Verizon Upgrades More Everything - Analyst Blog

Verizon Wireless of Verizon Communications Inc. VZ has announced an enhanced offering on its "More Everything" plan for customers who subscribe to Verizon Edge and minimum 10GB of data. The company announced a reduction in cost for smartphone line access from $40 per month to $15 per month.

For customers using 250 MB to 8 GB of data, discounts up to $10 can be availed on monthly line access using Verizon Edge. We expect the upgraded service offering to attract more customers and provide a competitive advantage.

We also appreciate the various strategic initiatives that the company has taken over the last couple of months. The  new data plan — Share Everything — accounts for almost 46% of its post-paid base, 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.

Further, Verizon is riding high on smartphones with the introduction of devices that would boost data revenues going forward. During the fourth 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 that these handsets will gradually reduce Verizon's reliance on CDMA chipsets, leading to lower device cost. Additionally, 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 has a Zacks Rank #3 (Hold).

Other Stocks

Better-ranked stocks in this sector include Shenandoah Telecommunications Co. SHEN, Nippon Telegraph and Telephone Corp. NTT and AT&T, Inc. T. While Shenandoah has a Zacks Rank #1 (Strong Buy), Nippon and AT&T carry a Zacks Rank #2 (Buy).