Verizon is one of the most popular and well-known wireless network operators in the United States, with over 143 million subscribers as of the end of 2022. But do you know who owns Verizon and how it came to be? In this article, we will explore the history, structure, performance, and benefits of Verizons parent company, Verizon Communications Inc., a multinational telecommunications conglomerate that operates in various segments, including wireless, broadband, media, and business services.
The History of Verizon Parent Company Communication
Verizon Parent Company Communication Inc. was formed in 2000 as a result of a merger between two major regional telephone companies, Bell Atlantic and GTE. However, the roots of Verizon can be traced back to the breakup of the Bell System in 1984, which created seven independent companies, known as the Baby Bells.
The Bell System Breakup
The Bell System was a monopoly that provided telephone service to most of the United States and Canada from 1877 to 1984. It was owned by AT&T Corporation, which also controlled the research and development arm of the industry, Bell Labs. However, in 1974, the U.S. Department of Justice filed an antitrust lawsuit against AT&T, alleging that it had abused its market power and stifled competition. After a decade of litigation, AT&T agreed to divest its local operating companies and retain its long-distance, mobile, and international services.
The divestiture took effect on January 1, 1984, creating seven regional holding companies that inherited the local telephone operations of AT&T. These were:
- Ameritech, serving Illinois, Indiana, Michigan, Ohio, and Wisconsin.
- Bell Atlantic, serving Delaware, the District of Columbia, Maryland, New Jersey, Pennsylvania, Virginia, and West Virginia.
- BellSouth, serving Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee.
- NYNEX, serving New York and New England.
- Pacific Telesis, serving California and Nevada.
- Southwestern Bell, serving Arkansas, Kansas, Missouri, Oklahoma, and Texas.
- US West, serving Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming.
Each of these companies operated as a Regional Bell Operating Company (RBOC), providing local exchange service within their territories. They were also allowed to offer some long-distance and mobile services within their regions or in collaboration with other RBOCs. However, they were prohibited from manufacturing equipment or providing information services.
The Merger of Bell Atlantic and GTE
In the following years after the breakup, the RBOCs underwent several mergers and acquisitions to expand their markets and diversify their businesses. One of the most significant deals was the merger of Bell Atlantic and GTE Corporation in 2000.
Bell Atlantic was one of the largest RBOCs in terms of population served and revenue generated. It also merged with another RBOC, NYNEX, in 1997, creating a dominant presence in the Northeast and Mid-Atlantic regions.
GTE Corporation was a leading independent telephone company that operated in 28 states and had international operations in Canada, the Dominican Republic, Puerto Rico, and Venezuela. It was also a major provider of long-distance, mobile, and internet services.
The merger between Bell Atlantic and GTE was announced in July 1998 and valued at $52 billion. It was expected to create a telecommunications giant that would offer a full range of services across the country and compete with AT&T and MCI WorldCom. However, the deal faced regulatory hurdles and opposition from consumer groups and competitors. It took almost two years to obtain approval from the Federal Communications Commission (FCC) and the Department of Justice (DOJ), as well as from various state and foreign authorities.
The merger was finally completed on June 30, 2000, creating Verizon Communications Inc., a new name that combined the words “veritas” (Latin for “truth”) and “horizon”. The new company had over 260,000 employees and served more than 63 million customers in 40 states and the District of Columbia. It also had a 55% stake in Verizon Wireless, a joint venture with British telecommunications company Vodafone that was formed in April 2000 as a combination of Bell Atlantic Mobile, GTE Wireless, and Vodafone’s U.S. wireless operations.
The Acquisition of Vodafone’s Stake
Verizon Parent Company Communication became the sole owner of Verizon Wireless in 2014 after buying Vodafone’s 45% stake in the joint venture for $130 billion. This was one of the largest corporate deals in history and marked the end of a long-standing partnership that had lasted for 14 years.
