Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) have been competing in the same telecommunication space and are both in pursuit of revenue growth. However, the two firms are using different strategies to get there.
Both Verizon and AT&T have been experiencing slow growth in the wireless telecommunications industry and they both believe that they should divert their focus to digital advertising. This field is, however, dominated by companies such as Facebook Inc (NASDAQ:FB). AT&T recently announced the acquisition of Time Warner Inc (NYSE:TWX) for a whopping $109 billion. The company acquired DIRECTV (NASDAQ:DTV) in 2015 for $49 billion in 2015. While AT&T’s acquisitions are a pricey affair, Verizon acquired Yahoo! Inc. (NASDAQ:YHOO) and AOL, Inc. (NYSE:AOL) for less than $10 billion.
The acquisitions highlight the difference in strategy between the two telecommunications companies. Despite their differences, both firms have a common goal and that is to attract customers to content especially on mobile phones. They then aim to use the content to make advertising revenue. Marni Walden, the Executive vice president for Verizon has a different point of view about his company’s strategy and that of AT&T.
“They are going after a market that exists today. We’re going after where we think the market is headed,” stated Walden during the latest Wall Street Journal conference.
Walden pointed out that the younger generation is less interested in traditional forms of media and entertainment. Instead, they prefer watching shorter video clips on social networks. The executive also stated that his firm does not plan to acquire a social media company. Verizon is, therefore, taking a different path which revolves around content creation and asset acquisition.
Recent subscriber numbers reveal that AT&T and Verizon have been lagging behind rival telecommunications company T-Mobile US Inc (NASDAQ:TMUS), which has been racking up more subscribers. However, they believe that the acquisitions will be vital towards leveraging a more competitive position and subsequently more revenue.
Verizon stock closed the latest trading session at $47.63.
