In a First On Fast Money, Verizon president and COO Dennis Strigl reveals why an FCC ruling Wednesday could give the phone giant's TV business a big boost.
Here’s some background…
Federal regulators plan to throw out exclusive cable television service contracts with apartment buildings and open up competition to phone companies, according to an AP report.
The new rule, which could significantly lower cable prices for millions of subscribers who live in apartments, is expected to be approved Wednesday by the FCC, The New York Times reported Monday, citing an interview with the agency's chairman.
Under FCC Chairman Kevin Martin's proposal, cable companies, such as Comcast Corp. and Time Warner Cable Inc., would no longer have exclusive deals with apartment buildings and other multiunit dwellings to provide cable TV to building residents, who usually have no other choice for such services.
The new rule could benefit other video providers, including telecommunications companies Verizon Communications Inc. and AT&T Inc.
Following are excerpts from the conversation between Dennis Strigl and the Fast Money panelists.
What does the FCC ruling on Wednesday mean for Verizon?
“I think it’s a very meaningful opportunity for us,” says Strigl. “When we market to (apartments), we’ve got to negotiate with landlords for an access license, also a marketing agreement. Then and only then can we begin signing up customers.
He adds “About 25% of our access lines are in (apartments)… this is a very significant opportunity to us.”
Will you make more money if the ruling goes your way?
“Certainly,” says Strig. "We plan to negotiate with 550,000 buildings by years end (if the ruling goes our way). That’s a great potential customer base.”
Tell us about your capacity to sustain growth in wireless?
“On the wireless side we continue to be strong. For many quarters in a row our retail net growth was outstanding at 1.8 million customers, revenue growth was 15% and we had the lowest churn in the industry,” says Strig. “We feel we can maintain these metrics going forward.”
How about other areas?
“In our telecom business we had record number of data and video ads,” says Strig. “And if you look at our overall video (business) we have 1.5 million customers. And 717,000 of them are our FiOS customers.”
What makes FiOS relevant to Verizon?
“We’ve been at this only 2 years now and we’ve had some very good penetration. I think we have a lot of upside potential,” replies Strig.
Dylan Ratigan asks the traders what they think of Verizon stock.
They all like it.
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