The deal was motivated by Verizon’s desire to gain full control over its wireless business, which was the most profitable and fastest-growing segment of its operations. Verizon also wanted to streamline its capital structure and simplify its management. On the other hand, Vodafone wanted to exit the U.S. market and focus on its core markets in Europe and emerging markets. Vodafone also wanted to return cash to its shareholders and invest in new technologies and acquisitions.
The deal was announced in September 2013 and completed in February 2014. It involved a combination of cash and stock payments, as well as the transfer of some assets and liabilities between the two companies. As a result of the deal, Verizon Communications increased its wireless subscriber base to over 100 million and became the largest wireless carrier in the U.S. by revenue. It also became one of the most indebted companies in the world, with a net debt of over $100 billion.
The Structure of Verizon Parent Company Communication
Verizon Parent Company Communication is a diversified telecommunications company that operates in three main segments: Consumer, Business, and Media. These segments offer various products and services to different customer groups, such as individuals, households, small and medium businesses, large enterprises, government agencies, and media outlets.
The Consumer Segment
The Consumer segment is the largest segment of Verizon Communications in terms of revenue and customers. It provides wireless, wireline, broadband, video, and security services to residential and individual customers across the U.S.
Wireless services include voice, data, text, video, and internet access through various devices, such as smartphones, tablets, laptops, wearables, and connected devices. The wireless network covers about 99% of the U.S. population and supports various technologies, such as 4G LTE, 5G, and Wi-Fi. The wireless services also include prepaid plans under the brands Visible by Verizon and TracFone Wireless, which Verizon acquired in 2021 for $6.25 billion.
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The broadband services include fixed wireless access (FWA) and mobile broadband access (MBA) through 5G technology. FWA provides high-speed internet access to homes and businesses through wireless signals that bypass traditional cables or wires. MBA provides high-speed internet access to mobile devices through cellular networks or Wi-Fi hotspots. Both FWA and MBA are part of Verizon’s strategy to expand its broadband coverage and compete with cable and satellite providers.
The security services include home security, identity protection, and device protection services that help customers safeguard their homes, personal information, and devices from threats or damages. The home security service is offered through the Canary
a subsidiary of Verizon that provides smart home devices and services, such as cameras, sensors, alarms, and notifications. The identity protection service is offered through LifeLock, a subsidiary of NortonLifeLock that provides identity theft monitoring and recovery services. The device protection service is offered through Asurion, a partner of Verizon that provides device insurance, repair, and replacement services.
The Consumer segment generated $87.5 billion in revenue and $32.1 billion in operating income in 2022, accounting for 70% and 76% of Verizon Communications’ total revenue and operating income, respectively.
The Business Segment
The Business segment is the second-largest segment of Verizon Communications in terms of revenue and customers. It provides wireless, wireline, broadband, cloud, security, Internet of Things (IoT), and professional services to small and medium businesses, large enterprises, government agencies, and educational institutions across the U.S. and globally.
Wireless services include voice, data, text, video, and internet access through various devices, such as smartphones, tablets, laptops, wearables, and connected devices. The wireless network covers about 99% of the U.S. population and supports various technologies, such as 4G LTE, 5G, and Wi-Fi. The wireless services also include mobile device management (MDM), mobile security, and mobile productivity solutions that help businesses manage and secure their mobile devices and applications.
The wireline services include voice, data, video, and internet access through fiber-optic or copper cables. The wireline network covers about 150 countries and supports various technologies, such as Ethernet, MPLS, SD-WAN, and VPN. The wireline services also include voice-over IP (VoIP), unified communications and collaboration (UCC), and contact center solutions that help businesses communicate and collaborate effectively.
The broadband services include fixed wireless access (FWA) and mobile broadband access (MBA) through 5G technology. FWA provides high-speed internet access to businesses through wireless signals that bypass traditional cables or wires. MBA provides high-speed internet access to businesses through cellular networks or Wi-Fi hotspots. Both FWA and MBA are part of Verizon’s strategy to expand its broadband coverage and compete with cable and satellite providers.
