Verizon and BT Combine Overseas Operations to Focus on Domestic Markets

Verizon and BT, two major telecom firms, have agreed to merge their overseas operations into a joint venture, taking these low-margin units off their books so they can focus on home markets. The two firms will hold equal voting power in the new entity, which still needs regulatory clearance.

BT revised its guidance for the fiscal year ending March 2027 downward because the international unit and other sold assets are being treated as discontinued operations. For years, BT has been exploring ways to handle its international division, which has dragged on expansion. The unit provides services to multinational companies across roughly 180 nations, but most contracts yield thin margins and are costly to run.

CEO Allison Kirkby, focused on returning BT to its UK roots, mentioned in 2024 that the company was considering a carve-out for the division. According to a Bloomberg News report from last year, BT had also contacted AT&T and Orange regarding potential partnerships for the international arm.

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BT's stock price rose 0.3% to 195.60 pence in London trading, up 6% year-to-date, placing the company's market cap at £19.5 billion ($25.8 billion). Meanwhile, Verizon shares dropped 7.1% to $43.23 in New York, after closing at $46.54 on Friday; the stock is up 5.5% this year, valuing the firm at $179.4 billion. Under new CEO Dan Schulman, Verizon is focusing on gaining customers and improving profitability from its current network assets. Schulman is reducing the workforce by about 20% and seeking to sell off underperforming divisions.

"This move aligns with Verizon's broader transformation strategy to streamline operations by exiting or rationalizing legacy products in secular decline to improve growth and profitability," Bloomberg Intelligence noted.

According to Bloomberg Intelligence, Verizon's overseas business includes wired network assets, private networking, and cybersecurity advisory services, but excludes the consumer wireless segment for which it is famous in the U.S. Its overseas clients include U.S. embassies and the Thames Freeport in the UK. BT issued a separate statement forecasting adjusted group revenue of £17.1 billion to £17.6 billion for 2027, down from a prior range of £19 billion to £19.5 billion. Adjusted EBITDA for that period is projected at £8.1 billion to £8.2 billion, £100 million below the earlier forecast.

New Street Research analyst James Ratzer said the equalization payment suggests an EBITDA multiple exceeding ten times. "The deal looks like a neat and attractive exit for BT," he added.

This transaction reflects a broader trend among legacy telecom operators that are retreating from global B2B service offerings, which often require heavy infrastructure investments and deliver slim returns. By pooling their international assets, both Verizon and BT can reduce overhead and reallocate capital toward core domestic markets - Verizon's U.S. wireless network and BT's UK fiber and broadband operations - where competition is intense but margins are healthier.

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