Verizon Communications is one of the two leading national US telecoms businesses (alongside arch-rival AT&T). It was formed in 2000 from the merger of Bell Atlantic and GTE Corporation, and has strengthened its position further with other acquisitions including long-distance operator MCI in 2006 and regional mobile service at Alltel at the beginning of 2009. The group offers a full range of communications services. However its most significant business is Verizon Wireless, for many years a joint venture with UK mobile giant Vodafone. After five years as America's #1 mobile service by subscribers, Verizon's lead in this fast-consolidating sector was overturned in 2008 by the new AT&T. Verizon regained the top spot just under a year later as a result of the purchase of Alltel. The group has also pushed aggressively into the broadcast market with a huge investment in fibre-optic technology, which provides the platform for its FiOS ultra-highspeed broadband and television service. It also claims the largest 4G high-speed wireless coverage in the US. In 2013, in one of the largest deals to-date in corporate history, Verizon agreed to buy out Vodafone's 45% stake in Verizon Wireless for a whopping $130bn in cash and shares. Matching AT&T's push into satellite TV with a corresponding move into online content, the group acquired one-time internet pioneer AOL in 2015 for $4bn, followed by Yahoo in 2016 for $4.8bn.
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Adbrands Weekly Update 5th Oct 2017: US telecoms giant Verizon has revealed that the massive data hack at Yahoo, whose acquisition it completed earlier this year, affected even more of the web pioneer's customers than previously thought. Yahoo warned last December that as many as 1bn accounts had been compromised. That was already the biggest cyber breach in history, but Verizon now says that the actual number was three times higher than that: all 3bn of Yahoo's customer accounts. Yahoo is now part of Verizon's Oath digital media division, alongside AOL and other brands. In a separate development, Verizon's top media executive Marni Walden, who currently oversees Oath and led the acquisition of Yahoo, is to depart the company. The move is not connected to the cyber breach, but is thought to reflect group CEO Lowell McAdam's recently stated intention of remaining in his role beyond his 65th birthday in two years time. Walden had been considered a potential successor. She will not be directly replaced, with her duties being reallocated to other executives, not least Oath CEO Tim Armstrong, who will now report directly to McAdam.
Adbrands Weekly Update 6th Jul 2017: The New York Post newspaper ignited considerable buzz over the holiday weekend with a report that Verizon might be considering a bid to acquire The Walt Disney Company. There were plenty of provisos attached to the story, but such a move would make sense in the light of AT&T's planned but yet-to-be-approved acquisition of Time Warner. So far at least, AT&T's push into content has appeared more assured than its telecom rival's. DirecTV and Time Warner are unquestionably more dynamic acquisitions than Verizon's equivalent buys of past-their-prime AOL and Yahoo. Disney would be a significant step in the right direction. Its shares ticked upwards by almost 2% in the wake of the story, suggesting that investors may have given it at least some credence.
Adbrands Weekly Update 15th Jun 2017: Finally, it's done. After a whole year of negotiation and renegotiation, Verizon completed the acquisition of the Yahoo business. The struggling internet pioneer merges with Verizon's existing AOL division to form new umbrella company Oath. In addition to AOL and Yahoo, its 20 or so brands also include HuffPost, Tumblr, Flickr, TechCrunch and Moviefone. Yahoo shareholders finally get something back after years of worry, while Yahoo CEO Marissa Mayer walks away with a reported $23m golden parachute. Oath CMO Allie Kline suggested that the enlarged division will be the P&G of media and technology. She told The Drum, "When you go to the grocery store, you don’t look for [the] P&G [brand], you look for Bounty, Head and Shoulders, Dawn… We wanted to create a brand that would be the underpinning brand the same way P&G is. It stands for a set of shared values among the employee base, but also the front-facing brand for advertisers, publishers and the media community."
