chief Ivan Seidenberg says the addition of MCI changes the game, but fiber optic plans remain the same.
The New York phone giant will spend about $8.4 billion this year on network overhauls and expects to be the No. 3 broadband service provider behind
"over the next couple years," Seidenberg said during a Citigroup investment conference in Phoenix Monday.
Seidenberg also said better-than-expected cost savings would help the newly combined company achieve about $1 billion in additional synergies as traffic moves to MCI's network and the pace of employee cuts steps up.
If you count workers from MCI and from Verizon's Verizon Wireless venture with
, Verizon now has more than 200,000 workers. The company has formed a team to help integrate operations and reduce expenses in labor, real estate and purchasing.
"One plus one plus one should not equal three," says Seidenberg.
From a competitive cost structure perspective, says a Verizon representative, the sum Seidenberg is looking for is "less than three."
The Verizon rep says there have been no new staff reduction efforts announced and that the topic of cuts will be addressed during the company's earnings report later this month. Observers and analysts expect to hear about substantial employee cuts especially in areas of little growth or overlap with MCI.
Some fans applaud the big telco's new debut.
"Verizon has the best strategy among the Bells and the best competitive position," says one New York money manager.
But Verizon has taken heat from Wall Street on its costly fiber optic expansion effort, which intended to transform the phone giant into a triple play video, phone and Net service provider. CEO Seidenberg stood by the plan.
He called fiber upgrades a "transformational event" that can open up a whole new set of innovations. As for targets, Seidenberg reiterated that the fiber-to-the-home, or Fios, service will be available to about 6 million customers, or roughly 20% of the company's territory.
Three years into the fiber program, Seidenberg says he is "comfortable" with its progress. He says he expects availability, or homes passed, to increase by some 3 million homes a year.
Seidenberg did not disclose any fiber-subscriber numbers. Investors have grumbled that the company has offered no updates that would help them determine the return Verizon is getting on its big fiber investment.
Verizon shares were up a nickel to $31.40 at midday Monday.