Wednesday, June 22, 2016

AT&T and Verizon Have Diverging Business Strategies

With rather sudden speed, AT&T and Verizon--which like all former incumbent telcos once had similar business strategies and profiles--have become distinctly different. Put simply, Verizon emphasizes mobile revenue, while AT&T actually emphasizes business customer revenue, with a major contribution from video entertainment.

Of the $32.2 billion Verizon earned in the first quarter of 2016, $22 billion was earned from mobile services, or 68 percent of total. Verizon does not break out the portion that is consumer or business revenue.

In its first quarter of 2016, AT&T earned $40.5 billion. Mobile services contributed $18 billion, or 44 percent of total revenue, including both business and consumer accounts. So mobility is a significantly smaller percentage of AT&T total revenue.

The two firms also emphasize revenue in different ways. AT&T, in 2015, says it earned just 24 percent of total revenue from consumer mobility, and consolidates fixed network and mobile services for business customers.

In 2015, AT&T business solutions represented 49 percent of 2015 sales. In other words, in AT&T’s view, business services are more important than consumer mobile.

At the same time, in 2015, AT&T’s entertainment group drove 24 percent of revenue, as important as consumer mobility. In other words, AT&T says it earns 73 percent of revenue from business and entertainment services.

In other words, Verizon in the first quarter earned 32 percent of total revenue from fixed network operations, both consumer and business.

But Verizon says it earned just just $4 billion from consumer fixed network operations, or about 12 percent of total revenue.

If total fixed network revenue was $9.3 billion in the first quarter of 2016, then business revenue (including wholesale) from fixed network operations was about $5.3 billion, or about 16 percent of total revenue.

So the story is Verizon mobile, AT&T business and entertainment video. That’s a pretty big distinction.

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