There has been a flurry of mergers within the telephone industry over the past three months, with the former Bell Atlantic at the center of it all. Now that the mergers have been finalized, two new monster-sized companies have been created: Verizon Communications and Verizon Wireless.

By Paul Larson (TMF Parlay)
July 13, 2000

Perhaps you've heard of Verizon Communications (NYSE: VZ) and Verizon Wireless, perhaps not. But if you're interested in the traditional telecommunications or the new wireless industry (see our recent report on the wireless Web), then these are two companies worth getting acquainted with.

First, some history. Verizon Wireless was originally conceived when Bell Atlantic and British firm Vodafone Airtouch (NYSE: VOD), the world's largest wireless carrier, decided in late 1999 to combine their domestic wireless assets. The PrimeCo wireless business was also thrown into the mix since each was a partner in PrimeCo. The deal was finalized in early April, and Verizon Wireless was born.

Verizon Communications was actually conceived a bit earlier than its sibling-child Verizon Wireless but was born just two weeks ago. Bell Atlantic and GTE agreed to merge way back in July 1998, but thanks to all the regulatory hurdles each was required to jump, the merger took two years to complete. The combined company changed its name to Verizon Communications upon finalization of the merger.

So What?
These deals are important because by teaming up and forming the two Verizons, Bell Atlantic, GTE and Vodafone have created two monster-sized companies. Verizon Communications is one of the largest telecommunications firms in existence and the largest local telephone company in the nation, with 95 million access lines and 260,000 employees under its umbrella. The company should have revenue near $70 billion for the year. Verizon Wireless is now the largest wireless carrier in the U.S., with approximately 25 million subscribers. (For comparison purposes, AT&T Wireless (NYSE: AWE), the second largest wireless carrier, has around 13 million subscribers.)

Verizon Communications is publicly traded and is owned by the former Bell Atlantic and GTE shareholders. It has 2.7 billion shares outstanding (giving it a market capitalization over $140 billion at this writing) and 2.7 million individual shareholders, making it one of the most-widely held stocks in the nation. Verizon Wireless remains private but plans to offer shares to the public in an IPO later this year. For now, its parent companies Verizon Communications and Vodafone remain partners in the wireless venture.

Now What?
Both companies will obviously be major forces within their industries. Verizon Communications is one of the few companies that is now allowed to offer both local and long distance telephone service to its customers. In addition, it is a major on-ramp to the Internet. Beyond offering plain old telephone services (POTs) for dial-up connections, Verizon Communications is also one of the largest providers of high-speed DSL Internet services.

By combining and creating Verizon Wireless, the partner companies have each gone from being a strong regional wireless player to one that owns a portion of a nationwide footprint. Businesses that can market their services nationwide while allowing customers to use their phones wherever they may be without roaming charges have a strong competitive advantage over local wireless companies. This is certainly a case where the whole is worth more than the sum of the individual parts.

Verizon Communications and Verizon Wireless are worth keeping tabs on, as each is a huge player in its sector. The word "Verizon" may have been foreign to you three months ago, but it won't be long before the brand is a household name.

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