance to 2.5% to 3.5% growth, an increase of approximately $125 million at the midpoint. We are increasing our guidance for adjusted EPS growth to a range of 1% to 3% to reflect a new adjusted EBITDA outlook. We are raising our 2025 free cash flow guidance to a range of $19.5 billion to $20.5 billion. The increase is driven by an estimated benefit of $1.5 billion to $2 billion from their recently enacted tax legislation, as well as the disciplined operational execution that drove our strong adjusted EBITDA and free cash flow performance in the first half of the year. Our wireless service revenue and CapEx guidance remains unchanged. As we get closer to the closing of the Frontier transaction, we expect to provide an update on our broadband plans, as well as our capital allocation strategy. In summary, we have a resilient business model with a high-quality customer base and continue to execute well in both mobility and broadband. Our second quarter financial performance reflects our disciplined approach to growth, and we are well-positioned to deliver on our improved outlook in the second half of the year. With that, I will turn the call back over to Hans.

Thank you, Tony. Our strong first-half results reaffirm our confidence in Verizon's strategy. Our strategic execution and the ongoing momentum across our business underpin our decision to raise full-year guidance. Our focus remains clear. We are committed to growing wireless service revenue, expanding adjusted EBITDA, and generating strong free cash flow. We will achieve this through three key priorities. First, Building on the network leadership to create compelling customer offerings that accelerate growth in our mobility and broadband businesses. Secondly, maintaining operational excellence and financial discipline across the organization. Thirdly, scaling our next generation platforms from capturing new enterprise opportunities with private networks to enabling AI at scale and unlocking new revenue streams from our existing assets. The opportunities ahead are significant, and the pending frontier acquisition will accelerate our fiber strategy. Verizon's unique market position and the essential nature of our services are fundamental to empowering individuals, businesses, and society. Verizon has the assets, the strategy, and most importantly, the team to deliver sustainable long-term growth. We are excited about the opportunities ahead. With that, Brady, it's time for Q&A.

Thanks, Hans. Brad, we're ready for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your touchtone phone. Please unmute your phone and record your name clearly when prompted. Your name is required to introduce your question. If at any point your question has been answered or you would like to withdraw your request, you may remove yourself by pressing star 2. One moment for the first question. The first question will come from Ben Swinburne of Morgan Stanley. Please go ahead, sir.

Thank you. Good morning. I want to ask about free cash flow, kind of capital allocation, and then also the outlook for consumer wireless. Hans and Tony, you guys have meaningfully more cash flow to play with now. I know you said a billion and a half to two this year. I think these tax benefits continue beyond 25. What's the best use of incremental capital at Verizon from your perspective? I know you laid out your priorities, but can you help us think about Your ambition to get to buyback sooner, build more fiber faster, et cetera, et cetera. And then on the consumer wireless front, should we still expect consumer net ad improvement, postpaid net ad improvement in 2025 versus 2024? I don't think that was reiterated on the prepared remarks. And maybe you could talk a little bit about the churn outlook in the second half where you'll be moving beyond the price increases and so whether we should still be expecting kind of churn normalization. Thanks so much.

