They say a picture tells a thousand words. In that case, a video must be worth at least a million, right?
I mention this in the context of the two CEOs in our sphere who announced their departures within the past month. T-Mobile CEO Mike Sievert revealed on September 22 that he will leave effective November 1, with heir apparent Srini Gopalan taking over. It was a choreographed move and not a surprise, as this change of the guard was telegraphed prior to the announcement.
Two weeks later, Verizon announced that CEO Hans Vestberg was leaving, “effective immediately,” although he will remain in an advisory role for one year as Verizon integrates Frontier Communications into its fold. In some ways, Vestberg’s departure seemed to come out of the blue, even though Verizon’s been bleeding postpaid wireless subscribers for a while now and it was only a matter of time before heads were going to roll.
To get an idea just how different these two staunch rivals are, check out these pics of Sievert’s last hurrah versus Vestberg’s parting thoughts. It’s like night and day.
Some of us were somewhat surprised that the CEO role didn’t go to Sowmyanarayan Sampath, currently CEO of the Verizon Consumer Group. The prevailing sentiment then and now is that Schulman was tapped for a temporary role to clean up the business before Sampath takes over longer term.
That theory was reinforced last week in an 8-K filing, where Verizon stated that Schulman’s contract runs through December 31, 2027. Sampath and CFO Tony Skiadas were given retention awards in the form of $4 million worth of restricted stock units that vest on December 31, 2027.
Clearly, the board would like these guys to stick around.
Vestberg’s tenure at Verizon
You don’t have to look far to find folks who didn’t like Vestberg. Some critics say he was too focused on making money for shareholders and not enough on customer service. That might be true, but Verizon’s shares have fallen 18% since Vestberg took over while T-Mobile’s shares have grown 280% during the same period. T-Mobile’s market cap is a whopping $258.95 billion compared to Verizon’s $172.03 billion.
Fierce has reported quarter after quarter on T-Mobile’s incredible metrics – to the point it’s nauseating. Meanwhile, Verizon’s been losing postpaid subscribers and its value proposition isn’t clear – at least, if it has a value proposition, it’s not being clearly communicated.
Verizon historically held the title as the “best network” in the U.S., but 5G changed that. T-Mobile in 2020 bought Sprint and its treasure trove of 2.5 GHz spectrum, then leapfrogged the competition in network prowess. Yes, it always boils down to whatever network works best where you live, work and play. But T-Mobile claimed the network crown and ran with it, to Verizon’s detriment.
Dan’s plan at Verizon
Now it’s up to Verizon’s new CEO, Dan Schulman, to pick up the pieces and put Verizon back together again. Schulman’s qualifications include eight years on Verizon’s board, including one year as lead independent director, as well as a history in the telecom space – beginning as head of AT&T’s Consumer Markets Division from 1981-1999.
From 2001-2009, he was the CEO of prepaid service provider Virgin Mobile USA, which is where he was when I first met him. Specifically, it was at a CTIA trade show sometime during that decade – I remember it well because it was also the time I got to meet Sir Richard Branson, head of the Virgin Group, among many other things. In 2002, Branson memorably appeared in New York’s Times Square to launch Virgin Mobile wearing a nude-colored bodysuit and a strategically placed cell phone to emphasize his company had “nothing to hide,” i.e., no hidden fees.
Stunts aside, under Schulman’s tenure, Virgin Mobile USA proved to be a disruptive force in the prepaid space and grew it to serve more than 5 million customers before it was sold to Sprint in 2009. He also served one year as president of the T-Mobile Prepaid Group before going on to do great things at American Express and PayPal.
One of Shulman’s missives is going to be to convince consumers that Verizon isn’t the highest priced anymore – and that its network is somehow still “the best.”
No doubt, Schulman knows the challenges. “We are going to move quickly and boldly to win in both mobility and broadband,” he said in a memo to employees. “I fully intend for us to regain our leadership by growing share across all segments of the market … At the same time, we must drive financial results that exceed current market expectations. We must also deliver for our shareholders.”
That’s no easy feat. But Schulman, at 67, can probably do whatever he needs to do within the next two years or so to right the ship. As Recon Analytics analyst Roger Entner said on his “The Week with Roger” podcast, Schulman can be very aggressive, whether it’s doubling down on convergence, making hay out of Verizon’s MyPlan perks or strengthening its commitment to customer service. Or all of the above and more.
If you look at Dan’s resume, “it screams experience in how to market and disrupt consumer behavior and consumer offers,” Entner said. “I don’t think anything is off the table or anything would surprise me that he would do.”
The board fired Vestberg just days after the close of the third quarter, which is a good indicator that the numbers were probably very bad. Verizon reports Q3 results next week, when we’ll get a better idea of how bad the quarter was – and hopefully, how Schulman intends to turn it around.