Verizon's McAdam: We have no near-term plans to sell the wireline business

Verizon's (NYSE: VZ) chief says that despite emerging rumors about the company's future, the telco has no intention of divesting any more of its wireline assets.

Speaking to investors during the Goldman Sachs 24th annual Communicopia Conference, Lowell McAdam, CEO of Verizon said he does not anticipate a sale anytime soon.  

"When people ask me, and I know there's some speculation that we might be interested in selling the wireline properties, I don't see it in the near-term," McAdam said.

Rumors that Verizon would sell off more wireline assets to Frontier have recently emerged as Verizon turned down funding from the second phase of the FCC's Connect America Fund (CAF-II). Frontier is currently moving forward with its $10.5 billion acquisition of Verizon's properties in California, Florida, and Texas.

Earlier this year, a financial analyst theorized that Altice, which just announced a deal to acquire Cablevision (NYSE: CVC), may be interested in purchasing Verizon's wireline assets as it furthers its own foothold in the U.S. video and wireline services market.

McAdam said that Verizon will focus on enhancing its existing Boston to Washington, D.C. wireline footprint after completing the sale of its wireline assets in three states to Frontier.

"I think there's lots of room within that Washington to Boston corridor to further penetrate where we already cover and if you can get the right relationships between what the local governments are looking for, what we're looking for and cooperation from our unions, I would not rule out some further expansion of FiOS, but you have to figure out the right formula," McAdam said. "It's a good asset with good returns and fits with the overall portfolio."

A big piece of Verizon's wireline focus going forward will be on enhancing FiOS broadband speeds, particularly as more customers cut the linear video cord and get their programming from over the top sources like Netflix (NASDAQ: NFLX) and Hulu.

By increasing broadband speeds to enable access to over the top services, Verizon hopes to address the so-called millennial generation. According to company estimates, 40 percent of millennials don't have a TV in their home, while another 20 percent have a TV but are thinking of cutting it. Instead, this group is either watching video on a mobile handset or digital media inside their home on a tablet or an OTT service.

What all this means it that from a wireline perspective customers are purchasing higher speed FiOS broadband services. Currently, Verizon offers symmetrical FiOS speeds from 25 Mbps up to 500 Mbps.

"We sell a lot of FiOS every year, but we're embracing the broadband service because that's where the market seems to be going," McAdam said. "We're offering higher speeds and we're selling a lot of 50 Mbps and we can easily do up to a Gig if we need to. We're also selling a lot of 150 Mbps packages to our customers today."

McAdam added that "we'll continue to support the linear TV for those customers that want it, but it's very clear that the market is moving towards broadband, skinnier bundles, and over the top."

Evidence of this trend was seen in its second quarter earnings results. During that period, Verizon reported that while it did add 26,000 FiOS TV customers that figure was down from the 100,000 it added during the previous year's quarter.

For more:
- listen to the webcast (reg. req.)

Editor's Corner: Does Verizon's CAF-II refusal mean another wireline asset sale is coming?

Related articles:
Verizon passes on $144M in CAF II funding as wireline asset sale rumors swirl
No strike yet: Verizon, CWA, IBEW unions to continue negotiations as contract expires
AT&T takes $427M in CAF II funding, sets plan to bring wireline, wireless broadband to 18 states
Frontier acquires Verizon wireline assets in 3 states for $10.5B

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