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Verizon Net Adds, Smartphone Sales Hit Record

Bedminster, N.J. — Verizon Wireless posted record retail postpaid net subscriber additions and record retail postpaid smartphones sales in the fourth quarter, driving up operating revenues by 9.5 percent compared with the year-ago period, to $20 billion.

The carrier posted 2.1 million retail postpaid net additions and activated 9.8 million smartphones, up from a year-ago 7.7 million smartphones but still below the more than the record 10 million smartphones activated by AT&T in the quarter.

For the full year, Verizon added 5 million net retail postpaid connections, the most in four years.

For the quarter, wireless operating income was also up, growing by 10.5 percent year over year to $4.79 billion, but operating income was down on a sequential basis by 20.8 percent.

For the quarter, operating income margin rose slightly to 24 percent from the year-ago 23.7 percent but was the lowest of the fiscal year compared with the first quarter’s 28.6 percent, the second quarter’s 30.8 percent, and the third quarter’s 31.8 percent.

Chief financial officer Fran Shammo, however, said full-year margins would return to second- and third-quarter 2012 levels because wireless “fundamentals are more sound” compared to a year ago. He cited average revenue per account (ARPA) rising in the fourth quarter by 6.6 percent to $146.80/month, expected reductions in smartphone-subsidy outlays as more smartphone OSs compete, continued cost reductions, a 53.7 percent year-over-year gain in retail prepaid and postpaid net adds to 2.24 million, and a low retail churn rate of 0.95 percent in the quarter.

ARPA is rising because subscribers who are using LTE devices are consuming more data and because consumers adopting the carrier’s new Share Everything Plan are attaching many data devices to their account, Shammo said.

During the quarter, the carrier activated a record number of smartphones, hitting 9.8 million, up from a year-ago 7.7 million, but falling below AT&T’s fourth-quarter smartphone activations of more than 10 million.

Of Verizon’s 9.8 million smartphone activations in the quarter, 6.2 million were iPhones following 3.1 million iPhone activations in the third quarter and 3.2 million iPhone activations in the first quarter. Second-quarter iPhone activations weren’t available.

Among the iPhones activated in the fourth quarter, about half featured 4G LTE, said Shammo. Android accounted for the majority of the remaining smartphone activations, and more than 95 percent of those phones featured LTE.

About 30 percent of all smartphone activations were subscribers new to Verizon.

With the activations, smartphones accounted for more than 58 percent of the carrier’s retail postpaid customer phone base, up from a year-ago 44 percent and a third-quarter 53 percent.

Out of all retail postpaid connections, 23.3 percent used a 4G LTE device at year’s end, whether smartphone, tablet or USB modems.

For the full year, wireless revenues were up 8.1 percent to $75.9 billion compared with a full-year gain of 13 percent to $18.3 billion. Full-year operating income was up 17.5 percent to $21.8 billion.

At the end of the year, the carrier had 98.2 retail prepaid and postpaid connections, up 6.6 percent from the year ago. Of that amount, 92.5 million were retail postpaid net connections.

LTE was available in 476 markets covering a population of 273 million people, or about 89 percent of the U.S. population.