We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Verizon (VZ) Woos Customers With Free Netflix: Will the Stock Benefit?
Read MoreHide Full Article
Verizon Communications Inc. (VZ - Free Report) reportedly announced a free subscription to Netflix Inc.’s (NFLX - Free Report) premium plan for 12 months to customers who purchase one year of the exclusive premium streaming service of the National Football League. Through this bundled offer under its “myPlan” program, Verizon is offering customers an opportunity to save $276 annually.
The combined package will enable customers to stream seven exclusive live games during the 2024-2025 NFL season and tune into NFL Network for round-the-clock football news and coverage, in addition to some engaging content from Netflix.
Double-Edged Sword for Verizon?
While the promotional offer will likely expand its customer base, the lucrative discounts are expected to weigh heavily on margins. To add to the woes, the company’s wireline division is struggling with persistent losses in access lines owing to competitive pressure from the voice-over-Internet protocol (VoIP) service providers and aggressive triple-play (voice, data and video) offerings by cable companies. These are weighing on the company’s revenues. VZ also recorded high capital expenditures to support the launch and continued build-out of its 5G Ultra Wideband network, deployment of significant fiber assets across the country and upgrade to Intelligent Edge Network architecture.
Verizon has splurged in the C-Band auction that is offering airwaves in the 3.7 gigahertz-to-4.2 gigahertz area of spectrum to acquire key mid-band spectrum for potential 5G deployments in the next few years. Unless the high auctioning expenses are justified, margins are likely to be compromised significantly.
Image Source: Zacks Investment Research
Verizon's Eroding Legacy Services
Verizon registered 65,000 Fios Video net losses in second-quarter 2024, reflecting the ongoing shift from traditional linear video to over-the-top offerings. The company operates in a competitive and almost saturated U.S. wireless market with players like AT&T Inc. (T - Free Report) and T-Mobile US Inc. (TMUS - Free Report) . The stock has gained 22.5% over the past year compared with the industry’s growth of 34.9%, lagging its peers.
Spectrum crunch has become a major issue in the U.S. telecom industry. Most carriers are finding it increasingly difficult to manage mobile data traffic, which is growing by leaps and bounds. The situation has become even more acute with the growing popularity of iPhone and Android smartphones as well as rising online mobile video streaming, cloud computing and video conferencing services.
Image Source: Zacks Investment Research
Tailwinds
Despite margin woes, the various mix-and-match pricing plans in both wireless and home broadband have undeniably led to solid customer additions. The company has witnessed increased adoption of 5G devices and premium unlimited plans. Moreover, Verizon is changing its revenue mix toward newer growth services like cloud, security and professional services in the enterprise and wholesale business.
In addition, Verizon is witnessing significant 5G adoption and fixed wireless broadband momentum. The telecom giant plans to accelerate the availability of its 5G Ultra Wideband network across the country. The company’s growth strategy includes 5G mobility, nationwide broadband and mobile edge compute and business solutions.
Verizon is building the entire network infrastructure and ecosystem to provide the most amazing 5G experience to customers. It continues to deploy Home Internet service in select cities, where users can experience a maximum download speed of up to 1 Gbps. It is also expanding 5G Business Internet service that offers an alternative to cable broadband. Verizon offers the best of LTE and 5G Ultra Wideband facilities with the launch of On Site 5G — a transformative on-premises, private 5G network — for business enterprises.
Verizon’s 5G mobility service offers an unmatched experience that impacts industries as diverse as public safety, health care, retail and sports. The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These include massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells.
Verizon’s Fiber Focus
With one of the most efficient wireless networks in the United States, Verizon continues to deploy the latest 4G LTE Advanced technologies to deliver faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and constant strategic investment. Verizon has been aggressively forging ahead to expand its fiber optics networks to support 4G LTE and 5G wireless standards as well as wireline connections. The company remains focused on making necessary capital expenditures due to the continued expansion of 5G mmWave in new and existing markets, the densification of the 4G LTE wireless network to cater to huge traffic demands across multiple verticals and the continued deployment of the fiber infrastructure.
Estimate Revision Trend
Earnings estimates for Verizon for 2024 have moved down 4% to $4.58 over the past year, while the same for 2025 has declined 5.3% to $4.67. The negative estimate revision depicts bearish sentiments for the stock.
Image Source: Zacks Investment Research
End Note
By investing steadily in infrastructure and pioneering new technologies, Verizon is well-positioned to bridge the digital divide and enhance the connectivity landscape nationwide. This is likely to translate into solid subscriber growth, higher average revenue per user and increased broadband and fiber penetration.
However, a saturated wireless market and price wars owing to competitive pressure have eroded its profitability. The downtrend in estimate revisions further portrays skepticism about the stock’s growth potential. With a Zacks Rank #3 (Hold), Verizon appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Verizon (VZ) Woos Customers With Free Netflix: Will the Stock Benefit?
