Verizon (NYSE:VZ) is a communication provider. It provides information related services to a number of consumers, including various businesses and governmental agencies. It is the largest telecom company in U.S. as regards market capitalization which stands at above $200 billion.
Verizon Wireless operates America’s most reliable wireless network, with 104.6 million retail connections nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and delivers integrated business solutions to customers in more than 150 countries.
Performance report card
VZ has posted a revenue growth of 8% recently. There is a sudden surge of increase in customers and tablet sales. For the quarter, VZ added 304,000 postpaid phone net additions. There was a net addition of wireless subscribers (1.4 million). Operating revenue stood at $31.48 billion which marked an increase of 5.7%. Annually, VZ generates $20 billion free cash flows. It made $31.5 billion in revenue last quarter. Total wireline revenue in Q2 2014 was $9.8 billion. In the last six months VZ has cut down capital expenditures from $2.95 billion to $2.73 billion. 64% of the smart phones on the VZ network were on 4G as of the first quarter this year.
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- VZ 15-Year Financial Data
- The intrinsic value of VZ
- Peter Lynch Chart of VZ
Consumer segment reported a strong performance. In this segment the FiOS added 100,000 video connections and 139,000 internet connections. VZ came up with the EDGE plan last year which enabled customers to upgrade their devices faster.
The company is known for increasing dividends. Consolidated EBITDA margin (non-GAAP, based on earnings before interest, taxes, depreciation and amortization) was 37.6 percent for second-quarter 2014, compared with 35.9 percent for second-quarter 2013. During the second quarter, Verizon Wireless continued to add capacity to its 4G LTE network, the largest in the United States, using AWS spectrum. The additional bandwidth, called XLTE, is now available in more than 350 markets across the country.
VZ is making huge investments for upgradation of its network. It is making efforts to provide its customers better services. Verizon Wireless was amongst the first to introduce shared data plans way back in the year 2012. This was a pleasant welcome by the customers since this increased mobility. It has already purchased the remaining 45% stake in Vodafone (NASDAQ:VOD). This will help to boost sales in the near future.
Shift from copper landlines
The shift from copper landlines to fiber-based voice networks is gaining pace already. VZ is pushing hard to shift traditional landline service. If the Federal Communications Commission approves this, a whole new internet-based phone will be there by 2020. The copper lines are expensive to maintain and are aging, too.
Chairman and CEO Lowell McAdam said, “Verizon’s second-quarter results continue to demonstrate our ability to deliver strong customer growth, with equally strong financial performance, in a dynamic and competitive environment. We have great momentum heading into the second half of the year. We remain focused on profitable growth and on meaningful network investments that provide our customers with the best and with a continuously improving, overall experience.”
It is evident that the company’s fundamentals are strong and the company is better positioned to provide good returns to its valued shareholders. It is generating significant cash flows by adding more and more subscribers. Verizon Wireless’ 4G LTE network provides better coverage than any other company’s 4G LTE network. In that way the consumers can stay on the network to send email on the go or search for valuable information. 4G LTE network carries about 73% of the total data traffic of the company’s network.
Currently the company is focused on charging minimum prices and provides better quality services to its customers. This strategy has worked well for the company. The growth of tablets poses several opportunities for this company. The company is trying to take market share from competitors. Verizon has 104.6 million net connections.