“We continue to favor Verizon among the major U.S. carriers," noted Canaccord Genuity analyst Greg Miller. "Despite persistent fears of a price war in wireless, Verizon has proven its ability to grow and retain its subscriber base due to its high-quality network and reasonable responses to competitors’ aggressive plan changes. In addition, wireline could become a tailwind later this year as declining businesses become smaller contributors, providing less drag. With the [video on demand] deal completed, we also expect an updated strategy for 2014 and beyond."
Wireless growth will continue for Verizon and be mixed for AT&T, Miller said, with Verizon's numbers driven by its More Everything plans – but reduced from the fourth quarter, which benefitted significantly from a new iPhone. AT&T's postpaid subscriber additions will likely be negatively impacted, as will service revenue growth due to faster uptake of Next, its device-upgrade program. This will be offset by higher equipment sales and margin, though, Miller noted.
The wireline sector for both carriers will be weak, with both seeing declines in legacy enterprise and wholesale businesses. Verizon will get a boost with strong growth from strategic services and FiOS, though, and AT&T will at least see strategic services and U-verse continuing to benefit from Project VIP investments, the analyst noted.
Miller assigned a "buy" rating to Verizon's stock, while maintining a "hold" for AT&T's. AT&T's price, however, is up more than 10 percent since March 1, while Verizon's has remained rather stagnant since that date.