Verizon Sells AWS $2 Billion of Fibre for Its AI Boom

By Daniel Rao | 27 October 2026

Here is the strangest thing about Verizon's week: the phone company that spent years begging you to upgrade your handset just made more money from the cables under the street than from the phones in your pocket — or at least, that is where its future now lies. Verizon has signed an agreement worth more than $2 billion with Amazon Web Services to supply the fibre-optic connectivity that will stitch AWS data centres together for the age of agentic AI, and it announced the deal on the same morning it reported its best third quarter for phone additions in five years. The phones are back. The fibre is the story.

The agreement, announced on Monday alongside Verizon's third-quarter results, establishes what Verizon calls a commercial framework to scale distributed computing for the real-time demands of agentic and generative AI workloads. In plainer language, reported by Reuters, Verizon will provide high-capacity fibre-optic connectivity for AWS data centres, allowing the vast, constant data transfers that AI training and inference demand to move faster and more reliably. TelecomTV's account of the earnings call adds a telling detail: this is a dark-fibre deal, meaning AWS gets dedicated, unlit strands of Verizon's network to light itself — the same model as Verizon's July agreement with Google, worth more than $1 billion, to connect data centres with dark fibre.

That July deal now looks less like a one-off and more like the opening of a new line of business. On the earnings call, chief executive Dan Schulman said Verizon now has signed contracts worth approximately $4 billion across its AI Connect business, including the AWS agreement. He also said the company is in active talks with more hyperscalers, neocloud providers and large enterprise clients about supplying dark or lit fibre. Read that twice: the carrier once defined by consumer wireless plans is now pitching itself, in Schulman's words, as the network that "technology leaders are choosing" to power AI infrastructure.

Photo: File photo of a data centre server rack at the US National Energy Research Scientific Computing Center (NERSC). This is not an AWS or Verizon facility. Image by Derrick Coetzee via Wikimedia Commons, CC0 public domain dedication.

A quarter that beat the sceptics — and still missed

The numbers underneath the AWS announcement are, by any honest measure, startling. Verizon added 406,000 postpaid phone subscribers in the third quarter, nearly double the 209,439 analysts tracked by Visible Alpha had expected, and more than nine times the 44,000 it managed in the same quarter a year ago. It was, the company said, its strongest third-quarter phone performance in five years. Postpaid account additions of 137,000 were the best in more than a decade. Postpaid phone churn improved to 0.94 per cent.

Yet the headline revenue figure refused to cooperate. Total operating revenue rose 1.5 per cent year on year to $34.3 billion, short of the $34.74 billion consensus compiled by LSEG. The culprit, Verizon said, was equipment: revenue from handset sales fell 9 per cent as customers held on to their phones for longer — a trend Verizon itself accelerated by cutting device subsidies. Adjusted earnings per share of $1.31 beat the $1.27 analysts expected, net income attributable to Verizon rose 5 per cent to $5.2 billion, and adjusted earnings before interest, tax, depreciation and amortisation hit a record $13.8 billion, up 8 per cent. Free cash flow reached $7.8 billion, up 12.1 per cent. The market, in that gloriously indecisive way it has, first pushed the shares up 2.4 per cent in premarket trading and then let them slip back in early trading as the revenue miss sank in.

We cross-checked Verizon's own release against Reuters' reporting and the earnings-call transcript, and the two accounts line up on every material figure — the adds, the revenue, the guidance. Where they differ is emphasis: Verizon leads with records; Reuters leads with the miss. Both are true, and the tension between them is the real story of this quarter.

Simplicity did the heavy lifting

Strip out the fibre headlines and this quarter was won by something far less glamorous: a pricing plan. Verizon launched its Simplicity plan in June, offering transparent pricing and unlimited data, and chief financial officer Tony Skiadas told analysts on the call that customers love it. "We are writing high-quality business," Skiadas said on the earnings call, "and we're pleased with how it's driving both account and [phone gross] adds." Consumer additions reached 266,000 in the quarter — Verizon's best third-quarter consumer performance in five years — helped by demand for the subsidy-free Simplicity plan.

The discipline shows up in the cost lines too. Promotional cost of acquisition fell 41 per cent year on year; promotional cost of retention fell 30 per cent. Verizon has stopped throwing free lines and fat subsidies at the market and is, instead, winning customers who actually pay. Broadband kept pace: 314,000 net additions in the quarter, split between 159,000 fixed wireless and 155,000 fibre customers, taking total broadband connections to 17.4 million. Mobility and broadband service revenue grew 2.9 per cent to $23.5 billion, and Verizon expects that growth to accelerate to about 4 per cent in the fourth quarter.

