The largest U.S. mobile operator
Verizon Communications Inc.
) unveiled new shared data plans for its wireless services,
effective June 28. The use of the new shared plan will put an end
to the company's current monthly voice and data plans.
The new shared data plan - Share Everything - will provide
unlimited voice minutes and text, including video and picture
messaging. It will bundle data services across multiple devices and
allow sharing data on as many as 10 devices including smartphones,
feature phones, tablets, netbooks, USB modems and Mi-Fi
Verizon Wireless, a joint venture of Verizon and
Vodafone Group Plc
), will offer shared data plans to all the new and existing
customers and charge $90 per month for one smartphone and one GB
data. As a result, the Share Everything price is lower than the
current plans when selected with unlimited calling and texting, but
higher than plans with limited calling and texting. Notably,
Verizon will now charge customers on a data basis rather than
metered or tiered basis.
While Verizon's new offer contains higher fee, we believe the
unlimited facility and shared data component would aid in making
the plans popular, thereby leading to higher demand. As the cell
phone markets are saturated and customers are hungrier for data
rather than voice, the new progress will boost the company's
monthly average revenue per user (ARPU) growth in the short term.
However, this growth will slow down making ARPU eventually
immaterial in the long term.
The shared data strategy is considered the biggest revamp in
wireless pricing over the past several years. Being the first U.S.
carrier to offer this service, Verizon will enjoy a competitive
edge over its major rivals.
) is considering promotion of this offer soon while
Sprint Nextel Corp.
) is still sticking to its unlimited data plans and does not have
any intention to launch shared data pricing plans in the short
The new wireless pricing plan will put the wireless business of
T-Mobile USA, a unit of
Deutsche Telekom AG
) as well as prepaid wireless carriers such as
MetroPCS Communications Inc
Leap Wireless International Inc.
) more at risk as they offer unlimited pricing plans.
We are maintaining our long-term Neutral recommendation on
Verizon. Currently, the stock retains the Zacks #3 (Hold) Rank for
the short term (1-3 months).
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