The cloud services include infrastructure as a service (IaaS), platform as a service (PaaS), software as a service (SaaS), and edge computing solutions that help businesses store, process, and access their data and applications on demand. The cloud services are offered through Verizon Cloud, a platform that integrates Verizon’s own data centers and network with third-party cloud providers, such as Amazon Web Services (AWS) and Microsoft Azure.
The security services include network security, endpoint security, cloud security, identity and access management (IAM), threat intelligence, and incident response solutions that help businesses protect their networks, devices, data, and users from cyberattacks. The security services are offered through Verizon Security Services, a division that leverages Verizon’s own expertise and partnerships with leading security vendors, such as Cisco, FireEye, IBM, and Symantec.
The IoT services include connectivity, platforms, solutions, and professional services that help businesses connect, manage, and optimize their physical assets and processes using sensors, devices, and data analytics. The IoT services are offered through Verizon IoT Services, a division that focuses on various verticals, such as automotive, healthcare, manufacturing, retail, smart cities, and transportation.
The professional services include consulting, design, implementation, management, and support services that help businesses plan, deploy, operate, and optimize their IT infrastructure and solutions. The professional services are offered through Verizon Professional Services, a division that employs over 10,000 experts in various domains, such as cloud, security, IoT, networking, mobility, and collaboration.
The Business segment generated $31 billion in revenue and $7.8 billion in operating income in 2022
accounting for 25% and 18% of Verizon Communications’ total revenue and operating income, respectively.
The Media Segment
The Media segment is the smallest segment of Verizon Communications in terms of revenue and customers. It provides digital media, advertising, and entertainment services to consumers, advertisers, publishers, and creators across the U.S. and globally.
Digital media services include online platforms, properties, and applications that deliver content, information, and services to various audiences and devices. The digital media services are offered through Yahoo, a subsidiary of Verizon that operates various online properties, such as Yahoo Mail, Yahoo News, Yahoo Sports, Yahoo Finance, and Yahoo Entertainment. Yahoo also owns other digital media brands, such as AOL, HuffPost, TechCrunch, Engadget, and RYOT.
The advertising services include display, video, native, search, and programmatic advertising solutions that help advertisers reach and engage their target audiences across various channels and devices. The advertising services are offered through Verizon Media Platform, a platform that integrates Verizon’s own ad network and technology with third-party ad exchanges and partners, such as Microsoft Advertising and Google Ads.
The entertainment services include streaming, gaming, and virtual reality (VR) services that deliver content and experiences to various devices and platforms. The streaming service is offered through Yahoo Plus, a subscription service that provides access to various streaming apps and channels, such as Disney+, ESPN+, Hulu, and Starz. The gaming service is offered through Yahoo Fantasy Sports, a platform that allows users to play fantasy sports games and compete with other users. The VR service is offered through RYOT, a subsidiary of Yahoo that produces and distributes immersive content and experiences using VR and augmented reality (AR) technologies.
The Media segment generated $7 billion in revenue and $0.7 billion in operating income in 2022 accounting for 6% and 2% of Verizon Communications’ total revenue and operating income, respectively.
The Performance of Verizon Parent Company Communication
Verizon Parent Company Communication is one of the largest and most successful telecommunications companies in the world. It has a strong financial performance, a large market share, and a positive future outlook. However, it also faces some challenges and risks in its competitive and dynamic industry.
The Financial Results
Verizon Communications reported $125.6 billion in revenue and $40.6 billion in operating income in 2022 representing a 3.9% increase and a 5.4% increase from 2021 respectively. The revenue growth was driven by the strong performance of the Consumer segment which benefited from the increased demand for wireless and broadband services amid the COVID-19 pandemic and the launch of 5G services in select markets. The operating income growth was driven by the improved profitability of the Business segment which benefited from the cost savings and efficiency gains from the network transformation initiatives and the digital transformation initiatives.
Verizon Communications also reported $17.8 billion in net income and $4.30 in earnings per share (EPS) in 2022 representing a 9.8% increase and a 10.3% increase from 2021 respectively. The net income growth was driven by the higher operating income as well as the lower income tax expense due to the favorable impact of tax reforms and credits. The EPS growth was driven by the higher net income as well as the lower weighted average shares outstanding due to the share repurchases and retirements.
