Verizon Unveils New Broadband Speed - Analyst Blog

Verizon Communications (VZ), the second largest U.S. phone company, introduced a new broadband speed of 150 megabits per second for the deployment of FiOS Internet service. This new download speed will cost around $200 per month.

Verizon's download speed offering is 50 times faster than a typical DSL line. Cable TV rival Cablevision Systems Corp. (CVC) has been offering a speed of 101 megabits per second for $100 per month since last year, and Comcast Corp. (CMCSA) rolled out a 105-megabit offer this year. Evidently, Verizon's broadband speed is the fasted among the major Internet providers and keeps it way ahead of its cable TV rivals.

We believe the new tier will speed up online backup and sending of video files. It is expected to boost Verizon's revenues by adding new customers and reducing churn (customer switch).

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. In order 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 since the last two years.

During the third quarter, Verizon added 204,000 and 226,000 new customers for its FiOS TV and FiOS Internet services, respectively, both representing a sequential increase. The company exited the quarter with 3.3 million (up 26.5%) FiOS TV customers and 3.9 million (up 23.9%) FiOS Internet customers. The penetration rate of both FiOS Internet and FiOS TV surged to approximately 31% and 27.2%, respectively, across all markets from the year-ago levels of 28.7% and 25.1%.

Verizon has begun to roll out the ultra high-speed FiOS network service to the majority of its customers, and will make the service available to small-business subscribers by the end of the year.

The company focuses on gaining market share through the deployment of service offerings, including expansion of voice-over-Internet protocol 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 revenues and operating income as well as increased market share.

We are currently maintaining our long-term Neutral recommendation with the Zacks #3 Rank (Ho.

 
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