Verizon has not disclosed the agreement's duration, implementation schedule or detailed commercial commitments. However, CEO Dan Schulman highlighted the role of the company's network investments in attracting technology customers.
“technology leaders are choosing our fiber network to power the next generation of AI infrastructure,” Schulman said.
The AWS agreement follows a separate deal announced in July with Google, valued at more than $1 billion, to connect data centers using dark fiber. Together, the agreements demonstrate Verizon's efforts to generate additional business from its network assets beyond conventional wireless and residential broadband services.
Verizon is expanding that network as part of its broader investment strategy. The company expects its fiber infrastructure to reach more than 32 million locations by the end of 2026, with a longer-term objective of reaching as many as 50 million.
Its annual capital expenditure forecast remains between $16 billion and $16.5 billion, including investments associated with its AI Connect initiative. The spending plan reflects Verizon's continued commitment to network expansion even as management emphasizes financial efficiency.
The AI announcement came alongside stronger-than-expected wireless subscriber growth, prompting Verizon to raise its annual financial outlook for the third consecutive quarter.
During the third quarter, the company added 406,000 postpaid phone subscribers, nearly twice the approximately 209,000 additions analysts had anticipated, according to Visible Alpha estimates. Verizon also gained 137,000 postpaid accounts, its strongest quarterly account growth in more than a decade.
Following those results, Verizon increased its forecast for full-year postpaid phone additions to between 1.1 million and 1.2 million, compared with its previous expectation of 750,000 to 1 million. Postpaid phone churn, a measure of customers leaving the service, declined to 0.94%.
Schulman attributed the improved customer performance primarily to changes in Verizon's wireless offerings and loyalty initiatives. The company introduced its Simplicity plans in June, emphasizing clearer pricing and unlimited data rather than relying heavily on promotional device discounts.
That approach has also reduced customer acquisition expenses. Verizon reported a 41% annual decline in promotional acquisition costs, while equipment revenue fell 9% as customers upgraded their devices less frequently and the company reduced handset subsidies.
Broadband operations contributed additional growth. Verizon gained 314,000 broadband connections during the quarter, including 159,000 fixed wireless subscribers and 155,000 fiber customers, bringing its total broadband connections to 17.4 million. More than half of its new fiber subscribers selected plans offering download speeds above 1 Gbps.
Financial results reflected the stronger subscriber performance, although revenue remained below Wall Street expectations.
Third-quarter revenue increased 1.5% from a year earlier to $34.3 billion, compared with analysts' estimates of $34.74 billion. Net income rose 5.2% to $5.3 billion, while reported earnings per share increased from $1.17 to $1.25.
Adjusted earnings reached $1.31 per share, an 8.3% annual increase. Adjusted EBITDA rose 8% to $13.8 billion, representing a margin of 40.2%. Free cash flow increased 12.1% to $7.8 billion.
Verizon now expects full-year adjusted earnings of $5.04 to $5.06 per share, up from its previous forecast of $4.99 to $5.04. That represents projected annual growth of 7% to 7.5%.
The company also raised its expectations for operating cash flow growth to between 3.5% and 5%, while free cash flow growth is now projected to approach 12%, compared with its earlier forecast of 9% to 10%.
“We are continuing to raise the bar and we are only one year into a multi-year growth story,” Schulman said.
The results come roughly a year into Schulman's tenure as CEO, during which Verizon has restructured operations and simplified its consumer wireless offerings. The company is seeking to improve subscriber growth and profitability while expanding its presence in infrastructure services for major technology companies.
The AWS agreement adds another multibillion-dollar commitment to that strategy, alongside Verizon's existing relationship with Google. While the financial terms beyond the agreement's overall value remain undisclosed, the deal establishes an additional commercial role for Verizon's fiber network in supporting AI computing infrastructure.
For Verizon, the combination of stronger wireless performance and new data center connectivity agreements provides two distinct areas of business growth. Its latest results show improving customer acquisition and cash generation, while the AWS partnership extends its network business into the infrastructure required for increasingly demanding AI applications.
This analysis is based on reporting from CNBC & TNW.
Image courtesy of Unsplash.
This article was generated with AI assistance and reviewed for accuracy and quality.
