Verizon Communications Inc.
) is on the verge of acquiring OnCue - the Internet TV (IPTV)
venture of computer chip maker
). The purchase deal is expected to be completed next week.
Verizon started pursuing OnCue in Oct 2013, and could end up
clinching the online start-up for less than $200 million. Verizon
expects OnCue to boost its exiting IPTV offering FiOS, which
delivered a solid performance in the third quarter of 2013.
Verizon exited the quarter with 5.9 million FiOS Internet
Intel disclosed details about its IPTV plan in February and
had plans to launch the service by the end of this year. The
company developed a set top box, a farm of software systems and
an on-screen interface software to offer content over the
Internet. The services over the high-speed Internet could have
become a potential threat to traditional cable and satellite TV
However, the launch was stalled as the chip maker struggled to
procure programming license. The problem aggravated as the new
management continued to focus on selling chips to mobile phone
companies. Intel then decided to divest the unit and was reported
to have been looking for as much as $500 million.
The proliferation of smartphones and other related devices has
led to an unprecedented growth in data traffic. This has forced
the legacy telecom operators to diversify their offerings to meet
customer demand and Verizon is no exception.
Last month, the company acquired uploading and streaming
service provider UpLynk and is currently eyeing EdgeCast, a
content delivery company based in California. Verizon already has
a joint venture with
), which allows online video steaming.
To support this huge data surge, carriers need to strengthen
their bandwidth and Verizon is not lagging in this respect. The
company is ramping up its spectrum base either through swap deals
or by purchasing bandwidth from smaller counterparts. Recently,
the New York based carrier completed the acquisition of
U.S. Cellular Corporation
) wireless spectrum in Missouri, thus fortifying its network in
the region. We believe deals like OnCue coupled with spectrum
acquisition will enable the company to meet the demands of its
data hungry subscribers.
Verizon currently holds a Zacks Rank #3 (Hold).
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