Will Verizon (VZ) Subscriber Base Benefit From Free Offers?

·4 min read

Verizon Communications Inc. VZ recently introduced a 30-day free trial offer for unlimited data on its 5G network. The offer is applicable on any 5G compatible, unlocked eSIM-capable smartphone without disrupting the existing plan.

The promotional offer, aimed primarily at non-Verizon customers, is likely to entice users who would prefer to enjoy the premium 5G network experience without any contractual obligations. The company expects that its super-fast network will likely attract and retain several new customers and augment its user base through lucrative mix-and-match unlimited plans. Verizon is offering various mix-and-match pricing in both wireless and home broadband plans that have historically led to increased adoption of 5G devices and premium unlimited plans, translating into healthy customer additions.

Last week, Verizon also announced the launch of BlueJeans Basic, a free virtual video conferencing plan for users that allows attendees to meet as long as they want. The new feature by Verizon subsidiary, BlueJeans, which offers an interoperable cloud-based video conferencing service across a wide range of devices and conferencing platforms, is aimed to facilitate a seamless transition to a hybrid workplace with a spontaneous and engaging interactive digital platform.

BlueJeans Basic allows up to 25 persons to meet on a single platform equipped with HD video, spatial audio, industry-leading noise reduction and dynamic leveling for impeccable call quality. Leveraging AES 256-bit encryption, BlueJeans Basic also includes enterprise-grade security features like Waiting Room, Screen Sharing Controls and the option to Hard Mute participants individually or upon entering the meeting.

Although such promotional offers and lucrative discounts are likely to expand its customer base, these are weighing on margins. In addition, 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. Verizon also recorded high capital expenditures for 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. It remains unclear if and when a reasonable return can be achieved from such investments.

Nevertheless, with one of the most efficient wireless networks in the United States, Verizon deploys 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. Its 5G mobility service offers an unparalleled 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 are 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.

The stock has lost 26.4% over the past year compared with the industry’s decline of 14.3%.

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Verizon carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Picks

Arista Networks, Inc. ANET, sporting a Zacks Rank #1, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 14.2% and delivered an earnings surprise of 14.2%, on average, in the trailing four quarters.

It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.

Juniper Networks, Inc. JNPR carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 7% and delivered an earnings surprise of 1.6%, on average, in the trailing four quarters.

Juniper is leveraging the 400-gig cycle to capture hyperscale switching opportunities inside the data center. The company is set to capitalize on the increasing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence.

Ubiquiti Inc. UI, carrying a Zacks Rank #2, offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. Ubiquiti’s excellent global business model, which is flexible and adaptable to evolving changes in markets, helps it to beat challenges and maximize growth.

Ubiquiti boasts a proprietary network communication platform that is well-equipped to meet end-market customer needs. In addition, the company is committed toward reducing its operational costs by using a self-sustaining mechanism for rapid product support and dissemination of information by leveraging the strength of the Ubiquiti Community.

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Verizon Communications Inc. (VZ) : Free Stock Analysis Report

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