Leading telecommunication company Verizon Communications Inc. (VZ) is planning to launch a mobile software store.
The company is in talks with several other carriers and hardware manufacturers to come up with a unique online store concept that will offer an alternative to other App-based stores by giants like Apple Inc. (AAPL) and Google Inc. (GOOG). We believe the proposed plan remains accretive to the company’s revenues and also fosters growth opportunity in the data service segment.
Verizon Communications has a strong foothold in the wireless market and expects growth from higher penetration of devices and increasing market penetration of 4G LTE services. On Jan 6, 2014, Verizon Wireless announced its agreement to transfer 700 MHz A Block spectrum licenses to T-Mobile USA for $2.4 billion and spectrum licenses in the AWS and PCS bands. The bands will help in expanding its 4G LTE network coverage. The transaction is expected to close by the first half of 2014.
Further, in Apr 2014, the company entered into an agreement with Cincinnati Bell Inc. (CBB) for purchasing spectrum licenses worth $194 million. The deal is expected to close by the second half of this year and would incorporate licenses in key markets like Greater Cincinnati and Dayton, OH, areas of northern Kentucky and southeastern Indiana. In these areas, Cincinnati Bell reportedly offered GSM-based 2G, 3G and HSPA+ services through 460 cell sites.
In addition, the company expects higher adoption of data plans going forward as it is extending distribution nationwide. Further, to counter intense competition, Verizon updated its data plan Share Everything and re-launched it under a new brand name, More Everything. More Everything offers reduced pricing plans to customers who subscribe to Verizon Edge and a minimum of 10GB of data. We believe such pricing policies will improve value proposition for customers, drive penetration of 4G devices and stimulate 4G LTE network usage.
Verizon currently has a Zacks Rank #3 (Hold).