Verizon exec gives glimpse of future of Yahoo, 5G, and streaming deals

Lianna Brinded
Head of Yahoo Finance UK
President of Verizon Consumer Group Ronan Dunne, left, and CEO at Verizon Media, K. Guru Gowrappan, at the 2019 Verizon Media NewFronts event in New York City on 30 April. Photo: Noam Galai/Getty Images for Verizon Media

Verizon (VZ) may have just posted a bumper set of third quarter earnings alongside eye-catching partnerships with Apple Music and Disney+, which pleases investors, but there are more big ticket items and a long-term strategy to integrate Verizon Media’s properties to come.

That’s according to Ronan Dunne, who leads all of the consumer business for one of the largest tech companies in the world, as the executive vice-president and group CEO of Verizon (VZ) Consumer Group.

Speaking to Yahoo Finance UK in London, fresh off the Q3 earnings release from Verizon, which is the parent company of Yahoo Finance, Dunne gave a glimpse into how the company is planning to gain more customers, integrate Verizon Media more into its ecosystem, and where there are opportunity “sweet spots.”

The formula Verizon uses to approaching new partnerships

An attendee views a 5G wireless enabled virtual reality headset for immersive learning at the Verizon booth during the Mobile World Congress. Photo: Patrick T Fallon/Bloomberg

Verizon’s third quarter earnings beat analysts' expectations on the top and bottom line.

  • Revenue: $32.9bn (£25.5bn) versus $32.7bn expected

  • Adjusted earnings per share: $1.25 versus $1.24 expected

Notably, it added 615,000 postpaid customers (subscribers who pay monthly bills) in the latest quarter, well above analysts’ estimates of 527,000. One of the reasons for this growth was the wireless carrier cutting prices of its unlimited plans — a shaving of $5 off its existing offerings.

It also added free streaming content for subscribers, such as a one-year subscription to Walt Disney Co’s (DIS) soon-to-be-launched Disney+ streaming service.

When asked whether the Disney partnership is going to lead to similar deals with companies who have launched their own subscriber-streaming networks, such as WWE (WWE), he said “the key thing to recognise here is that we are not necessarily targeting sub-segments and niches.

READ MORE: Verizon Q3 earnings boosted by strong wireless growth

“What we are looking for is a small number of very broadly applicable places where we can add significant value to the customers and the partners. So in the core Verizon brand of the business — we’re looking at those big players.”

He added that “the idea of network as a platform is that the Verizon brand will attract and retain a huge number of people but there may be some other segments that are better served directly.”

Dunne explained how there’s a granular effort to make sure that its strategy is built on a methodical use of “systems of insight” versus “systems of engagement.” In other words, after delving into the data and leveraging data insights from its various networks, does it decide to create partnerships with external brands or amplify and integrate the ones it owns already.

From cars to fridges — how Verizon plans to get into more people’s lives

A 5G wireless enabled extended reality (XR) retail shopping application is demonstrated at the Verizon booth during the Mobile World Congress. Photo: Patrick T Fallon/Bloomberg

Dunne’s concept of “systems of insight” versus “systems of engagement” is best explained by his division’s approach to society’s move towards smart cities and homes — more digitalised ways of living.

As part of the consumer business, Dunne is tasked with finding ways to integrate Verizon into more people’s lives. When asked about what Verizon’s approach to, for example, cars are, he revealed the way in which the carrier is approaching it as an opportunity.

“So, the B2B team, specifically Verizon Connect is right in that sweet spot of autonomous vehicles. What could be exciting within the consumer business is the linkage within a 5G market is whether or not we can look at insurance products that go with that,” he told Yahoo Finance UK.

“And one of the interesting things that I know from previous experiences is that the behavioural traits that people show in things like loyalty programmes, like My Verizon Up, have certain characteristics that correlate highly to their risk profile. So people who tend to be in loyalty programmes tend to be planned and organised and people who tend to be planned and organised tend to have fewer accidents because they don’t leave late for their meetings and various other things.

“Things we are looking at are the non-obvious links between behavioural patterns and other things based on our deeper knowledge and understanding of the customer to add value for them.”

READ MORE: Verizon exec: 5G will be 'transformational' for society, not just economy

In a separate interview with Yahoo Finance UK on stage at the One Young World conference in London, Dunne talked about how 5G would be transformational to society, not just the economy. This is because 5G will go beyond smartphones and be “an enabling platform, on which the next generation of our society will be built.”

