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iPhone, ThunderBolt Drive Verizon Wireless Q1 Gains

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

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

  • 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.