Verizon’s view on quadruple play services
In the earlier parts of this series, we learned about the proposed wireline asset sale in three states of Verizon (VZ) to Frontier Communications (FTR). At the recent Bank of America Merrill Lynch 2015 Media, Communications and Entertainment Conference, John Stratton, executive vice president and president of Verizon’s Global Enterprise and Consumer Wireline business, also shared his views on quadruple play services.
Stratton said, “From our perspective, having owned wireless and wireline assets in a common footprint, obviously the Northeast and mid-Atlantic I referenced before, we spent a good amount of energy for several years trying to find that magical combination of triple play plus wireless to create an exceptional value for customers.”
Wireline services of voice and Internet, as well as the pay-TV offering together with wireless services, is a typical quadruple play bundle. The three wireline services of voice, Internet, and pay-TV constitute triple-play services, one of the typical bundles offered in the cable and telecom space.
Regarding the wireless and wireline combinations, Stratton said, “I buy my wired fixed services for a place. The mobile business is really a person, an individual, and the incentives that we saw running across, they were just— they were very elusive, so it’s not at all clear to us that those combinations make sense.”
AT&T and DIRECTV
In July 2015, AT&T (T) acquired DIRECTV (DTV) for a transaction value of ~$63 billion. Before the acquisition, AT&T was an integrated telecom company. DIRECTV is the largest US satellite TV provider by subscribers.
AT&T is banking on the scale of combinations of wireline and wireless services it can offer its customers. It has integrated wireless and wireline services in a single division, Mobility and Business Solutions, to cater to businesses. Moreover, it offers a range of bundled wireless and pay-TV services after the DIRECTV merger.
You may consider taking a diversified exposure to Verizon by investing in the iShares Russell 1000 Growth ETF (IWF). The ETF held ~1.7% in the telecom company on August 31, 2015. However, if you want to take a more diversified exposure to Verizon, you may consider investing in the iShares Russell 1000 ETF (IWB). Verizon contributed to ~0.9% of IWB’s holdings on the same date.