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Tickers in this Article: VZ, LEAP, USM
Verizon Wireless, a subsidiary of Verizon Communications Inc. (VZ), is expanding its 4G presence in new markets like Vinton County and Zanesville in Ohio, Northern Kentucky and West Virginia. The company's LTE expansion into 470 markets, including the new ones, remains industry leading and a key driver for mobile data services. Verizon continues to focus on migrating 3G wireless traffic to 4G LTE. This would lead to improved operating and capital efficiency. The company continues to expand 4G networks and expects to reach the entire nationwide 3G footprint by mid 2013.

Additionally, Verizon is seeking the deployment of 4G services to rural areas using tower and backhaul assets and its 700 MHz spectrum. To complement its advance network, Verizon is also seeking to expand its smartphone offerings with the introduction of devices that would boost data revenue going forward.

Besides, Verizon has adopted a new shared data strategy, which is considered the biggest innovation in wireless pricing over the past several years. The new strategy - Share Everything - will maximize the carrier's long-term revenue, though it could put pressure on monthly average revenue per user growth in the short term. All these developments and operating efficiencies are aimed at bringing in $2 billion in cost savings in the wireless segment.

Furthermore, Verizon is moving quickly to acquire more spectrum licenses in order to support its video content and other data services in the rapidly growing wireless market. The company bought wireless spectrum from SpectrumCo (including Comcast, Time Warner Cable and Bright House Networks) and Cox Communications as wells as other wireless providers such as U.S. Cellular Corporation (USM) and Leap Wireless International Inc. (LEAP).

We believe the purchase of new spectrum will double Verizon's capacity and provide services at a much higher speed, thereby driving data revenues and boosting its competitive position.

We reaffirm our long-term Neutral recommendation on Verizon. Currently, the stock has a Zacks #3 Rank, implying a short-term (1-3 months) Hold rating.

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