Boston, MA 06/27/2014 (wallstreetpr) – Verizon Communications Inc. (NYSE:VZ) has had its business contract with the German government cancelled. The move is the latest thorn in the flesh of a U.S. company in relation to the alleged U.S. spying on foreign governments and citizens.
Following the damaging revelation by a former National Security Agency contractor, Edward Snowden, that the U.S. intelligence agency routinely access global data managed by telecom companies, there have been uproar in Europe and China where governments are threatening to cut business ties with U.S. companies.
In the latest development, Verizon Communications Inc. (NYSE:VZ) has lost its business contract with the German government. The giant telecom carrier provided telecom solutions to many federal agencies in Germany. Following the loss of the business, the company will have to look elsewhere to repair its balance sheet that will inevitably be impacted by the cancelation of the contract.
Intense competition
The adverse development comes at a time when the company has been seeking to attract more global customers as competition grows intense in the domestic market. The company is facing revenue threat in the U.S. wireless market as rivals AT&T Inc. (NYSE:T), Sprint Corporation (NYSE:S) and T-Mobile US Inc. (NYSE:TMUS) upgrade their networks and run competitively pricing campaigns.
The company bought British telecom giant Vodafone Group PLC (ADR) (NASDAQ:VOD) out of Verizon Wireless for $130 billion in an apparent effort by the company to keep all wireless profits in the U.S. for itself.
Pleas fall on deaf ears
Verizon Communications Inc. (NYSE:VZ) failed in its attempts to convince the German government that the U.S. security agencies cannot access its data stored outside the U.S.
The development in Germany where Verizon has lost an important government contract could kick off renewed market wars in the U.S. telecom industry as the carrier tries to boost performance in the local market to recoup the business lost in Germany.
Moreover, the rejection of Verizon Communications Inc. (NYSE:VZ) in Germany could also usher a trend where foreign customers cut ties with U.S. technology companies over information security concerns. In any case, there were reports earlier this month that China had asked domestic banks to replace International Business Machines Corp. (NYSE:IBM) servers in apparent efforts to tighten the country’s financial security.
