Verizon Communications reported consolidated Q1 revenues of $22.7 billion, a 25.1 percent increase compared with the first quarter 2005; consolidated total operating expenses were $18.9 billion, a 27.6 percent increase compared with the first quarter 2005; and consolidated operating income was $3.9 billion, a 14.0 percent increase compared with the first quarter 2005. Reported results include MCI subsequent to the close of the merger. Reported earnings were $1.6 billion, or 56 cents per diluted share, compared with $1.8 billion, or 63 cents per share, after 4 cents per share in special items for employee relocations and merger integration costs. Some highlights for the quarter:
Wireless
- This was the 15th consecutive quarter of double-digit, year-over-year revenue growth for Verizon Wireless, and also the eighth consecutive quarter that the company added more than 1.5 million customers
- 1.7 million net customer additions, up 2.9 percent from first quarter 2005; 53.0 million total customers, up 16.7 percent from first quarter 2005. The company has added a net of 7.6 million new customers in the past 12 months.
- Churn of 1.18 percent, retail postpaid churn of 0.92 percent
- Average monthly service revenue per customer (ARPU) was $48.67, down 0.7 percent from the similar period in 2005.
- At the end of the first quarter, 6.2 million customers had broadband-capable (EV-DO) devices.
- Total revenues up 18.8 percent from first quarter 2005; EBITDA margin (non-GAAP) of 44.5 percent; data ARPU up 79 percent from first quarter 2005
Wireline
- 541,000 net new broadband connections (DSL and FiOS data customers) in first quarter 2006; 5.7 million total broadband connections, up 47.1 percent from first quarter 2005
- In markets where Verizon has been selling FiOS data services for at least six months, the average penetration rate was 9 percent at the six-month mark in each market, well on the way toward achieving the company's goal of 30 percent penetration in five years. Earnings dilution from FiOS was 6 cents per share in the first quarter 2006.
- In Florida, Texas and Virginia markets where Verizon has been selling FiOS TV for at least four months, Verizon's penetration levels range from 9 percent to 12 percent, already halfway towards the company's goal of from 20 percent to 25 percent penetration in five years.
- Verizon now has 415,000 customers who receive a Verizon DirecTV bundle, up 66,000 from year-end 2005.
- 6.3 million consumer and small business accounts enrolled in Verizon Freedom service packages, up from 4.7 million in first quarter 2005
- Data revenues of $3.9 billion in the quarter, up 89.7 percent from first quarter 2005, including results from Verizon Business domestic and global operations. Data revenues now make up approximately 30 percent of Verizon's overall wireline revenues.
- Total switched access lines in service were 48.0 million at the end of the first quarter 2006, a 6.9 percent decline compared with the first quarter 2005. Among Verizon residential retail customers, gains in wireline broadband connections more than offset loss.
Verizon also noted that the integration of MCI is ahead of plan, resulting in first-quarter synergies exceeding expectations in network traffic migration, systems integration and workforce reductions.
So far, the company has migrated more than 80 percent of the voice traffic from the legacy Verizon Global Network Services network and 68 percent of all IP traffic onto the Verizon Business network. Systems integration includes consolidation of systems for the unit's sales force and product catalogs.
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