Verizon is facing its first strike in 11 years as 45,000 wireline workers walked out after union negotiations fell apart at the last minute. In the short run, the strike won't matter much to the company, but if the stalemate drags on Verizon will likely see a hit to its FiOS additions.
The telecom giant said Sunday that talks with unions---the Communications Workers of America and the International Brotherhood of Electrical Workers---representing its wireline employees in the Northeast and Mid-Atlantic states broke down and workers went on strike. Verizon added that it has contingency plans in place.
According to Verizon, it has 195,500 employees as of June 30. About 135,000 of those workers are non-union.
Deutsche Bank analyst Brett Feldman said that the strike isn't likely to be material to Verizon since it doesn't affect its wireless unit, which isn't unionized.
Among the key points from Feldman:
- If the Verizon strike is short, Verizon’s third quarter will be intact. Verizon recently reported a solid second quarter.
- "At most we could see a small impact on FiOS net adds (3Q ests: 190k Internet, 180k TV) and a slight delay in some wireline capex into 4Q (3Q wireline capex est: $1.5B)," said Feldman.
- In addition, Verizon could see its profit margin improved due to reduced wages to unionized employees in the third quarter.
Given that Verizon's wireline unit represents about 12 percent of the company's operating profit it's unclear how much leverage the striking unions really have. Feldman, however, thinks that Verizon's history of good relations with its unions over the years will keep the strike short.