Is Verizon Mulling Over Borrowing Consumer Data From Rivals?

According to a recent report by Business Insider, U.S. telecom behemoth Verizon Communications Inc. (NYSE:VZ) , is considering licensing consumer data from other leading telecom operators. Advertisement on the mobile video platform is gradually shifting from simple selling of banner ads on the mobile web to automated or programmatic ad selling. Verizon plans to create an innovative digital advertisement platform that can challenge tech giants Alphabet (NASDAQ:GOOGL), Facebook (NASDAQ:FB) and Twitter.

Data-Driven Advertising Market

Verizon wants to have access to a significant chunk of wireless consumer data that can be used for ad targeting. To this end, the company is exploring the possibility of forming a data partnership with its peers, such as, T-Mobile US Inc. (NYSE:S) , Sprint Corp. (NYSE:S) , Telefonica SA (NYSE:TEF) and Vodafone Group plc. (NASDAQ:VOD) . T-Mobile US, Sprint and Telefonica carry a Zacks Rank #3 (Hold) while Vodafone holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

In Jun 2015, Verizon took over AOL for $4.4 billion. The acquisition has provided Verizon an access to its state-of-the-art advertising technology which enables automated buying and selling of ads online. At present, AOL is developing an innovative automated technology that will enable advertisers to find video publishers who will help them reach the targeted audience.

In Oct 2015, Verizon acquired acquire mobile advertising company, Millennial Media for $238 million. The company sells mobile ads across numerous websites and applications. Its advertising platform is designed to monetize applications for publishers and developers by using data-driven ad targeting. Millennial Media has been merged with the AOL platform.

On Jun 2017, U.S. telecom behemoth, Verizon completed its long-awaited deal to acquire the core businesses of the Internet-company, Yahoo! Inc (NASDAQ:AABA)., for $4.48 billion. The deal will create a major player in the mobile media and advertising space. Verizon will take control of Yahoo's core assets including its search products, digital content brands, advertising and analytics assets. The core businesses of Yahoo perfectly complement Verizon’s focus areas of digital platform.

Verizon to Launch Oath

Verizon plans to unite its AOL division with Yahoo’s core Internet assets under one umbrella – Oath. This new division will be part of the company’s Media and Telematics organization. The division will also be overseeing a diverse house of more than 50 media and technology brands under Yahoo and AOL along with, engaging more than a billion people globally.

Verizon pre-estimates to have 1.3 billion users and $7–$10 billion of revenue growth by 2020, from the combined AOL and Yahoo. The company's CEO, Tim Armstrong, has chalked out plans to increase Oath's combined user base from 1.3 billion to 2 billion and achieve revenue growth in the range of $10–$20 billion by 2020. He aims to opt for some buyouts to achieve the required targets.

Price Performance of Verizon

Year-to-date, the stock price of Verizon has witnessed a decline of 16.00% compared with the Zacks categorized U.S National Wireless industry’s decline of 10.05% in the same time period. We believe that this is the primary reason for the stock having a Zacks Rank #4 (Sell).

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