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Verizon will sell its media group for $5 billion, a move that portends more investment in its 5G mobile network.
The company announced Monday the sale of the media group to Apollo Global Management. Verizon Media includes AOL, Yahoo, Engadget and TechCrunch, and a digital advertising platform. After the deal closes, the company will be called Yahoo.
Verizon said the move would let the company double down on its mobile phone networks while allowing Verizon Media to pursue growth under new ownership.
"The next iteration [of Verizon Media] requires full investment and the right resources," Verizon CEO Hans Vestberg said in a statement.
Verizon has been spending billions of dollars to purchase 5G spectrum and build out its network. The Wall Street Journal reported that the expenditures contributed to a cash crunch and $129 billion in debt as of the end of last year.
Gartner analyst Ted Chamberlin said Verizon could spend the $4.25 billion in cash from the sale to expand its national 5G services, including its in-stadium and in-venue offerings. Verizon could also pursue private 5G partnerships, like its recent alliance with Amazon Web Services.
"I don't see any big splash purchase items [using the sale's proceeds]," Chamberlin said. "They're building their [assets] to focus on their stated [5G] goals, which I think is smart."
Verizon could always get involved in media later through partnerships that would allow it to avoid spending billions on content, Chamberlin said.
Constellation Research founder R "Ray" Wang said the deal runs counter to the overall convergence of the telecom, media, entertainment and tech industries. He added that he finds the move to be shortsighted, as advertising data gleaned from the Verizon media group of properties could drive growth.
"[Verizon] has chosen to double down on what they know," he said.
The deal, expected to close in the second half of the year, also has Apollo paying Verizon $750 million in preferred interests. Verizon will retain a 10% stake in Verizon Media.
Verizon competes with AT&T and T-Mobile in delivering mobile 5G services. According to a January Opensignal report, T-Mobile had the highest 5G availability of the U.S. carriers.
Mike Gleason is a reporter covering unified communications and collaboration tools. He previously covered communities in the MetroWest region of Massachusetts for the Milford Daily News, Walpole Times, Sharon Advocate and Medfield Press. He has also worked for newspapers in central Massachusetts and southwestern Vermont and served as a local editor for Patch. He can be found on Twitter at @MGleason_TT.