Verizon awarded GSA Networx contract extension, prepares for EIS follow-on contract

Verizon (NYSE: VZ) has been granted an extension of the General Services Administration's Networx telecom services program, enabling the telco's public sector customers to continue purchasing services while paving a path to the Enterprise Infrastructure Solutions (EIS) contract.

Under the terms of the agreement with the GSA, the Networx contract extensions feature a one-year base period and two one-year options.

GSA extended the two Verizon Networx contracts that they were awarded in 2007 -- Networx Universal and Networx Enterprise -- to May and March 2020, respectively.

Originally, these contracts were set to expire in 2017.

Being able to get an extension on the Networx contracts is important for Verizon, particularly as it looks to win a spot on the upcoming EIS contract. This will enable Verizon to further its bond with its current government agency customer base and perhaps develop transition strategies for the EIS contract.

Fellow Networx contract holders CenturyLink (NYSE: CTL) and Level 3 Communications also got a three-year extension to the contract.

Besides Networx, the GSA also granted Verizon an extension on its contract under the Washington Interagency Telecommunications System 3 (WITS 3), program, which enables federal agencies to customers to purchase telecom services in Washington, D.C., and surrounding Maryland and Virginia counties.

Although the WITS 3 contract extension became effective in November 2015, the contract will now run through and two one-year options. The contract, if the government exercises its options, will now run through May 2020.

Regardless of these developments, Verizon has continued to report softness in public sector service revenues.

While it won't report second quarter earnings until next week, Verizon said in the first quarter that Global Enterprise revenues declined to $3.16 billion, down year-over-year from the same period a year ago.

For more:
- see the release

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