Verizon’s 4G LTE Penetration Should Increase in 2015



Verizon’s 4G LTE devices benefit the wireless division in 2014

In the earlier parts of this series, we learned that Verizon’s (VZ) wireless division is expected to support the company’s revenue growth in 2015. We also learned that the Edge installment plan should positively contribute to the growth of the division’s equipment revenues during the year. Now we will look at another aspect of the company’s offerings, which should facilitate the segment’s revenue growth in 2015.

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The contribution of 4G LTE (Long-Term Evolution) devices in Verizon’s postpaid subscriber base increased during 2014. As shown in the above chart, Verizon’s 4G LTE penetration rate expanded from 44.1% in 4Q13 to 66% in 4Q14. The increasing penetration of 4G LTE devices is particularly significant for wireless carriers such as AT&T (T), Sprint (S), and T-Mobile (TMUS).

According to Verizon, these devices make more money than those on the 3G network, contributing more toward revenues than 3G devices. These devices use high amounts of data. Verizon’s 4G LTE network catered to around 84% of the segment’s data traffic at the end of 2014.

Verizon still has room to grow its 4G LTE penetration in 2015

The adoption of LTE devices on Verizon’s network has increased. However, the company still has a significant subscriber base of 3G and basic phone users. As you can see in the above chart, ~34% of Verizon’s postpaid connections were not using 4G LTE devices in 4Q14.

According to the company, it had a total of ~31.5 million postpaid connections using basic phones and 3G smartphones at the end of 2014. Verizon’s revenues and profits should be positively impacted by the customers who choose to upgrade to 4G LTE smartphones in 2015.

If you want to take a diversified exposure to Verizon, you can invest in the Technology Select Sector SPDR ETF (XLK), which held ~5% in the telecommunications company on March 31, 2015.


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