Verizon Faces Challenges in Broadband Amidst Strong Wireless Sales

Verizon Faces Challenges in Broadband Amidst Strong Wireless Sales

Rafaela Costa
2 min read

Verizon Faces Challenges in Broadband Amidst Strong Wireless Sales

Verizon is experiencing continuous growth in its wireless sector but is encountering challenges in the broadband domain. Citi's recent research report indicates that the company is grappling with substantial headwinds in broadband, impacting its overall performance. Nevertheless, Citi has raised Verizon's price target to $47 per share and sustained a "Buy" rating.

The wireless division is thriving, attributed to organic expansion and effective pricing strategies. However, the broadband segment is confronting sluggish growth, compounded by the conclusion of the Affordable Connectivity Program, a critical government initiative. Consequently, Citi has revised down its projections for Verizon's broadband net additions for the second quarter.

Despite probable risks such as heightened competition, spectrum expenses, and economic downturns, Citi remains optimistic about Verizon's prospects. The company's emphasis on network quality and emerging technologies is positioned to confer a competitive advantage, propelling growth in the forthcoming years.

Key Takeaways

  • Verizon upholds a "Buy" stock rating with an updated price target of $47.
  • The FWA segment is on course to achieve 4-5 million subscribers by 2025.
  • Strategic investments in C-band and 5G are anticipated to drive long-term growth.
  • Wireless sales are robust, but broadband is grappling with challenges and expenditures.


Verizon's robust wireless sales stand in contrast to the challenges faced in the broadband sector due to the expiration of government programs. Citi's positive outlook, despite current headwinds, reflects the strategic focus on 5G and FWA. Although short-term obstacles in the broadband sphere may impact earnings, long-term advancements in 5G and FWA have the potential to stimulate substantial growth, influencing investors and competitors alike.

Did You Know?

  • Fixed Wireless Access (FWA): Fixed Wireless Access (FWA) utilizes wireless technology, typically over radio frequencies, to provide broadband internet access to both residential and commercial establishments. It delivers data over the air using antennas, offering a more flexible and scalable solution, especially in areas where laying cables is impractical or costly. Verizon's emphasis on FWA aligns with its objective to expand broadband coverage and compete with cable and fiber-optic providers.
  • C-band: C-band encompasses radio frequencies between 4 GHz and 8 GHz within the electromagnetic spectrum. These frequencies are highly valuable for telecommunications due to their ability to transmit data over long distances and penetrate buildings effectively. Verizon's investment in C-band spectrum is instrumental in enhancing its 5G network capabilities, enabling faster and more consistent data transmission, supporting greater capacity and lower latency.
  • Discounted Cash Flow (DCF) Analysis: DCF analysis is a crucial financial valuation method utilized to estimate the value of an investment based on its anticipated future cash flows. This approach discounts future cash flows to their present value, accounting for the time value of money, to assess the investment's valuation. In the context of Citi's evaluation of Verizon, the DCF analysis aids in determining the intrinsic value of the company's equity by projecting future cash flows and discounting them back to the present using a discount rate, such as the Weighted Average Cost of Capital (WACC).

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