Verizon Communications reported strong results for Q3 2008 supported by Verizon Wireless' continued strong performance, accelerating numbers of new FiOS customers, and continued increased sales of strategic business services. 
Verizon's total operating revenues grew 4.1 percent to $24.8 billion in the third quarter 2008, from $23.8 billion in the third quarter 2007. This is an increase of 5.4 percent when adjusted for the spinoff of non-strategic local exchange and related Wireline business assets earlier this year (non-GAAP). Total operating expenses increased 5.2 percent to $20.6 billion, or 5.4 percent on an adjusted basis, comparing third-quarter 2008 with third-quarter 2007. The company reported 59 cents in diluted earnings per share (EPS) in the third quarter 2008, compared with 44 cents per share in the third quarter 2007.
Some highlights for the quarter:
Verizon Wireless
- Wireless retail gross customer additions were strong, up 5.3 percent over the prior year.
- Organic growth (growth from sources other than acquisitions) was 1.5 million retail net customer additions, essentially all post-paid.
- Total growth was 2.1 million retail net additions. This included 630,000 retail customers from the Rural Cellular Corp. acquisition, and Verizon expects to have a net loss of approximately 120,000 of these customers under an exchange agreement with another carrier.
- Verizon Wireless had 70.8 million total customers at the end of the quarter.
- Churn was 1.33 percent. Among the company's retail post-paid customers, churn was even lower at 1.03 percent.
- Verizon Wireless continued its double-digit revenue growth, with total revenues of $12.7 billion, up 12.5 percent year over year. Service revenues were $10.9 billion, up 12.2 percent year over year, driven by customer growth and demand for data services.
- Total service ARPU of $52.18 was up 0.9 percent year over year, reflecting strong growth in total data ARPU, which was up 28.3 percent.
FiOS
- Verizon added 233,000 net new FiOS TV customers, compared with 176,000 in the second quarter 2008. The company has 1.6 million FiOS TV customers, compared with more than 700,000 FiOS TV customers at the end of third-quarter 2007.
- Verizon added 225,000 net new FiOS Internet customers, compared with 187,000 in the second quarter 2008. The company has 2.2 million FiOS Internet customers, compared with 1.3 million FiOS Internet customers at the end of third-quarter 2007.
- FiOS Internet sales penetration (sales as a percentage of potential customers) increased to 24.2 percent, compared with 20.0 percent in last year's third quarter. FiOS Internet is available for sale to nearly 9.1 million premises.
- FiOS TV sales penetration increased to 19.7 percent, compared with 15.2 percent in last year's third quarter. Verizon made FiOS TV service available for sale to a record 1.2 million additional premises in the quarter, bringing the total to 8.2 million.
- Broadband and video revenues from consumer customers totaled $1.1 billion in the third quarter, representing year-over-year growth of 45.3 percent.
- Consumer ARPU in legacy Verizon wireline markets (which excludes consumer markets served by the former MCI) was $66.67, a 12.8 percent increase compared with last year's third quarter.
- Verizon's broadband fiber-to-the-premises network passed 11.9 million premises throughout the company's wireline service territory by the end of the quarter.
- Total broadband connections were 8.5 million, a net increase of 129,000 over the second quarter 2008. This includes a decrease of 96,000 DSL-based Verizon High Speed Internet connections, which was more than offset by the increase in FiOS Internet customers. The 8.5 million is a 9.1 percent year-over-year increase.
- Broadband and TV products now account for 29.1 percent of consumer ARPU in legacy markets, compared with 27.6 percent in the second quarter 2008. The ARPU among FiOS customers continues to be more than $130 per month.
Verizon Business
- Verizon Business had total revenues of $5.4 billion, or growth of 1.2 percent compared with last year's third quarter. This was Verizon Business' eighth consecutive quarter of year-over-year pro-forma revenue growth (non-GAAP, calculated as if Verizon and MCI had merged on Jan. 1, 2005).
- Sales of strategic services -- such as IP (Internet protocol), managed services, Ethernet and optical ring services -- continued to drive growth at Verizon Business. These services generated $1.6 billion in revenue, up 15.4 percent from third-quarter 2007.
- Verizon Business continued to expand its global network reach and capabilities, announcing during the quarter that the first phase of the Trans-Pacific Express submarine cable system directly connecting Mainland China, the U.S., South Korea and Taiwan is ready for service. The company also began a significant expansion of its operations in India, activating Private IP nodes in five major business centers following receipt of international and national long-distance licenses earlier this year.
- Additional global network enhancements included installing 27 additional Private IP edge switches globally for a total of 621 edge switches in 158 markets; completing the first phase of the company's U.S. optical mesh network; expanding its mesh network in the Asia-Pacific region to Taiwan, Hong Kong and Korea; and deploying an additional 1,348 ultra long haul route-miles in the U.S.
