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What to Expect from VZ’s FiOS Internet Customer Growth in 1Q17

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Verizon’s FiOS Internet net additions

Now let’s look at Verizon’s (VZ) Internet component, a key growth driver for the company. Verizon’s labor dispute has come to an end, and going forward, it could see margin gains from its new union contract. Verizon could also gain a significant number of FiOS Internet subscribers in the near future.

In 4Q16, Verizon added 68,000 FiOS Internet subscribers, compared to 82,000 net additions in 4Q15. The net gains in VZ’s FiOS connections were offset by falls in its DSL-based (digital subscriber line) Internet connections by roughly the same amount.

Verizon’s FiOS Internet penetration rose 20 basis points to reach 40.4% in 4Q16, compared to 40.2% in 4Q15. The company’s number of FiOS Internet subscribers rose ~4.3% on a YoY (year-over-year) basis to ~5.7 million at the end of 4Q16.

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Verizon’s FiOS Instant Internet

During Verizon’s 4Q16 earnings conference call, its management mentioned that by utilizing its fiber assets, the carrier continues to innovate its FiOS platform.

In January 2017, Verizon introduced Instant Internet, a new service that offers both upload and download speeds of 750 megabits per second to its subscribers. This service was introduced in New York, New Jersey, Philadelphia, and Richmond, and it’s set to expand into other markets.

Although Verizon managed to gain 68,000 net FiOS Internet customers in 4Q16, its biggest threat comes from cable companies such as Comcast (CMCSA) and Charter Communications (CHTR), as they’ve managed to add the most Internet subscribers.

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