The No. 1 wireless provider for the past 15 years, Verizon is rapidly ceding market share to its rivals. Can a bookish company veteran turn it around?
(Bloomberg) — For more than a decade, Verizon Communications Inc. was the No. 1 US wireless provider by almost every metric that mattered. As recently as 2021 it commanded 40% of the mobile phone subscriber market and had a reputation for the best, most reliable network.
Today, a series of strategic errors have left Verizon in a precarious position. The costly purchases of AOL and Yahoo!, which were an attempt to grow in digital media, didn’t pan out. And a turn toward an alternative radio wave technology proved to be an unnecessary detour in the race to 5G, allowing T-Mobile USA Inc. to amass a two-year advantage. Verizon is now shedding more subscribers than it’s adding and has seen its market share shrink about 1.6% while T-Mobile has increased its share by about the same amount. Wall Street has made its disappointment known, sending the stock down 46% since the end of 2020.Two executives in as many years have tried and failed to pull Verizon out of this spiral. The third — the one widely seen as Verizon’s last chance to turn things around — is Sowmyanarayan Sampath. The nine-year company veteran was tapped earlier this year as the chief executive officer of Verizon’s consumer business, the unit that accounts for the vast majority of the company’s revenue. In May, he met with 400 managers and acknowledged the difficult path ahead.
“You’ve onboarded more CEOs than most people do in a lifetime,” he said to his staff. “I’m going to work really hard so you don’t have to onboard another person.”The 47-year-old executive speaks softly but quickly, often peppering his sentences with a mix of self-deprecation and praise for others. But behind the bookish demeanor is a hard-driving tactician who isn’t afraid to butt heads with other department leaders to shake up the tradition-bound Bell Telephone culture. A history buff, Sampath has named his campaign to restore subscriber growth at Verizon “Project Trenton,” a reference to the 1776 against-all-odds victory that altered the course of the American Revolution.
The stakes are high for Sampath and Verizon. If he’s successful in bringing Verizon back to sustained mobile phone subscriber growth — his target is 15% to 30% of the industry’s gains, or about 1 million new customers a year — he’ll undoubtedly earn a spot on a short list to eventually replace Verizon CEO Hans Vestberg, who has been in the role since 2019. If he fails, Verizon may be all but doomed to lose its leading position, one that could prove virtually impossible to regain in the fiercely competitive telecom industry.
“We won’t lose,’’ Sampath said adamantly, during a recent lunch near Verizon’s corporate headquarters in Midtown Manhattan.
Pulling Verizon out of its funk won’t be easy, as the big three phone companies are fighting fiercely for a shrinking pool of new subscribers. AT&T Inc., after a costly attempt to compete with entertainment colossus Walt Disney Co., is now on a slash-and-burn mission to return to its roots as a mobile and broadband provider. And industry growth leader T-Mobile shows no signs of slowing, using its lead in 5G network technology as a selling point to trounce its bigger rival: T-Mobile is expected to gain more than ten times as many mobile phone customers this year.
Verizon has lost about 200,000 mobile-phone customers since 2021, while T-Mobile has added more than 5 million, totaling 75.5 million now, according to data compiled by Bloomberg.
Verizon’s predicament is reminiscent of what happened to Nokia Oyj, said Tammy Parker, an analyst with GlobalData. For nearly a decade, the Finnish phone maker dominated the burgeoning mobile industry with its ubiquitous handsets. “But the success created a toxic mix of hubris, strategic mistakes and a lack of vision. Verizon’s fall from grace in consumer communications reflects all of those components.”
Like Nokia, Verizon didn’t take its challengers seriously and failed to adjust to where the market was going. To avoid Nokia’s failure, Sampath isn’t bringing a radical new vision, he’s just trying to get Verizon to return to its priorities, which starts with customers.
