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Verizon picks Hans Vestberg as its next CEO, showing how the company is prioritizing 5G

  • Verizon says Hans Vestberg will become CEO in August.
  • "We are racing ahead to remain at the forefront of technology, connectivity and mobility," Vestberg says.
  • He will succeed Lowell McAdam, who has been CEO since 2011.

Verizon Communications said Friday that Hans Vestberg will become CEO on Aug. 1, a move that shows how the No. 1 U.S. wireless carrier is prioritizing developing a next-generation network as it faces more competition from smaller rivals.

Vestberg, the company's chief technology officer, will succeed Lowell McAdam, who has been CEO since August 2011. McAdam will continue as chairman of the board.

Verizon has been losing postpaid wireless subscribers, or customers who pay a monthly bill, to its No. 3 rival T-Mobile, which has won customers by pitching itself as more consumer-friendly and offering more perks. T-Mobile recently announced a merger with No. 4 carrier Sprint, and executives at both companies have said that combining forces would speed up the development of 5G. A 5G network is expected to offer faster speeds, more capacity and lower response times.

"We are experiencing unprecedented changes in the way users interact in the digital world, and we are racing ahead to remain at the forefront of technology, connectivity and mobility," Vestberg said in a statement.

WATCH: Verizon CEO Lowell McAdam on the future of 5G

Verizon said last fall that Marni Walden, its former head of media and another rumored successor to McAdam, would leave in February, increasing the speculation over who would take the helm of the wireless provider.

A third potential candidate was John Stratton, Verizon's president of global operations, who had worked at Verizon for decades and risen through the ranks. Verizon announced Friday that Stratton will retire by the end of this year but will immediately step down from his current role to serve as a strategic advisor to the board.

The choice of Vestburg as CEO reflects how Verizon was willing to appoint a relative newcomer to double down on its mobile strategy. Vestberg, the former CEO of Ericsson, joined the company last year to oversee the buildout of Verizon's fiber infrastructure and 5G.

"You couldn't send a clearer message that the strategy is still all about the network," said Craig Moffett, an analyst at MoffettNathanson.