Is Verizon reinventing itself by shedding its legacy business?
As recently as 2000, Verizon Communications boasted the nation's largest local phone network with more than 60 million phone lines in 40 states from New York, New Jersey, and Pennsylvania to Florida and California.
As recently as 2000, Verizon Communications boasted the nation's largest local phone network with more than 60 million phone lines in 40 states from New York, New Jersey, and Pennsylvania to Florida and California.
But over the next 16 years, Verizon sold many of those legacy phone lines, including a blockbuster $10.5 billion sale on April 1 of its lines in California, Texas, and Florida.
While Verizon's legacy business shrank, its wireless division boomed, and it became a content provider, buying AOL Inc., the owner of the Huffington Post, for $4.4 billion in 2015.
This month, Verizon advanced further into content, acquiring a $159 million stake in the Hollywood digital studio AwesomenessTV. Verizon also is running after Internet portal Yahoo Inc. to grow a mobile ad business dominated by Google and Facebook.
Now, Verizon workers - 39,000 of whom went out on strike last Wednesday - and Wall Street analysts are wondering just how far Verizon's reinvention will go. Many believe Verizon could completely exit the business that seems to have become a distraction and requires huge investments to modernize.
"There certainly have been rumors floating around that they would get out of the wire-line business altogether," said Edward Jones equity analyst David Heger.
Company spokesman Robert Varettoni said Tuesday that Verizon "never said we'd exit the wire-line business," adding that the company promised last week to invest $300 million over six years in wire-line operations in Boston.
Wire lines are either copper or fiber-optic transmission lines strung telephone pole to telephone pole. The traditional voice-only services have declined dramatically, but consumers still subscribe to pay TV and Internet over modernized lines.
Verizon chief financial officer Fran Shammo told investors last month that its remaining wire-line operations are "one of the best footprints there is to sell broadband and TV in. And that footprint is still under-penetrated as far as FiOS goes, especially around New York and [Washington], because we are still building them out. So we believe we still have good runway there."
But Verizon workers - who walked off the job over job security - worry about Verizon's commitment and the future.
A company official said the last meeting between Verizon and union officials was on Friday for less than an hour. A union official said there had been two meetings with Verizon since the strike began, with no movement.
Verizon workers say they believe the company could compete with Comcast and other cable companies if it invested more heavily in its high-capacity fiber-optic network advertised as FiOS; Verizon has said, generally, it won't.
"We're hanging on," said Margie Butler, 57, of North Philadelphia. She said her Verizon "landline" department in Philadelphia has gone from 40 employees to 16 in recent years.
Sherrie Lane, also 57, a Verizon employee picketing with Butler on Friday at Ninth and Race Streets, said that Verizon would like to eliminate a no-layoffs provision in the contract, and "without that, they will be laying us off. They will take us department by department."
Lane added that it seems as if "every day you turn around and Verizon is buying this and buying that and they can't negotiate a contract."
Verizon CEO Lowell McAdam said in a blog post that wire-line revenues accounted for just under 30 percent of Verizon's revenues in 2015 but only about 7 percent of its operating income, or profits.
The company earned $33.1 billion in operating income last year, according to its regulatory filing. Wireless revenue in 2015 was $91.7 billion, while wire-line revenue amounted to $37.7 billion.
Originally created through the merger of Bell Atlantic in Philadelphia and Nynex in New York, Verizon later added GTE Corp. The telecom company began selling wire-line operations in 2002, shedding Alabama, Missouri, and Kentucky.
In 2005, the company sold lines in Hawaii.
In 2008, Verizon divested Maine, New Hampshire, and Vermont.
In 2010, Verizon closed its biggest deal to that point, with the sale of phone operations in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia, and Wisconsin.
With the April 1 sale of Texas, Florida and California, Verizon has retained wire-line operations in New York, Connecticut, New Jersey, Pennsylvania, Delaware, Rhode Island, Massachusetts, Virginia, Washington, and Maryland.
Edward Mooney, a district vice president for the Communications Workers of America, said an issue in the contract talks is that Verizon should hire more unionized call center employees. "We believe they need to make their investment across their footprint," he said.
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