BT: The Rival Becoming a PartnerThin moat

Verizon (VZ) — moat facet

Verizon is paying BT $625 million and taking a $746 million loss to share an international wireline business rather than keep competing in it.

Not every rival is fought. On 28 June 2026 Verizon agreed with BT Group to put their international wireline businesses into one company. Verizon will contribute "Verizon's international wireline connectivity and managed network services business" and BT its equivalent, and Verizon "will make a cash payment equal to $625 million to NewCo", each side taking "50% of the issued and outstanding equity interests"1.

The BT joint venture in figures ($M)Cash Verizon pays into the venture$625MLoss range Verizon expected$700-800MLoss booked, Q2 2026$746MBusiness revenue moved out, per quarter$302MVerizon 8-K of 29 June 2026; Q2 2026 results release; March 2026 recast
Verizon pays to leave the contest.

Verizon is paying to exit a head-to-head contest. It expected "an estimated loss in the range of $700 million to $800 million" on classifying the business as held for sale2 and booked a "$746 million loss on disposition of business" in the June 2026 quarter3. It also said it expects the deal "to be accretive to Verizon Business Group EBITDA"4, because the business moved out of the segment.

The move shows the segment reshaping itself. From the second quarter of 2026 the international business sits in Corporate and other; Business revenue for the June 2025 quarter was restated from $7,275 million5 to $6,973 million6, about $302 million a quarter moved7.

This is the fourth kind of competitive relationship on these pages: not a rival that grows at Verizon's expense, a rival that pays it, or a rival running the same plan, but one with which it shares the ownership of a business neither wanted to run alone. The deal still needs "customary regulatory approvals"8.

The deal also removes a loss-making line from the segment's reported numbers. Verizon said the transaction would be "accretive to Verizon Business Group EBITDA in the second quarter of 2026"9, and Business segment operating income rose 36.9% to $991 million in that quarter10.

The joint venture is a verdict on that business rather than a moat. The Business Group's EBITDA margin was 29.1% in the June 2026 quarter with the international business already removed11; a fall back below 25% would say the pruning did not fix the rest of the segment.

Moat trajectory: Holding steady

BT joint venture agreed June 2026; closing subject to approvals.

The number that tests this moat
Reported
Business segment EBITDA margin, latest quarter
29.1% (Q2 2026), against 24.7% a year earlier, with the international business moved to Corporate and other

Whether pruning fixed the segment; below 25% would mean it did not.

