Verizon eyes combined wired-mobile services, won't go into Canada

IDG News Service - Verizon Wireless has no plans to expand into the Canadian mobile market, the head of its parent company said on Tuesday in the wake of a deal to bring all of the wireless subsidiary under Verizon Communications.

Verizon is focused on finishing the proposed $130 billion deal with Vodafone Group and taking advantage of opportunities in video, mobile commerce, cloud services and other areas for a fully merged wired and mobile carrier, Chairman and CEO Lowell McAdam said on a conference call Tuesday.

In fact, the company was never as serious about competing in Canada as news reports had claimed, he said. Reports earlier this year had said the company might buy a Canadian mobile operator, setting off a storm of protest from that country's major carriers.

"It was always on the fringe for us," McAdam said. The company's planned "One Verizon" strategy with wired and wireless assets under one roof offers chances for much better returns than a Canadian mobile business would have, he said. "That's off the table at this point."

The One Verizon vision is at the heart of the Vodafone deal, McAdam said. Buying out Vodafone's 45 percent stake in Verizon Wireless will start to boost revenue immediately after completion of the deal, which is expected in the first quarter of next year, according to the company. The move may create some synergies, but its point is not to cut costs, McAdam said.

McAdam pointed to combined fixed and mobile capabilities several times during the call, without giving many details. But he cited some examples of areas where having both under the same roof might allow for new service offerings or features.

Verizon has made significant investments in new technologies on its wireline side and could make even better use of them across both the wired and wireless realms, McAdam said. Those investments include Verizon's acquisitions of cloud services company Terremark, managed security vendor Cybertrust and fleet management company Hughes Telematics. Merged with mobile services, those technologies could help Verizon serve industries including health care and energy, he said.

"We see it as clearing the road, if you will, for us to aggressively go after these market opportunities," McAdam said.

The deal could help Verizon pursue services beyond traditional one-to-a-customer phone contracts, leading to what may eventually be 500 percent market penetration for mobile, with many more devices than individual customers, McAdam said.

Verizon and U.K.-based Vodafone had once discussed the possibility of merging into one big international mobile operator but decided that wouldn't make sense for the companies' shareholders, McAdam said. However, with an already large international presence that includes 35 cloud data centers worldwide and services in 150 countries, Verizon may selectively make international investments if they enhance shareholder value, he said.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

Reprinted with permission from IDG.net. Story copyright 2012 International Data Group. All rights reserved.

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Verizon eyes combined wired-mobile services, won't go into Canada

Verizon Communications has reached an agreement to buy Vodafone Group's 45 percent stake in its Verizon Wireless subsidiary for $130 billion.

Under the deal, Verizon will take 100 percent ownership of the wireless unit, the largest mobile operator in the U.S. This will enhance its ability to offer customers "seamless and integrated services," the carrier said in a press release.

The transaction has been unanimously approved by the boards of both companies and is expected to close in the first quarter of 2014, subject to customary regulatory approvals. Verizon will pay a combination of cash and stock for Vodafone's stake.

"As a wholly owned entity, Verizon Wireless will be better equipped to take advantage of the changing competitive dynamics in the market and capitalize on the continuing evolution of consumer demand for wireless, video and broadband services," Verizon Chairman and CEO Lowell McAdam said in the press release.

"This transaction allows both Vodafone and Verizon to execute on their long-term strategic objectives," Vodafone Group CEO Vittorio Colao said in the release. "Our two companies have had a long and successful partnership and have grown Verizon Wireless into a market leader with great momentum. We wish Lowell and the Verizon team continuing success over the years ahead."

Verizon has sought to buy out its wireless business, originally formed as a joint venture with Vodafone, for several years. The transaction is unlikely to have a significant impact on U.S. mobile consumers, industry analysts said last week. Vodafone may use the huge windfall to buy smaller carriers and further its pursuit of wireline operations, analysts said.

Verizon was willing to pay a sky-high price for Vodafone's stake because of the strategic importance of the deal, said Chetan Sharma, founder and president of Chetan Sharma Consulting.

"They will be in control of their own destiny and they clearly believe in their future and that the stake will be worth a lot more in a few years," Sharma said in an email interview.

Because Verizon stock will make up part of the deal, it's a good one for Vodafone, said analyst Roger Entner of Recon Analytics.

"This transaction shows continued faith about the outperformance of of VZW and the U.S. wireless market in general," Entner said via email. "It also allows Vodafone to continue to participate in the upside in the U.S."

Vodafone is expected to use proceeds of the buyout to shore up its European business.

"What is finally motivating Vodafone is the implementation of their European integrated carrier strategy," Chetan Sharma, founder and president of Chetan Sharma Consulting, told IDG News last week.

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