Verizon Communications Inc. Gets Even Stronger

Cincinnati Bell throws in the towel with its wireless business, selling off assets to Verizon. Are the odds stacked against the smaller players?

Apr 8, 2014 at 9:00PM

Regional carrier Cincinnati Bell (NYSE:CBB) is effectively calling it quits on the difficult wireless carrier game. After struggling for the past five or six years, the 9th-largest wireless carrier is now selling its wireless assets to the top dog Verizon (NYSE:VZ), including valuable spectrum. More spectrum is never a bad thing for wireless carriers. Cincinnati Bell will encourage customers to transition to Verizon Wireless, but even if all 340,000 of them moved over to Big Red it wouldn't be a game-changer for Verizon relative to its current customer base of approximately 100 million.

The wireless industry structurally favors larger players for numerous reasons. Not only does the FCC auction spectrum licenses off to the highest bidder, but building network infrastructure is also incredibly capital intensive. These are some of the reasons why the industry is currently consolidating.

In this video from Tuesday's Tech Teardown, host Erin Kennedy and Motley Fool tech and telecom bureau chief Evan Niu take a look at the deal. They break down the one key asset in this acquisition that matters to Verizon, discuss where Cincinnati Bell will be focusing its efforts from here, and talk about how hard it is for smaller players in this space to compete, when the big just keep getting bigger.

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Erin Kennedy has no position in any stocks mentioned. Evan Niu, CFA owns shares of Verizon Communications. The Motley Fool owns shares of Cincinnati Bell. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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