"Verizon delivered another record-breaking quarter. One year into our transformation, Verizon is fundamentally stronger — operationally, financially, and competitively," Schulman said in the company's statement. "By prioritizing customer-first offerings like Simplicity and our expanded loyalty program over heavy subsidies, we are winning loyal, high-value customers while expanding margins, reducing churn, and generating strong sustained cash flow. At the same time, technology leaders are choosing our fiber network to power the next generation of AI infrastructure. We are continuing to raise the bar and we are only one year into a multi-year growth story."

Why this deal matters more than the quarter

Here is my position, stated plainly: the AWS deal matters more than any single quarter's subscriber count, because it changes what Verizon is. For a decade, American carriers have been treated as dumb pipes — utilities that sell commoditised connectivity while the cloud giants capture the value. Dark-fibre deals with Google and now AWS flip that logic. Verizon owns something the hyperscalers cannot conjure in a hurry: millions of miles of buried glass, rights of way, and the crews who know how to splice it. AI does not live in the cloud; it lives in buildings connected by fibre, and somebody has to own the connections.

There are caveats, and a serious report should not bury them. Verizon has not disclosed the AWS deal's duration, its revenue-recognition schedule, or how much of the $2 billion-plus figure is committed versus contingent — Schulman himself noted on the call that the company has "not yet begun to recognize significant revenue" from its AI Connect business. The $4 billion total contract figure is a pipeline, not a profit line. And the fibre build itself is capital-hungry: Verizon still expects capital expenditure of $16 billion to $16.5 billion for 2026, including success-based AI Connect investment. If AI demand cools, these are long assets with long payback periods.

Still, the direction of travel is unmistakable. Verizon raised its full-year guidance for the third consecutive quarter: postpaid phone additions of 1.1 to 1.2 million, up from 750,000 to 1 million previously, and adjusted earnings per share of $5.04 to $5.06, up from $4.99 to $5.04. A company does not raise guidance three quarters running by accident. And it does not get two of the world's largest cloud companies to sign billion-dollar fibre deals by accident either.

The SpaceX sideshow — and what it reveals

One surreal moment on the earnings call deserves mention, because it tells you how the industry now thinks. Asked about SpaceX's plans to enter the mobile market, Schulman said building a competing terrestrial network would take four to six years and cost $300 billion to $500 billion, and that Verizon would be "ferociously competitive" once SpaceX arrives. It was a bravado answer to a question that, a few years ago, would have sounded like science fiction. That a Verizon earnings call now fields questions about satellite rivals, AI data-centre fibre and handset subsidies in the same hour tells you how quickly the ground is shifting under the carriers — and how determined Schulman is to be seen as playing offence on all three fronts at once.

For readers following the wider AI infrastructure boom — and its mounting debt load — this deal belongs in the same frame as our earlier coverage of AI's $113 billion debt machine hitting the wall and Spain's retreat on data-centre rules. The money pouring into AI's physical backbone is no longer a side story to the model race; it is the race. Verizon, improbably, has just become one of its more interesting players.

What to watch next

Three things will decide whether this deal is remembered as a turning point or a press release. First, whether Verizon converts its "active pipeline" of hyperscaler talks into signed contracts at the same pace — Schulman's $4 billion figure is the benchmark now. Second, whether AI Connect revenue starts appearing in reported results in 2027, as Schulman hinted it would. Third, whether the consumer business holds: Simplicity's success is real, but it was built in a benign market, and a price war with T-Mobile or AT&T would test the new discipline fast.

For now, though, Verizon gets to enjoy a rare thing in telecoms: a genuinely good week. The phones came back, the guidance went up, and the company that connects America is now, quite literally, connecting the machines that will run its future.

Sources: Verizon's Q3 2026 results announcement (verizon.com); Reuters, "Verizon lifts annual forecasts, signs more than $2 billion AI infrastructure deal with AWS" (26 October 2026); Motley Fool / AlphaStreet Q3 2026 earnings-call transcript; TelecomTV earnings-call coverage; Morningstar/MarketWatch subscriber analysis.

Daniel Rao covers US technology and telecoms for TechPulse USA. He has reported on carriers, cloud infrastructure and AI policy from New York.