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What Investors Should Know about Verizon’s Enterprise Business

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Niddel to strengthen Verizon’s enterprise business

Verizon (VZ) said its acquisition of Niddel is designed to enhance its offerings in the enterprise market. Through its enterprise solutions unit, Verizon serves business and government clients around the world. Verizon Enterprise Solutions provides services including advanced communications, cloud computing, managed security services, and professional consulting.

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Verizon’s enterprise business needs shoring

In the context of the acquisition of Niddel, there seems to be a good reason Verizon may be looking to bolster its enterprise business. In 4Q17, Verizon’s enterprise solutions business continued to shrink with revenue falling 4.1% YoY (year-over-year) to less than $2.1 billion. Verizon’s enterprise solutions revenue fell 5.0% in 3Q17, and that followed a 4.1% decline in 2Q17, a 4.3% decline in 1Q17 and a 3.7% decline in 4Q16.

Verizon lagged T-Mobile in revenue growth

Verizon’s overall revenue increased 5.0% YoY to $34 billion in 4Q17. T-Mobile (TMUS) registered a 5.1% YoY increase in its 4Q17 revenue. At AT&T (T) and Sprint (S), revenues declined 0.2% and 3.5% YoY, respectively, in 4Q17.

Although Verizon grew its top line faster than most of its main competitors in 4Q17, perhaps the revenue growth would have been much faster or the actual revenue would have been larger if the enterprises solutions business was stronger.

It remains to be seen what impact Niddel will have on Verizon’s enterprise solutions business.

Verizon and AT&T are working to diversify their revenue streams, and they are taking on traditional media companies such as Comcast (CMCSA) and digital media providers such as Netflix (NFLX) in their pursuit of new revenues.

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