Verizon to Purchase Fiber Network Infrastructure; Lands Government Contract
Verizon Communications, Inc. (NYSE: VZ – $48.91) continues its push to collect assets useful for the next phase of network technology, called 5G. The carrier says it will pay $225 million for a portion of Englewood, Colorado-based WideOpenWest, a fiber broadband company that serves the Chicago area. In addition to being used for cell sites, Verizon says the fiber optic wires will be useful to serve small and medium-sized business customers with internet connections. Earlier this year, the company agreed to pay $3.1 billion for Straight Path which controlled high frequency wireless airwaves suitable for 5G. Wells Fargo Advisors tells Barron’s it is “yet another indicator of Verizon’s commitment to its One Fiber initiative — to invest in high-capacity, multi-use dense metro fiber assets”. Also, on its most recent earnings call, Chief Financial Officer Matt Ellis stated “Verizon will be adding capacity through a combination of ‘buying and building fiber’ as well as leasing fiber assets that already exist”.
Separately, Verizon said it has been named enterprise infrastructure solutions provider by the U.S. General Services Administration under a 15-year contract that has a total spending ceiling of $50 billion. Under the contract, federal agencies will be able to buy information technology, telecommunications services and other enterprise solutions from Verizon.
Not without intense competition in the wireless space and headwinds from the ever-changing landscape for companies providing on-demand content to subscribers, the shares of Verizon can be held in a well-diversified conservative account and enjoy a 4.7% dividend yield, to boot.