Verizon Communications Inc, America’s largest wireless operator, said it is purchasing Yahoo Inc’s core internet properties for $4.83 billion in cash. The deal signals the end of an internet pioneer and the beginning of a new, huge internet push by the telecommunications giant.
The deal will combine Yahoo’s messenger, email and search abilities and its advertising technology tools with Verizon’s AOL division, which it purchased last year for $4.4 billion. The deal is part of Verizon’s plan to generate more revenue via mobile video and advertising, veering away from the oversaturated wireless sector.
A month ago Barclays said that Verizon could potentially save $500 million annually in the cost of getting internet traffic, as well as other expenses, if they bought Yahoo’s internet business.
Observers are predicting that the deal will most likely will mean more investment in popular sites like AOL’s Huffington Post and Yahoo Finance, since they will become part of a much larger business.
“It now becomes somewhat easier to justify investing in content,” said Brian Wieser, an analyst at Pivotal Research.