Verizon Communications Inc (NYSE:VZ) is the former Bell Atlantic of the Ma Bell family but has done a very good job of becoming a modern-day competitor in the quickly shifting mobile telecom space. It was one of the first companies to really build out its cellular network and still maintains the leading mobile network, particularly in 4G LTE coverage.
But those kinds of bragging rights are much more in flux than they used to be, since every couple years, a new generation of mobile tech is unveiled. For example, while VZ and its chief competitor AT&T Inc (NYSE: T) argue over 4G LTE and 4G coverage areas, the real issue is already 5G LTE, which is going to be significantly faster than either current 4G technologies.
This speed also changes what users can do with their mobile devices. Massively multiplayer online role-playing games (MMORPGs) are now possible on phones and laptops, not just powerful desktops.
The cloud is changing how we store data and the online networks are changing how we interact with data. And VZ is looking for its part in this new dynamic.
What’s more, the loss of net neutrality will certainly usher in a new view for VZ in 2018 as it can potentially tier services and offer data plans that will be more beneficial to its product lines.
And one of the key product lines is content. This week VZ announced it had cut a 5-year $2.25 billion deal with the National Football League to broadcast games on its streaming services Yahoo, YahooSports and Go90. The deal will commence with this season’s playoff games.
What’s more, you don’t have to be a Verizon customer to watch. It’s open viewing, which means it will start to compete with free streaming content provider YouTube as well as ESPN streaming services.
It’s also in talks with Twenty-first Century Fox to see if it can pick up on some of Fox’s movie, cable and sports content and distribution channels.
Bottom Line on VZ Stock
The goal isn’t to get subscribers as much as is it is to get advertisers. Given the NFL brand, the more eyeballs VZ gets, the better for its ad revenue. And the NFL is the perfect U.S. vehicle to try this.
The wireless carriers have had a tough go of it in 2017, as the mobile market has matured. The huge subscriber growth numbers are now a thing of the past and with phones the price of nice laptops, subscribers aren’t always buying new phones every year.
The new revenue model is built around connectivity and content. And as usual, VZ is right in the thick of things.
VZ stock has tread water for 2017, but it still offers a rock-solid 4.5% dividend. The good news is, most of the bad news is baked in at this price and 2018 looks to be a very promising year.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.