Verizon wants to maintain its lead on coming 5G technology by purchasing XO Communications’ fiber optic network. Fortune writes…
The carrier has said it will likely go national with cable TV and Internet service offered via 5G, which can carry signals at speeds of two to five gigabits per second—20 to 50 times faster that common 4G networks.
The problem though is that Verizon will still have to build out 5G towers because 5G wireless cannot travel as far as 4G wireless. A carrier can have the fastest fiber optic network in the country, but until they build 5G towers that connect wireless customers to that fiber optic network, it’s useless for mobile smartphone users.
So why did Verizon just spend $1.8 billion of investors money on XO Communications? Verizon will use XO Communications’ nearly 26,000 miles of fiber optic cables to expand its consumer and business wired internet service offering. Verizon wants to grab market share from companies like Comcast in the home and business ISP market.
Verizon will no doubt have a significant role in the IoT industry as billions of more devices go online over the coming decade.
Verizon Stock Chart
The Twiggs Money Flow is rising nicely, but it is still below the 0 line. Nevertheless, I see the positive divergence on the money flow as a sign the bottom in Verizon stock is near. Verizon stock has sold off over the last five months giving an excellent valuation of P/E 14, and forward P/E of 12. The annual dividend yield on Verizon is a sweet 4.8%.
I see Verizon as a long-term hold on the growing IoT industry.
Disclosure: I do not hold any position in Verizon stock at the time of publishing this article.