Verizon Communications Inc. VZ has announced a three-year price lock guarantee for all its myPlan and myHome network plans. This ensures that the core monthly plan price for calling, data and texting will not change in the next three-year period, excluding taxes, fees and perks. The hassle-free enrollment for the changeover is being done automatically for all existing users and is reset for the next three years each time myPlan is changed. The customer-first strategy is designed to woo new customers and retain existing ones amid a challenging macroeconomic environment. 

At the same time, Verizon guarantees a free phone from Apple, Google or Samsung with any myPlan enrollment when users trade in any phone in any condition. Home Internet routers are included at no additional cost with every myHome plan. In addition, customers will be able to enjoy free satellite text messaging services on qualifying devices on any myPlan, while saving more than 40% on five of the most popular subscription services: Netflix, Max, Disney+, Hulu and ESPN+.

VZ Reinforcing its Customer-Centric Model

Verizon is the first and only carrier in the industry to offer such attractive benefits for customers. With a customer-centric business model, the company delivers faster peak data speeds and capacity for customers, driven by disciplined engineering and steady infrastructure investments. The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These include massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells.

Verizon is witnessing significant 5G adoption and fixed wireless broadband momentum with premium unlimited plans. It is offering various mix-and-match pricing in both wireless and home broadband plans, which has led to solid customer additions. Moreover, in the enterprise and wholesale business, Verizon is shifting its revenue mix toward newer growth services like cloud, security and professional services. 

Verizon has further expanded Fios Forward to support digital inclusion and provide opportunities for underserved households to thrive in the digital world. With no data caps, Fios customers can experience faster upload and download speeds than any other comparable plans. The telecom giant plans to accelerate the availability of its 5G Ultra Wideband network across the country. The company’s growth strategy includes 5G mobility, nationwide broadband and mobile edge compute and business solutions.

VZ Eyeing Santander Deal for Improved Customer Service

Verizon is reportedly eyeing a partnership with Spain-based banking giant Banco Santander, S.A. SAN to augment customer satisfaction. Per the deal, Verizon customers will benefit from extended bill credits once they open a high-yielding savings account with Santander's new digital bank platform. This is likely to translate into incremental customer additions and help Verizon expand its subscriber base.

By collaborating with Verizon, Santander is aiming to strengthen its geographical presence in the United States. With 409 branches primarily in nine states in the Northeast, it has one of the biggest auto-lending businesses in America. Santander now intends to leverage Verizon’s wide customer base to develop its technology platform in the United States for consumer banking, including digital-only banking and consumer finance. The proposed partnership with Verizon is one of the several options that the bank is currently considering to establish itself as a full-service digital bank in the country after having launched its U.S. digital bank in October 2024.

VZ Margins to Get Hit?

While the three-year price lock offer will likely expand its customer base, the lucrative discounts are expected to weigh heavily on margins. To add to the woes, the company’s wireline division is struggling with persistent losses in access lines due to competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. Moreover, to expand its customer base, Verizon is spending heavily on promotion and offering lucrative discounts, which are hurting margins.

VZ also recorded high capital expenditures to support the launch and continued build-out of its 5G Ultra Wideband network, deployment of significant fiber assets across the country, and upgrade to Intelligent Edge Network architecture. The company has splurged in the C-Band auction, which is offering airwaves in the 3.7 gigahertz-to-4.2 gigahertz area of spectrum to acquire key mid-band spectrum for potential 5G deployments in the next few years. Unless the high auctioning expenses are justified, margins are likely to be compromised significantly.

In addition, Verizon is facing a steady decline in legacy services. The company registered 60,000 Fios Video net losses in the fourth quarter of 2024, reflecting the ongoing shift from traditional linear video to over-the-top offerings. 

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Price Performance of VZ

VZ has gained 8.3% over the past year compared with the industry’s growth of 40.9%, lagging peers like AT&T Inc. T and T-Mobile US Inc. TMUS. AT&T has gained 64.2% and T-Mobile has soared 66.3% during this period. T-Mobile continues to enhance its network infrastructure, including 5G and fiber networks, to provide best-in-class coverage and capacity nationwide. On the other hand, AT&T is benefiting from the increased deployment of mid-band spectrum and greater fiber densification.  

One-Year VZ Stock Price Performance

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Estimate Revision Trend of VZ

Earnings estimates for Verizon for 2025 have declined 0.2% to $4.69 over the past year, while the same for 2026 has decreased 0.4% to $4.86. This portrays bearish sentiments for the stock. 

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End Note

By investing steadily in infrastructure and pioneering new technologies, Verizon is well-positioned to bridge the digital divide and enhance the connectivity landscape nationwide. The innovative industry-first three-year price lock strategy is expected to be a lucrative offer for customers. This is likely to translate into solid subscriber growth, higher average revenue per user and increased broadband and fiber penetration.

However, a saturated wireless market and price wars owing to competitive pressure have eroded its profitability. The guaranteed price lock is expected to squeeze margins further. The marginal downtrend in estimate revisions portrays skepticism about the stock’s growth potential. With a Zacks Rank #3 (Hold), Verizon appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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