) is likely to launch its 4G LTE network in December 2010. This
initial launch will cover 38 major markets including Boston, New
York, Chicago, Los Angeles, San Francisco, Seattle and Washington
D.C. However by end of 2013, Verizon plans to extend its LTE
network to all of its current 3G coverage.
Verizon has a competitive advantage in the sense that it is
ahead of AT&T (
) in terms of LTE deployment (early market entry advantage) and its
LTE 4G technology will offer better download speed
than Sprint's (
) WiMax 4G technology (technological advantage).
Additionally, LTE-based smartphones may be available in early
2011, and so Verizon should gain from higher growth in its
data revenue per subscriber
leading to potential upside of 5% to our price estimate.
Mobile Data Traffic Rising
The demand for mobile data has seen a tremendous rise due to the
success of smartphones. Newer devices like tablet computers,
netbooks and notebooks are further expected to aid mobile data
In the U.S., mobile data traffic has picked up since 2008
dramatically. Studies suggest that average data revenue per user
has doubled since the launch of Apple's (
) iPhone. Overall, the U.S. wireless data market grew by 25%
in Q3 2010 compared to Q3 of 2009, amounting to $14 billion. The
rapid growth in this area is likely to continue and faster networks
like 4G will support continued growth.
As a result Verizon's data revenue per user can potentially
increase more than we forecast. We currently forecast this figure
to increase from an estimated $17.50 in 2010 to a little under
$25.00 by the end of our forecast period. However if this figure
rises to $30.00 instead, as a result of explosive data usage
growth, our price estimate increases by 5%.
You can modify our forecasts above to see how data revenue per
subscriber can impact Verizon's stock.
You can see
the complete $31.69 Trefis price estimate for
Verizon's stock here.