Thank you. Let me start with the capital allocation. I think your comments and question there is more than valid. As you saw, we raised our guidance for free cash flow partly because of our cash flow from operation is improving, but also the tax reform that we indicated how much it is. As I said before, I mean, our capital allocation priorities are unchanged. I mean, it's first of all in our business, and we have increased the capex this year compared to 2024. The dividend, of course, 18 years of increase. We want to put the board in a position to continue to grow. We pay down our debt, we pay down our debt again with almost 3 billion in the first half, and then it will be buybacks. Now we are in a situation where we are just about, or in the couple of months from now, in the beginning of next year, closing frontier. So what I said in my prepared remarks is, I want to get a holistic view on all the capital allocation. I mean, how we're going to invest in fiber, what synergies we see, how we're going to do the capital allocation priorities. But clearly, the tax reform is helping us to get faster to the priorities we have. So we feel good about that. But let me come back to that so I can... we can give you a holistic view on capital allocation. But clearly, we are very excited about Frontier. The performance is great. The synergies are great. And of course, the convergence and the fiber opportunities are also great. So very excited for that. And so far, Frontier has performed really good. On the wireless consumer, I think that our ambition, as was outlined by Sampat in the beginning of the year, doing better this year is still valid. I mean, there's no difference on that. However, we're going to continue to be very financially disciplined. For us, we will not sacrifice our financials, but you're still getting net ads if it doesn't make sense, if it's too expensive. You saw us in the fourth quarter last year being aggressive because we saw the opportunities of creating and gaining a lot of high-quality customers. You saw gross ads in the second quarter. So it all depends where the market is and where we go, but ultimately our goal is to increase our service revenue and then expand our EBITDA and cash flow. That's our main KPIs. uh and then on churn uh tony will probably shine in on all of this but on churn expected in the second quarter was elevated uh coming from the price ups but also from the competitive environment i think the whole industry is up uh tampa put in a lot of very important churn measurements 624 that now is twiddling going through our our system all our ai empowered customer service impacting. So very encouraged about what the team is doing and how they are working on the loyalty and retention of our customers. That's all. Tony will chime in on all three, I guess. Yeah, thanks, Hans.

Good morning, Ben. So a couple things on churn. Obviously, we're focused on reducing churn in a financially disciplined manner. And as Hans mentioned, we have a great value proposition with the Verizon Value Guarantee and also MyBiz on the business side. You know, we have further deployment of CBAN. We said we're going to get to 80% to 90% of CBAN this year deployed, and we see lower churn where CBAN is deployed. And then the work that Hans mentioned on customer experience, we did a CX launch on June 24th, and that work is also augmented by AI, and we expect to see improvements there. And then obviously convergence will also reduce mobility churn. And the team has the retention tools to get there, and they're focused on it. And then one other comment just on tax reform, your question around looking ahead, we're not going to guide on 2026, but the extensions of bonus and R&E are permanent. So while we won't guide on 26, I would expect that the impacts in 2026 would be significant.

Yeah, thanks so much. Yeah, thanks, Ben. Brad, we're ready for the next question.

The next question comes from John Hudlick of UBS. Your line is open, sir.

Great, thanks. Good morning, guys. Two, if I can. First, it looks like you saw further deceleration in post-paid ARPA growth. Can you just talk a little bit about the drivers that are causing that deceleration? And then a follow-up on one of the comments, you know, the upgrade rates in the teens in the first half, do you expect mid-single digits for the year? What's the driver of the, what would suggest to be pretty rapid deceleration in the upgrades? Thanks.

Thank you. On the postpaid ARPA, I think, again, I mean, we have been growing our ARPA for a long time, and we continue to do. We have many levers in there all the way from our broadband, my step-ups, only 50% of our customers on my plan. We have the adjacent services. You heard when we had our prepared remarks on our – on our perks, basically doubling this year up to 15 million perks. So we have a lot of drivers for it. So we still believe that we have a good run rate on that. On the upgrades, as you articulated, we have been down eight quarters of the last nine when it comes to upgrades for many reasons. This quarter we put in, first of all, a couple of incentives. for customers to upgrade. So that's why we saw a little bit higher. But remember, when we talk about the mid-senior, that's both business and consumer. That's a total investment we're having in upgrades.

Yeah, and then just a couple other points on the upgrades. I mean, we absorbed the higher upgrades, but the upgrades were up 30% year over year, and we still produced strong EBITDA and cash flow in the quarter. So, you know, we had good operating leverage across the board there.

Great. Thank you.

Okay, yeah, thanks, John. Brad, we're ready for the next question.

The next question comes from Sebastiano Petty of J.P. Morgan. Your line is open, sir.

Hi, thanks for the question. Just to follow up on Ben and John's theme there for a second, as we think about the consumer net ad results in the quarter, any way to unpack maybe free line contribution inter-quarter? I know that was a below-the-line offer that was in market, as well as anything to – you know, quantify or read through from the deceleration and core prepaid down, you know, pretty materially, sequentially. Is there any migration activity within the quarter there? And then lastly, on the frontier deal close, you said early 2026. Is that implying a later than expected close versus 1Q26? Was the previous guidance given maybe, you know, some utility commission reviews that are ongoing out there? Thank you.

