Ciena Corporation (CIEN), AT&T Inc. (T), Verizon Communications Inc. (VZ): More Upside in Store for This Telecom Equipment Company

Verizon Communications Inc. (NYSE:VZ) has completed its initial LTE build-out and is now present in 500 markets, covering close to 300 million people. However, building an LTE network doesn’t mean that spending has come to an end, since Verizon Communications Inc. (NYSE:VZ) will have to make the network more efficient to provide better service. This is where densification, or replacing larger cell sites with a number of smaller cell sites, will come into play.

Densification allows telcos to provide better services, especially in crowded areas. Earlier this year, Big Red stated that it will start deploying small cell sites in the second half of the year. This means that even though Verizon has completed its initial LTE roll out, it will continue to spend to make the network better.

Then there’s AT&T Inc. (NYSE:T), which has been chasing Verizon Communications Inc. (NYSE:VZ) aggressively and consistently keeps adding to its LTE markets. AT&T has around 350 markets covered by 4G and intends to expand its coverage to 300 million people by next year. Apart from building its LTE infrastructure, AT&T Inc. (NYSE:T)’s Project Velocity IP also focuses on adding 40,000 small cells in urban areas.

Ma Bell will be spending a total of $40 billion in 2014 and 2015 to upgrade its wireless and wireline networks, and since Ciena is a supplier, it should benefit from AT&T Inc. (NYSE:T)’s capex plans.

The takeaway
With both Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) continuing to invest in their LTE infrastructure and accounting for a major part of Ciena’s top line, the equipment provider’s performance should strengthen going forward. In addition, Ciena Corporation (NASDAQ:CIEN) has been aggressively looking to capture more design wins in international markets and it has seen strong order inflows as well, making it a stock worth holding on to.

The article More Upside in Store for This Telecom Equipment Company originally appeared on Fool.com and is written by Harsh Chauhan.

Harsh Chauhan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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