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Verizon Communications Inc VZ

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Verizon and AT&T Dominate the C-band Auction, Narrowing the Spectrum Gap Versus T-Mobile

Analyst Note

| Michael Hodel, CFA |

The suspense is finally over as the FCC released the winners of the C-Band spectrum auction. As a reminder, we cut our fair value estimates on Verizon and AT&T on Dec. 23 as auction bidding reached nosebleed levels. Fortunately, activity cooled shortly thereafter. Actual results weren’t wildly different than our guesses, but carrier spending was higher than we’d hoped. Verizon spent $45.5 billion versus the $37.5 billion we’d penciled in while AT&T shelled out $23.4 billion versus our $22.5 billion projection with the actual amounts likely to end up $4-8 billion higher after paying to relocate existing spectrum holders. We hadn’t expected T-Mobile to participate extensively, but it still ended up spending $9.3 billion, more than double our estimate.

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Company Profile

Business Description

Verizon is now primarily a wireless business (70% of revenue and nearly all operating income). It serves about 89 million postpaid and 4 million prepaid phone customers and connects another 24 million data devices, like tablets, via its nationwide network, making it the largest U.S. wireless carrier. Fixed-line telecom operations include local networks (12% of revenue) in the Northeast, which reach about 25 million homes and businesses, and nationwide enterprise services (10%). Recent investments, including fiber network construction, have supported the wireless business in addition to expanding traditional fixed-line capabilities. Verizon Media Group, the online media and advertising firm formed with the acquisitions of AOL and Yahoo, provides the remainder of revenue.

1095 Avenue of the Americas
New York, NY, 10036
T +1 212 395-1000
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type High Yield
Employees 132,200