AT&T and Verizon Communications are soon likely to join hands to extend their reach to new consumers for new growth. This seems to be a tough call taken by the two free government cell phones service providers. Most of the business analysts in the global telecom industry are biting their nails to see if this alliance can survive the fierce market competition from T-mobile US or not.
Both of the telecom giants focused on investing on their network and additional spectrum. This allowed AT&T and Verizon Communications to generate a huge amount of profit in operating cash flow to secure enough funds to pay a generous dividend and reduce debt to ensure free government cellphone service. Verizon Communications had invested $7.7 billion and generated the amount of $12.8 billion whereas AT&T capital expenditure of $10.6 billion ensured the recovery of $18.2 billion in operating cash.
This is certainly helping both of the free cellular phone service providers survive fierce market competition from T-Mobile. A number of other factors mentioned below are also equally responsible:
• Wise investments
• Efforts to seek regulatory approval for Acquiring XO Communications
• Digesting
Let’s see how these factors bring the both of the free cellular service providers close for extending their reach to new customers for new growth.
1. Wise investments:
AT&T has recently taken over DirectTV as a parent company whereas Verizon Communications has acquired Yahoo INC and Fleetmatics. Now both of the companies are working out a plan to roll out 5G wireless network across the nation in 2017. The alliance of these two free cellular service providers and their financial investments for acquiring companies like Yahoo INC, Fleetmatics, and DirectTV is a strategic move to increase their capital expenditures so as not to lag behind in the race for the best coverage and quality of network.
2. Efforts to seek regulatory approval for Acquiring Xo Communications:
Verizon Communications has been trying to seek regulatory approval for acquiring XO Communications at the cost of $1.8 billion for 20000 fiber optic miles in 40 major markets connecting almost 85 cities in the United States. This has certainly forced all of the rivals to do some serious thinking. The company is planning to complete the entire acquisition process of XO Communications before 30th June 2017 whereas Fleetmatics will be acquired fully by the end of 2016. As for the Yahoo acquisition, the whole process should be a cakewalk for Verizon Communications.
On the other hand, AT&T plans to complete the entire acquisition process of DirectTV at the earliest for securing cross selling opportunities.
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3. Digesting:Both AT&T and Verizon Communications have always been strong on strategic front. Their efforts to complete their entire acquisition plans well within the time reflects exactly that. It is very easy for both of the free cellular service providers to complete the accusation process without any financial hiccups. Most importantly, future earnings of these two free government cellphone service provider will not get affected at any cost to stay on top of the market through constant innovations.
Now it is just a matter of time when AT&T and Verizon Communications get back at the top of the telecom market to consolidate their position.
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