In a bid to eliminate traditional cable subscriptions in the United States, Verizon Communications Inc. VZ announced a pricing breakthrough in the cable industry with the launch of Mix & Match on its FiOS platform. This offering comes as a likely savior in the wake of growing customer cancellations over high cable prices, ultimately coercing them into unwanted bundles and multiple contracts for a profitable bargain.
However, the latest change might not go down well with some subscribers due to the pricing structure. Consequently, shares of this telco company dipped 0.41% to $58.85 on Jan 9.
Mix & Match is a customizable pricing model enabling viewers to combine TV with Internet plans effectively without any hidden charges and annual contracts. This, in turn, will benefit subscribers with additional preferences and transparency.
The flexible pricing plan is specifically designed to sell Internet, phone and pay-TV services as separate products, ultimately putting an end to the triple pay bundle strategy. Infamous as cable industry’s torture device, triple pay bundles provide TV, Internet and landline services at a single discounted rate, pushing customers to enter into long-term contracts in exchange for a price break.
Customers can choose from an array of personalized TV plans, namely Your FiOS TV ($50/month), Most FiOS TV ($90/month), YouTube TV ($50/month) and More FiOS TV ($70/month) with access to multiple local broadcast networks, such as Fox Corporation FOX, Univision, Telemundo and NBC. However, if the viewers are unsure of the feasibility of the aforesaid plans, they are offered a privilege trial run of FiOS’ 425 channels under a $50/month “test drive plan” for two months. Impressively, wireless customers can also enjoy an added incentive of $10/month under Mobile+Home Rewards plan through My Verizon app.
Furthermore, customers can explore a plethora of Internet plans with speed ranging from 300 Mbps ($59.99/month) to 100 Mbps ($39.99/month) along with a Gigabit Connection ($79.99/month). Unlimited home phone services are available for $20/month. The telco behemoth is also providing one year of free Disney+ connection to its new broadband subscribers, which currently runs through Jun 1, 2020.
Markedly, Verizon expects considerable business growth in both its Wireless and Wireline businesses during 2020. It anticipates healthy improvement in margins on the back of continued strong FiOS network and strategic services in the Wireline business. The company earlier collaborated with industry-leading web-based video playback services providers THEO Technologies and IRIS.TV to deliver mobile video services with advertising functionality and monetize the video content. Its consistent focus on online content delivery, mobile video and online advertising augur well for the long term.
Verizon’s long-term earnings growth expectation is 3.2%. Driven by a solid momentum in the wireless business, the stock has inched up 1.4% compared with its industry’s rally of 10.4% in the past year.
Zacks Rank & Stocks to Consider
Verizon currently carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the broader industry are Ubiquiti Inc. UI and Cogent Communications Holdings, Inc. CCOI. While Ubiquiti sports a Zacks Rank #1 (Strong Buy), Cogent carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ubiquiti has a long-term earnings growth rate of 9.4%.
Cogent’s long-term earnings growth is projected at 8%.
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Verizon Communications Inc. (VZ) : Free Stock Analysis Report
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