With staggering competition at its home ground,
Verizon Communications Inc.
) is eying international opportunities. According to news
reports, the company has proposed to acquire Canadian wireless
provider Wind Mobile at an initial offer of $700 million. In
addition, reports suggest that the company is in talks to buy
Mobilicity, also a Canadian telecom company.
We believe the company's entry into new markets like Canada would
provide a significant opportunity to grow beyond the saturated US
wireless market. However, with big players still calling the
shots in the Canadian telecom space, we believe Verizon will have
its share of challenges ahead.
The news of possible takeovers in Canada by telecom giant,
Verizon, has started to threaten tier one Canadian telecom
Rogers Communications Inc.
). The Canadian market has been on the sidelines with share
prices for these carriers closing below the previous day's mark
on Wednesday's trade.
Despite the small stature, we believe these companies would mark
a significant stepping stone for the company in Canada.
Wind Mobile, which began its operations in 2009, has around
600,000 customers, which has almost surpassed the wirelesses
subscriber base of the fourth largest Canadian wireless carrier -
Saskatchewan Telecommunications Holding Corp.
Further, Mobilicity - targeted for acquisition by Telus in the
past - has around 250, 000 subscribers. Although Mobilicity
undertook no major expansion in the last two years, it continues
to operate in key areas like Greater Toronto Area, Ottawa,
Calgary, Edmonton and the Greater Vancouver.
Apart from acquisition, Verizon is seeking new ways such as new
pricing actions, FiOS Quantum, copper-to-fiber migration and
cost-cutting measures to drive FiOS revenue growth and maximize
profitability. The new FiOS pricing plans (set-top boxes and
planned bundled changes) would accelerate consumer revenue growth
for the next several quarters.
Verizon has also collaborated with Starz - a top-notch global
media and entertainment company - to launch STARZ PLAY and ENCORE
PLAY. Overall, we believe these combined efforts would lead to
improved revenue, high operating margins and greater market
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Verizon, currently has Zacks Rank #3 (Hold).