Verizon CEO to Retire, Replaced by a Newcomer
June 08 2018 - 7:29AM
Dow Jones News
By Sarah Krouse
Verizon Communications Inc. named Hans Vestberg as its next
chief executive, appointing a relative newcomer to run the wireless
giant at a time when its industry is being reshaped by
megadeals.
Mr. Vestberg, who joined the company about a year ago and is its
chief technology officer, will succeed longtime CEO Lowell McAdam
on Aug. 1. Mr. McAdam will remain executive chairman until the end
of the year and then become non-executive chairman.
The 52-year-old Swede was previously the chief executive of
Ericsson AB. Mr. Vestberg was ousted in July 2016 by the network
equipment maker's board when he was unable to halt slumping sales
and profits.
At Verizon, he will face the challenge of finding new pockets of
growth for a market leader with lower-cost rivals stealing
customers. He will steer a business with nearly $120 billion in
debt that has so far avoided a big media deal.
Shares of Verizon have gained about 35% during Mr. McAdam's
seven-year tenure, outpacing rival AT&T Inc. but lagging behind
the broader market, which rallied roughly 125% in the same
period.
Wireless rivals have turned to deals to revamp their operations
as the U.S. market matures. AT&T jumped into television by
buying DirecTV in 2015 and has a pending $85 billion deal for Time
Warner Inc. Smaller competitors T-Mobile US Inc. and Sprint Corp.
struck a $26 billion merger in April, betting regulators will allow
them to close the gap with the two bigger players.
Verizon's CEO appointment caps a multi-year succession process
in which Mr. Vestberg and company veteran John Stratton were the
lead contenders. Mr. Stratton, 57, president of global operations,
oversaw most of the company's biggest units. He plans to retire
later this year, the company said.
Mr. Vestberg was "a better match for where Verizon was going to
go," Mr. McAdam said in an interview. "With 5G in front of us, we
are at a huge inflection point. Whoever is at the head of the
business should be able to see that through."
Mr. Vestberg, who spent more than years at Ericsson, is an
expert in network architecture. Mr. McAdam cited Mr. Vestberg's
global experience at the helm of Ericsson and age as factors he and
the board considered.
His appointment is likely to surprise some investors and
analysts who viewed Mr. Stratton as the heir apparent. Past chief
executives of the firm have spent years at the company, often
leading several different divisions as they rose.
Mr. McAdam said to remain competitive Verizon needed new
perspectives. The board called its mission "identifying the next
CEO for the digital world," according to a document reviewed by The
Wall Street Journal.
The afternoon Verizon's board appointed him the next chief, Mr.
Vestberg was tieless, a watch on one arm and green-and-white beaded
bracelets bearing his initials on the other.
The company Mr. Vestberg inherits is looking to shed costs and
is fighting to defend its wireless-customer base. Verizon lost
24,000 postpaid phone connections in the first quarter of the year,
which are customers who pay their bill at the end of the month and
rarely switch providers.
It is also investing in a faster network, though it is unclear
how network providers will commercialize 5G. Mr. Vestberg said in
an interview that Verizon's 5G residential service is his top
priority.
Mr. McAdam, who turned 64 last month, was named CEO of Verizon
in August 2011 and at the time told associates he only wanted to
stay five years. Over the last year he has told the company's board
and analysts that he aimed to retire by his 65th birthday.
His signature move as CEO was the $130 billion buyout in 2014 of
Vodafone Group PLC's 45% stake in Verizon Wireless. The deal was
struck arguably at the peak of the U.S. wireless market, just
months after T-Mobile began its "un-carrier" campaign that
disrupted the industry. He later acquired Yahoo and AOL.
The former Navy engineer spent the later half of his tenure as
chief bringing in more outsiders, including Mr. Vestberg, to mix up
the backgrounds of top executives.
While the two men have known each other for about a decade
through Ericsson's role as a Verizon supplier, they spent more
personal time together as the board's process narrowed, the
executives said. Mr. McAdam went on a boat tour of some of Sweden's
archipelago with Mr. Vestberg and his wife.
Other executives the board considered in recent years included
former Telefónica UK Ltd. CEO Ronan Dunne, who joined Verizon in
late 2016, and Marni Walden, who ran Verizon's nascent media
business and left earlier this year. Candidates met with the board
individually over the last two years, each writing a three- to
five-page paper on their vision for the company.
Mr. Vestberg started his career at Ericsson in 1991 and rose to
the top of the company, but as its performance waned he became a
lightning rod for criticism over his compensation and his
preference for private business jets.
During his tenure, Ericsson ditched its consumer handset
business and slashed thousands of jobs as it tried to combat sales
lost to Huawei Technologies Co. and slowing demand in the
telecom-equipment market.
Mr. Vestberg will relocate from Sweden to New Jersey later this
year.
Write to Sarah Krouse at sarah.krouse@wsj.com
(END) Dow Jones Newswires
June 08, 2018 07:14 ET (11:14 GMT)
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