New order for US phones
Verizon has finally managed to win its contest against rival Qwest Communications to buy out the remaining business of MCI. The buy gives Verizon a better inroad into the corporation telephone market and extends its range nationwide. It also counters, to some extent, the position of its biggest competitor, Verizon, who made a similar move by buying up the remnant of AT&T earlier this year.
Qwest, desperate to buy MCI, made higher bids than Verizon repeatedly, but its shaky status makes its stock offers suspect. As a Forbes article puts it ("Qwests's Quixotic Quest", 4/7/2005)
The smallest of the four major regional phone companies, Qwest has a $27 billion in liabilities, and only $26 billion in assets. Revenue was down 3.4% in 2003, for a net loss of $1.79 billion. Verizon, in contrast, has liabilities of $108 billion, but the company's $166 billion in assets outweigh that. Revenue was up 5.7% in 2004, for an income of $7.26 billion. And Verizon's advantage isn't only in the numbers; Qwest doesn't own a mobile telephone network, so a combined Qwest/MCI couldn't exploit one of the fastest growing and most profitable areas in telephony.
In other words, the bigger the company, the likelier it is to get bigger. Qwest, Bell South, and Sprint are falling behind the big two, and are in danger of falling further back.
To sum up, the phone industry is settling into a battle between two major companies a few smaller ones.
- First there are the current RBOCs (Baby Bells). These are Verizon, Bell South, SBC, and Qwest.
- Long distance company AT&T is now part of SBC. Long distance company MCI has been looks like it will be acquired by Verizon. Sprint is the lone remaining major dedicated long distance company
- In the cell phone area, Verizon co-owns Verizon Wireless with British cellular company Vodafone. SBC and Bell South jointly own Cingular, which bought out AT&T Wireless last year. Sprint is #3, having taken over Nextel. T-Mobile, owned by Germany's Deutsche Telekom, remains a small player. Smaller player Alltel bought Western Wireless, an even smaller player.
10:36:52 PM 
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