Now we can start with the frontier. No, nothing has changed. It's on the plan, we said, actually, since we announced the acquisition. So it's the first quarter of 2026. So nothing has changed on that. And then on any particular things on our net ads, first of all, we had a great growth ad. I mean, the team did a great job. Our sales channels were working. Our product is resonating with the market. The free lines was insignificant. It was part of the 624 launch. and it just was on for a very short time period, and it's off right now. So that had nothing to do with it. It was a really good execution by the team.

And then on prepaid, as you can see, the segmentation strategy is working, and the operational rigor now that we have is paying dividends, and we have four straight quarters of growth in our prepaid business, and we're seeing good results across all of our main brands, whether it's Straight Talk, Visible, or Total Wireless, and we continue to scale the segmentation the distribution there. And the other thing I want to point out on prepaid is now that we have four straight quarters of volume growth, we've reached an inflection point, and we now expect prepaid will be a contributor to service revenue growth in the second half of 2025. So we feel good about the progress and the momentum we have in the prepaid business.

Just a quick follow-up there. Within prepaid to postpaid migrations, the 19% increase in gross additions in the quarter, would that reflect any migrations across the base?

No, not significant for us.

No.

Thank you.

Okay, yeah, thanks, Sebastiano. Brad, we're ready for the next question.

The next question comes from Jim Schneider of Goldman Sachs. Please go ahead, sir.

Good morning. Thanks for taking my question. I was wondering if you could maybe broadly comment on the broadband market trends that you're seeing right now. I think you talked about a softer move environment, but what are you seeing in terms of the gross ad environment more broadly across both fixed wireless and Fios heading into the back half of this year? Any change in competitive dynamics that would make you feel more or less confident about your ability to sustain better net ad additions in the back half? And specifically, can you maybe comment on your expectation for fixed wireless ads and whether they can improve and recover heading into your end? Thank you.

Thank you, Jim. When it comes to broadband the first half year, I mean, Fios has been fairly consistent. But, of course, what we saw here in the second quarter was a way lower mover market. Still, the product is the best product out there. The churn is very low, performing really well. On the fixed violence access, it's the same phenomena we talked before. As we go suburban and rural to the 80%, 90% of... C-band, that's where we create the opportunities for fixed-wise access, as is the secondary business case on our build. And that means that we have less passing, so whatever we call it in fixed-wise access work, we have less open for sale. So that's very natural. If I look into the second quarter, I'm pretty certain we will do better on broadband in the second half this year than we did in the first.

And maybe could you just comment on, you know, the status of your MDU rollout? I know it's in trial phases right now, but would you expect that to be a significant contributor as we head into 2026?

So the MDU solution, which is the world's first, you know, again, Verizon is leading with a solution that nobody else has done. That is more than trials right now, even though it's a smaller scale, where in many states we start rolling it out. And we want to have a short time. time period between we have the product and and we talk to the landlords it's going to start scaling even more in the second half i think it will be a bigger contributor in 26 than in 25 but it's a great product that can get very, very good broadband services all the way up to one gig, which is something extraordinary that the guys have been doing. But we will scale to see that we have the highest quality that Verizon is known for and is our trademark.

Thank you.

Yeah, thanks, Jim. Brad, ready for the next question?

The next question comes from Mike Rollins of Citigroup. Please go ahead.

Thanks, and good morning. Two topics, convergence and then EBITDA. So first on convergence, curious if you could share an update on how Verizon's progressing with the uptake of these converged bundles within the base, and if you can share how Verizon's looking to differentiate your converged offers versus the competition. And then on EBITDA, you referenced that it was up 4% in the second quarter, first half, and that's better than the guidance range of two and a half to three and a half. So can you unpack within the full year guidance, like what you're anticipating for the rest of the year and what are the factors that would put you at the high end versus the low end of that range?

