Citing its highest year-over-year revenue growth in three years, Verizon Communications reported consolidated revenues of $17.1 billion, up 3.9% compared with $16.5 billion in Q1 2003. For the quarter, Verizon's reported earnings were $1.2 billion, or 43 cents per share.
"While Domestic Telecom revenues were down, we recognize that this is part of the evolution of our business model, and we are on track with where we want to be. It's significant that new growth businesses, such as wireless, data, long-distance and broadband, now account for more than half of our revenues," said Ivan Seidenberg, Verizon chairman and CEO. Some highlights from Q1.
Verizon Wireless:
- Verizon Wireless' retail customer base grew 15.8% year-over-year and represented 37.2 million of the company's 38.9 million total customers at the end of the quarter. Retail gross additions were up 8.6% over Q1 2003. Retail net additions were up 58.9% to 1.2 million -- a first-quarter record -- of the company's 1.4 million total net additions.
- Verizon Wireless is a net beneficiary of the local number portability (LNP) rules that went into effect in November 2003.
- Customer loyalty reached an all-time high, with record-low total churn of 1.60% for Q1 2004. Churn in the retail post-pay segment, which is 91% of the company's base, was 1.35%, about flat with the previous quarter.
- Average monthly service revenue per customer was $48, up 1.8% from Q1 2003. Service revenue for the quarter was $5.5 billion, up 18.0%. The company does not include taxes and regulatory fees in service revenue.
- Cash expense per customer decreased 2.9% over the prior-year first quarter. This is the third consecutive quarter in which cash expense per customer has declined over the preceding sequential quarter.
- Verizon Wireless' operating income margin of 19.5% for Q1 surpassed all quarters since the company was formed in April 2000. Quarterly operating income grew 37.5% year-over-year to $1.2 billion.
- Verizon Wireless moved forward with national deployment of its third-generation EV-DO network. The company committed to expanding its BroadbandAccess service to cover one-third of its network by the end of this year.
- Data services contributed more than 3.6% of first-quarter total service revenue, up from 3.2% in Q4 2003 and 1.5% in Q1 2003.
- For the quarter there were 2.1 billion text messages, 19 million "Get It Now" application and ringtone downloads and 21 million picture messages.
Domestic Telecom:
- Verizon's had a total of 2.7 million DSL lines at the end of Q1, up by 345,000 net additions for the quarter. In the quarter, the company continued to see declines in acquisition costs.
- Approximately 45% of Verizon's local wireline customers have chosen Verizon as their long-distance carrier.
- Approximately 51% of Verizon residential customers have purchased local services in combination with either Verizon long-distance or Verizon DSL, or both.
- The average revenue per month per Verizon residential wireline customer increased more than 5% in Q1 2004, compared with Q1 2003.
- Total revenues for high-capacity and data services were $1.9 billion in Q1 2004, a 2.9% increase compared with $1.8 billion in Q1 2003.
- Domestic Telecom's cash expenses, excluding net pension and OPEB expenses, were reduced from $6.1 billion in Q4 2003 to $5.7 billion in Q1 2004. The business unit saw more than a $200 million decrease year-over-year in wage and salary expenses, attributable to last year's voluntary separation plan. In addition, cost-effective e-commerce channels operated at company-record levels, with Verizon.com registering 328,000 wireline product sales in Q1 2004.
- In the first quarter, Verizon's Enterprise Solutions Group continued to increase the company's presence in the large-business market, offering advanced local and long-distance data services to Enterprise customers. The quarter included nearly 500 Enterprise Advance sales.
Information Services:
- Verizon Information Services (VIS) revenue of $999 million decreased 2.2% for Q1 2004 compared with Q1 2003, primarily due to reduced domestic print advertising revenue and the elimination of revenue from the 2003 sale of European operations.
International:
- First-quarter revenues were $468 million compared with $517 million in Q1 2003. This 9.5% decline primarily resulted from deteriorating foreign exchange rates in the Dominican Republic.
