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Verizon’s new plan: consumers win, investors lose


Verizon has revived an unlimited data plan. If you’re a Verizon customer, that’s great. But that’s terrible news for investors.

Verizon ((((VZ). Earlier on Monday, stocks fell nearly 1.5%. This year has fallen by about 10% so far, making it Dow’s worst performance of 2017.

Verizon’s move underscores that the company must take every step to stay competitive with its wireless rivals. AT & T ((((T)., Sprint ((((S). When T-mobile ((((TMUS)...

“In recent months, both T-Mobile and Sprint have had some success in gaining additional market share from Verizon thanks to unlimited services,” an analyst at Morgan Stanley wrote in a report on Monday morning. increase.

This may explain why the shares of T-Mobile and Sprint, currently managed by Japan’s tech conglomerate Softbank, are both up this year, even though Verizon is down. Maybe. T-Mobile and Sprint are also permanently linked as possible merger partners.

But Verizon’s problems aren’t limited to the new telecommunications price war.

AT & T recently acquired satellite broadcast provider DirecTV. This is a move to make MaBell more competitive with Verizon in the fight to control people’s living rooms. Verizon offers its own FiOS broadband TV service.

Related: Verizon Revives Unlimited Data Plan

AT & T is also making even bigger bets on content and plans to acquire CNN’s parent company. Time Warner ((((TWX)... Verizon already owns AOL and wants to buy Yahoo’s core assets to enhance its unique digital content offerings.

However Yahoo ((((YHOO). Transactions could collapse after being exposed to a major data breach at Yahoo over the last few years.

Yahoo recently said it hopes the deal with Verizon will close in the second quarter of this year. Initially it was planned to be completed by the first quarter.

However, in the latest earnings announcement, Verizon simply said, “We continue to work with Yahoo to assess the impact of data breaches,” and did not expect the transaction to close soon.

Verizon has a lot on its plate, which can strain investors. In addition to the deal with Yahoo, the company is also purchasing a fiber optic network from XO Communications.And the data center business Equinix ((((EQIX)...

There have also been rumors over the past few weeks that Verizon may consider buying a cable provider. Charter Communications ((((CHTR)...

This is more than Verizon can currently handle realistically. But given how competitive the wireless world is today, there may be nothing off Verizon’s table.

Anything Verizon can dominate AT & T, Sprint, and T-Mobile could be possible.

Related: Charter shares soar due to reports of possible acquisition of Verizon

Still, it’s worth noting that AT & T’s share has fallen by about 5% this year as well. And Verizon and A & T have something in common that Sprint and T-Mobile lack. Verizon and AT & T pay huge dividends.

Since the election of Donald Trump, companies with high dividend yields have been similarly unsuccessful. Investors are betting on considerable stimulus from him and the Republican parliament, which may be partially fueled by debt.

This will increase bond yields and significantly reduce the attractiveness of high-dividend stocks like Verizon.

The Federal Reserve is expected to raise interest rates several times this year as well. This can result in even higher bond yields.

As a result, Verizon faces many major challenges this year that could hurt its inventory.

Therefore, Verizon, which is called Big Red from the crimson color of the logo, may be displayed in red in stock for the time being.

CNNMoney (New York) First Edition February 13, 2017: 11:27 AM ET



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