Image: Flickr
Image: Flickr

There are one billion and three reasons why Verizon is set to snap up Yahoo.

So let’s list the billion reasons first:

Reason number one: There is Paul.

Reason number two, there is Peter.

. . . well to save time let’s just lump those one billion reasons into one. It is the number of Yahoo users – roughly. It is odd, we heard about how the core Yahoo business has no future, we heard about the efforts of its boss Marissa Mayer to kick life into the company, for example by limiting the amount of time its employees can work from home.

And on occasions it has felt as if Yahoo was turning into Ya Who? But one billion users is not, according to most mathematical calculations, a trivial number. That’s active monthly users, by the way, yet it only has around 2% of the global digital advertising market.

It does seem as if Verizon, the US company which bought Vodafone’s stake in Verizon Wireless for $130 billion in 2013, is set to buy Yahoo’s core business, leaving Yahoo with its stake in Alibaba and Yahoo Japan – businesses that are thought to be collectively worth around $40bn. In fact, Yahoo’s track record as an investor, or business partner in companies, seems a good deal better than its track record, over the last ten years or so, as an on online provider of content. (It once teamed up with an up and coming company called Google.)

Verizon Wireless wants those one billion Yahoo users, but it wants three other things too.

The three other things consist of becoming a bigger player in online advertising, video and 5G. These three factors all overlap.

Verizon owns another company which was once very famous, but not so much today. It owns AOL. To put it mildly, AOL is not the force it used to be, but it has managed to create a rather powerful selection of ad-buying and targeting tools.

So combine the tools with one billion users and maybe you have an opportunity to generate a lot more advertising revenue.

Don’t lose sight of what Verizon is. Neither should you lose sight of what the next big thing in the Verizon market is likely to be. Verizon is a telecoms company, and the next big thing in telecommunications is 5G.

The 5G killer app will be video. All the big telecom players want a big slice of this. Verizon itself has been playing with video, via its mobile-only go90 video service.

If you are over 30, and you say ‘what is go90?’, then that is hardly surprising. Verizon is targeting the so called millennial generation with this service.

But forward wind the clock, and imagine 5G providing superfast internet speeds, and demand from users for more and more video – high quality video, maybe even combined with virtual reality. Then combine this with Yahoo content, Yahoo’s one billion users, and the AOL advertising tools.

That is what Verizon is up to, other telecom companies need to come up with a response.

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