Shares of mobile provider Verizon (VZ) are slightly higher in today’s trading after announcing that it will shell out $1 billion to purchase spectrum licenses from U.S. Cellular (USM). Spectrum licenses allow companies to use specific radio frequencies for wireless communication that ensure different users don’t interfere with each other.
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U.S. Cellular, noted reports, is looking to divest some of its portfolio, and Verizon stepped in to pick up these assets. This transaction, along with two other agreements with mobile network providers, hinges on a previously announced deal in which Verizon sells off some of its own spectrum assets and wireless operations to rival T-Mobile (TMUS).
Just last month, Verizon sold off leasing rights to several thousand towers that let it lease back capacity as needed, reports noted. But all of this is said to be part of a larger effort for United States wireless companies to better focus on their primary operations of providing wireless calling services. Currently, U.S. Cellular is actually one of the largest tower operations in the United States, but it will still have some spectrum licenses left even if it completes the sale to Verizon.
An Unexpected Savings
Meanwhile, a recent article from Boy Genius Report revealed a perk for Verizon customers, though it might not benefit Verizon itself as much. The report explained how some customers were getting coupons for $10 off per month, which seems like a strategy to keep them from switching providers.
Here’s how it worked: Customers selected the “Number Transfer Pin” option in their Device Management menu, which indicates they might be thinking about switching to another provider. When they did this, Verizon automatically redirected them to an offers page, giving them a coupon for $10 off per line each month for a year. Some might think this is jumping the gun a bit, but perhaps it is better to cut a bill a little than potentially lose a customer.
Is Verizon Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on VZ stock based on eight Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 46.29% rally in its share price over the past year, the average VZ price target of $46.47 per share implies 5.57% upside potential.
