The largest U.S. mobile operator
Verizon Communications Inc.
(
VZ
) has raised the prices for FiOS bundled Internet services while
increasing speeds.
Verizon is seeking to deploy faster speeds for the bundled FiOS
broadband Internet, television and phone services. The deployment
of high-speed data networks will provide the company a competitive
edge against major cable operators such as
Comcast Corporation
(
CMCSA
),
Time Warner Cable Inc.
(
TWC
) and
Cablevision Systems Corporation
(
CVC
).
The move will impose a burden on customers to pay an extra
$10-$15 per month for bundled television and broadband service. The
company will stop offering its lowest speed service plans - 25 Mbps
and 35 Mbps - to new customers. Instead, it will offer the new 50
mbps and 75 mbps plans to customers. In addition, there are various
bundled plans, which cost more to customers for high-speed data
service.
Verizon continued to grow its FiOS base throughout the year on
the back of high speed and progressive video offerings. In the
first quarter, Verizon added 180,000 and 193,000 new customers to
its FiOS Video and FiOS Internet services, respectively. The
penetration rate (subscribers as a percentage of potential
subscribers) of both FiOS Internet and FiOS Video grew to
approximately 36.4% and 32.3%, respectively, across all markets
from the year-ago levels of 33.1% and 29.1%.
The U.S. telecom carriers focus more on data rather than voice
both in the wireless and wireline businesses with higher speeds
deployments. A week ago, Verizon Wireless, a joint venture of
Verizon and
Vodafone Group Plc
(
VOD
), unveiled new shared data plans for its wireless services,
effective June 28 putting an end to the company's current monthly
voice and data plans.
We expect these efforts made by Verizon to lead to improved
revenue, high operating margins and greater market share. 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).
COMCAST CORP A (CMCSA): Free Stock Analysis
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CABLEVISION SYS (CVC): Free Stock Analysis
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TIME WARNER CAB (TWC): Free Stock Analysis
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VODAFONE GP PLC (VOD): Free Stock Analysis
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VERIZON COMM (VZ): Free Stock Analysis Report
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