Verizon 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 about 113 million retail connections. Verizon's wireline unit, with more than 18 million voice connections (end of 2015), 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 moved to expand its video and advertising capabilities with the acquisitions of AOL in 2015 and of Yahoo assets in 2016 for a total of some $9 billion.
The company's 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, some 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 more than 150 countries; it operates 200 data centers in some 24 countries. The company conducts research at 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, Target, and Wal-Mart. It also has a dedicated telemarketing sales force. In 2015 its average account paid $152.63 month, a 5% decrease from $159.80 a month in 2014.
The company is also 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 $2.7 billion in and $2.5 billion in 2014.
The company reported 2015 revenue of $131 billion, up 5% from 2014. Revenue from equipment sales, primarily smartphones, increased 54% in 2015, offsetting a decline in service revenue. Customers had paid higher service fees to buy phones at subsidized prices. But in 2015 Verizon, following other wireless carriers, shifted the costs to service and no longer subsidizes phones. Revenue from the wireline business decreased in 2015 due to a continued move away from traditional landline service. Verizon's FiOS digital cable service reported higher revenue.
Net income skyrocketed 85% higher to $17.8 billion in 2015 from $9.6 billion in 2014. Verizon has lower costs, which helped drive profit higher.
Cash from operations jumped to about $39 billion in 2015 from $31 billion in 2014.
With the acquisitions of Yahoo and AOL, Verizon is making a major push into mobile content. The acquisitions position Verizon as a top competitor to Google and Facebook in delivering mobile content and digital gaining advertising revenue. While loading up on content and advertising tools, Verizon must still manage the assets into a pattern of growth, something the previous owners of AOL and Yahoo had trouble doing.
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 Federal Communications Commission auction.
Verizon is developing a 5G network, which would increase data speeds and reduce latency. It also continues to build its Internet of Things business, which contributed $690 million in revenue in 2015, 18% higher than 2014. The company is working with automakers such as Mercedes-Benz, part of Daimler AG, to connect cars as well as applications for energy and agriculture.
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.
The Yahoo purchase 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, the Flickr and Tumblr. Also importantly 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 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 online video.
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.