Verizon Communications Inc. (VZ) seems to be on an expansion spree as it has extended its 100G network in the U.S. and Europe besides deploying 4G LTE network in several U.S. markets. The rapidly growing telecom traffic demand is forcing the company to expand its network infrastructure. The largest telecom operator in the U.S. has expanded by a massive 20,921 kilometers in the U.S. and by 2,600 kilometers in Europe.
In the U.S., Verizon has deployed its 100G technology in some select markets like Atlanta-Tampa, Kansas-Dallas and Salt Lake City-Seattle, where data demand is the highest. Alongside, within Europe, the company expanded its 100G technology in two new routes including the lucrative London-Paris and London-Frankfurt route.
100G or 100 Gigabyte Ethernet is a high speed computer network standard that supports data transfer at a speed of 100GB per second, which is 10 times better than the previous fastest Ethernet standard with a speed of 10GB per second. 100G technology supports both fixed and wireless services to create a high capacity network, which allows super-fast data transfer in multiple locations.
In November, 2007, Verizon became the first operator in the U.S. to successfully complete the trial of 100G technology. Several trials followed and in March 2011, the company deployed the 100G network in Europe, thereby expanding the infrastructure and performance for its customers. Following the European launch, Verizon successfully launched the network technology in several U.S. markets.
Cloud based and video streaming services have been on rise for the past few years. Increasing penetration of smartphone has increased the demand for wireless data services. Unprecedented uses of these services are driving bandwidth demand for the major carriers including arch rival AT&T Inc. (T).
We believe Verizon is expanding its 100G technology to meet this huge bandwidth demand. Additionally, the expansion will build on the company’s leading position in the Ethernet market, thereby enhancing the end-users experience.
We maintain our long-term Neutral recommendation on Verizon Communications Inc. The company also retains a Zacks #3 Rank, implying a short-term Hold rating.
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