Verizon Communications is a leading provider of wireless services in the US. Verizon has an estimated market share of about 40%, the company is also a leading provider of wireline communications to consumers, businesses, and governments.
Unlike its main US competitor AT&T, Verizon has strategically stayed away from large media acquisitions and focused on the longer view of the wireless business with significant network investments. About 70% of its revenue comes from the consumer segment and 20% from businesses. The company has made the strategic decision to drive revenue growth and margins via a trade- off between higher ARPU and fewer subscribers. As of now, the company disposes of roughly USD 18bn in free cash flow and an EBITDA in the range of USD 47 to 48.5bn. Given that the company’s leverage ratio is outside the target range, the management does not consider any stock buybacks.
Risks include economic conditions, execution, competition, plus, like any US telecom company, cable and network related liabilities that they own in their name.
Verizon credit is stable and its bonds trade at fair value and spread that perform in line with the peer group values.