Craig Moffett shoots down deal rumors. There's lots of speculation about Verizon buying Charter or Comcast, giving them a local network to support their 5G build. Buying Comcast would cost $240B+, including $58B in debt. Charter would go for a modest $164B+, including $59B debt. They can build their own fiber networks for $5-10B, which looks smarter.

Moffett adds to the doubts by pointing out any deal would hurt Verzon's leverage ratio or dividend coverage. Both are already challenging. They could probably find the money somehow, I believe, but their balance sheet would wind up very ugly.

CFO Ellis in the latest quarterly report writes

  • That it is on track for a return by the 2018-2019 timeframe to the company’s credit-rating profile prior to the acquisition of Vodafone’s indirect 45 percent interest in Verizon Wireless in early 2014.

That would be all but impossible with a large acquisition.

Every part of the company is struggling and much cash flow is going to dividends. They've already cut capex ~20% in recent years, as a percentage of sales. It's hard to see where VZ would find the net income to pay down debt, even if they continue to squeeze down pension contributions.

Craig wrote it well and allowed me to reprint.  

VERIZON: A SOBRIETY TEST - APRIL 24, 2017

A few years ago, as Charter Communications was just beginning its long pursuit of Time Warner Cable, their parent company Liberty Media playfully played a clip from the Rolling Stones at their annual investor day.  The crowd laughed as a young Mick Jagger crooned that “Time, time, time is on my side.”

Now, Verizon is the pursuer, and to hear the company talk, it sounds for all the world that they have their eye on none other than Charter, or perhaps even on Comcast. 

Cue the Rolling Stones one more time.  “You can’t always get what you want.” 

When Verizon’s interest in Charter was first reported in late January, we illustrated the financing hurdles that would make buying Charter so difficult.  Verizon was then caught in a vise of high leverage and an even higher dividend payout ratio.  The more cash rich the offer, the more damage it would do to Verizon’s leverage ratio.  The more equity rich, the more damage it would do to Verizon’s dividend coverage.  There was no mathematical solution at the time for a mix of cash and stock that would keep Verizon’s leverage below 4x EBITDA and its dividend payout ratio below 80% Well, things have only gotten worse since then.  ... an adjusted leverage of about 3.4x – nearly a turn higher than their as-reported leverage.

dave ask

Newsfeed

The 3.3-4.2 spectrum should be shared, not exclusively used by one company, concludes an important U.S. Defense Innovation Board report. If more wireless broadband is important, sharing is of course right because shared networks can yield far more

It does work! Verizon's mmWave tests over a gigabit in the real world. 
The $669 OnePlus 7 Pro outclasses the best Apples and probably the new Galaxy 10 or Huawei P30 Pro. Optical zoom, three cameras, liquid cooling, Qualcomm 855 and more.
Korea at 400,000 5G May 15. Chinese "pre-commercial" signing customers, 60,000-120,000 base stations in 2019, million+ remarkable soon. 
5G phones Huawei Mate 20, Samsung Galaxy 10, ZTE Nubia, LG V50, and OPPO are all on sale at China Unicom. All cost US$1,000 to 1,500 before subsidy. Xiaomi promises US$600.
Natural monopoly? Vodafone & Telecom Italia to share 5G, invite all other companies to join.
Huawei predicts 5G phones for US$200 in 2021, $300 even earlier
NY Times says "5G is dangerous" is a Russian plot. Really.
Althiostar raised US$114 million for a virtual RAN system in the cloud. Rakuten, Japan's new #4, is using it and invested.
Ireland is proposing a US$3 billion subsidy for rural fibre that will be much too expensive. Politics.
Telefonica Brazil has 9M FTTH homes passed and will add 6M more within two years. Adjusted for population, that's more than the U.S. The CEO publicly urged other carriers to raise prices together.
CableLabs and Cisco have developed Low Latency XHaul (LLX) with 5-15 ms latency for 5G backhaul,  U.S. cable is soon to come in very strong in wireless. Details 
Korea Telecom won 100,000 5G customers in the first month. SK & LG added 150,000 more. KT has 37,500 cells. planning 90% of the country by yearend. 
The Chinese giants expect 60,000 to 90,000 5G cells by the end of 2019.
China Telecom's Yang Xin warns, "Real large-scale deployment of operators' edge computing may be after 2021." Customers are hard to find.
Reliance Jio registered 97.5% 4G availability across India in Open Signal testing. Best in world.

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Welcome On Oct 1, 2019 Verizon turned on the first $20B 5G mmWave network with extraordinary hopes. The actual early results have been dismal. Good engineers tell me that will change. Meanwhile, the hype is unreal. Time for reporting closer to the truth.

The estimates you hear about 5G costs are wildly exaggerated. Verizon is building the most advanced wireless network while reducing capex. Deutsche Telekom and Orange/France Telecom also confirm they won't raise capex.

Massive MIMO in either 4G or "5G" can increase capacity 3X to 7X, including putting 2.3 GHz to 4.2 GHz to use. Carrier Aggregation, 256 QAM, and other tools double and triple that. Verizon sees cost/bit dropping 40% per year.

Cisco & others see traffic growth slowing to 30%/year or less.  I infer overcapacity almost everywhere.  

Believe it or not, 80% of 5G (mid-band) for several years will be slower than good 4G, which is more developed.