Verizon Communications Inc. confirmed on Monday that it plans to sell its media business to Apollo Funds for $5 billion.
After the transaction is completed, the telecommunications company will hold a 10% stake in the company, and the company will be called Yahoo. The Verizon Media umbrella includes brands such as Yahoo, AOL, TechCrunch and Engadget.
After the transaction is completed, the company will receive US$4.25 billion in cash and US$750 million in preferred rights. The transaction is expected to be completed in the second quarter.
In pre-market trading on Monday, Verizon’s stock rose 0.5%.Wall Street Journal Reported the sale plan last week.
“We firmly believe in Yahoo’s growth prospects and the macro headwinds driving the growth of digital media, advertising technology and consumer Internet platforms,” Apollo senior partner David Sambur said in a press release.
Verizon CEO Hans Vestberg said in a press release: “In the past two and a half years, Verizon Media has done a very good job reversing its business and has huge growth potential.”
Although the Verizon Media business only accounted for 6% of Verizon’s revenue in the most recent quarter, the sale of assets will allow Verizon to focus more on the telecommunications business and bring in funds to help pay for the expensive 5G network construction costs.
The company pointed out in its latest earnings report that it recently paid approximately $45 billion to the Federal Communications Commission to obtain the C-band spectrum obtained in a recent wireless auction. The company raised US$12 billion in the fourth quarter and more than US$31 billion in the first quarter to purchase spectrum, although various other capital costs are involved in establishing a 5G network.
As of Friday, Verizon’s share price has fallen 1.6% year-to-date, while the SPDR Communication Services Select Sector exchange traded fund
Rose 15.7%, the Dow Jones Industrial Average
It has risen by 10.7%.