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Verizon highlights dark fiber deals as AI growth catalyst
Alphabet is expected to rent Verizon dark fiber worth more than $1 billion in revenue, supporting margin gains and Verizon’s capital return plans.
MarketBeat Ratings frames Verizon’s network as an AI infrastructure play, pointing to Verizon dark fiber as the unused long distance capacity that hyperscalers need for data movement. While Verizon is not a semiconductor maker or model builder, the outlet says AI data still depends on fiber links from data centers to devices.
The article cites a deal announced by Verizon CEO Dan Schulman in which Alphabet is set to rent Verizon dark fiber, described as worth more than $1 billion in revenue. MarketBeat Ratings says the arrangement is expected to be an initial example of similar arrangements as hyperscalers seek to lock in long haul fiber capacity.
MarketBeat Ratings adds that the dark fiber rental model uses capacity that already exists from earlier buildouts, which the outlet says can translate into high margin economics with low start up costs. It also describes the flow of costs and benefits, with Alphabet covering the hardware and Verizon collecting rent fees.
On capital returns, the piece says Verizon is already positioned to strengthen its balance sheet and continue paying dividends, with distributions annualizing to roughly 6%. It further notes Verizon accelerated buybacks in Q2, contributing to an approximate 1.35% trailing 12 month reduction in share count, and raised the annual buyback target to $4.5 billion.