Last May, I alerted you that a solid source told me Verizon was looking to spin off Terremark. Today, we learned this is indeed the case thanks to Reuters (I love to scoop the financial media. Especially when they label their story “Exclusive” ). Peter Radizeski explains why Verizon is doing this – he opines that the telcos are generally hurting.
One point Peter may not have considered is the US government’s insatiable demand to open the US up to people who are likely to need financial assistance means the number of people getting free wireless service thanks to the US government will only continue to grow. Basic research shows more than 20 million people get free phones today at a cost of at least $2.2 billion per year. The beneficiaries of this program include AT&T, Verizon and others. By the way, the FCC Lifeline program is sometimes referred to as Obamaphone.
Bottom line… The wireless carriers have unlimited growth opportunities ahead of them if the US population continues to expand… Especially if someone else is often footing the bill.