Cost Under a New Chief ExecutiveNarrow moat

Verizon (VZ) — moat facet

Verizon's turnaround is a cost story first: 13,000 positions cut and a record 40.1% margin, on a shared network whose scale rivals cannot easily match.

Running one very large network is cheaper per customer than running a small one, and a new chief executive has made that the centre of the turnaround. Dan Schulman was appointed on 4 October 2025, "effective immediately", when Hans Vestberg stepped down1. Within weeks he announced the elimination of over 13,000 positions2, and by the June 2026 quarter adjusted EBITDA margin was 40.1%, "the highest the company ever reported"3.

Verizon consolidated adjusted EBITDA margin (%)36.2202436.2202537.1Q2 202540.1Q2 2026Verizon Q4 2025 and Q2 2026 results releases; annual margins Moat Explorer calc
Flat for two years, then a three-point jump.

Scale is what makes cost an advantage here. About $27.7 billion of network and shared service costs45 are spread over 147 million retail connections6, and every extra customer rides capacity already paid for. A smaller carrier has to spread a similar network over fewer bills.

The four pages below test it. Thirteen Thousand Positions is the cut. A Network Shared Between Two Segments is the shared cost base. A 40 Percent EBITDA Margin is the result. The Union Contract to 2030 is the labour cost that is now fixed.

The weakness is that cost advantages erode. Rivals can cut too, and the cheapest savings are made first. The company is also changing its incentives: Schulman's performance stock units carry a "$30 million target value"7, and his term was extended to 31 December 20288. His predecessor's 2025 long-term incentive target had been raised "from $18,000,000 to $25,000,000" seven months before he left9.

The board changed with the chief executive. On the same day Schulman was appointed, "Mark Bertolini has been elected Chairman of the Verizon Board of Directors"10, and Hans Vestberg became special adviser through 4 October 2026, focused on the Frontier integration11. In February 2026 the head of the Consumer Group "ceased to serve"12. Shareholders backed the pay plan at the May 2026 meeting, with 2,403,857,612 votes for13.

The facet is narrow. It widens only if the margin holds without further cuts: if adjusted EBITDA margin stays above 38% in 2027 with severance below $1 billion, the leaner company will be a new level rather than a one-time harvest.

Moat trajectory: Widening

Adjusted EBITDA margin 40.1% in Q2 2026; headcount down 9.7% in 2025.

The number that tests this moat
Reported
Consolidated adjusted EBITDA, full year
$49,997M (2025), 36.2% of revenue, from $48,791M in 2024

The cost base at work; a margin above 38% for 2027 with severance below $1bn would make the harvest a level.

