Verizon Reduces CO2 Emissions – Analyst Blog

Verizon Communications (VZ), a global leader in delivering broadband and other wireless and wire line communications services, will buy natural gas vans from Ford Motor Company (F) in its effort to conserve energy, reduce greenhouse gas emissions and improve the quality of air.

 

Verizon will add 501 Ford E-250 cargo vans equipped with engines that burn compressed natural gas (CNG) compared with conventional gas models and expect the vans to save 1.62 metric tons of carbon dioxide (CO2) per year.

 

The company is finding ways to increase the efficiency of its fleet. CNG, a clean, rich and renewable source of energy, is also cheaper than other fuels such as gasoline or diesel. The company plans to use the Ford E-250 cargo vans in its major markets throughout the country that have fueling stations for CNG.

 

These cargo vans will be primarily used by technicians who install and maintain phones and FiOS TV and Internet services for homes and businesses. At the end of the first quarter 2010, Verizon added 168,000 and 185,000 new customers for its FiOS TV and FiOS Internet services and ended the quarter with 3 million (up 36.6%) and 3.6 million (up 30.2%) FiOS TV customers and FiOS Internet customers, respectively. The penetration rate of FiOS Internet and FiOS TV averaged 28.8% and 25.2% across all markets, respectively.

 

Verizon remains committed to expand program content on FiOS TV as it added Viacom promoted movie channel EPIX in October 2009 to offer multi-channel entertainment services. Moreover, the carrier launched HBO’s new website “HBO GO” in February 2010. Efforts are underway to add other major networks such as CBS Corp (CBS), FOX News, MTV and Hallmark Channel. FiOS TV currently offers 140 HD channels and 2,800 HD movie titles.

 

Verizon remains significantly challenged by the intense competition from cable operators, who are aggressively promoting triple-play (voice, Internet and video) services. Moreover, FiOS TV competes head-to-head with AT&T’s (T) U-verse TV service. As such, Verizon is aiming at countering competition from cable, satellite TV and other competing services by augmenting its FiOS TV offering to include premium content and differentiated features.

 

Going forward, we expect Verizon’s business prospects to be driven by the synergies from the Alltel acquisition and increased market penetration of its 3G and FiOS network footprints. However, we remain concerned about persistent access line losses, slowdown in postpaid subscriber growth as well as the company’s costly promotional war with AT&T, which may drag the near-term earnings.