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Verizon Ahead of LTE Schedule

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The wireless giant Verizon Communication Inc. (VZ - Free Report) is running ahead of its 4G LTE deployment schedule. The company will launch its LTE in 400th market (Marquette, Michigan) on October 18, two months ahead of the schedule.

Verizon will introduce 21 new markets on that day with another 30 planned for November and December. Currently, Verizon covers 75% of the U.S. population and it expects its 4G footprint to expand across the nation by the middle of next year.

Verizon is way ahead of its rivals AT&T Inc. (T - Free Report) , Sprint Nextel Corp. (S - Free Report) and T-Mobile USA in deploying LTE networks. The LTE coverage of AT&T, the second-largest U.S. mobile service, is currently available in 60 markets and expects to reach 100 by the end of the year. AT&T expects the LTE deployment to be almost completed by the end of 2013.

Sprint, the third-largest wireless operator, is in the process of expanding its high-speed LTE networks in 100 additional cities in the coming months. It made its LTE debut in five major markets – Atlanta, Dallas, Houston, Kansas City and San Antonio – in mid-July. The company expects to complete nationwide deployment by the end of 2013. The LTE coverage is expected to reach more than 120 million people (or roughly half of its CDMA footprint) by the year-end and 250 million by next year. The fourth wireless provider T-Mobile USA, unit of Deutsche Telekom (DTEGY - Free Report) , plans to upgrade to LTE networks in 2013.

To support its 4G services, Verizon has introduced 37 different LTE devices including tablets, dongles, mobile hotspots and smartphones since the launch of its LTE network. The recently launched Motorola Droid RAZR MAXX, the Motorola Droid 4, the Droid Incredible 4G LTE and the Samsung Galaxy S III will further boost its portfolio. Additionally, Verizon recently introduced in-home wireless broadband service, “HomeFusion Broadband”, based on LTE technology in some rural and remote homes, which do not have access to DSL or cables.

At the end of September, Verizon’s LTE network accounted for about 35% of the data traffic. The company expects majority of the traffic to be on LTE soon due to the surging demand for high-speed wireless services. The rapidly growing 4G services will lift the company’s data revenue going forward.

Nevertheless, LTE poses a major risk to Verzion’s wireless segment as the other wireless service providers may delay their deployment of LTE or change their selection and adopt different next-generation technologies, including those that are incompatible with Verizon.

We are maintaining our long-term Neutral recommendation on the stock. Currently, the stock retains the Zacks # 3 (Hold) Rank for the short term (1–3 months).

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