Verizon Wireless (NYSE:VZ) wants to keep traffic on its 3G CDMA network humming even as it pushes more and more postpaid customers to move to its LTE network because traffic on its 3G network is very profitable, according to Verizon Communications CFO Fran Shammo.
Shammo, speaking at the Nomura Global Media & Telecom Summit, noted that the carrier stopped investing in upgrading its 3G network in 2012 and now spends capital to simply maintain it. He said the company's LTE network, which now covers 95 percent of Verizon's 3G footprint, is its primary network for retail postpaid customers. However, he said Verizon will continue to be aggressive in adding prepaid, reseller and wholesale customers to its 3G network.
"You want to try and keep that as full as possible because it's mostly a fixed cost," he said, referring to the CDMA network. "Both of those customers (wholesale and prepaid) are very profitable customers on that network," Shammo said. "What we don't want is to overbuild that network at this point."
Indeed, Verizon recently increased the amount of data available to prepaid customers on its 3G network in a bid to drive prepaid 3G data sales. On its existing $60 per month prepaid plan, which includes unlimited calling and texting, Verizon increased the data allotment from 500 MB to 2 GB. On its $70 plan, Verizon raised its data allotment to 4 GB per month, up from 2 GB previously.
Speaking of the company's LTE network, Shammo said that Verizon will likely launch Voice over LTE service initially in the fourth quarter of this year. "We will really go commercial with it in the first half of next year," he said. By the fourth quarter of 2014, Verizon expects to launch its first LTE-only smartphone without support for CDMA networks.
"We will take this slow because we need make sure the quality of that voice call is no different than a 3G call," he added. AT&T Mobility (NYSE:T) plans to launch VoLTE in some markets by year-end.
Sprint Nextel (NYSE:S) spokeswoman Kelly Schlageter told FierceWireless that the carrier has not made any announcements about when it will launch VoLTE. A T-Mobile US (NYSE:TMUS) spokesman said the carrier has not announced anything on VoLTE but "is working and innovating on VoLTE from a technology perspective and we expect to deploy it as the ecosystem matures and the experiences are on par with or better than what customers get today. We aren't in as much of a hurry as other wireless companies may be because we aren't currently spectrum constrained and we're able to support HSPA+ and LTE within one chipset, unlike CDMA."
As for the perennial question of what Verizon Communications will do with Vodafone's 45 percent stake in Verizon Wireless, Shammo again reiterated that Verizon wants to get Vodafone's stake but had nothing new to add. Analysts have continued to speculate about a potential buyout by Verizon of Vodafone's share in the company. "It's pretty evident that we've been pretty clear we want to own the 45 percent," Shammo said. "For us to say that, it's obviously pretty important for us to have that happen." He said Verizon will continue to be good stewards of cash at Verizon Wireless.
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