Source: Verizon Q2 2026 results release ↗
References
  1. ReportedVerizon will contribute "Verizon's international wireline connectivity and managed network services business" and BT its equivalent, and Verizon "will make a cash payment equal to $625 million to NewCo", each side taking "50% of the issued and outstanding equity interests".
    Verizon Form 8-K of 29 June 2026, Item 7.01 - agreement with BT to combine international wireline businesses in a 50/50 joint venture. — June 2026 · publ. 29 June 2026 · source ↗
  2. ReportedIt expected "an estimated loss in the range of $700 million to $800 million" on classifying the business as held for sale and booked a "$746 million loss on disposition of business" in the June 2026 quarter.
    Verizon Form 8-K of 29 June 2026, Item 7.01 - agreement with BT to combine international wireline businesses in a 50/50 joint venture. — June 2026 · publ. 29 June 2026 · source ↗
  3. ReportedIt expected "an estimated loss in the range of $700 million to $800 million" on classifying the business as held for sale and booked a "$746 million loss on disposition of business" in the June 2026 quarter.
    Verizon second-quarter 2026 results release, Form 8-K exhibit 99 - consolidated and segment results, operating statistics, cash flow, balance sheet and guidance - Consumer and Business segment results. — Q2 2026 · publ. 24 July 2026 · source ↗
  4. ReportedIt also said it expects the deal "to be accretive to Verizon Business Group EBITDA", because the business moved out of the segment.
    Verizon Form 8-K of 29 June 2026, Item 7.01 - agreement with BT to combine international wireline businesses in a 50/50 joint venture. — June 2026 · publ. 29 June 2026 · source ↗
  5. ReportedFrom the second quarter of 2026 the international business sits in Corporate and other; Business revenue for the June 2025 quarter was restated from $7,275 million to $6,973 million, about $302 million a quarter moved.
    Verizon Form 8-K exhibit 99 of 13 March 2026 - 2025 quarterly segment revenue recast to the new mobility and broadband service presentation. — FY2025 · publ. 13 March 2026 · source ↗
  6. ReportedFrom the second quarter of 2026 the international business sits in Corporate and other; Business revenue for the June 2025 quarter was restated from $7,275 million to $6,973 million, about $302 million a quarter moved.
    Verizon second-quarter 2026 results release, Form 8-K exhibit 99 - consolidated and segment results, operating statistics, cash flow, balance sheet and guidance - Consumer and Business segment results. — Q2 2026 · publ. 24 July 2026 · source ↗
  7. Moat Explorer calcFrom the second quarter of 2026 the international business sits in Corporate and other; Business revenue for the June 2025 quarter was restated from $7,275 million to $6,973 million, about $302 million a quarter moved.
    Moat Explorer calculation from Verizon's reported figures ($ millions unless stated; calendar years). Revenue and profit over the decade: revenue 2015-2025 (138,191 / 131,620) ^ (1/10) - 1 = about 0.5% a year; 138,191 / 131,620 - 1 = +5.0%; range 138,191 - 125,980 = about 12.2bn; 2027 revenue of 142bn would need (142 / 138.191) ^ (1/2) - 1 = about 1.4% a year; operating income 29,259 / 30,615 - 1 = -4.4%; net income 17,174 / 17,879 - 1 = -3.9%; diluted EPS 4.06 / 4.37 - 1 = -7.1%; total assets 404,258 / 244,175 - 1 = +65.6%. Segments 2025: Consumer share of segment operating income 29,628 / (29,628 + 2,532 = 32,160) = 92.1% (2024 29,484 / 31,542 = 93.5%; 2023 29,011 / 31,077 = 93.4%); Business share 2,532 / 32,160 = 7.9%; Q2 2026 Consumer 8,032 / (8,032 + 991 = 9,023) = 89.0%, Q2 2025 7,643 / (7,643 + 724 = 8,367) = 91.3%; Consumer operating margin 29,628 / 106,807 = 27.7%, Business 2,532 / 29,069 = 8.7%; Business share of segment revenue 29,069 / 135,876 = 21.4%; shared network and service costs 17,991 + 9,717 = 27,708, Business share 9,717 / 27,708 = 35.1%; Consumer share of segment EBITDA 43,801 / (43,801 + 6,644) = 86.8%; Consumer revenue 2025 106,807 / 102,904 - 1 = +3.8%, 2023-2025 106,807 / 101,626 - 1 = +5.1%; Consumer service revenue 80,617 / 77,127 - 1 = +4.5%; Consumer equipment 21,779 - 23,930 = -2,151, about 2.2bn below cost; Business revenue 29,069 / 30,122 - 1 = -3.5%; Enterprise and Public Sector 13,532 / 15,076 - 1 = -10.2%; Business Markets and Other 13,555 / 12,697 - 1 = +6.8%; Wholesale 1,953 / 2,313 - 1 = -15.6%; institutional and wholesale decline (15,076 - 13,532) + (2,313 - 1,953) = 1,904; Q2 2026 Consumer revenue 26,242 / 26,648 - 1 = -1.5%; Business revenue 7,155 / 6,973 - 1 = +2.6%; restatement 7,275 - 6,973 = 302 a quarter; mobility and broadband service revenue 2025 75,923 + 14,940 = 90,863. Customers: T-Mobile postpaid accounts 34,700 - 34,237 = 463 more than Verizon; T-Mobile 34,700 / 31,502 - 1 = +10.2%, 34,700 - 31,502 = 3,198; Verizon accounts 34,237 - 34,646 = -409, -1.2%; ARPA premium 168.35 / 152.91 - 1 = +10.1%; cable lines 10,187 + 12,540 = about 22.7 million; cable Q2 net adds 448 + 406 = 854 thousand, 854 / 184 = 4.6 times; Q2 net adds share 184 / (184 + 432 + 448 + 406 = 1,470) = 12.5%; fibre net adds 155 / 367 = 42%; annual churn at 0.92% a month 0.92 x 12 = 11.0%, about one customer in ten; 0.1 point on 94 million = about 