Verizon Communications Inc. (VZ - Free Report) reportedly announced a free subscription to Netflix Inc.’s (NFLX - Free Report) premium plan for 12 months to customers who purchase one year of the exclusive premium streaming service of the National Football League. Through this bundled offer under its “myPlan” program, Verizon is offering customers an opportunity to save $276 annually.
The combined package will enable customers to stream seven exclusive live games during the 2024-2025 NFL season and tune into NFL Network for round-the-clock football news and coverage, in addition to some engaging content from Netflix.
Double-Edged Sword for Verizon?
While the promotional offer will likely expand its customer base, the lucrative discounts are expected to weigh heavily on margins. To add to the woes, the company’s wireline division is struggling with persistent losses in access lines owing to competitive pressure from the voice-over-Internet protocol (VoIP) service providers and aggressive triple-play (voice, data and video) offerings by cable companies. These are weighing on the company’s revenues. VZ also recorded high capital expenditures to support the launch and continued build-out of its 5G Ultra Wideband network, deployment of significant fiber assets across the country and upgrade to Intelligent Edge Network architecture.
Verizon has splurged in the C-Band auction that is offering airwaves in the 3.7 gigahertz-to-4.2 gigahertz area of spectrum to acquire key mid-band spectrum for potential 5G deployments in the next few years. Unless the high auctioning expenses are justified, margins are likely to be compromised significantly.
Image Source: Zacks Investment Research
Verizon's Eroding Legacy Services
Verizon registered 65,000 Fios Video net losses in second-quarter 2024, reflecting the ongoing shift from traditional linear video to over-the-top offerings. The company operates in a competitive and almost saturated U.S. wireless market with players like AT&T Inc. (T - Free Report) and T-Mobile US Inc. (TMUS - Free Report) . The stock has gained 22.5% over the past year compared with the industry’s growth of 34.9%, lagging its peers.
Spectrum crunch has become a major issue in the U.S. telecom industry. Most carriers are finding it increasingly difficult to manage mobile data traffic, which is growing by leaps and bounds. The situation has become even more acute with the growing popularity of iPhone and Android smartphones as well as rising online mobile video streaming, cloud computing and video conferencing services.
Image Source: Zacks Investment Research
Tailwinds
Despite margin woes, the various mix-and-match pricing plans in both wireless and home broadband have undeniably led to solid customer additions. The company has witnessed increased adoption of 5G devices and premium unlimited plans. Moreover, Verizon is changing its revenue mix toward newer growth services like cloud, security and professional services in the enterprise and wholesale business.
In addition, Verizon is witnessing significant 5G adoption and fixed wireless broadband momentum. The telecom giant plans to accelerate the availability of its 5G Ultra Wideband network across the country. The company’s growth strategy includes 5G mobility, nationwide broadband and mobile edge compute and business solutions.
Verizon is building the entire network infrastructure and ecosystem to provide the most amazing 5G experience to customers. It continues to deploy Home Internet service in select cities, where users can experience a maximum download speed of up to 1 Gbps. It is also expanding 5G Business Internet service that offers an alternative to cable broadband. Verizon offers the best of LTE and 5G Ultra Wideband facilities with the launch of On Site 5G — a transformative on-premises, private 5G network — for business enterprises.
Verizon’s 5G mobility service offers an unmatched experience that impacts industries as diverse as public safety, health care, retail and sports. The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These include massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells.
Verizon’s Fiber Focus
With one of the most efficient wireless networks in the United States, Verizon continues to deploy the latest 4G LTE Advanced technologies to deliver faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and constant strategic investment. Verizon has been aggressively forging ahead to expand its fiber optics networks to support 4G LTE and 5G wireless standards as well as wireline connections. The company remains focused on making necessary capital expenditures due to the continued expansion of 5G mmWave in new and existing markets, the densification of the 4G LTE wireless network to cater to huge traffic demands across multiple verticals and the continued deployment of the fiber infrastructure.
Estimate Revision Trend
Earnings estimates for Verizon for 2024 have moved down 4% to $4.58 over the past year, while the same for 2025 has declined 5.3% to $4.67. The negative estimate revision depicts bearish sentiments for the stock.
Image Source: Zacks Investment Research
End Note
By investing steadily in infrastructure and pioneering new technologies, Verizon is well-positioned to bridge the digital divide and enhance the connectivity landscape nationwide. This is likely to translate into solid subscriber growth, higher average revenue per user and increased broadband and fiber penetration.
However, a saturated wireless market and price wars owing to competitive pressure have eroded its profitability. The downtrend in estimate revisions further portrays skepticism about the stock’s growth potential. With a Zacks Rank #3 (Hold), Verizon appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.