Valuations: How much is Verizon's landline business worth?

Tom Paine

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The value the market places on Verizon's ( (NYSE: VZ) non-wireless business (essentially, what is considered the landline business) has been difficult to determine. But perhaps its recent agreement to buy out Vodafone's stake in Verizon Wireless provides some clues. Then again, perhaps not.

The Vodafone deal values Verizon Wireless at about $290 billion. By that measure, Verizon's 55% stake would then presumably be valued at $159.5 billion.

The market cap for Verizon (which includes its Verizon Wireless stake) is about $134 billion. Acording to Capital IQ, Verizon's enterprise value, a measure that typically equates to market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents, is $184.1 billion.

Verizon's non-wireless assets include its advanced fiber FiOS footprint, its legacy copper telephone footprint, and a strong enterprise business, which includes its Terramark enterprise cloud business acquired in 2011.

At times, there has been speculation that the landline business could be spun off. Another, perhaps more likely, alternative would be an increased use of the wireless network to supplement, and in some cases replace the copper network using 4G LTE. The single ownership of the two businesses should make a more integrated approach to managing them possible. Broadband Reports' Karl Bode does suggest that Verizon may consider selling (or dumping) some non-core area, copper-based networks, as it did previously to Frontier and Fairpoint.

There has been considerable debate as to whether Verizon's FiOS investment, which has been somewhere in the $20 billion range, has paid off.

Verizon Cloud for smartphones & tablets, introduced in April, now available for iOS

Tom Paine

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In late April, Verizon Wireless introduced Verizon Cloud for smartphones and tablets, a cloud storage service available only to Verizon Wireless customers. Originally it ran on only certain Android models, but Verizon Wireless announced in late May that it is now available for iOS devices and additional Android devices, including the Samsung Galaxy S4 and the DROID DNA by HTC. Verizon Cloud allows for up to 125 GB of storage, although only the first 500 MB are free. Beyond that, pricing ranges from $2.99 a month for a 25GB plan to $9.99 for 125GB. That's competitive with DropBox's 100GB plan, but is roughly double the price of 100GB offerings from Google Drive and Microsoft’s SkyDrive.

Verizon Wireless emphasizes Verizon Cloud's ability to store phone-centric files (for example, saving copies of contact lists, text messages and call logs, although these features reportedly don't work on the iOS version), and to transfer some content between Android and iOS devices. It also stresses its potential value to multiple users sharing a data plan across several devices.

Verizon Cloud appears to supplant an existing, more limited Verizon Wireless utility called Backup Assistant, although current Backup Assistant users are switched over to Verizon Cloud.

Verizon Cloud was panned by some reviewers as being a me-too, less than price competitive, offering. An interesting aspect of Verizon Cloud, however, is that its technology was developed by Terremark, David Samberg, National PR Manager for Verizon Wireless told me in a phone interview. Terremark is Verizon Communication's (not Verizon Wirless') enterprise-grade cloud services unit; Verizon Communications owns 55% of Verizon Wireless. Terremark's proficiency in cloud services suggests a possibility that Verizon may have broader ambitions for Verizon Cloud, both on the consumer and SME (Small & Medium Enterprise) markets in the future. See Verizon's Shammo: SMB cloud is a great opportunity for growth.




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