Verizon Communications is the #2 US telecom services provider overall after AT&T, but it holds the top spot in wireless services ahead of rival AT&T Mobility. The company's core mobile business (about two-thirds of sales) is primarily retail and is overseen by Verizon Wireless, which operates as a joint venture with Vodafone; it serves nearly 100 million customers. Verizon's wireline unit, with nearly 24 million landline accounts, provides local telephone, long-distance, Internet access, and digital TV services to residential and wholesale customers. In addition to those services, Verizon offers a wide range of telecom, managed network, and IT services to commercial and government clients in more than 150 countries.
The company reported 2012 revenue of $116 billion, up nearly 5% from 2011. Its growing wireless business (up 8% for 2012) outpaced the receding wireline business (down 2%). Mobile sales again grew in response to higher subscriber numbers (5.1 million new customers) and growing usage of data services, as well as a smartphone-driven increase in equipment sales. The key culprit in the decline of the wireline segment was traditional voice revenues, falling in the global wholesale and enterprise businesses.
Net income fell nearly 65% that year to $875 million, primarily because of more than $1 billion in fees resulting from the early redemption of debt.
Mergers and Acquisitions
Verizon has used the acquisition of regional mobile phone companies to transform itself from a purely wireline telephone company into a leading US wireless carrier and telecom services provider. It has responded to the migration of callers to cell phone and Internet telephony accounts, such as those offered by cable companies, by downsizing its consumer landline business and investing in enterprise customers. The landscape of today's Verizon is dominated by wireless, FiOS broadband, and global strategic services.
The company expanded on this transformation in 2012 as it started development in the growing field of telematics, the integration of communications and information, often in mobile and automotive settings. It moved quickly to fuel that effort when later that year it acquired HUGHES Telematics for more than $610 million, expanding its expertise in automotive and fleet as well as machine-to-machine applications for this technology.
Also that year it bought spectrum from Advanced Wireless Service for about $4 billion to facilitate its 4G LTE (long-term evolution) network.
To bolster its options with enterprise customers, the company bought Terremark Worldwide for about $1.4 billion in 2011, making a play for the exploding demand for hosted, Web-based data, application, and network services for the enterprise market. Terremark specializes in IT infrastructure services that it hosts from data centers in the US, Europe, and Latin America. Piggybacking on that purchase the same year, Verizon snapped up enterprise cloud gateway provider CloudSwitch and announced plans to integrate it with Terremark. CloudSwitch offers software that helps businesses interact with the cloud by eliminating some of the technical and security hurdles such as application re-architecting
With a competitive eye toward the convergence of wireline communications and digital broadcasting services, Verizon has been building out its fiber-to-the-premises (FTTP) network, which powers FiOS, at a cost of $18 billion to improve digital video transmission services and gain an edge on leading cable operators like Comcast and Time Warner Cable. The upgraded network infrastructure replaces traditional copper network connections with fiber optics in order to increase broadband capacity.
Verizon is looking for every opportunity to make FiOS services available to customers. FiOS can be accessed through Verizon wireless services and devices, and is also available on devices from industry-leading partners such as Microsoft's Xbox home video game console. Verizon also sees FiOS as key to expanding its offerings, such as enabling users to remotely monitor and control their home's lights, locks, thermostats, and appliances, which the company began offering in 2011.
In 2012 it expanded its network platform in Africa, bringing its Private IP service to six additional countries there (making 21 in total): Gabon, Djibouti, Ethiopia, Malawi, Zimbabwe, and Swaziland. Bahrain and Qatar in the Middle East were also a part of the expansion. In 2011 the company activated capacity on a consortium-backed Europe India Gateway submarine cable system to offer expanded capacity to its strategic services enterprise customers.
It joined with video kiosk firm Redbox, a subsidiary of Coinstar, to launch a streaming video service, Redbox Instant by Verizon, in late 2012. Verizon owns 65% of the venture with Redbox holding the rest.