Verizon Communications also reported $35.7 billion in free cash flow (FCF) in 2022 representing a 15.8% increase from 2021. The FCF growth was driven by the higher operating cash flow as well as the lower capital expenditures (CapEx) due to the lower spending on network equipment and spectrum licenses. Verizon Communications used its FCF to pay dividends repurchase shares reduce debt and invest in strategic opportunities.
Verizon Communications also reported $152.7 billion in total assets $113.4 billion in total liabilities and $39.3 billion in total equity as of December 31, 2022. The total assets increased by 1.9% the total liabilities decreased by 0.9% and the total equity increased by 10% from December 31, 2021. The changes in the balance sheet were mainly due to the acquisition of TracFone Wireless the issuance of new debt the repayment of existing debt the payment of dividends the repurchase of shares the recognition of deferred tax assets and the changes in fair value of derivatives.
Verizon Communications has a solid financial position with a high profitability ratio, a moderate leverage ratio, a strong liquidity ratio, and a stable solvency ratio. It has a return on assets (ROA) of 11.7% a return on equity (ROE) of 45.3% a debt-to-equity ratio of 1.89 a current ratio of 0.94 and a debt-to-assets ratio of 0.74 as of December 31, 2022.
The Market Share and Competition
Verizon has the largest wireless market share in the United States by revenue and the second-largest by subscribers as of 2022. It has a wireless revenue market share of 35% and a wireless subscriber market share of 30% as of 2022. It competes with other wireless carriers, such as AT&T, T-Mobile, and Sprint, as well as with other wireless service providers, such as Comcast, Charter, and Dish Network.
Verizon Communications is also one of the largest broadband providers in the U.S. by revenue and by subscribers as of 2022. It has a broadband revenue market share of 12% and a broadband subscriber market share of 9% as of 2022. It competes with other broadband providers, such as Comcast, Charter, AT&T, and CenturyLink, as well as with other broadband service providers, such as Google Fiber, Starlink, and HughesNet.
Verizon Communications is also one of the largest media companies in the U.S. by revenue and by users as of 2022. It has a media revenue market share of 3% and a media user market share of 4% as of 2022. It competes with other media companies, such as Google, Facebook, Amazon, and Netflix, as well as with other media service providers, such as Disney, Apple, Spotify, and Roku.
Verizon Communications has a strong competitive advantage in its industry due to its network quality and coverage, its customer service and loyalty, its innovation and leadership, and its diversified and integrated portfolio of products and services. However, it also faces some competitive threats and challenges from its rivals, such as price wars, market saturation, technological disruption, regulatory uncertainty, and cyberattacks.
The Future Outlook and Challenges
Verizon Communications has a positive future outlook and growth potential in its industry due to its strategic initiatives and investments in various areas, such as 5G technology, broadband expansion, media transformation, customer experience enhancement, and social responsibility fulfillment. However, it also faces some risks and uncertainties that may affect its performance and prospects, such as economic downturns, pandemic outbreaks, natural disasters, political instability, legal disputes, and environmental issues.
Some of the key opportunities and challenges for Verizon Communications in the near future are:
- Leveraging the power and potential of 5G technology to deliver faster speeds, lower latency, higher capacity, and enhanced reliability to its customers across various segments and markets. Verizon Communications is a leader in 5G deployment and innovation in the U.S., having launched its 5G Ultra Wideband service in select cities in 2019 and its 5G Nationwide service in over 1,800 cities in 2020. It also acquired over $45 billion worth of spectrum licenses in the C-band auction in 2021 to expand its 5G coverage and capacity. However, Verizon Communications also faces some challenges in rolling out its 5G network, such as high capital costs, technical complexities, regulatory hurdles, and competitive pressures.
