Stock Analysis & Valuation Verizon Communications Inc. (BAC.DE)

• Previous Close: €36.86
• Sector Valuation Confidence Level: High

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	35.00	-5
Intrinsic value (DCF)	21.15	-43
Graham-Dodd Method		n/a
Graham Formula	31.30	-15

Strategic Investment Analysis

Company Overview

Verizon Communications Inc. (NYSE: VZ, XETRA: BAC.DE) is a global leader in telecommunications, delivering cutting-edge communications, technology, and entertainment services to consumers, businesses, and government entities. Headquartered in New York, Verizon operates through two primary segments: Consumer and Business. The Consumer segment offers wireless and wireline services, including postpaid and prepaid plans, broadband internet, Fios video, and smart devices. The Business segment provides enterprise solutions such as private networking, cloud connectivity, IoT services, and cybersecurity. With approximately 115 million wireless retail connections and a robust fiber-optic network, Verizon is a dominant force in the U.S. telecom market. The company’s strong infrastructure, including its 5G rollout, positions it as a key player in the evolving digital economy. Verizon’s commitment to innovation and customer service makes it a critical enabler of connectivity in an increasingly interconnected world.

Investment Summary

Verizon Communications Inc. presents a stable investment opportunity with its strong market position, reliable cash flows, and consistent dividend payouts (current yield ~6.5%). The company benefits from its extensive 5G network deployment, which enhances revenue growth potential in wireless and broadband services. However, high capital expenditures ($17.99B in FY 2023) and substantial debt ($168.36B) pose risks, particularly in a rising interest rate environment. While Verizon’s beta (0.383) indicates lower volatility compared to the broader market, competitive pressures from T-Mobile and AT&T could limit margin expansion. Investors seeking defensive exposure to telecom with income generation may find Verizon attractive, but growth-oriented investors might prefer more agile competitors.

Competitive Analysis

Verizon’s competitive advantage lies in its premium network quality, extensive 5G infrastructure, and strong brand reputation. The company leads in wireless reliability and coverage, particularly in urban markets, which supports its premium pricing strategy. However, T-Mobile’s aggressive mid-band 5G rollout and AT&T’s bundling strategies (e.g., HBO Max integration) have intensified competition. Verizon’s Business segment differentiates through enterprise-grade security and IoT solutions, but it faces pressure from cloud providers like Amazon Web Services and Microsoft Azure in managed services. The company’s high debt load limits financial flexibility compared to leaner rivals like T-Mobile, which could hinder future spectrum acquisitions. Verizon’s focus on network superiority and customer retention (low churn rates) remains its core strength, but it must balance investment returns with shareholder returns to maintain competitiveness.

Major Competitors

• AT&T Inc. (T): AT&T is Verizon’s closest rival, with a similar scale in wireless and broadband. Its strengths include bundling strategies (e.g., HBO Max) and a growing fiber-optic footprint. However, AT&T’s weaker network performance and past missteps (e.g., DirecTV acquisition) have eroded its competitive edge. Its dividend yield (~7%) is higher than Verizon’s, but its debt levels are even more concerning.
• T-Mobile US Inc. (TMUS): T-Mobile has disrupted the U.S. telecom market with aggressive pricing and rapid 5G deployment (especially mid-band spectrum). Its merger with Sprint expanded its customer base and network capacity. However, T-Mobile’s network reliability still lags Verizon’s in rural areas, and its postpaid phone churn is slightly higher. Its lack of a dividend may deter income-focused investors.
• Charter Communications Inc. (CHTR): Charter competes with Verizon in broadband via its Spectrum brand. Its strengths include a cable-centric model with lower capital intensity than telecom peers. However, Charter lacks a meaningful wireless presence, relying on MVNO agreements. Its high-speed internet growth is strong, but it faces pressure from fiber expansion by Verizon and AT&T.
• Comcast Corporation (CMCSA): Comcast overlaps with Verizon in broadband and streaming (Peacock vs. Fios). Its diversified media assets (NBCUniversal) provide cross-selling opportunities, but its wireless service (Xfinity Mobile) is an MVNO reliant on Verizon’s network. Comcast’s cable dominance is challenged by fiber and 5G fixed wireless alternatives.