Verizon Communications reported total operating revenues of $24.1 billion in the second quarter 2008. This is a 3.7 percent increase compared with the second quarter 2007, or an increase of 4.9 percent when adjusted for the spin-off of the Wireline segment's non-strategic local exchange and related business assets in Maine, New Hampshire and Vermont (non-GAAP). Total operating expenses increased 2.4 percent to $19.6 billion, comparing second quarter 2008 with second quarter 2007. Verizon reported 66 cents in diluted earnings per share (EPS) in the second quarter 2008, compared with 58 cents per share in the second quarter 2007.
At the end of Q2, Verizon's total debt was $43.1 billion, compared with $35.8 billion at the end of the first quarter 2008. In the second quarter, the company made final payments of approximately $8.5 billion for licenses won in the Federal Communications Commission's 700 MHz spectrum auction and purchased $4.8 billion of Alltel Corp. debt in connection with the pending acquisition of Alltel.
Some highlights for the quarter:
Wireless
- Verizon Wireless reported 1.5 million total net customer additions, essentially all were retail post-paid. Retail gross customer additions were up 3.2 percent over the prior year.
- Total churn was down year over year at 1.12 percent, a record low for the company. Among the company's retail post-paid customers, churn was even lower at 0.83 percent, also a record low.
- Wireless continued its double-digit revenue growth, with total revenues of $12.1 billion, up 11.8 percent year over year. Service revenues were $10.5 billion, up 11.6 percent year over year, driven by customer growth and demand for data services. ARPU levels (average monthly revenue per customer) increased year over year for the ninth consecutive quarter. Total service ARPU of $51.53 was up 0.9 percent year over year driven by total data ARPU, which was up 31.3 percent.
- Verizon Wireless' data revenues grew 45.3 percent over the prior year, contributing nearly $2.6 billion. The company had 49.6 million retail data customers in June (approximately three-quarters of its retail customer base), a 25.6 percent increase over the prior year.
Wireline
- Verizon Wireline expanded penetration of FiOS services. Sales penetration rates (percentage of potential customers who buy the service) increased for both FiOS Internet (available for sale to nearly 8.4 million premises) and FiOS TV (available for sale to 7.0 million premises).
- Verizon's FTTP network, which delivers FiOS Internet and FiOS TV services, passed 11.0 million and 9.6 million premises, respectively, throughout the company's entire service territory by the end of the quarter.
- FiOS Internet penetration averaged 23.5 percent across all markets, up from 18.7 percent in last year's second quarter. FiOS TV penetration averaged 19.7 percent across all markets, up from 13.3 percent.
- Verizon added 176,000 net new FiOS TV customers, for a total of nearly 1.4 million FiOS TV customers as of the end of the quarter.
- Verizon added 187,000 net new FiOS Internet customers. The company had nearly 2 million FiOS Internet customers at the end of the quarter, nearly doubling the number of FiOS Internet customers since the end of second quarter 2007. Verizon added its 2 millionth FiOS Internet customer earlier this month.
- Total broadband connections were 8.3 million, a net increase of 54,000 over the first quarter 2008. This includes a decrease of 133,000 DSL-based Verizon High Speed Internet connections, which was more than offset by the increase in FiOS Internet customers. The 8.3 million is an 11.5 percent year-over year increase, excluding broadband connections in 2007 in the three New England states that have since been spun off.
- Wireline data revenues -- which now represent 41.8 percent of total wireline revenues -- were $5.1 billion, an increase of 16.1 percent compared with the second quarter 2007. This includes revenues from consumer broadband services, wholesale data transport and Verizon Business data services.
- Broadband and video revenues from consumer customers totaled more than $1.0 billion in the second quarter, representing year-over-year growth of 52.9 percent.
- Growing revenue from broadband and video services drove consumer ARPU in legacy Verizon wireline markets (which excludes consumer markets served by the former MCI) to $63.76, a 10.4 percent increase compared with last year's second quarter. The ARPU among FiOS customers was more than $130 per month.
- Verizon Business had total revenues of $5.3 billion, or growth of 0.9 percent compared with last year's second quarter.
- Sales of strategic services -- such as IP, managed services, Ethernet and optical ring services -- continued to drive growth at Verizon Business. These services generated $1.5 billion in revenue, up 18.7 percent from second quarter 2007.
- Wireline total operating revenues were $12.1 billion, a 1.8 percent decrease compared with the second quarter 2007. Wireline total operating expenses decreased 1.7 percent over the same period.
