Verizon Communications is the #1 wireless phone service in the US (ahead of rival AT&T), but #2 to A&T in terms of overall telecom services. The company's core mobile business, Verizon Wireless, serves more than 115 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. Verizon 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. 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 2017.
The corporate and other segment, which includes Oath media businesses, telematics, and other businesses, supplies about 5% of revenue.
Verizon, based in New York City, is present throughout the US. It also has representation in countries around the world. 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. It also has a dedicated telemarketing sales force. The average retail customer account pays about $135 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 $2.6 billion a year, which is about two-thirds of what AT&T spends on advertising.
After Verizon’s revenue rose to $131 billion in 2015 from about $120 billion in 2013, the company has taken a step or two back.
Verizon reported about $126 billion in 2017 sales, which was just a touch higher than the 2016 figure. The added revenue from the Yahoo acquisition and contributions from telematics operations pushed Verizon to an overall increase for the year. Equipment sales grew from an increase in payment plans and the sale of higher priced phones while the XO acquisition raised wireline sales. Verizon's services revenue, however, fell as more customers switched to unlimited data plans, which reduced revenue from overage charges and other fees. Average revenue per postpaid retail account fell to about $135 in 2017 from about $144 in 2016.
Verizon’s profit more than doubled to about $30 million in 2017 from 2016, aided by a one-time tax reduction of $17 billion because of the US Tax Cuts and Jobs Act.
Cash on hand slipped to $2.1 billion in 2017 from $2.8 billion in 2016. Verizon in 2017 made a discretionary payment of about $3.4 billion to its pension fund, which should enable it to contribute smaller amounts for the next couple of years. Capital spending, much of it for fiber installation, was steady at about $17 billion.
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 did join the rest of the industry in offering unlimited data plans in 2017.
Verizon spend about $17 billion a year to improve its network, adding more fiber optic cable to improve 4G service and get ready for higher-speed 5G service. The company has standing agreements with Corning and Prysmian to supply fiber optic cable. Verizon views its overall network as a collection of assets, including 4G LTE, fiber, 5G, and software-defined networks, which it calls the Verizon Intelligent Edge Network. The 2017 $1.8 billion acquisition of XO Communications is another facet of Verizon’s fiber plan.
Even as it spends to beef up its network, Verizon has begun a cost-reduction program that aims to save some $10 billion by 2021. The company expects the US tax legislation enacted in 2017 to add $3.5 billion-$4 billion to cash flow in 2018.
On the content side, Verizon looks to its Oath business, which includes Yahoo, AOL, and several online publications (including Huffington Post, TechCrunch, and Engadget), to engage about a billion viewers a year. Oath generated about $6 billion in revenue in 2017.
Mergers and Acquisitions
In 2018 Verizon acquired Moment, a New York-based design and strategy firm, to develop customer experience materials for in-store, online, mobile, and live customer service by phone or chat.
Verizon in 2017 bought 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.
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. In smaller deal, Verizon Communications bought Chicago-area fiber-optic network assets from WideOpenWest Inc.
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