According to a recent report by Bloomberg , U.S. telecom behemoth Verizon Communications Inc.VZ may have again introduced a new wireless business expansion plans just after the release of its fourth-quarter 2016 financial results.
Unlimited data plans or unlimited offerings are quite common in the wireless industry. We have seen three other U.S. wireless carriers Sprint Corp. S , AT&T Inc. T and T-Mobile US TMUS opting unlimited offerings as a weapon to lure customers from their rivals. These unlimited offerings usually come with attractive promotional plans, advertisements and lucrative discounts. To this end, Verizon's unlimited 4G LTE data plan, called Verizon Unlimited, comes after a span of almost five years. The last time that the company had offered unlimited data plans for most customers was in 2011.
Verizon's unlimited plan is reportedly starting at $80 per month for unlimited data, talk and text for the first line. A family plan for four subscribers on smartphones or tablets will cost $45 per line, or $180 monthly, plus fees. Both new and existing subscribers can sign up.
Moreover, the unlimited plan allows users to stream video at a High Definition (HD) resolution and includes up to 10 GB of LTE mobile hotspot data before cutting that to 3G speeds. However, it has not been specified whether videos are allowed to stream above a 720p resolution which is the minimum threshold for HD video.
Reports states that the plan also provides unlimited calling and texting to Canada and Mexico, along with 500 MB a day of LTE data in those countries. A $10-a-day pass allows for that same amount of data outside North America.
However, as part of the new promotion, Verizon has started offering free iPhones to new customers with qualifying trade-ins. The company used free iPhone promotions for a few weeks during the holiday season to match similar offers from rivals. However, such promotional schemes led to high cash burn and heavy losses for the company.
We appreciate such a move on Verizon's part and believe that it will add to the company's long-term growth prospects. Moreover, Verizon has always attempted diversifying its business model in fields like communications, technology, wireless industry, Internet of Things (IoT) and the media video and digital platform.
However, the company's last reported fourth-quarter financial results have been quite disappointing in terms of total revenue, which declined 5.6% year over year. A major portion of Verizon's business still comes from its retail wireless and wireline business. Hence, we look forward to it, expecting the company to succeed in adding subscribers, keeping pace with competition.
Over the past three months, Verizon returned 5.13%, while the Zacks-categorized Wireless National industry gained 11.43%.
Verizon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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