Leveraging the Mobile Video Opportunity: Verizon and AT&T

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(Continued from Prior Part)

Tapping into the mobile video opportunity

A report by the Wall Street Journal highlighted the different approaches of AT&T (T) and Verizon Communications (VZ) for tapping into mobile video opportunities. Referring to Verizon and AT&T, the report mentioned that “both companies have been focusing on video as the next frontier for mobile services,” which “has meant creating inventory for video advertising through the launch of the youth-focused go90 and monetizing it with the help of AOL, which it bought last June.”

The same report highlighted that “AT&T…is focused on bringing the full TV experience to mobile devices. The company, which bought DirecTV last year, has been trying to sell its wireless subscribers on the service.”

Mobile cross-selling opportunity for AT&T

The DirecTV (DTV) acquisition brought significant cross-selling opportunities for AT&T. As of August 12, 2015, the company expected a significant cross-selling opportunity from the combined entity—to an estimated 39 million households.

As the graph above shows, according to the company, this cross-sell potential for wireless services to DirecTV households was ~15 million. The cross-sell opportunity for video services to AT&T’s wireless customers was in ~21 million households.

For a diversified exposure to select telecom companies in the US, you may consider investing in the SPDR S&P 500 ETF (SPY). The ETF held a total of ~2.8% in AT&T (T), Verizon (VZ), CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of March 2016.

Now let’s look at Verizon’s Frontier transaction.

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Browse this series on Market Realist:

• Part 1 - Inside Verizon’s Transaction for a Stake in AwesomenessTV

• Part 3 - Behind Verizon’s Wireline Asset Sale Transaction with Frontier

• Part 4 - Understanding Frontier’s Scale of Operations after the Verizon Transaction