Verizon has relaunched its unlimited data plans. If you're a Verizon customer, this is good news. But it's terrible news for investors.
verizon (VZ) The stock was down nearly 1.5% in Monday morning trading. It's down about 10% so far this year, marking the Dow's worst performance of 2017.
Verizon's move is a clear signal that the company must do everything it can to remain competitive with its wireless rivals. AT&T (tea), sprint (S) and T-Mobile (Timus).
“In recent months, T-Mobile and Sprint have been successful in gaining additional shares of Verizon thanks to their unlimited offerings,” Morgan Stanley analysts wrote in a report Monday morning.
This may explain why shares of T-Mobile and Sprint, now controlled by Japanese tech giant SoftBank, have both risen this year, while Verizon's has fallen. T-Mobile and Sprint have also been linked forever as possible merger partners.
But the new telecom price war isn't Verizon's only problem.
AT&T recently acquired satellite broadcast provider DirecTV. It's a move that will make Ma Bell more competitive against Verizon in the battle for control of people's living rooms. Verizon offers its own FiOS broadband TV service.
Related: Verizon brings back unlimited data plans.
AT&T is also making an even bigger investment in content, with plans to acquire CNN's parent company. time warner (TWX). Verizon already owns AOL and is looking to buy Yahoo's key assets to bolster its own digital content offering.
but Yahoo (you) The deal could fall through following revelations of massive data breaches at Yahoo over the past few years.
Yahoo recently said it hopes to close its deal with Verizon in the second quarter of this year. It was originally scheduled to be completed within the first quarter.
However, in its latest earnings call, Verizon only said that it “continues to work with Yahoo to assess the impact of the data breach.” That doesn't mean we expect the deal to close any time soon.
Verizon has a lot going on, which could make investors nervous. In addition to the Yahoo deal, the company is also in the process of purchasing XO Communications' fiber network. And we plan to sell our data center business to the following companies. Equinix (EQIX).
There have also been rumors over the past few weeks that Verizon may be considering acquiring the cable provider. Charter Communications (CHTR).
This may be more than Verizon can realistically handle at the moment. But considering how competitive the wireless world is these days, Verizon may have none of it.
Anything that could give Verizon an edge over AT&T, Sprint, and T-Mobile could be possible.
Related: Reports of possible Verizon acquisition send jeonse stocks soaring.
Still, it's worth noting that AT&T's stock price is down about 5% this year as well. And Verizon and A&T have something in common that Sprint and T-Mobile lack. Verizon and AT&T pay huge dividends.
Companies with large dividend yields have not performed well since Donald Trump was elected. Investors are betting on a sizable stimulus package from him and the Republican Congress, which could be fueled in part by debt.
This has caused bond yields to rise, making stocks of large dividend payers like Verizon much less attractive.
The Federal Reserve is expected to raise interest rates several times this year. This could push bond yields higher.
So Verizon faces a number of big challenges this year that could hurt its stock.
That's why Verizon, nicknamed Big Red because of the crimson color of its logo, could see its stock turn red in the near future.
CNN Money (New York) First Posted: February 13, 2017: 11:27 AM ET