Wireless, FiOS Drive Verizon Q1 Net Growth
Verizon Communications’ Q1 profit was up 19.7 percent year-over-year to $3.9 billion. The growth was helped by gains in wireless and broadband services, Chief Financial Officer Fran Shammo said during a conference call Thursday. Though FiOS is a bright spot, the wireline unit continued to decline. The company will stop selling DSL services in areas where its FiOS service is available, Shammo said.
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Despite its solid growth in LTE, Verizon’s net subscriber additions were 734,000, down from 1.45 million adds in Q4 2011. However, the decline was seasonal, Shammo said, noting Q4 is always a strong quarter due to the holiday buying season. The carrier sold 2.9 million LTE devices in the quarter, up from 2.3 million in Q4. That brings its total LTE subscribers to 8 million, about 9 percent of its postpaid customer base. The carrier had 93 million mobile customers at the end of the quarter, up 5.2 percent from a year ago. The company sold 6.3 million smartphones in the quarter, including 3.2 million iPhones. Meanwhile, a proposed spectrum sale isn’t a result of a “roadblock” at the FCC on the cable deal, Shammo said (see separate report in this issue).
Verizon is supporting Microsoft’s effort to build what Shammo called “a third ecosystem” for Windows-powered mobile devices in addition to Apple’s iOS and Google’s Android, Shammo said. The CFO is also bullish on tablet sales going forward. The carrier sold 390,000 in Q1, up 60 percent versus the same period last year.
Wireline revenue was down 2 percent year-over-year to $9.9 million. But the company added 104,000 net new broadband customers, bringing its total broadband subscriber base to 8.8 million. It added 193,000 net new FiOS Internet connections and 180,000 net new FiOS Video connections in Q1. Verizon had a total of 5 million FiOS Internet and 4.4 million FiOS Video connections at the end of the quarter. While Verizon will continue to support existing DSL customers, it won’t sell the service in FiOS territories, Shammo said. The company is also doing away with pay phones and calling card businesses, he said. About 89,000 subscribers dropped Verizon DSL service in the quarter. Wireline is “a drag on growth and a drag on value” and it still accounts for around 70 percent of invested capital, Bernstein Research’s Craig Moffett said.