Verizon Communications Inc. VZ recently achieved the top spot in the industry, winning the Best 5G, Fastest 5G and Most Reliable 5G carrier awards in the 2024 RootMetrics second-half drive tests carried across the country. The tests are deemed to be the nation’s most rigorous independent scientific study by Rootmetrics – a mobile analytics firm and a subsidiary of Ookla that tests network performance when consumers are using their mobile phones for voice or data communications.

VZ Rides on Superior 5G Accolades

With one of the most efficient wireless networks in the United States, Verizon delivers faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and steady infrastructure investments. The company achieved 874 Metro Area RootScore Awards, which was about 70% more than its closest competitor, marking its eighth consecutive national 5G reliability award. The appreciation underscored Verizon's unwavering commitment to providing customers with a superior 5G network experience.

The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These are 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. The telecom giant plans to accelerate the availability of its 5G Ultra Wideband network across the country, with 280 million people currently having access to it. The company’s growth strategy includes 5G mobility, nationwide broadband and mobile edge compute and business solutions. 

The deployment of a cloud-native, container-based, virtualized architecture for higher flexibility, scalability and cost efficiency across its network is likely to benefit the company’s long-term growth. Mix-and-match pricing plans for wireless and home broadband have further led to solid customer additions.

VZ to Boost Fiber Network Infrastructure

Verizon has entered into a definitive agreement to acquire Frontier Communications Parent, Inc. FYBR, the largest pure-play fiber provider in the United States. The deal, worth approximately $20 billion of enterprise value, aims to expand Verizon’s fiber footprint across the nation, accelerating its delivery of premium mobility and broadband services to current and new customers.

Post-acquisition, Verizon will integrate Frontier’s state-of-the-art fiber network within its Fios network to boost its industry-leading portfolio of fiber and wireless assets. Additionally, the combination of Frontier’s premium broadband with Verizon’s premium mobile offering is anticipated to improve the customer churn rate by approximately 50% for postpaid mobility. This, in turn, is expected to boost the revenues of the mobility division. Verizon expects to achieve a minimum of $500 million in run-rate cost synergies by the third year, backed by increased scale, distribution and network integration.

Verizon has also 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 than comparable plans.

Low Margins Dent VZ

Despite solid wireless traction, 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 weighing on 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.

Moreover, the company operates in a competitive and almost saturated U.S. wireless market. Spectrum crunch has become a major issue in the country’s  telecom industry. Most carriers are finding it increasingly challenging to manage mobile data traffic and video streaming demand, which is growing by leaps and bounds.  

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 a mere 1% over the past year compared with the industry’s growth of 34.3%, lagging peers like AT&T Inc. T and T-Mobile US Inc. TMUS.

One-Year VZ Stock Price Performance

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Estimate Revision Trend of VZ

Earnings estimates for Verizon for 2025 have declined 1.1% to $4.67 over the past year, while the same for 2026 has decreased 1.4% to $4.85. These portray 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. 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 marginal downtrend in estimate revisions further 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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