I can start and then I'm going to hand it over to Tony. on the convergence i think that of course our our main key differentiator is that we have owners economics on mobility and broadband we have the biggest mobility base and we're now adding our fiber base with frontier so we're going to have an unparalleled opportunity for convergence that our customers have a chance to work on both and as said before we have a very high degree on our broadband net ads per quarter that are already converged. So it's more about when we're going to scale that opportunity, we have even more chances. And if you think about coming into the frontier footprint when that's approved, we have a huge opportunity for convergence. So we're excited over that, and that's our offering. And on EBITDA, before Tony says something, I think you see right now our leverage, the cost takes out what we've done, the growth we're doing, and it's falling straight down to bottom line. And we will continue to focus on that. As I said so many times before, the whole executive management and the whole company had three KPIs. It's the service revenue growth, and then it's EBITDA and cash flow generation. So very, very, very good start of the year.

Thanks, Ante. Mike, so on the EBITDA, we were up over $500 million in the quarter and about $1 billion of EBITDA growth year-to-date. And that's also in light of having a pretty significant upgrade activity, mostly driven by the launch of our value guarantee. And we stayed very disciplined in the quarter. We didn't chase volumes. And they gave us the confidence, the resiliency in the business gave us the confidence to raise the guide. And it starts with the top-line revenue, and service revenue is up 2.4% year-to-date. So we're seeing great operating leverage, as Hans mentioned. And there's a lot of work going on on the cost side of the house to continue to make the business a lot more efficient in serving customers day in and day out. If you think about the customer care and the work we launched on June 24th, that includes having A.I., enabled customer care, managed services. We're seeing great progress now with the managed services work that Kyle and the team are doing, and we're seeing good savings here ramping up in 2025. The network team continues to take out cost and legacy network elements, and that includes copper decommissioning, and that work is ongoing. And then even in business wireline, we continue to de-emphasize low-margin deals and stay very disciplined there. And then from a headcount standpoint, the voluntary separation program is now behind us, and we're seeing a full run rate benefit for the balance of the year. So there's really no assumption changes in upgrades, as you asked before. We said mid-single digits for the full year. That still stays intact. And what we've said is volumes are important, but we're going to stay disciplined in our approach and in support of the three measures that Hans mentioned, service, revenue, and free cash flow. And, you know, we'll pulse in, pulse out where it makes sense, but we're not going to chase unprofitable growth for the sake of net ads. So we're very pleased with the progress on EBIT on the first half of the year and very comfortable raising the guidance for the back half.

Thanks. Yeah, thanks, Mike. Brad, we're ready for the next question.

The next question comes from Cutgun Morale of Evercore ISI. Please go ahead.

Good morning, and thanks for taking the question. I want to ask about your wireless go-to-market strategy. I know you pulse in and out of the market, Tony, just like you said, but looking through some of your postpaid offers in the second quarter, at times there seem to have been a bit more promotional activity on the device side targeting the value end. Over the last few years, you've expanded your portfolio into segments that you target with track phone and fixed wireless, for example, but The value end had historically been perhaps less of a focus on the post-fade side. So I was curious if this was more of an opportunistic tilt that was specific to the quarter, or if it's part of a more strategic shift in the way that you expect to go to market moving forward. Thank you.

Thank you. First of all, Sampat and the team together with our CMO, Leslie, have been working really hard to segment up our market. As we see the market having less and less new customers coming into the market, a segmented approach becomes important. We're running now, I think, eight or nine different brands. All of them have different brand attributes and appealing to different segmentations. So this is a sort of a segmented growth strategy we have in wireless for consumer. And that will continue and just refine it and see that we have the right offerings in all the different type of brands we have. I would say some of the brands are doing extraordinarily well. I mean, total wireless, visible, very good, very targeted. Some of them have some sort of promotions. Some of them are just having a service fee. It's very different, and you're going to see us continue doing that work because that is part of our growth story, that we can actually meet any consumer with different economical background with the service. And as you can see in this quarter and the previous quarters, we were actually excited about those opportunities.

Great.

Thanks, Hans.

Yeah, thanks, Cook. And, Brad, we're ready for the next question.

The next question comes from Frank Lauvin of Raymond James. Please go ahead, sir.

