Verizon Wireless, a joint venture between Verizon Communications Inc. (VZ) and Vodafone Group plc (VOD), plans to extend its Long-Term Evolution (LTE) based 4G networks in Dayton and Springfield by the end of this year.
The company started deploying its high-speed LTE network in December 2010, with average download speed more than five-times faster than its 3G network. Verizon covered approximately 39 markets with around 110 million people at year-end 2010. The company 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 targets to roll out ten 4G devices –– four smartphones, two tablets, two notebooks and two additional 4G devices by mid 2011. On March 17, the company introduced its first 4G handset “ThunderBolt” in collaboration with HTC Corp. that runs on Google Inc. (GOOG) Android software program. The handset will enjoy the first-mover advantage and will offer download speeds of 5 to 12 Mbps and upload speeds of 2 to 5 Mbps.
Moreover, as part of its 4G LTE network deployment plans, Verizon announced collaborative efforts with rural companies to build and operate it in those areas, using Verizon Wireless’ 700MHz spectrum.
Verizon continues to be the market leader in providing wireless voice and data communication services in the U.S. In early February, Verizon also started selling Apple Inc.‘s (AAPL) iPhone putting an end to 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 higher smartphone adoption will enhance the company’s competitive position against its rivals Sprint Nextel Corp. (S) and AT&T. Further, deployment of 4G network and 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, upgrading to 4G services as well as Verizon’s iPhone might increase operating costs of the company.
Thus, we are currently maintaining our long-term Neutral rating on the stock with the Zacks Rank # 3 (Hold) Rank.
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