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Verizon Wireless, a subsidiary of Verizon Communications Inc. (VZ - Analyst Report) is expanding its network capabilities with new cell sites in the Hawaii Islands. The company introduced 4G sites in Princeville, Kukui'ula, Kilauea, Moloa'a, Anahola, Nawiliwili, Wailua, Lihu’e, Kapa'a, Knudsen Gap, Koloa Town and Kalaheo. The expansion plans in the 4G space would will likely boost the company’s data revenues and tap potential opportunities in the LTE market.

Verizon remains on track with current target of expanding 4G coverage into 400 markets by the end of 2012. Including the latest network expansion, Verizon LTE coverage is now available in 470 markets. The wireless giant now plans to turn its entire 3G market into 4G by the end of 2013.

To achieve its goal, Verizon is moving quickly to acquire more spectrum licenses in order to support its video content and other data services in the rapidly growing smartphone market. The company bought wireless spectrum from SpectrumCo and Cox Communications as wells as other wireless providers such as Leap Wireless International Inc. .

We believe the purchase of new spectrum will double Verizon’s capacity and provide services at a much higher speed, thereby driving data revenues and boosting its competitive position.

Further, Verizon is riding high on smartphones with the introduction of devices that would boost data revenue going forward. Verizon has also adopted a new shared data strategy — Share Everything — which is considered the biggest innovation in wireless pricing over the past several years. Share Everything will maximize the carrier’s long-term revenue, though it could put pressure on monthly average revenue per user growth in the short term. All these developments and operating efficiencies are aimed to bring in $2 billion in cost savings in the wireless segment.

Verizon has a Zacks #3 Rank, implying a short-term (1–3 months) Hold rating. For the long term, we have a Neutral recommendation on the stock.

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