Leading wireless company, Verizon Communications Inc. (VZ) is gearing up to revamp its prepaid business. Reportedly, the company is set to launch new prepaid plans – ALLSET – which starts at $25 per month. The company will reportedly offer 500 voice minutes and 500 MB data.
Customers can, however, opt for the $45 per month plan which offers unlimited voice and 500 MB Data. For additional data, Verizon will charge $5 for 500 Mb, $10 for 1 GB and $20 for 3GB.
We believe the new plans will remain accretive to the company’s subscriber growth in the prepaid category and also contribute to overall revenue growth.
Verizon has a strong foothold in the wireless business and continues to capture additional market share via robust deployment of the 4G Long Term Evolution (LTE) network. This leads to improved operating and capital efficiency. The company is leading the industry in terms of 4G deployment.
On Jan 6, Verizon Wireless announced its agreements to transfer 700 MHz A Block spectrum licenses to T-Mobile USA in exchange for cash ($2.4 billion) and spectrum licenses in the AWS and PCS bands which it will use to add capacity to its 4G LTE network. The transaction expected to close in the first half of 2014.
As of Dec 31, 2013, it covered 500 markets and more than 305 million people (nearly 99% of the total 3G network). We also appreciate the various strategic initiatives that the company has taken over the last couple of months.
The company’s new data plan — Share Everything — accounts for almost 46% of its post-paid account, representing 16.2 million users. Going forward, this plan is expected to boost the company’s device adoption and usage resulting in a higher number of devices and revenue per account.
In addition, in February, Verizon launched the MORE Everything plan, which offers increased data and unlimited global text messaging over and above the Share Everything package at the same cost. We believe the company’s move to complement customers with more offerings at the same price is likely to be accretive to its subscriber base, enhancing market penetration.
Zacks Rank and Other Stocks
Currently, Verizon has a Zacks Rank #3 (Hold).
Better-ranked stocks in this segment include Level 3 Communications, Inc. (LVLT), Nippon Telegraph and Telephone Corp. (NTT) and Swisscom AG (SCMWY). All these have a Zacks Rank #2 (Buy).
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