According to sources,
Verizon Communications Inc.
) is on the path of re-building its position in the pre-paid 3G
domain, which is gradually getting obsolete from the market.
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The entry of 4G long-term evolution (LTE) in the market and its
increasing popularity among carriers and subscribers have
affected 3G's market share. Thus, to boost the 3G market, Verizon
has put forward a lucrative double-data promotional offer to
prepaid customers for the upcoming holiday season.
According to the offer, Verizon - which has nearly 5.5 million
prepaid subscriptions - is providing the subscribers with 2GB of
data for prepaid $80 unlimited-talk-and-text plan, in place of
the customary 1GB data. This offer - which will end on January 31
- is exclusively for customers using 3G and not for 4G LTE
Through this step, Verizon aims to expand the 3G prepaid market,
while placing 4G postpaid plans for smartphones on the shelf.
With this offer, the company expects to attract the youth and
New York-based Verizon targets to use 3G connectivity as a
back-up option for those regions that cannot be served with 4G.
With the growing market penetration of 4G, the company expects 3G
network to be wiped out within the next few years. Until then,
management aims to reap in most benefits by adding on more people
in the 3G prepaid network.
Verizon, with a vast 3G network set-up, has the option to gain
market share in the prepaid division by endorsing unlimited voice
plans at higher than average prepaid ARPUs (average revenue per
user) minus any additional capital spending. For this, the
company might be required to trim its prepaid prices that are a
bit expensive compared to peers.
Currently, Verizon connects more than 250 million Americans via
its LTE network in almost 420 markets across the nation. Among
other top telecom service providers,
) serves LTE network to 150 million people, and
Sprint Nextel Corp.
) has just started rolling out the service and covers only 43
We are maintaining our long-term Neutral recommendation on
Verizon. For the short term (1-3 months), the stock retains a
Zacks #3 (Hold) Rank.