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Verizon on Bundled Offers

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Verizon’s view on bundled offers

In the last part of the series, we looked at the transaction between Verizon (VZ) and XO Communications. Recently, David Small, executive vice president of wireless operations at Verizon, gave the telecom company’s view on bundled offers of wireless and Fios services. He spoke about this at the Jefferies Media & Communications Conference on February 24, 2016.

During the event, Small said, “We have had mixed success in terms of overall bundling. What we generally see from the market is, when there is a bundling play, generally people think — either their first or their second reaction is: I want a bottom of the bill discount. So with the markets where we offer wireless service and FiOS service, we’ve historically not had great success in doing that.”

He added, “For many reasons, consumers — for some it’s interesting to have one bill. For others, frankly, they like to keep their business separate. So, look, if it’s simply a bottom of the bill discount play, that’s something that we’re generally not interested in.”

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About Verizon’s Fios service

Fios is Verizon’s fiber-based voice, Internet, and video service. As you can see in the above graph, in Fios, Verizon had ~7 million, ~5.8 million, and ~4.8 million Internet, video, and voice connections, respectively, at the end of 4Q15.

Note that Fios is similar to AT&T’s (T) U-verse. Moreover, it’s comparable to offerings of cable companies such as Comcast (CMCSA) and Time Warner Cable (TWC).

Instead of taking a direct exposure to Verizon’s stock, you may take a diversified exposure to the telecom company by investing in the SPDR Dow Jones Industrial Average ETF (DIA).

The ETF held ~1.8% in Verizon at the end of December 2015.

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