Telecom major Vodafone Group plc (VOD - Analyst Report) announced that its U.K. arm has reached 500,000 4G customers within six months of the super-fast wireless technology launch. The news bears testimony to the popularity of 4G and the quick acceptance it is enjoying.
The U.K. based mobile operator has noticed that 4G customers are using twice as much data as its 3G users owing to more usage of this faster version of mobile network for video streaming, video calling and m-commerce purpose. Vodafone’s 4G customers used 300 TB of data during December.
On Aug 29, 2013, Vodafone launched its 4G service in U.K. along with O2, which is owned by Spanish wireless operator Telefonica (TEF - Analyst Report). Although Vodafone launched its 4G service in the U.K. 10 months later than Everything Everywhere, the telecom behemoth has outpaced its larger rival in hitting the half million 4G customer mark.
Newbury based Vodafone’s success can be attributable to its efforts to diversify 4G offering by providing sizeable data allowances along with a two year free subscription for either Spotify Premium or Sky Sports Mobile TV.
Vodafone’s 4G network currently covers 36% of the U.K. The company will invest £900 million this year to ramp up its 4G network and aims to cover 98% of Britain by 2015. That is quite an ambitious target given the fact that 4G customers constitute only a fraction of its total subscriber base, which stands at 419.4 million at the end of 2013.
4G is rapidly gaining momentum globally owing to demand for high-speed wireless data services and mobile video. Unprecedented progress of smartphones has only fuelled the demand. We believe the rapid growth of 4G will boost the company’s financial performance given the higher ARPU generating capacity of the wireless technology.
Recently, Vodafone reached an agreement with Verizon Communications Inc. (VZ - Analyst Report) to sell its 45% interest in Verizon Wireless for $130 billion. This enormous fund will be sufficient for Vodafone to expand its 4G network.
However, Vodafone still needs to go a long way before catching up with Everything Everywhere, which is way ahead with 2 million customers covering 70% of U.K.
Vodafone currently carries a Zacks Rank #3 (Hold). A better-ranked stock within this sector includes BT Group plc (BT - Snapshot Report), with a Zacks Rank #2 (Buy).