Verizon (VZ) to Augment Defense Network Service Facilities

Verizon Communications Inc. VZ recently secured three contracts from the U.S. Department of Defense (“DOD”) for $966.5 million to upgrade network infrastructure facilities and provide support services to the Pentagon, the DOD National Capital Region (NCR) and Fort Belvoir installations. The deal underscores the trust and reliability enjoyed by the carrier as it continues to support the digital transformation initiatives of the federal government.Verizon Public sector, the unit dedicated to serving various public sector entities, has been entrusted with replacing the legacy copper-based telephony services with advanced Internet Protocol (IP)-based module for the entire Pentagon military and civilian population. This, in turn, will offer a converged-enterprise environment for the Pentagon’s voice and data services. The task order valued at $515.3 million will enable the gradual transition of more than 52,000 voice lines for optimized voice and video services.Per another task order valued at $432.9 million with DOD-NCR, which is responsible for the homeland security and defense of the Washington, DC area and surrounding counties in Virginia and Maryland, Verizon will offer core voice, transport, Internet and professional services to more than 370 locations in the region. The remaining $18.3 million task order aims to fortify the communications technology infrastructure at Fort Belvoir, which serves as the U.S. Army garrison.The fact that the DOD is engaging with industry participants speaks volumes about the strategic importance of 5G and Verizon’s market-leading position within it. With one of the most efficient wireless networks in the United States, Verizon deploys the latest 4G LTE Advanced technologies to deliver faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and constant strategic investment. The company remains focused on making necessary capital expenditures due to the expansion of 5G mmWave in new and existing markets, the densification of the 4G LTE wireless network to cater to huge traffic demands across multiple verticals and the continued deployment of the fiber infrastructure.Verizon’s 5G mobility service offers an unparalleled experience that impacts industries as diverse as public safety, health care, retail and sports. The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These are massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells. In order to expand coverage and improve connectivity, Verizon has acquired 161MHz of mid-band spectrum in the C-Band auction for a total consideration of $45.5 billion. These airwaves offer significant bandwidth with better propagation characteristics for optimum coverage in both rural and urban areas.The company is continuing with the aggressive rollout of 5G Ultra Wideband service to expand its coverage across the country. It is also offering the best of LTE and 5G Ultrawideband facilities with the launch of On Site 5G — a transformative on-premises, private 5G network — for business enterprises. This customized solution enables firms hitherto crippled with coverage gaps, lost connectivity, fractured security, data congestion and inconsistent service quality to have a dedicated capacity with adequate bandwidth to minimize costly downtime and missed opportunities.Some notable firms within the broader industry are KVH Industries, Inc. KVHI, TESSCO Technologies Incorporated TESS and Knowles Corporation KN.KVH Industries delivered an earnings surprise of 20%, on average, in the trailing four quarters. Despite global supply chain disruptions, KVH Industries is driving growth and margin expansion through new product introduction and subscriber migration to High-Throughput Satellites. The company aims to make decisive inroads into the still-nascent autonomous transportation markets with a strong balance sheet position and zero debt. If KVH Industries manages to effectively mitigate supply chain woes, there could be further room for cash flow expansion.TESSCO delivered an earnings surprise of 55.4%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 28.8% since March 2021. It offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With over three decades of profound experience, TESSCO delivers complete end-to-end solutions to the wireless industry.Knowles has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 21% since March 2021. The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.

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