Google Inc. (NASDAQ:GOOG) Plans to Enter the Wireless Market:Verizon(NYSE:VZ) Not Worried

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By Chris Hillman on January 24, 2015 Technology & Software

Google (NASDAQ:GOOG) has entered the wireless industry. Perhaps this is not the worst time after all as there is an aggressive war going on in the industry over the acquisition of spectrum.The company has entered a number of industries and it always ends up disrupting the previous set up. Chances are that it will undercut the existing companies in terms of price in order to attract more and more customers. At a time when the telecom companies are introducing latest offers every day in order to lure the customers, the entry of Google (NASDAQ:GOOG)in the wireless world can turn things around.

What is interesting to note here is the fact that Verizon (NYSE:VZ), the biggest name when it comes to the wireless industry, seems not too concerned with Google’s (NASDAQ:GOOG) entry.The chief financial officer of Verizon(NYSE:VZ), Fran Shammo, during the fourth quarter’s earnings call, mentioned that Google (NASDAQ:GOOG)is just another competitor. He further mentioned that the company is entering the market so it can increase the internet speed.

An increased speed will allow people to search more through Google’s (NASDAQ:GOOG)search engine, which will mean increased profits for the company.Google (NASDAQ:GOOG) drives its revenues from its search engines, and hence, its profits will increase by many folds if only more people could have access to internet. The company entered the broadband segment due to this reason. The CFO of Google (NASDAQ:GOOG)told the media that the main target to enter the broadband market was to increase the speeds in order to make it easier for the customers to use google’s(NASDAQ:GOOG)search engine.

While talking to CNET, the Chief Financial Officer of Verizon(NYSE:VZ) said that Comcast and AT&T have increased their internet speeds in those markets where Google (NASDAQ:GOOG)has introduced its fiber services.News has it that Google (NASDAQ:GOOG) will be entering the wireless market as an MNVO. It will be using the network of T-Mobile and Sprint in order to provide affordable internet bundles to the customers.These MVNO partnerships are not uncommon in the respective industry.

According to some estimates, some 34 million subscribers use MNVO bundles; meaning that 10 percent of the total internet users are on some kind of MVNO subscription.There are a number of such partnerships in the wireless industry. The prominent one among them is Tracfone Wireless. Tracfone provides low rate prepaid services to its subscribers. The CFO of Verizon (NYSE:VZ)mentioned that since Tracfone deals with a whole different market, it will not prove to be a threat to the future business of Verizon(NYSE:VZ).

Coming to the stock price of Google (NASDAQ:GOOG), the company is currently trading in the range of $533 to $542.17. It has a market cap of $366.96 billion with a P/E (price to earnings) ratio of 27.37.The shares of Verizon(NYSE:VZ), on the other hand, are being traded in the range of $46.98 to $47.93. It has a market cap of $195.91 billion.