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Verizon’s Global Enterprise revenues should follow declining trend

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Dec. 4 2020, Updated 10:52 a.m. ET

Global Enterprise line in the Wireline segment

Revenues for Verizon’s Global Enterprise line of business in its Wireline segment continued to decline in the first three quarters of 2014. However, revenues from the larger strategic services market declined at a much slower rate than Verizon’s (VZ) legacy core services.

In strategic services, the company primarily provides private IP (Internet Protocol), cloud, storage, and security services. Core services primarily comprise legacy voice and data services to enterprises.

Verizon’s management expects this trend in revenues to continue during 4Q14. Verizon’s Global Enterprise revenues are expected to decline by ~4% year-over-year in 2014.

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Strategic services

Verizon’s Global Enterprise line in its Wireline segment includes strategic and core services. It caters to medium and large enterprises. Verizon considers a medium enterprise as one with not more than 1,000 employees. Verizon segregates businesses with 20 or fewer employees into the Mass Market bucket, as we learned in the last part of this series.

The company’s strategic services dominates Global Enterprise. As you can see in the above chart, it represented 61% of the Wireline segment in 3Q14. Telecom companies particularly like these services since they usually have better margins and contracts with long durations. The customers of strategic services are stickier than those of core services.

Performance of Global Enterprise in the first nine months of 2014

Revenues for Verizon’s Global Enterprise line in its Wireline segment followed a declining trend in the first three quarters of 2014. This was due primarily to a shrinking base of legacy core services such as voice and dedicated lines. However, these revenues decreased at a slower rate due to Verizon’s strategic services.

Like core services, strategic services also declined, although at a much slower pace over the first three quarters of 2014. Quarter-over-quarter, however, strategic service revenues grew in 2Q14 and declined in 3Q14.

IP (Internet Protocol) services witnessed significant pricing pressure from cable companies such as Comcast (CMCSA) and Time Warner Cable (TWC), and telecoms such as AT&T (T), CenturyLink (CTL), and Frontier Communications (FTR).

In the first three quarters of 2014, Verizon’s Global Enterprise revenues declined by ~4.2%. Core services declined by ~9.4%, and strategic services decreased by a marginal ~0.6%. Please read Verizon’s struggling wholesale business to learn more.

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