Verizon Communications is the #1 wireless phone service in the
US (ahead of rival AT&T Mobility) and the #2 US telecom
services provider overall (after AT&T ). The company's core
mobile business, Verizon Wireless, serves more than 146 million
connections. Verizon's wireline unit, with more than 18 million
voice connections, provides local telephone, long-distance,
internet access, and digital TV services to residential and
wholesale customers. In addition, Verizon offers a wide range of
telecom, managed network, and IT services to commercial and
government clients in more than 150 countries. Verizon has expanded
its video and advertising capabilities with the acquisitions of AOL
and Yahoo assets.
Verizon Communications' Verizon Wireless segment accounts for
70% of revenue. It operates one of the most extensive wireless
networks in the US and the largest 4G LTE and third-generation
Evolution-Data Optimized (EV-DO) networks. The 4G LTE network is
available to more than 98% of the US population.
The wireline segment, which provides about a quarter of revenue,
provides voice, data, and video communications products, and
enhanced services, including broadband video and data, corporate
networking services, data center and cloud services, security and
managed network services, and local and long distance voice
services. AOL and Verizon's telematics business are included in the
wireline segment. The segment also includes Verizon's Fios service,
which offers high-speed internet and TV. The company reported
nearly 6 million Fios internet and close to 5 million Fios video
subscribers at the end of 2016.
A corporate category supplies about 5% of revenue.
Verizon is all over the horizon, with a network that stretches
across the US and offices in more than 150 countries. The company
conducts research in San Francisco and Waltham, Massachusetts.
Sales and Marketing
Verizon sells its prepaid and postpaid wireless phone services
through its website, its own stores, and national retailers such as
Best Buy, Target, and Wal-Mart. It also has a dedicated
telemarketing sales force. The average retail customer account pays
about $144 a month.
The company is a major advertiser, with a coordinated program of
TV, print, radio, outdoor signage, internet, and point-of-sale
media promotions. Those Verizon ads, commercials, and other
promotional vehicles cost the company about $2.7 billion a year,
which is about two-thirds of what AT&T spends on
After several years of riding the wireless wave, Verizon's 2016
financial performance stumbled in the wake of changes in pricing
plans. Revenue dropped 4% to about $126 billion in 2016 from about
$132 million in 2015. Service revenue fell about $4 billion in 2016
because of lower retail postpaid service revenue as customers
flocked to unsubsidized service pricing. Equipment revenue rose
about $600 million in 2016 from better sales of smartphones under
the company's device payment program. Revenue from the wireline
business decreased about 2% in 2016 from declines in Global
Enterprise and Global Wholesale as well as a reduction in Fios
marketing activities during a month-and-a-half long union work
Verizon's net income slumped 27% to about $13 billion in 2016
from about $18 billion in 2015. The lower profit resulted mainly
from the revenue decrease as the company's operating expenses
increased just $361 million in 2016 from 2015.
Cash flow from operations was $23 billion in 2016, down from
about $39 billion in 2015. Some of the difference came from a
change in how Verizon monetizes device payments. It changed them
from receivables to asset-backed securitizations. That switches the
proceeds from operating activities to financing activities. It
means Verizon reports lower cash flow from operations, but does not
reduce the cash available to run the business.
When its rivals slash prices on wireless service, Verizon
Communications touts the coverage, speed, and reliability of its
network. Maybe it costs a bit more, Verizon tells customers, but
the network is worth it. Verizon is investing to expand and
strengthen the network to develop new streams of revenue.
The company has committed to spend about $1.4 billion over the
next three years to extend its fiber optic cable network to improve
4G service and get ready for higher-speed 5G service in a few
years. It has contracted with Corning and the Italian fiber cable
maker Prysmian to supply more than 20 million fiber miles over the
next several years. In 2017 Verizon shelled out another $1.8
billion to buy the fiber network business of XO Communications. The
deal included metro rings in 45 of the top 50 US markets.
In Boston, Verizon is installing a fiber network to deliver
high-speed service to businesses and consumers. It plans to build
similar networks in several other markets. In another network
bolstering move, Verizon is installing small cell antennas on
utility poles and the like to improve network density and relieve
While wireless telephone service remains Verizon's main
business, the company is moving into markets that leverage its
network. With its telematics and Smart City initiatives, Verizon
looks to monetize data traffic through Internet of Things
Verizon wants to use its network to deliver its own content. Its
acquisitions of AOL and Yahoo (which closed in June 2017) provide
it with advertising technology and a range of content that could
open new revenue streams. Verizon maintains its go90 video platform
with content aimed millennials; daily use was about 30 minutes per
view in 2016. It also plans to launch a streaming service in
The company has assembled a digital rights portfolio that
includes the NFL and NBA and provides enhanced viewing options for
Verizon wireless customers. In 2017, Verizon agreed to pay about
$20 million to stream over the internet an NFL game from London.
Verizon can stream the game on any of its properties, including AOL
Mergers and Acquisitions
Verizon Communications agreed to buy Straight Path
Communications for more than $3 billion, gaining a trove of 28 GHz
and 39 GHz millimeter wave spectrum used in mobile communications.
The spectrum could give Verizon a boost in developing 5G
technology. Verizon outbid AT&T for Straight Path.
In 2016 Verizon bought Fleetmatics, a telematics company, for
about $2.4 billion. Verizon made Fleetmatics a part of its
telematics unit that focuses on fleet management, mobile workforce
services, and the Internet of Things.
Verizon acquired XO Holdings' wireline business, which owns and
operates one of the largest fiber-based IP and Ethernet networks,
for about $1.8 billion in February 2017. The purchase extends
Verizon's fiber tracks in the US.
Verizon's acquisition of AOL provides the carrier with boosts in
traffic for mobile and video as well as a strong presence in
programmatic advertising. AOL's ad technologies are to enable
Verizon to more precisely place ads in front of willing buyers. AOL
also brought several high-profile content sites, including the
Huffington Post, TechCrunch, and Engadget.
The Yahoo purchase, which concluded in 2017, brings some one
billion users, including 600 million on mobile devices (according
to Yahoo figures) to Verizon. The deal includes Yahoos news,
finance, and sports websites as well as Flickr and Tumblr. Also
important are the advertising assets that Brightroll, a
programmatic ad platform; Flurry, a mobile apps analytics service;
and Gemini, a native and search advertising service. Verizon was
the winning bidder in a process that took several months to work
through. In early 2017, Verizon lowered the amount it would for
Yahoo by $350 million, bringing the deal's value to $4.48 billion.
The move came after several hacking episodes exposed Yahoo to
liabilities. As part of the rejiggered deal, the companies will
split certain legal and financial liabilities.
In 2016 Verizon agreed to acquire Volicon, a provider of video
capture, archival, compliance monitoring and clip creation
workflow. The acquisition expands Verizon Digital Media Services as
a provider of technology and media services for broadcast and