94 thousand phones a month; prepaid churn 3.59 / 0.92 = 3.9 times; prepaid annual loss 1 - (1 - 0.0359) ^ 12 = 35.5%, average life 1 / 0.0359 = 27.9 months, a little over two years; revenue per postpaid line 170.62 / 3.67 = 46.49 (2025), 167.26 / 3.61 = 46.33 (2024); ARPA 2025 170.62 / 167.26 - 1 = +2.0%; ARPA Q2 2026 168.35 / 170.79 - 1 = -1.4%; ARPA H1 2026 167.50 / 170.30 - 1 = -1.6%; wireless service revenue 83,703 / 82,073 - 1 = +2.0%; wireless service share of revenue 83,703 / 138,191 = 60.6%; FWA revenue 2,940 / 2,139 - 1 = +37.4%; FWA revenue share 2,940 / 138,191 = 2.1%; fibre annualised 155 x 4 = 620 thousand; passings 2.0 / 30 = 6.7%; passings to fill 2,000 / 620 = 3.2 times. Spectrum and capital: C-Band 45.5 + 7.5 = 53.0bn; licences share of assets 158,159 / 410,186 = 38.6%; licences over goodwill 158,159 / 30,664 = 5.2 times; licences over equity 158,159 / 105,196 = 1.5 times; wireless service revenue per dollar of licences 83,703 / 157,039 = 0.53; spectrum bought June 2026 1.0 + 3.2 = 4.2bn; capex / revenue 17,011 / 138,191 = 12.3% (2025), 23,087 / 136,835 = 16.9% (2022); capex 17,011 / 23,087 - 1 = -26.3%; capex less depreciation 17,011 - 18,349 = -1,338; ROIC averages 2015-2019 (10.8 + 9.1 + 12.7 + 8.2 + 11.3) / 5 = 10.4%, 2021-2025 (8.7 + 7.3 + 5.0 + 7.0 + 7.1) / 5 = 7.0%; interest expense 6,694 / 5,524 - 1 = +21.2% (2023-2025); Q2 interest 1,985 / 1,639 - 1 = +21.1%; interest / operating income 6,694 / 29,259 = 22.9%. Cost, cash and capital returns: employees 89.9 / 99.6 - 1 = -9.7%; severance 533 + 1,733 + 1,715 + 397 = 4,378, about 4.4bn; adjusted EBITDA margin 49,997 / 138,191 = 36.2% (2025), 48,791 / 134,788 = 36.2% (2024); Q2 2026 operating income 7,179 / 8,172 - 1 = -12.2%; free cash flow Q2 6,426 / 5,167 - 1 = +24.4%; adjusted EPS less diluted EPS 4.71 - 4.06 = 0.65; phones sold below cost 28,976 - 25,470 = 3,506, about 3.5bn; dividends / free cash flow 11,481 / 20,126 = 57.0% (2025), 5,864 / 10,209 = 57.4% (H1 2026); dividends / net income 11,481 / 17,174 = 66.9%; dividends per share 2.735 / 2.230 - 1 = +22.6%, (2.735 / 2.230) ^ (1/10) - 1 = 2.1% a year; dividend cost a quarter 0.7075 x 4,155 = about 2,940; buyback average 3,500 / 72.047 = about $48.58 a share; shares 4,155 / 4,217 - 1 = -1.5%; free cash flow yield 21.53 / 193.94 = 11.1%; cash returned about (11.5 + 4.5) / 193.94 = 8.2% of market value; net unsecured debt 128,682 - 110,053 = 18,629; backlog 55.2 / 58.1 - 1 = -5.0%; backlog months 58.1 / 138.191 x 12 = about 5.0; device receivables 34,004 / 31,308 - 1 = +8.6%, allowance 1,628 / 1,315 - 1 = +23.8%; TracFone 3.5 + 3.0 = 6.5bn plus up to 0.65bn. Valuation: Frontier price / market value 22.3 / 193.94 = 11.5%; market value 193.94 / 253.94 - 1 = -23.6% (against end-2019), 193.94 / 188.06 - 1 = +3.1% (against end-2015); target 51.58 / 46.68 - 1 = +10.5%; year-end market value over net income 188.06 / 17.879 = 10.5 (2015), 217.61 / 13.127 = 16.6 (2016), 215.92 / 30.101 = 7.2 (2017), 232.30 / 15.528 = 15.0 (2018), 253.94 / 19.265 = 13.2 (2019), 243.11 / 17.801 = 13.7 (2020), 215.12 / 22.065 = 9.7 (2021), 165.47 / 21.256 = 7.8 (2022), 158.49 / 11.614 = 13.6 (2023), 168.34 / 17.506 = 9.6 (2024), 171.74 / 17.174 = 10.0 (2025); trailing twelve months to June 2026 revenue 138,191 - 67,989 + 68,693 = 138,895, net income 17,174 - 9,882 + 8,880 = 16,172, 193.94 / 16.172 = 12.0, 193.94 / 138.895 = 1.40 - segments and customer groups. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Verizon's Forms 10-K and 10-Q, quarterly results releases, the recast segment revenue 8-K, peer results releases (T-Mobile, AT&T, Comcast, Charter) and market data; operands shown in the source line.
  8. ReportedThe deal still needs "customary regulatory approvals".
    Verizon Form 8-K of 29 June 2026, Item 7.01 - agreement with BT to combine international wireline businesses in a 50/50 joint venture. — June 2026 · publ. 29 June 2026 · source ↗
  9. ReportedVerizon said the transaction would be "accretive to Verizon Business Group EBITDA in the second quarter of 2026", and Business segment operating income rose 36.9% to $991 million in that quarter.
    Verizon Form 8-K of 29 June 2026, Item 7.01 - agreement with BT to combine international wireline businesses in a 50/50 joint venture. — June 2026 · publ. 29 June 2026 · source ↗
  10. ReportedVerizon said the transaction would be "accretive to Verizon Business Group EBITDA in the second quarter of 2026", and Business segment operating income rose 36.9% to $991 million in that quarter.
    Verizon second-quarter 2026 results release, Form 8-K exhibit 99 - consolidated and segment results, operating statistics, cash flow, balance sheet and guidance - Consumer and Business segment results. — Q2 2026 · publ. 24 July 2026 · source ↗
  11. ReportedThe Business Group's EBITDA margin was 29.1% in the June 2026 quarter with the international business already removed; a fall back below 25% would say the pruning did not fix the rest of the segment.
    Verizon second-quarter 2026 results release, Form 8-K exhibit 99 - consolidated and segment results, operating statistics, cash flow, balance sheet and guidance - Consumer and Business segment results. — Q2 2026 · publ. 24 July 2026 · source ↗
Sources
Generated September 29, 2026