Verizon to Spend More Than $5 Billion on FiOS Fiber Product
Verizon expects to spend more than $5 billion total on its FiOS fiber project, company officials said, in the first update in some time on costs for video and broadband services. The Bell may spend several times that figure, predicted some analysts. Verizon’s FiOS service passes more than a million homes and businesses (CD Sept 26 p8). The company has said it expects service to be available to 3 million by year-end. Not all homes will be able to get video.
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Verizon’s costs may far outstrip SBC, said analysts. SBC has said it plans to spend $5 billion on its own TV service, called Project Lightspeed. “We expect [FiOS] to be significantly more expensive given the costs of trenching and burying fiber,” said Jessica Zufolo of Medley Global Advisors: “I think it will be pretty expensive.” One Wall Street analyst said such spending is a “major concern” for investors. “Should this strategy trouble investors?” asked analyst Viktor Shvets of Deutsche Bank: “Yes it should, particularly given the degree of commitment involved.” Bells could spend $40 billion over the next 6-7 years on fiber to the premises, he said. “Investors are cautiously watching the FiOS buildout and whether that will ultimately turn a profit for video,” said Zufolo.
The Verizon officials were responding to our question about whether the Bell anticipates spending more than SBC. Their remarks come after a Verizon executive said at a Washington conference last week that Verizon could spend $20 billion on fiber. Later, the executive told us he wasn’t speaking on behalf of the firm, and was instead referring to analyst predictions, which vary. That executive and another said no “official” cost projections are available.