Verizon 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, Verizon Wireless, is primarily retail and serves 103 million customers. (Verizon Wireless was a joint venture with Vodafone until 2014, when Verizon bought out Vodafone's stake for $130 billion.) Verizon's wireline unit, with nearly 21 million landline accounts, 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 is all over the horizon, with offices in 150 countries. It operates two R&D centers in San Francisco and Waltham, MA.
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, RadioShack, Target, and Wal-Mart. It also has a dedicated telemarketing sales force. In 2013 its average account paid $154 a month, a 7% increase from 2012's average of $144.
The company is also a major advertiser, with a coordinated program of TV, print, radio, outdoor signage, Internet, and point-of-sale media promotions.
The company reported 2013 revenue of $120.5 billion, up 4% from 2012. Its growing wireless business (up 7% for 2013) outpaced the receding wireline business (down 1.4%). Mobile sales again grew in response to higher subscriber numbers (4.2 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. However, those wireline decreases were offset by higher sales of its FiOS digital cable service.
Profits, on the other hand, skyrocketed from $875 million in 2012 to a record high of $11.5 billion in 2013. That year Verizon reduced operating expenses and the cost of services and sales in both its wireless and wireline segments. Cash flow was also up to almost $39 billion for the year due to increase revenue, lower pension contributions, and improved working capital.
Verizon bought the 45% stake in Verizon Wireless from Vodafone in early 2014 for $130 billion. Under the deal, Verizon paid $58.9 billion in cash, $60.2 billion in stock, and an additional $11 billion from smaller transactions to the UK-based carrier. The split was part of an effort by Vodafone to exit joint ventures and partnerships that it doesn't control in order to expand in other areas. Verizon already had operational control of the company, and with full ownership, now has access to full profits and can better position itself against the fierce competition in the US mobile market.
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.
The company has made several acquisitions to gain a competitive edge in the TV market. In 2014 it bought Intel Media, an Intel division that had been developing a streaming TV service under the OnCue brand. OnCue will be integrated with FiOS to allow customers to watch programming from any device at any time. The Intel acquisition came on the heels of upLynk and EdgeCast, two other technology acquisitions for its Verizon Digital Media Services unit.
Meanwhile, it joined with video kiosk firm Redbox to launch a streaming video service, Redbox Instant by Verizon, in late 2012. Verizon owns 65% of the venture with Redbox holding the rest.
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 digital phone 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.
In 2014 it sold spectrum licenses to T-Mobile for $2.3 billion while at the same time picking up licenses on a different spectrum to add capacity to its 4G LTE (long-term evolution) network. In 2012 it paid $4 billion for spectrum licenses from Advanced Wireless Service to facilitate its 4G LTE 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