Verizon Updates: New Web Offering & Google Wallet Noise

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Verizon (NYSE:VZ) is all set to take on Netflix (NASDAQ:NFLX) as well as the traditional cable television companies like Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC) with a standalone service allowing customers to stream movies and television shows over the web. [1] In another update, Verizon is in talks with Google (NASDAQ:GOOG) on whether to allow its payments app Google Wallet on the new Galaxy Nexus smartphone.

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Our $43.52 price estimate for Verizon stock is about 15% above market price.

See our complete analysis for Verizon stock here

New web service to boost Verizon’s margins

Verizon plans to launch this service in 2012 outside of markets where it currently offers its broadband and TV package, better known as FiOS. We believe through this service, Verizon will be able to expand its customer base and lower its programming costs per subscriber. A large customer base will allow Verizon to negotiate for lower fees from distributors, and hence boost its margins.

Will Verizon block Google Wallet service?

Initially it was revealed that Verizon plans to block the Google Wallet service on its smartphone, citing security concerns. However, it was later clarified by Verizon that it was not blocking this service and that it is still in talks with Google. [2]

Verizon, AT&T (NYSE:T) and T-Mobile plans to to invest more than $100 million in a joint venture called Isis, which competes with Google Wallet service. Verizon plans to roll out Isis in a few markets next year, and hence it might be tempted to try and put a few speed bumps in front of Google by blocking Wallet service. It will be interesting to see the outcome of this over the next weeks.

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Notes:
  1. Verizon May Ignite Online Pay-TV Competition With Web Offering, Bloomberg, December 7th, 2011 []
  2. Verizon says not blocking Google Wallet, Reuters, December 6th, 2011 []