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 108 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 more than 19 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 moved to expand its video and advertising capabilities with the acquisition of AOL for $4.4 billion in mid-2015.
The company's Verizon Wireless segment account for 69% of revenue. It operates one of the most extensive wireless networks in the US and the largest fourth-generation LTE and third-generation Evolution—Data Optimized (EV-DO) networks. The 4G LTE network covers more than 98% of the US population.
The Wireline segment, 30% 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.
Verizon is all over the horizon, with offices in 150 countries. It operates two R&D centers 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, RadioShack, Target, and Wal-Mart. It also has a dedicated telemarketing sales force. In 2014 its average account paid $159.80 a month, a 4% increase from 2013's average of $154.
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 2014 revenue of $127 billion, up 8.2% from 2013. Its growing wireless business (up 8.2% for 2014) outpaced the receding wireline business (down 0.5%). Mobile sales again grew in response to higher subscriber numbers (5 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 (up 3.8%) of its FiOS digital cable service.
Profits, on the other hand, fell by $1.8 billion to $9.6 billion in 2014 from 2013, which was a record high net income. Verizon had higher operating expenses in 2014 from increases in severance, pension, and benefits charges.
Cash flow also dropped in 2014, to $30 billion from $39 billion because of higher tax payments.
Verizon increased its focus on the wireless world when it bought the 45% stake in Verizon Wireless that it didn't own from Vodafone in 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.
In early 2015, the company sold wireline operations (including FiOS lines) in Texas, California, and Florida to Frontier Communications for about $10.5 billion. The deal sent 1.2 million FiOS Internet subscribers and 1.5 million FiOS video subscribers as wells as landline subscribers to Frontier. The operations had generated more than $5 billion in revenue for Verizon.
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.
The company bid more than $10 billion to win 181 spectrum licenses in a auction by the Federal Communications Commission.
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's venture with video kiosk firm Redbox to launch a streaming video service shut down in late 2014. The service, Redbox Instant by Verizon, ended when Redbox withdrew.
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.
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.
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.