Verizon Communications (VZ, Financial) ended the first quarter on a strong note, delivering solid results. The communications company is well-positioned to grow its profitability. It is accelerating its investments in the business and with a better momentum, Verizon is set to carry forward its growth trend. Verizon's strategy to improve the overall customer experience is competing well in the markets, holding a competitive edge among its rivals.
The wireless segment is the best-performing segment for Verizon. The company is especially focused on earning more in this segment.
Smart capital investment strategy
In addition, Verizon also has a capital investment strategy which is focused on adding capacity to the network to meet increasing 4G device adoption. This is expected to drive higher customer usage. Moreover, Verizon’s plans such as MORE everything for high quality 4G LTE network is driving the device volume. The company is also seeing an increase in the 4G smartphone and tablet activation, and with these best in class services, Verizon is seeing good customer addition as well as customer retention.Â
Moving ahead, Verizon is proactively investing to be able to meet the growing demands. It is optimizing its 4G LTE network by focusing on adding capacity and increasing network density and the point spectrum. Further, the company is geared up to actively deploy AWS spectrum across the nation. This seems to be a strong move by Verizon. It is expecting that this deployment and addition of small sales distributed in terms of systems in building solutions will fortify its network advantage.
Better times ahead
Verizon’s cash flows are expected to increase in the next quarter. The company has already closed up with Vodafone; this will lead to higher cash payments for interest and taxes. But the cash flows from financing section will have lower cash distribution to Vodafone and higher overall dividend payments to the shareholders.
The wireless segment also stands as a profitable segment for Verizon. The company is anticipating the same growth that it saw in the last quarter. The revenues grew to $21.5 billion, up 7.5%. But there was sequential decline as well, which was a result of a tradeoff between the lower service revenue and higher billing of monthly equipment. The company is seeing an increase in the number of Verizon Edge users. Verizon has seen about 18% of improvement in the customers choosing Verizon Edge. This is good news for the company as it indicates better customer engagement to Verizon.
With the growing tablet and mobile usage, the company is seeing good growth in the customers for the postpaid connections. The postpaid net additions were very strong with 1.441 million, up 900,000 connections sequentially.
Moreover, Verizon has ramped up its penetration in the smartphone and it has improved to about 75% of its total phones. Its 4G device penetration continues to see impressive improvement. With the growth in the Wireless network, Verizon is seeing more traffic than its competitors, and expects better revenues in the future.
Verizon is enriching the customer value proposition and driving investment returns by creating new and innovative services on its FiOS platform. it recently introduced FiOS Quantum TV. This is now equipped with enhanced features and functionality as far as recording capabilities, storage, and control of content is concerned.
Conclusion
Verizon seems to be making a number of positive moves that investors should not miss. It will be a good idea to hold this stock for the long run.
