Verizon names tech chief CEO; prioritizes 5G network over content

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(Reuters) – Verizon Communications Inc (VZ.N) named Chief Technology Officer Hans Vestberg its new CEO, surprising analysts and signaling the No. 1 wireless company’s priority is building the next-generation 5G network, not expanding further into media content.

Verizon’s strategy differs markedly from that of AT&T Inc (T.N), its next biggest wireless rival, which is battling with the U.S. Justice Department to acquire media company Time Warner Inc (TWX.N) in an $85 billion deal.

Vestberg has led a team building out Verizon’s fiber network infrastructure and was overseeing the U.S. build-out. Current Verizon CEO Lowell McAdam said in an interview it was the perfect time to hand the reins to Vestberg, with Verizon at an “inflection point” holding all the pieces it needs for 5G, such as fiber and spectrum.

Analysts at Wells Fargo said in a research note the appointment of an executive with an equipment background was “very telling,” evidence Verizon was serious about expanding its fiber network. Some analysts had expected John Stratton, Verizon’s president of global operations, to succeed McAdam, who said he will retire.

Vestberg said in an interview Verizon would keep pursuing its current 5G strategy but he did not “see anything new on the horizon” to pursue media content. Some analysts have speculated that the company will match AT&T’s push into media.

Under McAdam, Verizon expanded into content when it bought media sites AOL and Yahoo, creating a media division called Oath last year, which also owns sites like Tumblr and HuffPost.

FILE PHOTO – Hans Vestberg, Verizon executive vice president and president of Global Networks and Chief Technology Officer, speaks during a panel discussion on 5G wireless broadband technology during the 2018 CES in Las Vegas, Nevada, U.S. January 10, 2018. REUTERS/Steve Marcus

Vestberg, 52, joined Verizon a year ago after being fired in an investor-driven shakeup at Ericsson (ERICb.ST)(ERIC.O) in 2016, following years of dismal growth and weak earnings. He was CEO of the Swedish company, one of the world’s largest equipment suppliers to the telecommunications industry, for six years.

Lars Soderfjell, a portfolio manager at Finnish bank Alandsbanken, which owns Ericsson shares, said Vestberg pushed to expand the company’s services unit, which included managing networks for mobile operators. He said that could make Vestberg a good fit for Verizon as it focuses on building its 5G network.

Until he retires at year end, McAdam will serve as executive chairman, then become non-executive chairman, the company said in a statement.

Verizon has gained about 40 percent of its $202.5 billion market value since McAdam took charge of the company on Aug. 1, 2011.

By early afternoon, Verizon shares were up 3 cents at $49.04 per share, on a day that other tech shares fell on reports Apple (AAPL.O) expects to cut iPhone production this year.

(This version of the story has been refiled to add missing word “strategy in second paragraph)

Reporting by Supantha Mukherjee in Bengaluru and Sheila Dang in New York; additional reporting by Olof Swahnberg in Stockholm; Editing by David Gregorio

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