Verizon to Launch iPad Live TV App - Analyst Blog

Verizon Communications (VZ) plans to launch a software application for mobile devices that will enable the FiOS TV customers to watch live television shows and movies on Apple Inc.'s (AAPL) iPad.

 

FiOS TV customers can watch one program through Verizon's set-top box on a traditional TV and another program on the iPad with an in-home Wi-Fi connection. Verizon expects the launch of iPad Live TV App in 2011.

 

This new launch will minimize competition from cable rivals such as Comcast Corp. (CMCSA) and Time Warner Cable (TWC). Verizon is in negotiation with content providers like Time Warner Inc. (TWX) and Walt Disney Co. (DIS) for the extension of live TV viewing to tablet computers and home appliances.

 

During the second quarter 2010, Verizon added 174,000 and 196,000 new customers for its FiOS TV and FiOS Internet services, respectively, both representing a sequential increase. The carrier exited the quarter with 3.2 million (up 36.6%) FiOS TV customers and 3.8 million (up 30.2%) FiOS Internet customers. The penetration rate of FiOS Internet and FiOS TV averaged 29.7% and 25.9%, respectively, across all markets.

 

In the wireline business, Verizon remains committed to expanding its coveted fiber-to-the-premises (FTTP) network (delivering FiOS Internet and FiOS TV services to customers), representing an integral part of the carrier's long-term growth strategy. To make the wireline business a viable proposition, Verizon has invested heavily for the rapid deployment of its FTTP infrastructure leading to high capital expenditure during the last two years.

 

The company focuses on gaining market share through the deployment of service offerings, including expansion of voice-over-Internet protocol (VoIP) and international Ethernet capabilities, the introduction of video and web-based conferencing capabilities, and enhancements to the virtual private network portfolio. We believe these efforts made by Verizon will lead to improved revenue and operating income and help in gaining market share.

  

 

Although Verizon continues to expand its 3G wireless and wireline FiOS network footprints, the returns from these investments are highly uncertain. The company is making continued investments in more advanced fourth-generation (4G) infrastructure, which may become headwinds if other service providers shift to different generation technologies. However, Verizon remains committed to offering incremental returns to its shareholders via dividends and leveraging a healthy free cash flow.

 

We are currently maintaining our Neutral recommendation with Zacks #3 (Hold)

Rank for Verizon.