Verizon (NYSE: VZ) may have a strong set of wireline and wireless assets, but the telco does not see itself following its European service provider counterparts in offering a quad-play service bundle for its consumers.
Speaking to investors during the Bank Of America Merrill Lynch 2015 Media, Communications & Entertainment Conference, John Stratton, EVP and president of operations for Verizon, said that the U.S. market has different dynamics that aren't amenable to making a quad-play work.
"From our perspective, having owned wireless and wireline assets on a common footprint, we spent a good amount of energy trying to find that magical combination of triple play plus wireless to create an exceptional value for customers," Stratton said. "In our experience, beyond a bottom of bill discount, we did not see a compelling case or the buyer moving in one direction to consolidate those services because they serve very different needs."
Instead, Verizon has typically seen consumers purchase wireline fixed broadband and voice services for a home or apartment, while the wireless business is related to an individual person.
"The incentives we saw running across were very elusive so it's not at all clear to us that those combinations made sense," Stratton said. "In terms of the need to have a broad footprint of quad-play assets, we don't see that as essential.
While Verizon has been placing more emphasis on its wireless business, Stratton maintains that the wireline broadband business is still important.
At the same time, Verizon's pending deal to sell off its wireline assets in California, Florida and Texas to Frontier shows that it wants to shed assets in regions it does not believe are an important fit.
"I wouldn't suggest that the wireline broadband product is less essential to us than it has been in years past in a material way, but what I would say is that we've looked at peripheral assets that were not in the business to leverage them to their optimal levels, and a great example of that is the Frontier transaction that's underway," Stratton said.
Stratton added that while the properties in California, Florida and Texas were sound, the "issue was geographic adjacency so when we look at those markets they were islands and it made sense for us to consider an alternative approach."
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