- Expanding its broadband presence and penetration to reach more customers and markets with high-speed internet access and services. Verizon Communications is investing in both fixed wireless access (FWA) and mobile broadband access (MBA) through 5G technology to provide alternative and affordable broadband solutions to underserved and unserved areas. It also acquired TracFone Wireless in 2021 to increase its prepaid customer base and offer low-cost wireless plans. However, Verizon Communications also faces some challenges in growing its broadband business, such as low margins, high churn rates, customer preferences, and infrastructure limitations.
- Transforming its media business to adapt to the changing consumer behavior and preferences for digital content and services. Verizon Communications is focusing on enhancing its Yahoo brand and platform to provide more personalized, engaging, and relevant content and services to its users and advertisers. It also sold off some of its non-core media assets, such as HuffPost and Tumblr to streamline its operations and focus on its core competencies. However, Verizon Communications also faces some challenges in revitalizing its media business, such as declining revenues, fierce competition, content quality, and user privacy.
- Enhancing its customer experience and satisfaction to retain and attract more customers across various segments and markets. Verizon Communications is investing in improving its customer service and support through digital channels, such as chatbots, self-service portals, and mobile apps. It also launched Verizon Up a loyalty program that rewards customers with perks, discounts, and experiences. However, Verizon Communications also faces some challenges in maintaining its customer loyalty and reputation, such as service
- Fulfilling its social responsibility and commitment to create a positive impact on society and the environment. Verizon Communications is supporting various initiatives and causes that align with its values and goals, such as diversity and inclusion, education and literacy, health and wellness, and sustainability and climate action. It also launched Verizon Forward a corporate responsibility strategy that aims to deliver on four pillars: digital inclusion, climate protection, human prosperity, and trust and reliability. However, Verizon Communications also faces some challenges in fulfilling its social responsibility, such as stakeholder expectations, resource constraints, performance measurement, and accountability.
The Benefits of Verizon Parent Company Communication
Verizon Parent Company Communication is a leading telecommunications company that offers many benefits to its customers, employees, partners, shareholders, and society. Some of the benefits are:
- The network quality and coverage: Verizon Communications has the best network quality and coverage in the U.S., according to various independent tests and surveys. It has invested heavily in building and upgrading its network infrastructure and technology to provide reliable, fast, and secure services to its customers across various segments and markets. It has also launched its 5G services in select cities, offering unprecedented speeds, lower latency, higher capacity, and enhanced reliability to its customers.
- Customer service and loyalty: Verizon Communications has the best customer service and loyalty in the U.S., according to various independent tests and surveys. It has invested heavily in improving its customer service and support through digital channels, such as chatbots, self-service portals, and mobile apps. It has also launched Verizon Up a loyalty program that rewards customers with perks, discounts, and experiences. It has also received numerous awards and recognition for its customer service and loyalty, such as the J.D. Power Award the American Customer Satisfaction Index (ACSI), and the Brand Keys Customer Loyalty Engagement Index.
- Innovation and leadership: Verizon Communications is a leader in innovation and leadership in the telecommunications industry. It has invested heavily in research and development (R&D) and strategic partnerships and acquisitions to create new products and services that meet the changing needs and preferences of its customers. It has also launched various initiatives and programs that foster a culture of innovation and leadership within its organization, such as the Verizon Innovation Program the Verizon Leadership Development Program, and the Verizon 5G Labs.
Verizon Parent Company Communication is a multinational telecommunications conglomerate that operates in three main segments: Consumer, Business, and Media. It provides wireless, wireline, broadband, cloud, security, IoT, and professional services to various customer groups, such as individuals, households, small and medium businesses, large enterprises, government agencies, and media outlets.
Verizon Communications was formed in 2000 as a result of a merger between two major regional telephone companies, Bell Atlantic and GTE. However, the roots of Verizon can be traced back to the breakup of the Bell System in 1984, which created seven independent companies, known as the Baby Bells.
If you are interested in learning more about Verizon Communications or becoming a customer or partner of Verizon Communications, you can visit their website at [www.verizon.com] or contact them at 1-800-VERIZON.