Source: Verizon Q4 2025 results release ↗
Aspects of the moat
DIG DEEPER 01
Thirteen Thousand Positions
Schulman cut over 13,000 positions within six weeks of taking over, taking headcount from 99.6 thousand to 89.9 thousand before Frontier added 7.7…
DIG DEEPER 02
A Network Shared Between Two Segments
About $27.7 billion of Verizon's costs are one shared network split between its segments, the scale that makes each extra customer cheap to serve.
DIG DEEPER 03
A 40 Percent EBITDA Margin
Verizon's adjusted EBITDA margin reached a record 40.1% in mid-2026, earned by selling fewer subsidised phones and employing fewer people, not by…
DIG DEEPER 04
The Union Contract to 2030
Verizon bought four years of labour peace for the fibre build with a 17.62% compounded wage rise, on revenue guided close to flat.
⚠ Threats to the moat
⚠ THREAT 01
Cuts Can Be Made Once
Verizon's record margin came from cutting people and phone subsidies, savings that improve the margin once and then need revenue growth to continue.
⚠ THREAT 02
Retiree Promises of $10.6 Billion
Verizon's pension is fully funded, but $10.6 billion of retiree health promises are paid out of the same cash that funds the dividend.
References
  1. ReportedDan Schulman was appointed on 4 October 2025, "effective immediately", when Hans Vestberg stepped down.
    Verizon Form 8-K of 6 October 2025, Item 5.02 - appointment of Daniel H. Schulman as chief executive and Hans Vestberg stepping down. — October 2025 · publ. 6 October 2025 · source ↗
  2. ReportedWithin weeks he announced the elimination of over 13,000 positions, and by the June 2026 quarter adjusted EBITDA margin was 40.1%, "the highest the company ever reported".
    Verizon Form 8-K of 20 November 2025, Item 7.01 - elimination of over 13,000 positions and expected severance of $1.6 billion to $1.8 billion. — November 2025 · publ. 20 November 2025 · source ↗
  3. ReportedWithin weeks he announced the elimination of over 13,000 positions, and by the June 2026 quarter adjusted EBITDA margin was 40.1%, "the highest the company ever reported".
    Verizon second-quarter 2026 results release, Form 8-K exhibit 99 - consolidated and segment results, operating statistics, cash flow, balance sheet and guidance - consolidated results and special items. — Q2 2026 · publ. 24 July 2026 · source ↗
  4. ReportedAbout $27.7 billion of network and shared service costs are spread over 147 million retail connections, and every extra customer rides capacity already paid for.
    Verizon Communications Inc. Form 10-K for fiscal 2025 (year ended 31 December 2025) - Item 1 business: services, networks, employees and the Frontier and Starry acquisitions. — FY2025 · publ. 17 February 2026 · source ↗
  5. Moat Explorer calcAbout $27.7 billion of network and shared service costs are spread over 147 million retail connections, and every extra customer rides capacity already paid for.
    Moat Explorer calculation from Verizon's reported figures ($ millions unless stated; calendar years). Revenue and profit over the decade: revenue 2015-2025 (138,191 / 131,620) ^ (1/10) - 1 = about 0.5% a year; 138,191 / 131,620 - 1 = +5.0%; range 138,191 - 125,980 = about 12.2bn; 2027 revenue of 142bn would need (142 / 138.191) ^ (1/2) - 1 = about 1.4% a year; operating income 29,259 / 30,615 - 1 = -4.4%; net income 17,174 / 17,879 - 1 = -3.9%; diluted EPS 4.06 / 4.37 - 1 = -7.1%; total assets 404,258 / 244,175 - 1 = +65.6%. Segments 2025: Consumer share of segment operating income 29,628 / (29,628 + 2,532 = 32,160) = 92.1% (2024 29,484 / 31,542 = 93.5%; 2023 29,011 / 31,077 = 93.4%); Business share 2,532 / 32,160 = 7.9%; Q2 2026 Consumer 8,032 / (8,032 + 991 = 9,023) = 89.0%, Q2 2025 7,643 / (7,643 + 724 = 8,367) = 91.3%; Consumer operating margin 29,628 / 106,807 = 27.7%, Business 2,532 / 29,069 = 8.7%; Business share of segment revenue 29,069 / 135,876 = 21.4%; shared network and service costs 17,991 + 9,717 = 