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Verizon Wireless of Verizon Communications Inc. (VZ - Analyst Report) has once again proven its mettle as a quality wireless network provider, reinforcing its growing infrastructural strength.

In a wireless network quality study conducted by J.D. Power in the Northeast region, which includes Massachusetts, Connecticut, Maine, New Hampshire, New York, Rhode Island and Vermont, Verizon ranked highest among other national wireless service operators.

We believe the company’s leading performance metrics in the wireless business are accretive to its subscriber base and offers a competitive advantage over its peers.

Early this year, Verizon also topped the RootMetrics network performance study, in which it scored 89.7 on a scale of 100 for its network speed, call quality, and data and text messaging services. Wireless service providers like AT&T Inc. (T - Analyst Report), Sprint Corp. (S - Analyst Report) and T-Mobile US Inc. (TMUS - Snapshot Report), who were also a part of this study, also fared well in terms of their scores.

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.      

However, while Wireless continues to outperform, the 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 cable companies. These are weighing on the company’s revenues and margins.

In order to make itself 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 challenged over the next couple of quarters due to the company’s actions to improve profitability. Product rationalization and process simplification initiatives would also dilute profits in the short term.

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

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