Verizon's (NYSE: VZ) Fran Shammo said he is not concerned about cable operators like Comcast (NASDAQ: CMCSA) and Charter Communications (NASDAQ: CHTR) launching wireless services through MVNO agreements with Verizon. In fact, Shammo said that Verizon would ink an MVNO agreement with Europe's Altice, which has acquired Suddenlink in the United States and is close to closing its agreement to purchase Cablevision.
When questioned whether Verizon would sign an MVNO agreement with Altice, Shammo said that "we would have to do that, because that's part of some of our DoJ and equal [sic] and net neutrality-type things. So yeah, we're perfectly fine with that."
"From Verizon Wireless' perspective, I'm perfectly fine with the MVNO," he said during an appearance today at the Bank Of America Merrill Lynch 2016 Telecom & Media Conference.
Interestingly, Shammo also said that Verizon has no regrets in its recent dealings with the nation's cable operators. Comcast, Time Warner Cable (NYSE: TWC) and Bright House Networks and Cox Communications -- through their SpectrumCo joint venture -- included an option to launch MVNO services through Verizon as part of their $3.9 billion sale of AWS-1 spectrum to Verizon in a deal that closed in 2012. Late last year, Comcast confirmed it had activated that MVNO agreement and company executives have said they will test some kind of wireless service this year. Moreover, Charter's CEO Tom Rutledge last month said his company can now potentially offer a nationwide wireless service because its Time Warner Cable acquisition gives it access to the same Verizon MVNO agreement as Comcast. Charter recently closed its acquisition of both TWC and Bright House.
"We would certainly do that again today," Shammo said of Verizon's deal with SpectrumCo. "We went into the MVNO with open eyes."
Shammo added that Verizon still has an advantage against cable companies because of its Go90 mobile video offering and its move toward 5G technology. "That I think also puts some cable companies on their back heels as potential competition for them," he said, adding: "We're not standing still, we're moving forward."
And Shammo also noted that the public Wi-Fi networks that Comcast and other cable operators are building won't necessarily give them an advantage over Verizon. "It's an unmanaged network," Shammo said of Wi-Fi, explaining that the situation can sometimes lead to a poor user experience when compared with a managed network like Verizon's cellular network.
Separately, Shammo also confirmed that Verizon will move forward with a change to the way it finances its equipment installment plans (EIPs) for its customers' smartphones and mobile devices. "We will be changing the way we finance these receivables," he said.
"We have been looking at for over a year now alternatives to, really looking at ways to finance the handsets. Because I don't want to be in the financing business," Shammo said, explaining that for the past few years Verizon has been handling EIPs by "securitizing through our membership banks on an off-balance sheet type basis."
"One of the things that we've been looking at is, what if we converted to the asset-backed security market? Which is a public market," he said, noting that such a move "actually gives us a benefit in our ratings from a debt perspective because now this won't be added to my unsecured debt, it will be treated as a separate pool of financing -- short-term, asset-backed security debt -- similar to the auto industry."
"Going into the third quarter you'll see us go out to the public market to start financing the old securitization on the on-balance sheet method," he said, noting there is financial demand for such an action. "You will see that for about the next year."
"The auto industry has been in this market for years," Shammo explained. "Yes, for our industry, this is new for the industry, but this market has been out there for years."
- see this webcast
Cox: We're 'keeping our options open' for a return to MVNO market
Charter CEO: Now that we own TWC, we can use Verizon MVNO deal to offer nationwide wireless
Verizon's Shammo: EIP take rate 'not getting there,' stuck at around 68%, below expectations
Analyst: Comcast triggers MVNO deal, will launch Wi-Fi-first service in 2016