Verizon Wireless, a joint venture between Verizon Communications Inc. (VZ) and Vodafone Group plc (VOD), will debut its first 4G handset “ThunderBolt” on March 17. The smartphone will be available at all Verizon stores and is priced at $249.99 with a two-year contract.
Verizon will sell its first 4G handset in collaboration with HTC Corp. and will run on Google Inc. (GOOG) Android software program. By virtue of being the first and only 4G handset, ThunderBolt will take full advantage of Verizon’s latest Long-Term Evolution (LTE) network, which offers download speeds of 5 to 12 Mbps and upload speeds of 2 to 5 Mbps.
The company started deploying its high-speed LTE network in December with average download speed more than five-times faster than the company’s 3G network. It covered approximately 39 markets with around 110 million people at year-end 2010. Verizon plans to expand its 4G LTE network in 140 additional markets by the end of 2011and cover virtually its entire nationwide 3G footprint by the end of 2013.
To support these services, Verizon expects to unveil ten 4G devices––four smartphones, two tablets, two notebooks and two additional 4G devices by mid 2011. In addition, as part of its 4G LTE network deployment plans, Verizon announced collaborative efforts with rural companies to build and operate 4G networks in those areas, using Verizon Wireless’ 700MHz spectrum.
In early February, Verizon also started selling Apple Inc.‘s (AAPL) iPhone putting an end to the AT&T Inc. (T) exclusive hold on the device.Verizon’s iPhone is expected to add 2.1 million net new subscribers in 2011 outpacing AT&T for the first time since 2008.
We believe all these developments along with the higher smartphone adoption will enhance the company’s competitive position against its rivals Sprint Nextel Corp. (S) and AT&T. Further, in 4G networks and the sale of IPhone will boost Verizon’s earnings and revenue going forward.
However,the 4G infrastructure may be an obstacle if other service providers shift to different generation technologies. Additionally, enhancement to 4G services as well as Verizon’s iPhone will increase operating costs of the company.
Thus, we are currently maintaining our long-term Neutral rating on the stock with the Zacks #3 Rank (Hold).
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