Verizon (NYSE: VZ) sees continual momentum for expanding its enterprise services outside of the United States, but according to Fran Shammo, EVP and CFO, the telco can do it without having to purchase other service providers.
Shammo (Source: Verizon)
"We want to expand with our platforms and our cloud, and Hughes Telematics is one of those platforms, but we don't think we need to own the underlying network to be successful internationally," Shammo said at the Morgan Stanley 13th Annual Technology, Media & Telecom Conference. "You will see us expand internationally but not necessarily buying network companies to do the expansion."
One particular area of growth Verizon sees on the international front is cloud services via its Terremark data center subsidiary, particularly in Latin America.
This trend was illustrated in its Q3 2013 business sector revenue.
Verizon reported that global enterprise strategic services, including cloud and data center services, security and IT solutions, rose 5.2 percent year-over-year.
In tandem with cloud growth, the telco sees great potential with its Hughes Telematics machine to machine (M2M) platform which runs over the Terremark cloud infrastructure.
With two of Hughes Telematics' largest customers residing outside of the United States, Shammo sees new opportunities to grow its international cloud and M2M service presence.
"Our Terremark acquisition allowed us to have data centers throughout the world and that platform now sits in those data centers," he said. "We believe that we can deliver machine to machine, but we can do it outside the States by utilizing other people's networks."
In addition to selling data center space and M2M, Verizon sees potential in virtual cloud services.
Leveraging the assets it purchased from CloudSwitch, this service allows any size business to go online and select their own desired security and service levels. The service is available to select customers participating in a beta trial. Verizon plans to make it commercially available in 2014.
"We think this will be extremely competitive in the small to medium business space and also be appealing to enterprise because it comes with the security side enterprises are looking for," Shammo said.
Regardless of the growth it forecasts for cloud and M2M service, the telco continues to weather a rough storm where enterprises are delaying spending or are not spending at all.
"The good news is it's not getting worse, but the bad news is it's not getting better," Shammo said. "At least in the States, we have too much uncertainty around what the tax reform looks like."
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