Verizon Communications CEO Hans Vestberg painted an optimistic future picture Thursday, telling CNBC’s Jim Cramer the telecom giant has “more growth opportunity than we’ve ever had before.”
Vestberg’s comments in a “Mad Money” interview came after Verizon held an investor day earlier Thursday, during which it laid out its strategy for the years ahead. It’s targeting growth of at least 4% for service and other revenue in 2024.
“We’ve done quite a lot in the last couple of years, and we stand here right now with more growth opportunity than we’ve ever had before,” Vestberg said. He pointed to its recent acquisition of value wireless brand TracFone and its large purchase of C-Band spectrum in early 2021, a move to help build out 5G in the US He also mentioned its sale of Verizon Media last year.
“We built a network for many, many different things, a multi-purpose network,” Vestberg said.
Verizon also announced Thursday that it entered into a strategic partnership with Facebook parent Meta. It’s focused on how Verizon’s 5G network and computing power can help build out the so-called metaverse, a new and major priority for the Mark Zuckerberg-led social media firm.
Vestberg stressed it’s still early innings for the development of these immersive, digital worlds known as the metaverse. The concept was not even on his radar when he joined Verizon in 2017, initially as chief technology officer and president of Global Networks, he said. He became CEO in 2018.
“We’re just starting in that area….and actually that’s not even in my numbers for the future because it’s so early,” Vestberg said. “But clearly we built a network that’s so different than anybody else in the market. That’s why we talked to Meta, and that’s why they chose to work with us.”
Verizon shares rose nearly 1% Thursday, closing at $54.66, to bring its year-to-date gains to 5.2%. The S&P 500 is down 8.5% in the same span.
Investors don’t look to telecommunications firms like Verizon for eye-popping revenue growth. The stocks tend to be seen as a relatively defensive play, with their dividends being a key reason some income-seeking investors want to own them. Verizon boasts a dividend yield of 4.7% based on Thursday’s close.
Cramer asked Vestberg whether the company’s emphasis on growth initiatives will hold back Verizon in further boosting its dividend payout.
The CEO said Verizon has a clear capital allocation strategy, with the top priority being reducing its capital intensity to under 12% in 2024. The second priority is continuing to grow the dividend, Vestberg said.
“Then after that, we pay down our debt and then we come to the repurchase of shares and today we talked about that as well, that we will now start considering doing repurchasing earlier than we had said before,” he said.
Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.