Verizon Communications CFO Fran Shammo has said the company would look at Yahoo’s core internet business under the right circumstances. He also left the door open for further divestments following the US$10.54bn sale of wireline assets to Frontier and stressed that capital will be primarily allocated to the wireless side of the business going forward.
Verizon Communications (NYSE:VZ) CFO Fran Shammo has said the company would look at Yahoo’s (NASDAQ:YHOO) core internet business under the right circumstances.
Speaking at a UBS conference in New York, Shammo (pictured) prefaced his comments on Yahoo, the board of which has been assessing its options, including the possibility of selling the core internet business, by saying he thinks it’s “way too premature” to talk about a potential purchase.
“I mean their board and investors have not decided what they’re going to do with that asset,” he said. “But it is like everything, it is just like with AOL, we will look at everything across the spectrum and if we see there is a strategic fit and it makes sense for our shareholders and we can return value, we will look at it.”
Last month, Yahoo investor Starboard Value called upon the company to abandon plans to spin off its stake in Alibaba Group Holding and instead sell its struggling core internet search and display ad business. The Yahoo board held a series of meetings last week to discuss the matter.
Verizon has made big bets on content this year, paying US$4.4bn for AOL over the summer and launching its ad-funded mobile video streaming service Go90 in October. It also bought mobile ad and app monetisation provider Millennial Media for US$238m to further bolster its capabilities in wireless advertising.
With AOL, the cellco aims to boost its LTE wireless and video strategy by building content such as The Huffington Post, AOL.com and original OTT videos into its subscription business and advertising platforms.
Go90, which distributes its own and third-party content and ads, is for its part aimed at the millennial market.
At the conference, Shammo said the company’s focus will increasingly be on the wireless side.
“We are taking all the excess capital and investing it in what Marni Walden [president of product innovation and new business] is running around Go90 and Hum and these platforms that are going to really escalate our revenue stream. AOL is another one, so we are giving them more capital to do what we need to do and that is where the growth is going to come from.”
Further divestments possible
Shammo also did not rule out selling further assets in the wake of its US$10.54bn sale of wireline assets in three states to Frontier Communications – a deal which cleared its final regulatory hurdle last week and is expected to close in March 2016.
He said that while he’s happy with the current asset portfolio, “we look at everything every day and if something makes sense where we can return value to our shareholders and it is not a strategic fit and it doesn’t play out over the long term for us, then obviously we would look at that”.
He cited the company’s disposal of towers as a prime example of a situation in which it had no interest in selling until the right opportunity came along.
“[W]e got into a great financial position with that where we could monetise it, return some value to our shareholders and we sold our towers,” he said.
Shammo also sought to allay concerns that Verizon is running out of capacity on its wireless network, saying it uses only 40% of its airwaves for LTE, which handle 87% of data traffic. He noted that the company is starting to reallocate PCS spectrum to LTE and will follow suit with 850 MHz airwaves.
He confirmed that the company will take part in the FCC spectrum auction set to begin in late March but stressed that it has “plenty” of spectrum, saying “this philosophy that Verizon is spectrum short is just false”.