Superfast wireless internet could allow for the greater adoption of smart technology in the home. Bridging those earlier comments with the conversation he had with Yahoo Finance UK later, he pointed out that with systems of insight and systems of engagement, “we are trying to make sure that our customer, who are with us for a long time, that we reflect that in every engagement by knowing and understanding our customers we offer them better choices and therefore better value.”

“So whether it be a product of insurance that could be in the home even though we may not be the one who is providing the home hardware like the connected TV because we know how that consumer uses the technology. We may be the best placed person to help them with their home setup and their smartphone, but also the insurance they have around the products around their home, their fridges, (smart setup), we are seeing opportunities around things like that and be a curator of experiences.

“We are not going to do 10 lines of hardware, but we may be the best person to bring all those pieces together in a way that adds more value to the consumer and we’re looking at a few things in that area at the moment.”

How Yahoo is the ‘bridge’ between businesses and consumer brand internationally

Yahoo website displayed on the computer screen through a magnifying glass. Photo: Rafael Henrique/SOPA Images/LightRocket via Getty

Verizon paid $4.4bn for AOL in 2015 and $4.5bn for Yahoo in 2017, creating a mega-media company (now-called) Verizon Media.

But over the years there has been great focus on how the telecoms giant plans to leverage the assets within the company, which also owns Techcrunch and HuffPost, and further integrate it into the wider Verizon networks.

Verizon’s third quarter earnings showed that Verizon Media revenues fell 2% year-on-year to $1.8bn, but was continuing to improve on sales due to gains in native and mobile advertising, offsetting declines in desktop advertising.

Dunne echoed the company’s statement to Yahoo Finance UK and highlighted how Verizon Media is building momentum in key areas and said there are some exciting developments on greater integration between the wireless carrier and the media group.

Guru Gowrappan, CEO of Verizon Media has recently said in an interview with Campaign that he “would love” for the group “to be 50/50” model of half the revenue coming from commerce and half coming from advertising, which is how Yahoo in Taiwan currently operates. Intertwined into that model is the success of e-commerce operations. In his interview he outlined how he’s turning Verizon Media more consumer-centric and shifting mindset towards becoming growth-oriented.

"That's the big culture shift," he said."Everyone of our 11,000 employees will have to start making an impact to play more offence rather than playing defence."

And it’s that mindset that is at synergy with Verizon, it seems. Dunne said that “what we are doing is thinking about how Yahoo and its core assets, the email platform, sports, news, finance platforms, have their part of how we know and understand our customers and how in the membership equation for Yahoo we can add further value to those things.”

CEO at Verizon Media K. Guru Gowrappan at the 2019 Verizon Media NewFronts event in New York City. Photo: Slaven Vlasic/Getty Images for Verizon Media

“So an example, might be, a low-latency subscription where someone who is a home day trader is actually on a 5G connection so they have a lower latency than a Wall Street trader.”

While there has been a lot of talk about e-commerce and loyalty programmes, Yahoo Finance UK asked about how Verizon is viewing the amplification of content and journalism.

“We look at the consumer business and look at the strategy of direct-to-consumer and we’re looking at how we can curate content,” he said.

“So in the conversations we’re having with other content providers, or device manufacturers like Amazon or Roku or other things, we’re thinking about how we can place Yahoo’s content on the top rail as part of the curated pieces for Verizon consumer customers. So it’s absolutely integrated.

“The other area we’re doing [things] in is in the relationships with device manufacturers, so some of the support inside Bixby (the virtual assistant developed by Samsung Electronics) is provided by Yahoo, some of the support provided in various Apple products on the iOS system is supported by Yahoo. So our relationships with large customers like Apple and Samsung allow us to bring all of Verizon Media’s capabilities to the table in a way that it creates a greater synergy between the two businesses and with our key partners.”

Verizon is a behemoth of a company. But outside the US it’s not as instantly recognisable as a consumer brand, on the UK high street, for example. Dunne says that this is where Yahoo in particular comes into the future of Verizon as a whole.

“The key for us is that consumer is a US domestic business, so we’re not investing in making the Verizon consumer brand known outside the US. However, Verizon business is already serving 50% of the FTSE 100 companies in the UK — so it’s a well-known commodity for CIOs [chief investment officers] and CTOs [chief technology officers] who are investing in the best technologies.

“So, we are well known for the buyers of those services and where we bridge between the two is Yahoo because Yahoo is well known to businesses in Europe but it’s a well-known consumer brand as well. So actually, as a consumer platform, Yahoo is our strongest consumer platform in Europe and other parts of the world.”