Verizon Wireless of Verizon Communications Inc. (VZ) has launched its 4G LTE Network in Summersville Area, West Virginia. The company initially launched 4G LTE network in West Virginia in Dec 2010, and now covers key areas in the region including Fayetteville, Oak Hill and Mount Hope. We believe the expansion of LTE coverage is imperative to Verizon’s growth given the rising demand for high speed data services.
Verizon has a strong foothold in 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 as well as a better competitive position among large players like AT&T Inc. (T) and Sprint Corp. (S).
The company is leading the industry in terms of 4G deployment. On Jan 6, Verizon Wireless announced its agreement to transfer 700 MHz A Block spectrum licenses to T-Mobile USA (TMUS) 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 is 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).
Verizon’s LTE growth is also supported smartphone usage that would boost data revenues going forward. During the quarter, the company’s smartphone penetration increased to 70%. It activated 8.8 million smartphones in the fourth quarter and introduced numerous devices to attract customers to 4G LTE that covers over 69% of total data traffic.
In addition, the plan to roll out VoLTE is expected to boost its performance level. The first series of handsets will be available by the end of 2014. We believe voice traffic on LTE will help the company in refarming its 3G spectrum to accommodate LTE and increase bandwidth. Further, the company’s 4G LTE Router – an Internet access gadget compatible with both wired and Wi-Fi-enabled devices – will likely gain popularity in the coming days.
Verizon currently retains a Zacks Rank #3 (Hold).
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