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Verizon to Charge for Backup Batteries

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Leading U.S. telecom operator, Verizon Communications Inc. (VZ - Analyst Report) will be offering backup batteries for telephone handsets at an extra charge to its new wireline subscribers. Generally, these batteries are useful to subscribers during complete power failure in emergencies like storms, earthquakes and floods.

Most telecom operators have stopped offering free batteries to its subscribers. Thus, Verizon will be the latest to join the bandwagon. The U.S. carrier will be charging offering the batteries for a one-time cost of $30.

Continuous rise in maintenance cost coupled with persistent loss in landline business has forced the telecom operator to withdraw such free facilities.  In the third quarter of 2013, Verizon’s Wireline revenues which also includes landlines, dipped 1.0% year over year to $9.8 billion due to continued decline in global business. However, it’s FiOS Video and FiOS Internet services added 135,000 and 173,000 new customers, respectively, during the quarter.

On the flip side, Verizon’s Wireless revenues increased 7.2% year over year to $20.4 billion in the third quarter supported by substantial growth in retail post-paid customers and rising smartphone penetration.

During the quarter, Verizon added over 1.1 million retail subscribers, including 927,000 post-paid customers. At the end of the quarter, the company had 101.2 million retail subscribers (including 95.2 million post-paid and 6 million prepaid customers), reflecting a 5.5% year-over-year increase.

The company continues to bring in more markets under its wings with the rapid expansion of 4G Long-Term Evolution (LTE) services, which now covers 99% of its 3G market with availability across 500 markets and serving over 303 million customers. Further, strong sale of Apple Inc.’s (AAPL - Analyst Report) iPhone and increased adoption of Google Inc.’s Android smartphones also aided growth at Verizon Wireless.

We believe that Verizon will continue to experience solid momentum in its wireless business, as subscriber additions were strong. Going forward, Verizon will continue to solidify its position in the U.S. markets against AT&T, Inc. (T - Analyst Report) and Sprint by expanding network to new markets and generating robust cash flow growth.

Currently, Verizon has a Zacks Rank #3 (Hold).

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