Beyond Verizon Communications Inc. (VZ)’s Earnings

Also, the carrier beat Wall Street estimates of 634,000 customer additions by adding 677,000 subscribers, which was up from 501,000 additions last year. Other than this Verizon also added 188,000 FiOS Internet and 169,000 FiOS Video subscriptions during the period. The wireline business experienced decent revenue growth of 4.3% to $3.6 billion.

Verizon is off to a good start as both wireless and wireline numbers look pretty much on track. So what’s ahead for the company?

Looking ahead

While spectrum remains the key asset for any wireless operator, particularly at a time when data consumption levels are shooting higher at an incredible rate, both Verizon and AT&T must be looking forward to the incentive spectrum auction planned by regulators. However, policies that aim to restrict their participation in the auction so that smaller players, including Sprint and T-Mobile, get their hands on the lower frequencies have annoyed the biggies.

Another issue that could threaten Verizon’s growth in the coming quarters is T-Mobile’s entry as an iPhone seller on April 12. The fourth largest US carrier is offering iPhone 5 on installment and no-contract basis for $99 as the down payment.

Also both Sprint Nextel Corporation (NYSE:S) and T-Mobile are trying to attack the biggies with renewed forces through their combinations with Softbank and MetroPCS respectively. This is a threat to Verizon’s and AT&T’s dominance as it shall increase competition in the wireless industry in times to come. Last year AT&T and Verizon Communications Inc. (NYSE:VZ) substantially benefited from Sprint Nextel Corporation (NYSE:S)’s and T-Mobile’s weaknesses which helped both the carriers to draw subscribers and increase smartphone market share. The revival of these two players would put pressure on net subscriber additions as well as the mobile market share.

My Takeaway

While other industry players are working hard to effectively compete with the industry giant, Verizon Communications Inc. (NYSE:VZ) has a significant advantage over these players. It is way ahead with its 4G LTE deployment, covering about 500 markets. Though the company’s capital expenditure is running high to build the network, it should pay off in the future as network speed is essential to attract customers. This will continue to drive the company’s future growth.

The article Looking Beyond Verizon’s Earnings originally appeared on Fool.com and is written by Rajesh M..

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