At Verizon, a Changing of the Guard as It Pursues 5G
Posted June 8, 2018 6:53 p.m. EDT
The telecom giant Verizon said on Friday that it was installing its head of technology as chief executive. The changing of the guard comes at a time when the wireless industry as a whole is grappling with new technologies and a wave of consolidation.
In a statement, Verizon said Lowell C. McAdam, the current chief executive, was retiring and that Hans E. Vestberg, the chief technology officer, will succeed him on Aug. 1.
The choice of Vestberg, who has overseen the deployment of next-generation 5G mobile services, underscores the importance Verizon places on that technology, which will greatly increase download speeds and lay the wireless foundation for self-driving cars and smart appliances.
“I am humbled to be appointed CEO of Verizon at such an exciting and dynamic time for our company and industry,” Vestberg said in the statement. “We are experiencing unprecedented changes in the way users interact in the digital world, and we are racing ahead to remain at the forefront of technology, connectivity and mobility.”
Vestberg, 52, is a relative newcomer to Verizon. He joined the company in April 2017 from Ericsson, where he worked for 25 years, the last six as chief executive. He was ousted from the Stockholm-based telecommunications company in 2016 amid criticism that he had not been aggressive enough in cutting costs and that he lacked a strategic focus.
McAdam, who served six years in the Navy’s Civil Engineer Corps before embarking on his career, became Verizon’s chief executive in August 2011. During his tenure, he took big steps to prepare the company for the industry’s current upheaval. In that time, Verizon’s share price has increased nearly 40 percent, to $49.01.
After leaving his post on Aug. 1, McAdam, 64, will continue as Verizon’s executive chairman until he retires at the end of the year, the company said.
His legacy includes a deal that was years in the making — the purchase of Vodafone’s stake in Verizon’s wireless business for $130 billion. The transaction gave McAdam and his team more control over the company’s main business at a crucial time.
He also changed the identity of Verizon, making it more than just a provider of phone and internet services when he steered it into the business of digital content, buying AOL and Yahoo for more than $9 billion.
In addition, McAdam put together a $3.1 billion deal for Straight Path, a telecommunications company specializing in the network airwaves carrying data, and he led the purchase of Fleetmatics, an Irish company that helps large corporations manage employees on the road, for $2.4 billion.
On McAdam’s watch, the company also flirted with old-school media and entertainment companies, having briefly considered buying the assets of 21st Century Fox before the Walt Disney Co. ended up agreeing to acquire them in a $52.4 billion deal. Verizon also expressed interest in the CBS Corp., according to a lawsuit filed last month by CBS against its controlling shareholder, Shari Redstone.
While visiting the New York Stock Exchange last month, however, McAdam sent a strong signal that the company would focus on making 5G technology a reality and would not pursue takeovers of the traditional content companies.
“We’ve looked at that over the years, and we made our decision to go digital,” he said in an interview with CNBC. “That’s why we bought AOL and Yahoo, and we talk now about superchannels of sports and finance and news and some entertainment.”
Verizon’s appointment of its chief technology officer to the top spot suggests that the focus on infrastructure will drive the company’s strategy in the years to come. Interestingly, though, Vestberg, unlike the executive he is set to replace, is not an engineer.
The incoming chief executive is a new kind of figure for Verizon. Unlike the three previous chief executives — McAdam, Ivan Seidenberg and Charles R. Lee — who have run Verizon since it came into the world upon the merger of Bell Atlantic and GTE in 2000, Vestberg was not born in the United States. A native of Hudiksvall, Sweden, a small city along the Hudiksvallsfjarden bay, he speaks English, Portuguese and Spanish in addition to his native tongue and is a skiing and handball enthusiast.
Vestberg began his career in the travel expenses department of Ericsson soon after earning a degree in business administration at the University of Uppsala. During two decades, he worked his way up at the company and was mentored by its chief executive, Carl-Henric Svanberg, who is now the top executive at BP and Volvo. In 2009, Vestberg replaced his boss, becoming the first chief executive in Ericsson’s long history without an engineering background. In recent years, he has served as the president of the Swedish Handball Federation and the chairman of the Swedish Olympic Committee. A Verizon public relations executive, Bob Varettoni, noted the change in nationality of Verizon’s leadership with a jaunty Twitter post on Friday. It included a photograph taken from the Verizon boardroom in midtown Manhattan of a huge billboard advertising a Swedish brand, Yupik Parka.
Vestberg will oversee a company of more than 150,000 employees as it navigates an industry undergoing rapid change, with consumers all over the world flocking to wireless devices and online media. The shift has persuaded the industry’s major players to pursue deals to become ever larger and, in some cases, more diverse in their offerings.
Sprint and T-Mobile, which are in the midst of a planned merger, contend that building a 5G network requires tens of billions of dollars in investments that only an enormous corporation can afford to spare.
Verizon’s main rival, AT&T, in its quest for scale, has followed a different path, bidding $85.4 billion for Time Warner. The Justice Department — itself trying to define the rules for an industry in flux — has challenged the deal on antitrust grounds, with a federal judge expected to rule on Tuesday.
Other Verizon competitors have been offering more of everything. Comcast, for example, has lured hundreds of thousands of new customers to its mobile phone service by bundling it with cable television plans. In a second line of attack, it has made itself a surprise player for the purchase of the Fox assets — a potential deal that would require a bid bold enough to upend Fox’s agreement with Disney.
Despite Verizon’s recent feints toward old-line companies, McAdam largely stuck to a strategy of improving the company’s network — it regularly receives industry accolades for its performance and reach — and leading the quest for the industry’s latest holy grail: 5G.
Last month, McAdam told CNBC that Verizon would roll out 5G in four cities — starting with Los Angeles and Sacramento — by the end of 2018.