Verizon's McAdam says AOL is not acquisition target, hints at higher Q4 churn

Verizon Communications (NYSE: VZ) may be talking to AOL about a potential content partnership, but it is not interested in acquiring the company. Speaking at the 2015 Citi Global Internet, Media & Telecommunications conference in Las Vegas today, Verizon Chairman and CEO Lowell McAdam said that yesterday's Bloomberg report claiming that Verizon approached AOL about a potential acquisition or joint venture is inaccurate. "I think of AOL and a lot of other media companies as potential partners," he said. "But saying we are having significant acquisition discussions is not accurate."

McAdam went on to say that Verizon is interested in distributing content but that it will not become a content company. He also said that Verizon has finished negotiating all its content deals and is happy with the content rights it has secured. He added that by the second half of 2015, Verizon will have a video product to debut and it will be "mobile first." However, he refused to provide any other specifics on what that product offering will be.

This isn't the first time McAdam has hinted about Verizon's plans to launch an Internet-based mobile video service. Last September, he said that major content owners were interested in supporting online video and working with Verizon on a future product.

Interestingly, McAdam also said that the company's fourth quarter 2014 wireless churn was higher than it has been in the past--but McAdam did not provide specifics, noting that Verizon will report its fourth quarter earnings later this month. He added that the fourth quarter results overall were strong, but he said that the higher churn indicated that customers are moving around in response to the escalating price competition in the wireless market. "I'm comfortable with the quality of our base and the movement," he added. "The churn is resulting in a higher quality customer base."

McAdam also said the current pricing scenarios among wireless providers, which offer different rate plans for bundled devices or unbundled devices, are "confusing" to consumers. But he said he expects this will stabilize soon because wireless is a capital-intensive business, and even low-cost operators like Sprint (NYSE: S) and T-Mobile US (NYSE:TMUS) will need to invest in their networks. 

However, he also added that he thinks it's good for operators to have different strategies. He said that operators should compete for different market segments similar to how the airline industry has low-cost carriers that go after different types of flyers.

For more:
- see this webcast
- see this Bloomberg article

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