The wireless communication giant
Verizon Communications Inc.
) expects FiOS subscriber growth to remain stable in the third
quarter due to the new pricing. The new FiOS pricing have imposed a
burden on customers to pay an extra $10-$15 per month for bundled
television and broadband service, thereby leading to lower
Verizon is seeking new ways such as FiOS Quantum, copper-to-fiber
migration and cost-cutting measures to drive FiOS revenue growth
and maximize profitability. However, these initiatives would
restrict near-term FiOS subscriber additions. As a result, wireline
revenue trends would also remain challenging over the next couple
Earlier, Verizon had projected FiOS subscriber growth in a range of
150,000-170,000 for the third quarter. Now, the company will not be
able to meet this expectation until the fourth quarter.
Verizon continued to grow its FiOS subscriber base in the second
quarter on the back of high speed and progressive video offerings.
The company added 120,000 and 134,000 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 increased to approximately 36.6% and
32.6%, respectively, across all markets from the year-ago
respective levels of 33.9% and 29.9%.
The deployment of high-speed FiOS data networks will provide the
company a competitive edge against major cable operators such as
Time Warner Cable Inc
Cablevision Systems Corporation
We have a long-term Neutral recommendation on Verizon. Currently,
the stock retains the Zacks #3 (Hold) Rank for the short term (1-3
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