Verizon Enters 2010 on a Roll

Carl Weinschenk

Verizon has made some good decisions during the past few years. That manifested itself in relatively good performance during the recession and a pretty good outlook going forward.

 

Verizon, facing the same challenge as other wireline carriers, was watching its core business die a a painfully slow death. It had to find a way to transform itself on two levels: the actual entry into new businesses and technologies, and the psychological evolution of recognizing that the days of monopoly status are over forever.

 

Several stories this week suggest that Verizon has done a good job of accepting and adjusting to the new reality. Several years ago, Verizon saw the handwriting on the copper and launched the FiOS fiber initiative. Even after deciding to cast its lot with fiber, the company could have opted for the less-expensive incremental approach tabbed by AT&T and terminated the fiber at neighborhood nodes. This option, which offers less capacity, relies on the legacy twisted pair copper to traffic signals to and from the premises.

 

It seems to have been a good choice in bringing fiber all the way to the premise. All signs are that demand for bandwidth will continue to escalate across the industry. Verizon already is benefiting from the hunger for bandwidth, as FiOS may become operating income positive this year, according to comments made by CEO and chairman Ivan Seidenberg at a Citgroup investor conference in San Francisco covered by OneTRAK.

 

The story paints a picture of robust growth. The story says that at the end of the third quarter of 2009, Verizon had 2.7 million FiOS TV subscribers in a base of 10.9 million homes marketed to. The company, the story reports, originally aimed at adding 1 million subscribers annually. Seidenberg suggested that it may ease up on the aggregate total in favor of a smoother rollout.


 

The second leg of the stool is the success of Verizon Wireless, which Verizon co-owns with Vodafone. Reuters reported out of the same conference that Verizon Wireless surpassed the anticipated total of a million new customers during the fourth quarter. The story suggests that the wheels are turning: Verizon could eventually buy out Vodafone's position in Verizon Wireless, a public offering could be made or the two parents could merge. Seidenberg is quoted as saying that a buyout was possible, but that it is not a priority for the company.

 

Verizon and its part-owned wireless company are entering 2010 -- when the curtain will fully rise on Long Term Evolution (LTE), the next big thing -- in good shape, especially considering the financial picture of the past few years.



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