Verizon Communications Inc.'s third-quarter profit more than doubled as the carrier's growth in contract wireless subscribers outpaced rivals.
The company added 882,000 wireless contracts, a 51% improvement from a year earlier. Including prepaid and other customers, the carrier added 1.3 million wireless users, compared with rival AT&T Inc.'s 2.1 million.
Verizon's quarterly profits have more than doubled over the year ago period as wireless revenues surged by more than 9 percent. But overall subscriber additions were below expectations. Arik Hesseldahl discusses on Digits.
As wireless growth nears a saturation point (there are currently more wireless connections than people in the U.S.), Verizon and other carriers face an uphill battle to bring in new customers. The carriers have altered mobile data pricing and introduced new devices, such as the Apple Inc. iPad, to generate new revenue streams.
Verizon broke AT&T's four-year exclusive hold on the iPhone in February and has begun sales of the latest version, the 4S, in competition with AT&T and Sprint Nextel Corp. While AT&T reported 2.7 million iPhone activations in the third quarter, Verizon reported 2 million.
Like AT&T and Apple, Verizon said the more modest iPhone results—the company reported 2.3 million activations in the second quarter—were the result of customers delaying action in anticipation of Apple's 4S model rollout.
"We anticipate that the strong demand we're seeing for the new iPhone 4S will bring even more new customers," said Verizon finance chief Fran Shammo.
The company didn't say how many 4S models it has sold. Apple reported a record four million iPhones were sold in the first three days of the 4S, and AT&T said Thursday it has sold at least 1 million. Verizon and AT&T will have to contend with at least one competitive iPhone advantage from their smaller competitor Sprint—unlimited data packages.
Shares of Verizon recently rose 10 cents to $37.20. Verizon Wireless is jointly owned by Verizon and Vodafone Group PLC.
Verizon's wireline division, which includes business and home telephone as well as the FiOS television offering, continued to contract as more customers made the switch to wireless phone service. Revenue fell 1.3% to $10.15 billion.
The company is in ongoing negotiations with about 45,000 wireline union workers who walked off the job for two weeks to protest deep concessions the company is seeking in a new multiyear contract. The strike and the impact from Hurricane Irene and Tropical Storm Lee cost Verizon about $250 million.
Mr. Shammo didn't give details about the progress of union talks.
Verizon Communications reported a profit of $1.38 billion, or 49 cents a share, up sharply from $659 million, or 23 cents a share, a year earlier. Revenue rose 5.4% to $27.9 billion from $26.5 billion a year ago.
Excluding items such as the impact of pension and benefits remeasurements, per-share earnings rose to 56 cents from 55 cents a year ago.
Operating revenue improved 5.4% to $27.91 billion. Analysts surveyed by Thomson Reuters expected earnings of 55 cents a share on revenue of $27.88 billion.
Verizon is rolling out its faster 4G LTE wireless broadband network and said it now can provide service to about 186 million Americans. Sales of LTE-enabled devices jumped to 1.4 million from 1.2 million the previous quarter.
Verizon lagged AT&T in average revenue per user, a closely tracked metric, by about $10. However, Verizon lifted that measure by 2.4% from a year earlier, compared to AT&T's 1.4%.
Both Verizon and AT&T held onto contract customers more tightly, a measure known as churn. Verizon cut churn to 1.26% from 1.43% a year earlier, while AT&T lowered that rate to 1.28% from 1.32%.
AT&T on Thursday reported higher third-quarter earnings, excluding a large year-ago gain, amid better-than-expected growth in overall wireless subscriptions.
COMMENTARY: I wonder how times Verizon Wireless overbilled its customers. They are known for doing this. All the wireless carriers do this. The little tricks they play to squeeze every dollar out of you.
Courtesy of an article dated October 24, 2011 appearing in The Wall Street Journal
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