Wireless Industry News » Verizon Eyes Asset- Backed Financing Ahead of Spectrum Auction
Verizon is looking into using asset-backed receivable financing as a means to secure cash upfront for the payments customers owe on equipment installment plans (EIPs).
“When we sold an EIP or an installment sale to our customers, say it was $700, we turned around and the banks prefunded that receivable on a securitization basis, and we called that ‘off balance sheet financing’ because the receivable in essence came off our books and actually was put on the bank books,” Shammo explained.
Shammo said the move has the potential to bring both efficiency and lower cost of capital benefits to the company.
The bid to generate cash-on-hand comes just ahead of the start of the FCC’s auction of wireless spectrum at the end of March. In last year’s AWS-3 auction, Verizon spent more than $10 billion. The company is expected to spend more than $6 billion this time around, and will need funds readily available to turn around a quick payment to the FCC. Read More