Verizon (VZ) Hikes Monthly Data Plan, Increases Data Limit

Leading U.S. telecom carrier, Verizon Communications Inc. (NYSE:VZ) has increased its monthly data plan by up to $10/month, depending upon the size of the plan. The increase in rates is, however, accompanied by higher data caps for each and every plan. Interestingly, the rate hike will actually lower the cost per GB for consumers. Notably, the company’s rivals, including Sprint Corp. (NYSE:S) , AT&T Inc. (NYSE:T) and T-Mobile US Inc. (NYSE:T) , have all been lowering prices on data to entice customers in an already saturated wireless market.

Details of the Plans

Verizon was previously offering a starter pack comprising 1 GB of data for $30 per month, along with unlimited calls and text. After the rate hike, this plan will provide a 2 GB data limit for $35 per month. Similar updates were offered for Verizon’s other plans too. Additionally, the carrier will now allow carry-over of data to the next month. This is anticipated to be extremely popular in today’s data-driven world. The company is also introducing some plans that will allow Verizon customers to make unlimited calls and send unlimited texts to Mexico and Canada.

Our Take

With the increasing infallibility of Internet in our lives, telecom providers have shifted their focus to data revenues in addition to the usual charges for voice calls and text messages. In our opinion, although Verizon has increased the rates of its monthly plans, customers will be able to benefit from the updated ones as they will now pay less for more data.

Notably, Verizon has a robust 4G LTE footprint and has the largest wireless subscriber base in the U.S. We believe such plans will prove to be immensely beneficial for Verizon as they would not only boost the company’s revenues, but also keep the churn rate in check.

Verizon currently carries a Zacks Rank #4 (Sell).