By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Bedminster, N.J. – Verizon Wireless accelerated operating income growth subscriber additions fell.
Verizon reported in the third quarter and first nine months of its fiscal year and posted operating-revenue gains in both periods even though net new retail subscriber additions fell at double-digit percentage rates in both periods.
Operating income margins rose during the quarter and nine-month periods, though churn rates also ticked up, and average revenue per account continued to rise.
The carrier also reported smartphone activation gains and said iPhone sales rose despite supply constraints at the end of September. A total of 7.6 million retail postpaid smartphones were activated in the quarter, up from the second quarter’s 7.5 million and up 12.5 percent compared to the year-ago period.
Of the smartphones activated, about 51 percent were iPhones despite supply constraints at the end of September, said CFO Fran Shammo. The number of iPhones activated hit 3.88 million, up from the second quarter’s 3.83 million and the year-ago 3.1 million.
During the quarter, operating income grew 13.9 percent to $6.89 billion, with income rising for the nine-month period by 16.4 percent to $19.8 billion. Operating income margins rose to 33.8 percent in the quarter from a year-ago 31.8 percent, and margins for the nine-month period rose to 33 percent from a year-ago 30.4 percent.
The number of net new retail subscriber additions (postpaid and prepaid combined) fell 39.8 percent in the quarter to 1.06 million compared to the year-ago quarter but were up sequentially from the second quarter’s 1.04 million. Net new retail adds for the nine-month period fell by 23.3 percent to 2.82 million.
Retail postpaid net adds fell 39.6 percent for the quarter compared to the year ago to 927,000 and were down sequentially to 927,000 from 941,000. Retail postpaid net adds fell for the nine-month period by 13 percent compared to the year ago to 2.55 million.
Retail prepaid net adds fell 41.2 percent in the quarter to 134,000 and by 63.5 percent for the nine months to 274,000.
Average revenue per account rose 7.1 percent in the quarter to $155.74 per month and for the nine months by 6.8 percent to $152.84.
The churn rate for retail subscribers (postpaid and prepaid combined) rose to 1.28 percent in the quarter from a year-ago 1.27 percent, with retail postpaid churn rising to 0.97 percent from 0.91 percent. For the nine-month-period, total retail churn rose to 1.27 percent from 1.18 percent, with retail postpaid churn rising to 0.97 percent from 0.9 percent.
At the end of the quarter, the carrier had 101.2 million retail subscribers, up 5.5 percent over the year earlier, with postpaid retail connections accounting for 95.2 million of the total.
A total of 42 percent of postpaid accounts are on Share Everything plans after only 15 months of plan availability, Shammo noted.
Also at the end of the quarter, smartphones accounted for more than 67 percent of retail postpaid phone users, up from a second-quarter 64 percent.
Of the 10.2 million retail postpaid devices activated in the quarter, 88 percent were phones, and 7.6 million of the devices were smartphones, up sequentially and up 12.5 percent compared to the year ago. About 29 percent of smartphone activations were new to Verizon. Of all retail postpaid devices activated in the quarter, 6.8 million were 4G LTE devices.
LTE service is available to more than 303 million people in 500 markets, the carrier said.
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