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Verizon Communications Inc. (VZ) to Retire Copper Networks for Fiber Migration

By Zacks Equity Research, Zacks Investment Research

Verizon Communications Inc. (NYSE:VZ) has sought permission from U.S. telecom regulator, The Federal Communications Commission (FCC), to retire copper networks in eight northeast markets. The U.S. telecom behemoth wants to migrate its customer base in these regions to high-speed fiber-optic networks. Affected markets will be Virginia, New York, New Jersey, Pennsylvania, Rhode Island, Massachusetts, Maryland and Delaware.

Verizon said that the network switchover will take effect on or after Feb 28, 2018, provided the FCC allows it to do so. It will mainly be the business customers, who will be affected temporarily due to this switchover. The company has already served copper retirement notice in these markets.

Notably, Verizon has decided to aggressively cooperate with major U.S. cities so that it can expand its fiber optics networks to support 4G LTE and upcoming 5G wireless standards as well as wireline connections. Beside Verizon, other incumbent local exchange carriers (ILEC), such as AT&T Inc. (NYSE:T) and CenturyLink Inc (NYSE:CTL) have also decided to migrate to fiber-based network from copper.

At the recently concluded Goldman Sachs 26th Annual Communacopia Conference, Verizon’s chairman and CEO Lowell McAdam stated that the company is no longer interested in acquiring big cable MSOs (multi service operators). Instead, it will strengthen its fiber-based networks. In the cities of Boston and Sacramento, VZ has already started upgrading the city’s aging copper network infrastructure with fiber and wireless network to support high-end mobile and wireline services for smart city, residential and business applications.

Meanwhile, in August 2017, Verizon stated that it would spend $225 million to acquire a high-capacity fiber network in the Chicago area belonging to WideOpenWest Inc (NYSE:WOW). VZ has been leasing this fiber network, which provides connectivity to more than 1,000 cell sites of different scales.

Price Performance of Verizon

Shares of Verizon stock have increased 7.75%, outperforming the industry’s gain of a mere 1% over the past 90 days. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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