Verizon Communications Inc., through its subsidiaries, provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. Its Wireless segment offers wireless voice and data services; Internet access on various smart and basic phones, notebook computers, and tablets; and multimedia access, business-focused, location-based, global data, home phone handsets, and high-speed Internet services, as well as network access and value added services to support wireless connections for the Internet of Things (IoT). This segment also provides IoT services that support devices used in fleet management and telematics, energy, agricultural technology, and smart community markets; and wireless devices, such as smartphones and basic phones, tablets, and other Internet access devices. As of December 31, 2016, it had 114.2 million retail connections. The company's Wireline segment offers high-speed Internet, Fios Internet, and Fios video services; voice services, such as local exchange, regional and long distance calling, and voice messaging services, as well as Voice over Internet protocol services; network products and solutions comprising private Internet protocol (IP), public Internet, Ethernet, and optical networking services; IT infrastructure services that include collocation and managed hosting services; cloud services, which comprise computing, storage, backup, recovery, and application platforms; and business communications services. This segment also provides data security, voice and data, cloud and IT, business communications, IoT, and mobility services; and data, voice, local dial tone, and broadband services primarily to local, long distance, wireless, and other carriers. The company was formerly known as Bell Atlantic Corporation and changed its name to Verizon Communications Inc. in June 2000. Verizon Communications Inc. was founded in 1983 and is headquartered in New York City, New York.
Business Analysis of Verizon
The Telecommunications Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Verizon compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Verizon to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Verizon with an interactive chart.
- Revenue Growth: Verizon reported a revenue growth of -4.3% year-on-year during 2016. Telecom Services Industry grew at 8.6% in the same period
- COGS share of Revenues: As a percentage of revenue, Verizon spent 40.8% of its total revenues on COGS. Telecom Services industry average (COGS share of revenue) in the same period was 37.8%
- R&D share of Revenues: Verizon R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, Verizon spent 25.1% of its total revenues on Sales, Marketing, and General Administration (SG&A). Telecom Services industry average SG&A spending in the same period was 26.6%
- Inventory share of Revenues: As a percentage of revenue, Verizon spent 1.0% of its total revenues on Inventories. Telecom Services industry average Inventory spending in the same period was 0.9%
- Accounts Payable share of Revenues: As a percentage of revenue, Verizon invested 15.6% of its total revenues on Accounts Payable (A/P) Telecom Services industry average Accounts Payable investment in the same period was 15.9%
- Accounts Receivable share of Revenues: As a percentage of revenue, Verizon invested 13.9% of its total revenues on Accounts Receivable (A/R). Telecom Services industry average Accounts Receivable investment in the same period was 11.4%
- PP&E share of Revenues: As a percentage of revenue, Verizon invested 67.3% of its total revenues on Property, Plants, and Equipments (PP&E). Telecom Services industry average PPE investment in the same period was 79.2%
- Intangibles share of Revenues: As a percentage of revenue, Verizon invested 97.5% of its total revenues on Intangibles. Telecom Services industry average Intangibles investment in the same period was 116.1%
- Net Margins: Verizon Net Margins in the year 2016 were 10.4%. Telecom Services industry average Net Margins in the same period were 6.9%
Sector and Industry Association of Verizon
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
Verizon is associated with Telecommunications Sector and Telecom Services Industry.
Telecommunications sector is comprised of the following industries: Telecom Services; Communication Equipment. The definitions for each of the industries is as follows:
- Telecom Services industry includes providers of fixed-line and mobile telephone services.
- Communication Equipment industry includes providers of communication equipment to the telecom service providers. It also includes companies that own, operate, and lease mobile site towers to multiple wireless services providers.
Industry Ranking of Verizon
With $126 billion revenues, Verizon ranked number 2 of all the companies in the US Telecom Services industry. There were a total of 36 public companies in the US Telecom Services industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Telecom Services industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.