Great, thank you. Can you talk to us about the pace of the fixed wireless deployment? Are you seeing that increase? Doing more investment there? Is that kind of staying the same? And then can you characterize the promotion activity in July? Do you think that's going to be similar this quarter with seasonality? How should we think about that? Thanks.

Thank you. On the pace on fixed wireless access, that's not changing at all. I mean, we are gearing up for reaching 80-90% of C-band this year. And that's where we followed through with our fixed-wise access opportunities. And by next year, we're going to have basically built all our C-band on top of the grid we defined from the beginning. And after that, we can always debate how we're going to continue to allocate capital. But right now, we allocate capital for mobility for the simple reason that where we build the c-band we have better step ups we have better upgrades from our customers so that's the number one but let us finish this and then we're going to see but the pace has not changed the same c-band build out what you see on the capex is actually also an efficiency work we're doing everything that was planned for 25 right now but we do it more efficient the team The network team is doing a great job actually creating efficiencies on our CapEx. And that's very important for us going forward when we're also going to have Frontier inside.

Got it. Thanks, Frank. Brad, we're ready for the next question.

The next question comes from Craig Moffitt of Moffitt Nathanson. Please go ahead.

Hi. I want to follow up to Ben's first question where you talked about capital allocation. Under the new budget or the one big beautiful bill, there is an expectation of significant spectrum sales even though the spectrum hasn't been identified. Can you just talk a little bit about that as to how you would prioritize spectrum purchases if there's either a government auction or alternatively if private market spectrum comes available from Echostar as to how that might affect for example, your discussion about possible share buybacks?

Thank you. When it comes to spectrum, I think that what we have, we're sitting on a really good position on spectrum. We've got C-band, millimeter wave, our low band, and that's what you see are deploying right now. So we feel good about where we are with spectrum. Then I've said all the time that The U.S. over time needs more spectrum, especially as 6G comes up, et cetera, in order to stay competitive and being the most digitalized country in the world. So we're, of course, thinking it's good that's part of the bill, but as you rightfully said, it still needs to be auctioned out. There has to be free up spectrum and all of that, and that will take some time. When it comes to, in general, capital allocation, the spectrum, we always do the build versus buy. I mean, we have done it way before I joined. We look into, will this buy the spectrum being better than building on our own spectrum today? Comparative all is going to do when we see spectrum in the market, but again we feel good about the position we have And we are encouraged that the government is planning over time to bring more spectrum to the market for the competitiveness of the United States of America Thank you, thank you.

Yeah, thanks Craig right from next question The next question comes from Michael funk of Bank of America. Please go ahead

Yes, hi, good morning. Thank you for the question. So on postpaid phone subscriber acquisition cost, what are you seeing for the increase in acquisition cost year over year? And then what are you modeling for second half? And what's the right mix of budget for retention versus acquisition?

You know, this is close to... how we work constantly between Sampat, me and Tony, seeing that we have an envelope for the full investment of customers, which is including acquisition, retention and media. To give you an exact number, that wouldn't be appropriate. But I think that what you should be feeling confidence about, that we weekly think about what is the best allocation, that we get the best return on investment on the LTV and getting the right customers to all retention or acquisition. So that is a fluid work we're doing constantly, and we have improved this dramatically over the years. Before it was an overall budget. Now it's a much more dynamic, but we stay within the financial discipline we have, so we're not overshooting on anything.

Yeah, great. Thanks, Mike. Brad, ready for the next question?

The next question comes from Greg Williams of TD Cowen. Please go ahead.

Great. Thanks for taking my questions. First one's just on the consumer phone gross ads. You guys said you're disciplined and not chasing volumes, but it's up 19%. I think that's a 2Q record. How sustainable is this level of gross ads going forward in the balance of the year? And the second question is just on the customer experience that you guys launched on June 24th, because you're talking it up quite a bit here. Wanted to get more color on what it is and the specifics, and you mentioned AI enabling customer care, et cetera. So any color there would be great. Thanks.

