Verizon has unveiled its Q2 earnings and its growth numbers are dimmer than expected, with one of the root causes for the fall being the multiple-week strike that started in spring.
The results put the recently inked deal with Yahoo in a new light, as Verizon's decision to acquire Yahoo's assets for $4.8 billion could prove to be a great investment toward a brighter future.
The deal is consistent with Verizon's strategy to turn itself into something more than just another telecom and data provider. Yahoo should join Verizon's other online asset, AOL, in the quest to craft a digital ad and media platform able to go toe-to-toe with rivals such as Facebook and Google.
"By acquiring Yahoo, we will dramatically accelerate the timetable for scaling up to be a major competitor in mobile media," says Lowell McAdam, CEO of Verizon.
Verizon's numbers make it clear that the carrier needs to tap into additional resources for growth, as its main sector, wireless phone business, reached a plateau.
Only 86,000 new phone customers joined Verizon's ranks in the quarter, and that happened mainly due to company's new offers that brought tablets to boot. To put things in perspective, Sprint recently announced that no less than 173,000 customers signed up for its postpaid services during the same time frame.
Other big players in the telecom industry are also ramping up to transform into media businesses. AT&T, for example, purchased DirecTV with this purpose in mind. Meanwhile, T-Mobile offers strong cost perks for clients who choose to join their network.
It should be noted that all three carriers that reported their Q2 performances are linked by a common thread, specifically the lower number of customer turnover.
For Verizon, this is good news, as it means that it is not losing existing customers to other networks. Thanks to its subscription offers that came with attached tablets, the company ranked an industry turnover rate of 0.94 percent.
A closer look at the carrier's second quarter figures show that Verizon earned only 17 cents a share on revenue of $30.5 billion. A year-over-year comparison shows that the company was banking $1.04 a share on revenue of $32.2 billion in 2015.
During the earnings report, Verizon also noted that it lost about 13,000 new FiOS broadband subscribers because of the prolonged strike that took place earlier this year.
Verizon concluded the earnings report by saying that it will bring growth in service revenue by the end of 2017.