“Sampath has all the tools,” said Craig Moffett, an analyst with MoffettNathanson Research. “He’s incredibly smart, and he has a very clear view of each and every one of the levers he can pull.” But Moffett acknowledged Sampath faces a “hard problem to solve. It’s not a marketing problem, it’s a reality problem. Verizon charges a premium price for what used to be the best network in the country. But Verizon doesn’t have the best network anymore.”
After spending more than $45 billion in 2021 to secure airwaves for faster wireless services, Verizon’s network upgrades will be largely complete by the end of the year. That should bolster Sampath’s efforts to woo back customers Verizon has lost to AT&T through its aggressive free-phone campaign, and T-Mobile, with its 5G marketing juggernaut.
While Sampath is a very qualified leader, consumer marketing isn’t one of his traditional strengths, said Peter Supino, an analyst at Wolfe Research. “Verizon is one of the largest consumer brands in the world and it’s pretty obvious it has had a rough run for the past few years,” Supino said. “I would love to hear Sampath’s vision for reviving the Verizon brand.”
Sampath’s plan focuses on retail, where he’s moving more decision making to the front lines. Verizon has 6,500 stores and 65% of all its phone sales happen there. He wants to reduce the amount of time it takes to processes a new customer. “Thirty minutes is too long,” he said. To help improve responsiveness, he’s put a manager in every store, created a leaderboard system to measure wins and restored sales commissions. That effort has seemed to jumpstart the competitive juices among retail staff, according to some employees at a store in Manhattan’s Upper West Side, who weren’t happy that colleagues in Harlem were outselling them.
Born in Kolkata, India, Sampath was always good with numbers. Instead of following his peers into engineering, he aimed at a career in accounting. After getting his MBA at Boston University, he worked as a finance consultant at KPMG, followed by a decade with the Boston Consulting Group, where he led the telecom practice.
In 2014 he was hired by Verizon as the business transformation officer. To some longtime executives, Sampath was part of an annoying trend. One former Verizon executive said Sampath was seen as just another in a long procession of consultants that the company brought to help guide the way: guys with big ideas and lots of buzzwords.
But Sampath isn’t a traditional Verizon executive. A practicing Hindu, he embraces his Indian culture and often wears vibrant traditional Nehru vests at the office, where the typical garb is a golf shirt under a blazer. Sampath loves to delve deeply into history and studies a different country every year. He prefers to read older material, nothing written in the past 20 years, to get beyond recent cultural associations, he said. He’s currently studying ancient China, which he’s given an extra year because there’s so much to learn. He sees himself as a bridge between a new generation and the old guard. He says his mentors are his parents, who taught him the importance of family and “not to be an ass.”
Sampath has taken on many roles in nearly a decade at Verizon, coming on board during a difficult transitional period for the company as it modernized and moved toward a more nimble, software-run cloud centric network. He has had to twist arms to get a fiber rollout underway in Boston and corral far-flung regional chiefs to create a more efficient operation. But it was his ability to bring people together on tasks that earned him enough confidence from company leaders to be handed the toughest assignment of his life.
“He has touched almost every part of the company in his time here,” said Vestberg. “He’s super smart and understands the broader industry. He’s turned into a fantastic operator with an intense focus on delivering results.”
One of his first major assignments when he joined Verizon was to combine 21 different wireless territories into six regions. Mobile sales had been booming, growth was running at more than a 50% clip and the territories were given room to run wild during that time. But as growth slowed, some areas had to be roped in.
“Each region was doing its own procurement and it’s own pricing plans. Each group was so autonomous that your badge would rarely work from one regional office and another,” Sampath said. He broke down the territorial divides and persuaded the all the managers that they were stronger if they worked together.
Now, Sampath visits retail stores weekly and seeks progress reports from employees out in the field. He keeps a list of 30 people inside and outside the company that he talks to every week, trusting them to be candid about what’s working and what’s not. One of the biggest challenges Sampath faces is convincing staff that the old Verizon is no longer the best Verizon.
“There are two types of people: those that tolerate change and those who embrace it,” Sampath said. “My whole career has been trying to take people who tolerate change and make them embrace it.”
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