Adbrands Weekly Update 11th May 2017: Verizon and AT&T have spent the past month engaged in a bidding war over next generation technology. As long ago as 2001, Straight Path Communications acquired a portfolio of high frequency radio waves. Though they were not licensed for use then, they could now be used to build a 5G wireless network. AT&T agreed to acquire the business in April for $1.6bn, prompting Verizon to make a higher counter offer. After a series of back-and-forth bids, AT&T declined to top Verizon's latest offer of $3.1bn, more than seven times what Straight Path was worth before the bidding began.
Adbrands Weekly Update 6th Apr 2017: Oath. That will be the name of Verizon's digital media division when it completes its acquisition of Yahoo this summer. The new unit, to be headed by Tim Armstrong, will combine Yahoo and AOL and their 20 or so surviving subsidiary brands, like Huffington Post, Engadget, Tumblr and Flickr. As AOL CMO Allie Kline told Adweek, the new name isn't about swearwords - as non-Americans might have assumed - but about loyalty and allegiance. "When you look at the diversity of this set of brands, and you look at the one thing that connects or binds all of these assets and the people who work on them, it is a set of values we share.... It’s being deeply committed to building brands and not just aggregating content... An oath is one of the most long-term and profound commitments a human being can make. We wanted to be anchored by that, not just in the name but in the people who work on all of our brands."
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Free for all users | see full profile for current activities: Until 1984, much of the company that subsequently became Verizon was a regional operation of AT&T, the giant US national telephone operator [see AT&T profile for more]. With a virtual monopoly of the US market since its formation in the late 19th century, regulators had become increasingly concerned with AT&T's power by the 1970s. After forcing the company to open up its network in the 1960s, a lawsuit in 1974 demanded the complete break-up of the business. AT&T disputed the demands in the courts for ten years, but eventually the regulators got their way. In 1984, "Ma Bell" gave birth to seven regional telephone operators, the so-called "Baby Bells", while Ma herself kept the long-distance network which connected them to one another.
One of the biggest of the Baby Bells was Bell Atlantic, which was granted service for seven states in the North-East, including Pennsylvania and Washington DC. It also inherited a small cellular phone business, and was quick to develop its operations in wireless communication and internet access during the 1980s. As the global telecoms industry began to deregulate during the following decade, Bell Atlantic looked to the international marketplace. It dipped a toe into New Zealand, acquiring that country's state telecoms business, and also established operations in Czechoslovakia and Mexico.
However it became increasingly apparent that the company's real sphere of interest remained the US. In 1992, the group acquired East Coast mobile phone company Metro Mobile. In an attempt to transform itself into a major power it attempted to merge with cable company TCI in 1994, but was beaten off by AT&T. Instead it formed a strategic alliance with Nynex, another of the Baby Bells, based in New York and New England. The two companies initially combined their wireless operations in 1995, before announcing a full merger in 1997. Effectively, Bell Atlantic acquired its counterpart for $25.6bn, becoming the country's #2 telecoms business behind AT&T.
Two years later, Bell Atlantic spent twice as much again to acquire rival fixed and wireless operator GTE in a $53m deal. GTE was a remarkable business by US telecoms standards, in that it had grown to the same size as the biggest of the Baby Bells without the benefit of a leg-up from AT&T. The company had started in 1916 as Associated Telephone Utilities, operating local services in Wisconsin and California in competition with the Bell System. Although it did well for itself in the 1920s without AT&T's infrastructure, ATU was unable to withstand the Great Depression at the end of that decade. It went bust in 1935, eventually restructuring as General Telephone. In the 1950s, the company added other strings to its bow, acquiring electronics firm Sylvania. In 1956 it renamed itself General Telephone and Electronics (GTE).
In the 1980s, GTE refocused on its core phone business, setting up mobile services before launching a then-massive $6.6bn takeover of regional phone company group Contel in 1991. Like Bell Atlantic, by the end of the 1990s GTE was looking for a deal that it would propel it into the upper ranks of the telecoms industry. In 1998, the company launched a bid for MCI, but was outbid by Worldcom. The merger with Bell Atlantic was a more than logical next step.
