Verizon Bolstered By Smartphones, Data In Q3

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New York - Explosive growth in smartphone activations and data demand helped edge up Verizon's net earnings 1.1 percent to $2.9 billion for the third quarter, ended Sept. 30.

But net income attributable to Verizon fell 25.1 percent to $881 million due largely to the impact of pension settlements, and net revenue slipped nearly 3 percent to $26.5 billion on a 3.6 percent decline in the company's wireline operation, which includes landline and FiOS service.

Verizon also confirmed that it would introduce a two-tiered data pricing plan for cellphones next week. Described during a conference call this morning as a fourth-quarter promotion, the plan provides unlimited data for $30 per month and150MB of data for $15 per month. The company said pricing plans are expected to change with the broad rollout of its LTE 4G network early next year.

 "Verizon built on a strong second quarter with a stronger third quarter, resulting in improved earnings performance and substantial cash flow," said chairman/CEO Ivan Seidenberg.  "We are building momentum and are on track to achieve our goal of growing earnings in the second half of the year.  We are excited by the opportunities we see to expand wireline margins and the growth we see related to the upcoming launch of next-generation wireless services."

In wireless, total revenue rose 6 percent to $16.3 billion, of which 35.7 percent, or $5.1 billion, was comprised of data charges, up 26.3 percent year over year. Retail service revenues in the quarter totaled $13.5 billion, up 5 percent year over year, while retail data revenues were $4.8 billion, up 22.8 percent. Operating income margin was 29.9 percent, an increase of 220 basis points, and segment EBITDA margin on service revenues (non-GAAP) was 47.2 percent, up 150 basis points over third-quarter 2009.

Among other wireless highlights:

Verizon Wireless added 584,000 retail postpaid and 447,000 total retail customers in the quarter (excluding acquisitions and adjustments) and added 550,000 reseller customers, giving it a total customer count of 93.2 million at the end of the quarter. Of that, 86.7 million, or 93 percent, were retail customers.

Retail postpaid churn remained low at under 1.1 percent. Retail and total customer churn levels were 1.4 percent.

Within its wireline business, Verizon said it added 226,000 net new FiOS Internet customers and 204,000 net new FiOS TV customers, up about 17 percent and 19 percent, respectively, compared with second-quarter 2010, representing the largest net quarterly increase in FiOS customers in more than a year.  By the end of the third quarter, Verizon had 3.9 million FiOS Internet and 3.3 million FiOS TV customers.

Total wireline broadband and video revenues -- including FiOS Internet, FiOS TV and HSI (DSL-based high-speed Internet) -- were $1.8 billion in the quarter, up 20.8 percent from third-quarter 2009.


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