Verizon Stock: 5G Investment Phase and the Road Ahead

Strategic Insights -

Verizon stock has been attracting income-oriented investors with its dividend, but 5G wireless services could make it a more appealing option for growth investors. Despite expected competition from T-Mobile US and AT&T, Verizon has emerged as the top bidder in a government auction of midband radio spectrum, spending $53 billion. The company aims to reach 175 million people by the end of 2022 with midband spectrum-based 5G services that provide faster data speeds.

Key Takeaways:

  • Verizon stock has underperformed the S&P 500, but its dividend makes it attractive to income-oriented investors.
  • 5G wireless services could reignite earnings and revenue growth, making Verizon stock more appealing for growth investors.
  • Competition from T-Mobile US and AT&T is expected to intensify, but Verizon has acquired sufficient 5G midband spectrum.
  • Verizon aims to reach 175 million people by the end of 2022 with midband spectrum-based 5G services.
  • The company expects to spend $10 billion more on building 5G wireless network infrastructure over the next three years.
  • Verizon has partnered with various companies, including Walt Disney, Apple, and IBM, to develop 5G services.
  • The company's senior leadership is new, with Chief Executive Hans Vestberg and Chief Strategy Officer Rima Qureshi joining Verizon in 2017.
  • Revenue growth remains a challenge for the company, as the U.S. wireless market is saturated.
  • Analysts expect wireless subscriber growth to rebound in the June quarter, but there will be a financial drag from C-band investments.

Statistics:

  • Verizon stock has underperformed the S&P 500, with a 4.6% dividend yield.
  • The company spent $53 billion in a government auction of midband radio spectrum.
  • Verizon aims to reach 175 million people by the end of 2022 with midband spectrum-based 5G services.
  • The company expects to spend $10 billion more on building 5G wireless network infrastructure over the next three years.
  • Verizon has 61% of consumer subscribers with unlimited data plans, up from 40% in 2018.
  • The company expects to reach 30 million homes with fixed broadband services by the end of 2023.

Sources:

  • Verizon investor day report (March 10)
  • CNBC article (May 3)
  • Investor's Business Daily article (February 16)
  • Wells Fargo analyst Eric Luebchow report (March 31)
  • Credit Suisse analyst Douglas Mitchelson report (February 16)
  • Forbes article (September 14)
  • Bloomberg article (December 16)
  • Investor's Business Daily article (May 25)