Even as the merger of Bell Atlantic and GTE was being finalised during 1999, both companies were intent on forging other deals. At the beginning of 1999, Bell Atlantic offered $45bn to acquire US West Coast mobile service Airtouch, proposing a merger of the two companies' mobile operations. However Bell was in turn outbid by British company Vodafone, which successfully clinched a deal with an offer of $60bn. Just three months later, the newly enlarged Vodafone Airtouch agreed to go ahead with the mobiles merger already proposed by Bell Atlantic. Following Vodafone's subsequent purchase of CommNet Cellular, all these various wireless operations were combined and spun off into a new entity jointly owned by Verizon and Vodafone: Verizon Wireless. Meanwhile, GTE spun off its Internet backbone business as Genuity, and sold its Canadian operation BC Telecom (acquired in 1951) to rival Telus in return for 27% in stock of the enlarged business. It also sold off its remaining electronics operations to General Dynamics for $1bn.
The new name for the combined company was chosen to echo "veritas", the Latin word suggesting certainty and reliability, and horizon, signifying forward-looking and visionary. But even as the two companies formally completed their merger, the business was hit by industrial action by almost 100,000 employees, who went on strike for better working conditions. After 18 days, terms were agreed. Ironically, this had one massive benefit - widespread press coverage of the strike made the company's unfamiliar new title a household name.
In late 2000, the group filled in holes in its US network by agreeing to acquire Price Communications, operating in the state of Georgia and northern Florida, and Onepoint Communications, which provide cable communications links to apartment blocks in 31 states (renamed Verizon Avenue). The group also agreed in late 2000 to merge its broadband services with those of competitor Northpoint Communications, paying $800m for a 55% stake. However this deal was later called off after a downturn in Northpoint's performance. (Northpoint was later acquired by AT&T).
In 2001, Verizon bought the yellow pages division of Telus for $520m, and merged it into its own Canadian directory operation to form Dominion Information Services, Canada's first nationwide print, wireless and online directory provider (sold to Bain Capital two years later). The company completed a rash of deals at the end of the year, selling off fixed lines and exchanges in lower-performing US states. Operations in Alabama and Missouri were sold to CenturyTel for $2.2bn, those in Kentucky went to AllTel for another $1.9bn. Meanwhile Verizon Wireless acquired regional wireless operator Dobson Communications for $465m. It also sold off wireless call-processing subsidiary TSI Telecommunications for around $800m. Later that year, the group's headquarters, located close to the World Trade Center in New York, were damaged in the September 11th terrorist attacks.
The group continued to dabble in the international market, where it had inherited stakes from its various component businesses. As a result of consolidation between cable TV operators in the UK during the 1990s, Verizon had ended up with shareholdings in the UK's Cable & Wireless and NTL. These, as well as a 21% shareholding in Telecom New Zealand, were sold in 2002. In 2003 Verizon sold its 39% holding in struggling Mexican wireless service Iusacell to local company Grupo Salinas for around $5m (writing off a loss of almost $1bn on the sale). Its shares in Telus of Canada and Eurotel in the Czech Republic were sold in 2004, as well as its directory publishing operations in Canada.
In Spring 2005, Verizon launched a surprise bid for MCI, breaking up talks between MCI and smaller carrier Qwest. MCI's board immediately spurned Qwest in order to accept Verizon's bid of $6.8bn in cash and stock. However a spanner was subsequently thrown into the works when Qwest revealed that its own offer, so quickly rejected, had been worth around $8bn, considerably higher than Verizon's. MCI's board responded that it considered Verizon's bid to be safer in the long-term, pointing to Qwest's precarious financial position. However the price difference sparked off protests from MCI's shareholders that they were being short-changed. There ensued a see-saw of ever higher bids. Verizon attempted to break the deadlock by negotiating a side-deal to acquire the stake held by MCI's biggest shareholder, Mexican billionaire Carlos Slim. Qwest raised the stakes again with a new offer of $9.75bn, but Verizon's response of $8.45bn sealed the deal once and for all. Qwest withdrew from the fray shortly afterwards. The merger closed in January 2006. See full profile for current activities
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