Verizon And AT&T Moving In Very Different Directions: Wells Fargo

MarketWatch Pulse

Verizon Communications Inc.'s purchase of AOL Inc. is further evidence of the widening gap in strategy between Verizon and fellow telecommunications giant AT&T Inc. , said analyst Jennifer Fritzsche at Wells Fargo. She said she believes the primary attraction of AOL was the technology it had developed to sell ads and deliver online and mobile video. "While [AT&T] believes there is a greater need to own more physical infrastructure (through [DirecTV]), Verizon is building up more assets to strengthen its 'mobile first' [over-the-top] initiative -- with advertising playing a key role," Fritzsche wrote in a note to clients on Tuesday. AT&T is buying DirecTV in a $49 billion deal expected to close in the current quarter. Fritzsche said she believes the acquisition of AOL will allow Verizon to gather valuable information for advertisers and content providers. "This," she said, "should provide Verizon a stronger bargaining position in the connected TV, mobile media and advertising sectors." Shares of AOL surged 18% in premarket trade, while Verizon slipped 0.2% and AT&T lost 0.4%.

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