Okay, sure. Greg, on the growth stats, a couple things here. The strength came from two places. First, we had very strong sales execution in our stores and distribution. The team did a great job. And then secondly, the value proposition, when you think about we launched the best value guarantee back at the beginning of April, and that is resonating with customers in the market. And we see a healthy mix of new to Verizon in the quarter, and we're also writing good business as well. And what we said many times is, you know, volumes are important, and we'll pulse in and pulse out, but where it makes financial sense. And then, as we said earlier, the biggest opportunity for us is loyalty and retention, and the team is focused on it.

Yeah, and if we talk about what was launched 6-24, I think that it was a lot of AI-supported customer experience tools we put in. I mean, first of all, when it comes to the process, we now will have a customer care employee following a request or a complaint from our customers all the way. So we actually finish it out with the same person starting and ending and also having updates. That was a concern for our customers that we heard through the year and that we needed to improve. The other thing is we're also opening up our customer service 24 by 7. very important again that was a feedback that people are having different work hours they want to call different times we're going to fix that and then of course we're giving our customer care employees an ai tool so they can treat our customer better and know their problems better because this could be stressful we know that having the connectivity is such an essential service mobility in broadband and then the last thing we're going to leverage even more our stores i mean 93% of the U.S. population has less than 30 minutes to a Verizon store. We want to leverage that more, see that that's going to be a place where we can get more support and help as well. So we leverage all the assets and all our employees to see that we're treating our customers better. And I think it's an area we can excel in. And then we basically have worked a lot on our product side, where we have MyPlan, MyBiz, MyHome, all of that with perks, which is really resonating. We have worked on a brand that we refreshed a brand last year, and that is actually going really good as well. And the network is, of course, the best network in the market that once again was proven by GD Power and Root Metrics. So we're working on all the cylinders, how we compete for any type of customer, all the way from enterprise government, small and medium, to prepaid, postpaid customers on broadband and mobility. So it's a holistic thinking how we're going to do this. So thank you for the question.

Thank you.

Yeah, thanks, Greg. Brad, we're ready for the next question.

The next question comes from Peter Cipino of Wolf Research. Your line is open.

Good morning, everybody. A question about costs and one about churn on costs. You mentioned your expectations for continuing cost efficiency, and we see obviously headcount is flat year to date in your reporting compared to 5% improvement or decline in 2024. And so thinking at medium term, thinking about 2026, 2027, I wonder if you could describe any opportunities you see for ongoing efficiency gains outside of price increases. And then on churn, now that we're well past the impact of extended installment plans on consumer churn, what do you think is the cause of today's churn levels? Obviously, your initiatives in June indicate some incremental concern there. And does that trend require less aggressive, less positive price increases in the future?

Thanks. First of all, any future commercial plans I will not share. That I cannot do. I start with the cost. I think that both Tone and I see more cost opportunities than we have seen in a long time. And that's what you see in our leverage right now. And many of the AI solutions we have put in, we talked about them last year, we're putting into our capital planning for our customers, for our employees. That's still not into any cost base for us. The headcount, we have been very, very good, and it's going down all the time. So we have been very efficient on managing our resources that is handling this market. Very happy with that. And I hand it over to Tony to talk a little bit more about cost and insurance.

Yeah, thanks. So, Peter, a couple of things. The headcount is down 3.7% year over year. And as I said earlier, we had a lot of EBITDA margin expansion in the first half. And we continue to take costs out, whether it's AI, whether it's network. The team continues to take copper out of the network, and that work continues. And whether it's IT or real estate, IT platform consolidation or real estate, we're continuing to push cost out of the business. And even on business wireline, as I said before, we're being really disciplined at the deal desk. And even on wireless, we're being disciplined at the deal desk as well. And we're not chasing growth for the sake of growth. So as Don says, we're operating differently, and we feel good about the cost actions that are driving the EBIT improvements and also the increase in the guide.

Thank you. All right. Yeah, thanks, Peter. Brad, we're ready for the next question.

The next question is from Brian Craft of Deutsche Bank. Your line is open, sir.

Hi, good morning. I just had a question on BEAD. With the recent changes in the program, I was wondering how you're thinking about the opportunity to participate