27,708, Business share 9,717 / 27,708 = 35.1%; Consumer share of segment EBITDA 43,801 / (43,801 + 6,644) = 86.8%; Consumer revenue 2025 106,807 / 102,904 - 1 = +3.8%, 2023-2025 106,807 / 101,626 - 1 = +5.1%; Consumer service revenue 80,617 / 77,127 - 1 = +4.5%; Consumer equipment 21,779 - 23,930 = -2,151, about 2.2bn below cost; Business revenue 29,069 / 30,122 - 1 = -3.5%; Enterprise and Public Sector 13,532 / 15,076 - 1 = -10.2%; Business Markets and Other 13,555 / 12,697 - 1 = +6.8%; Wholesale 1,953 / 2,313 - 1 = -15.6%; institutional and wholesale decline (15,076 - 13,532) + (2,313 - 1,953) = 1,904; Q2 2026 Consumer revenue 26,242 / 26,648 - 1 = -1.5%; Business revenue 7,155 / 6,973 - 1 = +2.6%; restatement 7,275 - 6,973 = 302 a quarter; mobility and broadband service revenue 2025 75,923 + 14,940 = 90,863. Customers: T-Mobile postpaid accounts 34,700 - 34,237 = 463 more than Verizon; T-Mobile 34,700 / 31,502 - 1 = +10.2%, 34,700 - 31,502 = 3,198; Verizon accounts 34,237 - 34,646 = -409, -1.2%; ARPA premium 168.35 / 152.91 - 1 = +10.1%; cable lines 10,187 + 12,540 = about 22.7 million; cable Q2 net adds 448 + 406 = 854 thousand, 854 / 184 = 4.6 times; Q2 net adds share 184 / (184 + 432 + 448 + 406 = 1,470) = 12.5%; fibre net adds 155 / 367 = 42%; annual churn at 0.92% a month 0.92 x 12 = 11.0%, about one customer in ten; 0.1 point on 94 million = about 94 thousand phones a month; prepaid churn 3.59 / 0.92 = 3.9 times; prepaid annual loss 1 - (1 - 0.0359) ^ 12 = 35.5%, average life 1 / 0.0359 = 27.9 months, a little over two years; revenue per postpaid line 170.62 / 3.67 = 46.49 (2025), 167.26 / 3.61 = 46.33 (2024); ARPA 2025 170.62 / 167.26 - 1 = +2.0%; ARPA Q2 2026 168.35 / 170.79 - 1 = -1.4%; ARPA H1 2026 167.50 / 170.30 - 1 = -1.6%; wireless service revenue 83,703 / 82,073 - 1 = +2.0%; wireless service share of revenue 83,703 / 138,191 = 60.6%; FWA revenue 2,940 / 2,139 - 1 = +37.4%; FWA revenue share 2,940 / 138,191 = 2.1%; fibre annualised 155 x 4 = 620 thousand; passings 2.0 / 30 = 6.7%; passings to fill 2,000 / 620 = 3.2 times. Spectrum and capital: C-Band 45.5 + 7.5 = 53.0bn; licences share of assets 158,159 / 410,186 = 38.6%; licences over goodwill 158,159 / 30,664 = 5.2 times; licences over equity 158,159 / 105,196 = 1.5 times; wireless service revenue per dollar of licences 83,703 / 157,039 = 0.53; spectrum bought June 2026 1.0 + 3.2 = 4.2bn; capex / revenue 17,011 / 138,191 = 12.3% (2025), 23,087 / 136,835 = 16.9% (2022); capex 17,011 / 23,087 - 1 = -26.3%; capex less depreciation 17,011 - 18,349 = -1,338; ROIC averages 2015-2019 (10.8 + 9.1 + 12.7 + 8.2 + 11.3) / 5 = 10.4%, 2021-2025 (8.7 + 7.3 + 5.0 + 7.0 + 7.1) / 5 = 7.0%; interest expense 6,694 / 5,524 - 1 = +21.2% (2023-2025); Q2 interest 1,985 / 1,639 - 1 = +21.1%; interest / operating income 6,694 / 29,259 = 22.9%. Cost, cash and capital returns: employees 89.9 / 99.6 - 1 = -9.7%; severance 533 + 1,733 + 1,715 + 397 = 4,378, about 4.4bn; adjusted EBITDA margin 49,997 / 138,191 = 36.2% (2025), 48,791 / 134,788 = 36.2% (2024); Q2 2026 operating income 7,179 / 8,172 - 1 = -12.2%; free cash flow Q2 6,426 / 5,167 - 1 = +24.4%; adjusted EPS less diluted EPS 4.71 - 4.06 = 0.65; phones sold below cost 28,976 - 25,470 = 3,506, about 3.5bn; dividends / free cash flow 11,481 / 20,126 = 57.0% (2025), 5,864 / 10,209 = 57.4% (H1 2026); dividends / net income 11,481 / 17,174 = 66.9%; dividends per share 2.735 / 2.230 - 1 = +22.6%, (2.735 / 2.230) ^ (1/10) - 1 = 2.1% a year; dividend cost a quarter 0.7075 x 4,155 = about 2,940; buyback average 3,500 / 72.047 = about $48.58 a share; shares 4,155 / 4,217 - 1 = -1.5%; free cash flow yield 21.53 / 193.94 = 11.1%; cash returned about (11.5 + 4.5) / 193.94 = 8.2% of market value; net unsecured debt 128,682 - 110,053 = 18,629; backlog 55.2 / 58.1 - 1 = -5.0%; backlog months 58.1 / 138.191 x 12 = about 5.0; device receivables 34,004 / 31,308 - 1 = +8.6%, allowance 1,628 / 1,315 - 1 = +23.8%; TracFone 3.5 + 3.0 = 6.5bn plus up to 0.65bn. Valuation: Frontier price / market value 22.3 / 193.94 = 11.5%; market value 193.94 / 253.94 - 1 = -23.6% (against end-2019), 193.94 / 188.06 - 1 = +3.1% (against end-2015); target 51.58 / 46.68 - 1 = +10.5%; year-end market value over net income 188.06 / 17.879 = 10.5 (2015), 217.61 / 13.127 = 16.6 (2016), 215.92 / 30.101 = 7.2 (2017), 232.30 / 15.528 = 15.0 (2018), 253.94 / 19.265 = 13.2 (2019), 243.11 / 17.801 = 13.7 (2020), 215.12 / 22.065 = 9.7 (2021), 165.47 / 21.256 = 7.8 (2022), 158.49 / 11.614 = 13.6 (2023), 168.34 / 17.506 = 9.6 (2024), 171.74 / 17.174 = 10.0 (2025); trailing twelve months to June 2026 revenue 138,191 - 67,989 + 68,693 = 138,895, net income 17,174 - 9,882 + 8,880 = 16,172, 193.94 / 16.172 = 12.0, 193.94 / 138.895 = 1.40 - segments and customer groups. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Verizon's Forms 10-K and 10-Q, quarterly results releases, the recast segment revenue 8-K, peer results releases (T-Mobile, AT&T, Comcast, Charter) and market data; operands shown in the source line.
  6. ReportedAbout $27.7 billion of network and shared service costs are spread over 147 million retail connections, and every extra customer rides capacity already paid for.
    Verizon second-quarter 2026 results release, Form 8-K exhibit 99 - consolidated and segment results, operating statistics, cash flow, balance sheet and guidance - operating statistics: connections, net additions, churn, ARPA, upgrades and broadband. — Q2 2026 · publ. 24 July 2026 · source ↗
  7. ReportedThe company is also changing its incentives: Schulman's performance stock units carry a "$30 million target value", and his term was extended to 31 December 2028.
    Verizon Form 8-K of 12 January 2026, Item 5.02 - Dan Schulman's performance stock unit award with a $30 million target value. — January 2026 · publ. 12 January 2026 · source ↗
  8. ReportedThe company is also changing its incentives: Schulman's performance stock units carry a "$30 million target value", and his term was extended to 31 December 2028.
    Verizon Form 8-K of 24 July 2026, Item 5.02 - Dan Schulman's term extended to 31 December 2028. — July 2026 · publ. 24 July 2026 · source ↗
  9. ReportedHis predecessor's 2025 long-term incentive target had been raised "from $18,000,000 to $25,000,000" seven months before he left.
    Verizon Form 8-K of 18 March 2025, Item 5.02 - Hans Vestberg's 2025 long-term incentive target raised from $18 million to $25 million. — March 2025 · publ. 18 March 2025 · source ↗
  10. ReportedOn the same day Schulman was appointed, "Mark Bertolini has been elected Chairman of the Verizon Board of Directors", and Hans Vestberg became special adviser through 4 October 2026, focused on the Frontier integration.
    Verizon release of 6 October 2025, Form 8-K exhibit 99.1 - Dan Schulman named chief executive, Mark Bertolini chairman. — October 2025 · publ. 6 October 2025 · source ↗
  11. ReportedOn the same day Schulman was appointed, "Mark Bertolini has been elected Chairman of the Verizon Board of Directors", and Hans Vestberg became special adviser through 4 October 2026, focused on the Frontier integration.
    Verizon release of 6 October 2025, Form 8-K exhibit 99.1 - Dan Schulman named chief executive, Mark Bertolini chairman. — October 2025 · publ. 6 October 2025 · source ↗
  12. ReportedIn February 2026 the head of the Consumer Group "ceased to serve".
    Verizon Form 8-K of 5 February 2026, Item 5.02 - the Consumer Group chief executive ceased to serve. — February 2026 · publ. 5 February 2026 · source ↗
  13. ReportedShareholders backed the pay plan at the May 2026 meeting, with 2,403,857,612 votes for.
    Verizon Form 8-K of 28 May 2026, Items 5.02 and 5.07 - results of the 2026 annual meeting, including the advisory vote on executive pay. — May 2026 · publ. 28 May 2026 · source ↗
Sources
Generated September 29, 2026