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Verizon’s New Plan: Consumers Win, Investors Lose

Verizon has brought back its unlimited data plan. That’s great if you’re a Verizon customer. But it is bad news for its investors.

Verizon (vz) shares fell almost 1.5% in early trading on Monday. It is now down 10% year-to-date, making it the Dow’s worst performer of 2017.

Verizon’s move is a clear sign that the company has to do everything it can to remain competitive with its wireless rivals. AT&T (T), pique (yes) other T Mobile (TMUS).

“In recent months, both T-Mobile and Sprint have had some success taking additional Verizon stake by virtue of their unlimited offerings,” Morgan Stanley analysts wrote in a report Monday morning.

That may explain why shares of T-Mobile and Sprint, which is now controlled by Japanese tech conglomerate SoftBank, are up this year while Verizon is down. T-Mobile and Sprint have also been permanently linked as potential merger partners.

But the new price of telecommunications was not the only problem for Verizon.

AT&T recently acquired satellite broadcast provider DirecTV, a move that makes Ma Bell more competitive against Verizon in the battle to control people’s living rooms. Verizon offers its own FiOS Broadband TV service.

Related: Verizon brings back unlimited data plans

And AT&T is also betting much more on content, with plans to buy CNN’s parent company. weather warner (TWX). Verizon already owns AOL and is looking to buy Yahoo’s core assets to bolster its own digital content offerings.

But yahoo (yhoo) the deal could fall apart in the wake of revelations of massive data breaches at Yahoo in recent years.

Yahoo recently said it expects the Verizon deal to close in the second quarter of this year. It was originally supposed to be finished by the first quarter.

However, in its latest earnings release, Verizon simply said that it “continues to work with Yahoo to assess the impact of the data breaches”; Not that he expected the deal to close anytime soon.

Verizon has a lot at stake, which could be making investors nervous. In addition to the deal with Yahoo, the company is also in the process of buying XO Communications’ fiber optic network. And it’s selling its data center business to equinix (Balance).

There have also been rumors in recent weeks that Verizon might even consider buying a cable provider. communications letter (CHTR).

That may be more than Verizon can realistically handle right now. But nothing can be off the table for Verizon given how competitive the wireless world is these days.

Anything that could give Verizon an edge over AT&T, Sprint and T-Mobile could be possible.

Related: Charter Stock Featured in Report on Potential Verizon Acquisition

Still, it’s worth noting that AT&T stock is also down this year, down about 5%. And Verizon and AT&T have something in common that Sprint and T-Mobile lack: Verizon and AT&T pay gargantuan dividends.

Companies that have great dividend yields have not done so well since Donald Trump was elected. Investors are betting on a sizeable stimulus package from him and the Republican Congress, which may be fueled in part by debt.

That caused bond yields to rise, and that makes stocks in big dividend payers like Verizon much less attractive.

The Federal Reserve is expected to raise interest rates several times this year as well. That could further boost bond yields.

So Verizon faces a lot of big challenges that could hurt its stock this year.

That’s why Verizon, nicknamed Big Red due to the crimson hue of its logo, may see its stock turn red for the foreseeable future.

CNNMoney (New York) First Posted Feb 13, 2017: 11:27am ET

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