Saturday, August 17, 2013

Verizon Gets Aussie Police Contract - Analyst Blog

Leading wireless provider, Verizon Communications Inc. (VZ) has received a three-year contract from the Australian Federal Police. Under the deal, Verizon will provide Internet gateway service to aid the IT capabilities of the agency.

The system promises enhanced security and reliability along with efficiency. It will be equipped with intrusion detection and firewall management, anti-spam, and anti-virus management capabilities. The contract is worth AU$15 million ($14 million).

We believe that the company's expansion into markets like Australia would provide a significant opportunity to grow beyond the saturated U.S. wireless market. Previously, Verizon had a similar received a similar five-year contract from the Australian Department of Defense for AU$50 million ($46 million).

Other than Australia, the company is also making forays into cross border markets like Canada. Recently, there have been reports on the company proposing to acquire Canadian wireless provider Wind Mobile at an initial offer of $700 million. In addition, reports suggest that the company is in talks to buy Mobilicity, also a Canadian telecom company, representing a potential threat for tier one Canadian telecom carriers like TELUS Corporation (TU), BCE, Inc. (BCE) and Rogers Communications Inc. (RCI).

Apart from acquisition, Verizon is seeking new ways such as new pricing actions, FiOS Quantum, copper-to-fiber migration and cost-cutting measures to drive FiOS revenue growth and maximize profitability. The new FiOS pricing plans (set-top boxes and planned bundled changes) would accelerate consumer revenue growth for the next several quarters.

Verizon has also collaborated with Starz – a top-notch global media and entertainment company – to launch STARZ PLAY and ENCORE PLAY. We expect these combined efforts to lead to improved revenues, high operating margins and greater market share.

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

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