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iPhone, ThunderBolt Drive Verizon Wireless Q1 Gains

4/21/2011 10:51:58 AM Eastern
Basking Ridge, N.J. - Sales of the iPhone 4 and HTC's 4G ThunderBolt drove Verizon's net new wireless-subscriber growth in the first quarter, the carrier announced.

The ThunderBolt is Verizon's first 4G phone. The iPhone 4 was previously available only with AT&T cellular service.

Activations of the two phones accounted for 54 percent of the carrier's retail postpaid net subscriber additions of 906,000, up from the year-ago 412,000.

In the first quarter, Verizon Wireless boasted that it activated 2.2 million iPhones.  Although that number didn't match AT&T's first-quarter iPhone activations of 3.6 million, Verizon didn't start offering the iPhone until Feb. 10, and the carrier's iPhone rollout to all of its distribution channels wasn't complete until mid-March, said executive VP/CFO Gran Shammo.

The carrier also said 48 percent of people buying iPhones were new to the smartphone category. A total of 22 percent of iPhones activated in the quarter were new Verizon subscribers.

As for the ThunderBolt, the carrier said it sold 260,000 ThunderBolts in the two-week period between March 17, the day the product was launched through all distribution channels, and the end of the first quarter.

The iPhone and ThunderBolt purchases helped push the percentage of Verizon subscribers using smartphones to 32 percent from the fourth quarter's 28 percent. That, in turn, helped drive up total wireless revenues by 10.2 percent to $16.9 billion because $30/month data plans are attached to smartphones, whereas multimedia phones require only a $10/month data plan and feature phones require no data plan.

Wireless operating income was essentially flat at $4.35 billion, however, in part because of higher subsidy costs on smartphones. Smartphone activations accounted for 60 percent of first-quarter activations compared to the year-ago 36 percent.

The carrier, however, said it identified more than $1 billion in wireless cost-saving opportunities that it wants to pursue this year.

Verizon also said that wireless profitability will rise as its moves 3G data users to its 4G network because its 4G network is more efficient and therefore more profitable even though 4G users use more data than 3G users.

Although the company wouldn't say whether its next iPhone will incorporate 4G, it did say the next model would be a global phone.

The carrier will expand its 4G phone offerings to three models by the end of the second quarter, with Samsung's 4G phone due "very shortly," the company added.

In reporting total net new subscription additions, the carrier said it added 1.78 million net new connections, up from the year-ago 1.51 million. The first-quarter 2011 number includes:

  • 906,000 net new retail postpaid subscribers, more than double the year-ago 412,000; 

  • a decline of 27,000 retail prepaid subscribers, a smaller loss than the year-ago 146,000 loss; and

  • 897,000 wholesale subscriptions and connected-device subscriptions, such as alarm-monitoring and vehicle-tracking connections whose subscriptions aren't billed directly by Verizon. That number is down from the year-ago 1.24 million.

Verizon didn't break out connected-device subscriptions separately.
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