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Verizon's Wireless Kingdom: 'Can You Hear Me Now?'

Ivan Seidenberg, chairman of the board and CEO of Verizon, held an informative and entertaining session at Spangler Auditorium March 7, hosted by the Globalization Club. The CEO gave an overview of Verizon, its history and its current structure. He also discussed the challenges and opportunities in the telecommunications industry and concluded by answering several students’ questions on a variety of topics.

Mr. Seidenberg was instrumental in reshaping the communications industry through two of the largest mergers in its history: the merger of Bell Atlantic and NYNEX in 1997 and the Bell Atlantic merger with GTE in 2000. He also led efforts to form Verizon Wireless, operator of America’s most reliable wireless network. Mr. Seidenberg earned a bachelor’s degree in mathematics from City University of New York and a master’s degree in business administration and marketing from Pace.

Mr. Seidenberg began the discussion by outlining the evolution of Verizon. He said, “Go back 15 years, and 75 to 80 percent of our business was locked in ‘plain-old telephone calls,’ we were a one-trick pony, then came new technology which displaced the existing infrastructure.”

Ivan noted that Verizon adopted the strategy of taking cash from ongoing operations and reinvesting it in new technical platforms very early. “Reinvesting cash gives us a strong platform for future growth,” he said.

However, executing this strategy required scale. Mr. Seidenberg achieved scale through an aggressive acquisition strategy. Now Verizon is $93 billion collection of five to six mega telecom companies, each composed of a mix of many smaller acquisitions. In discussing the recently proposed AT&T merger with Bell South, Verizon’s CEO characterized it as a positive move and drew a parallel to the strategy Verizon has taken since its formation.

Ivan also described the current structure of Verizon. The company is made up of five profit centers: core telecom, Verizon business, Verizon Wireless, yellow page/directory, and international. Verizon Wireless, a $35 billion division, is the most visible and profitable part of Mr. Seidenberg’s firm. According to him, Verizon has stayed ahead of its wireless competitors by spending more on developing its network, IT infrastructure and by having the most retail outlets. This has allowed Verizon to differentiate itself with consumers.

He also commented on the impact of the popular “Can you hear me now?” campaign, noting it was a big part of Verizon’s successful strategy, which has proven customers will pay for superior service and coverage.

Asked about the stalemate between Verizon and Vodafone, owner of 45 percent in Verizon Wireless, Ivan affirmed that Verizon’s buyout of Vodafone’s shares is in the best interest of both parties. He said the transaction will take place at some point, but Verizon is not in any immediate hurry.

Asked if he is concerned about the propagation of Mobile Virtual Network Operators (MVNOs) who provide their own content such as ESPN Mobile and Virgin Mobile, Mr. Seidenberg responded, “The notion that content is king is a myth. There is no king without a kingdom.”

According to Seidenberg, the wireless infrastructure is the kingdom, and as long as MVNOs continue to purchase the service wholesale from carriers, he sees no threat to Verizon. He added, “Because of their ability to segment the market, MVNOs have the capability to expand and grow the wireless market, which can only benefit Verizon.”

Discussing the opportunities HBS student have in the industry, Ivan said, “The knowledge and skills many MBA’s have when leaving school took me 25 years to acquire. But knowledge and skills are not enough, you need to know how to apply them, and you need to find a way to contribute and become involved quickly.”

Specifically, Mr. Seidenberg characterizes Verizon as a company full of engineers, but he sees a gap in the expertise needed to exploit the capital they have created, and he sees this as an area where MBAs can add value.

Mr. Seidenberg advised students: “It is very important to understand and be perceptive with how other people see you. See yourself through their eyes. Pay more attention to how people see you than how you see yourself in the mirror.” This is a skill that cannot be turned on and off but can be learned if you work at it. He also urged the audience, “Don’t let anyone outwork you, ever!” Ivan continued, “When you work hard you cast a shadow and people can tell that you care. In contrast, they can also tell if you are faking it.”

The session concluded with an entertaining raffle conducted by Mr. Seidenberg. Five HBS students received Verizon phones, including the newly released and highly coveted Treo 700W smart phone and the slick Motorola RAZR phone.

Abhi Shah, President of the Globalization Club, who was instrumental in bringing Mr. Seidenberg to HBS, commented after the session: “Ivan’s journey from a cable splicer’s assistant to chairman and CEO of America’s largest telecom company was truly inspiring! He is living the American dream, a dream many of us aspire to achieve. Along with the talk, the opportunity to informally spend time with him in a small group setting over dinner was incredible.”

March 13, 2006
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