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Verizon Wireless of Verizon Communications Inc. (VZ - Analyst Report) emerged winner in the RootMetrics network performance study. According to a six-month review by RootMetrics, Verizon Wireless scored 89.7 in a scale of 100 for its network speed, call quality, and data and text messaging services.

AT&T Inc. (T - Analyst Report) came a close second with a score of 86.2, while Sprint Corp. (S - Analyst Report) and T-Mobile US Inc. (TMUS - Snapshot Report) scored 68.2 and 64.3, respectively. Leading performance metrics in the wireless business are accretive to the company’s subscriber base and offers a competitive advantage.

Verizon has a strong foothold in the wireless business and continues to capture additional market share via robust deployment of the 4G Long Term Evolution (LTE) network. This leads to improved operating and capital efficiency. The company is leading the industry in terms of 4G deployment. As of Dec 31, 2013, it covered 500 markets and more than 305 million people.

A study conducted by RootMetrics last year showed AT&T  as the clear winner in the LTE speed test. The carrier had an LTE-only download speed of 18.6 Mbps and an average upload speed of 9 Mbps. Maximum download speed was around 57.7 Mbps and maximum upload speed averaged 19.6 Mbps. For Verizon, the tests showed download speed of 14.3 Mbps and upload speed of 8.5 Mbps.

Maximum LTE speed was 49.3M bps for download and 19.7 Mbps for upload. However, Verizon continues to supersede AT&T in terms of market coverage.

While Wireless continues to outperform, Wireline business still continues to be a drag on Verizon’s financials. The company’s wireline division is struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol (VoIP) service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. These are weighing on the company’s revenues and margins.

In order to make it profitable, Verizon is making significant investments and is streamlining its cost structure. It remains unclear if and when a reasonable return can be achieved from such investments. Further, Wireline revenue trends would remain challenging over the next couple of quarters due to the company’s actions to improve profitability. The product rationalization and process simplification initiatives would dilute profits in the short term.

Verizon currently has a Zacks Rank #3 (Hold).

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