Verizon's total Q3 operating revenues grew 10.2 percent to $27.3 billion, compared with the third quarter 2008, including revenues from Alltel, which Verizon acquired in January 2009. On a pro forma basis (consolidating the operating results of Verizon and the former Alltel as though the acquisition had occurred on Jan. 1, 2008), operating revenue growth was 0.6 percent. Diluted earnings per share (EPS) were 41 cents in the third quarter, compared with 59 cents per share in the third quarter 2008. O
Verizon's growth was driven by its wireless operations, where revenues totaled $15.8 billion, up 24.4 percent year over year and up 4.9 percent on a pro forma basis. The company's FiOS network added customers as well, including 198,000 net new FiOS Internet customers and 191,000 net new FiOS TV customers.
Cash flow from operations totaled $23.1 billion for the first nine months of 2009, up 16.0 percent, or $3.2 billion, over the same period last year. Free cash flow (cash flow from operations minus capital expenditures) totaled $10.7 billion, up $3.3 billion over the same period last year.
"Verizon continues to generate strong cash flow, which we have used in building the foundation for sustainable, long-term shareowner value," said Verizon Chairman and CEO Ivan Seidenberg. "Even through the worst of the recession, we have continued to raise our dividend and to add new customers, expand markets and grow revenues based on the power and innovation of Verizon's wireless, broadband and global networks."
Some highlights from Q3:
- Wireless retail (non-wholesale) gross customer additions were up 15.0 percent over the prior year. On a pro forma basis, retail gross customer additions decreased by 8.3 percent.
- Verizon Wireless had 89.0 million customers at the end of the quarter, an increase of 25.7 percent year over year, and 6.3 percent on a pro forma basis. Verizon Wireless is the largest wireless company in the U.S. in terms of total customers and revenues.
- The company also has the most retail customers of any U.S. wireless provider and continued to grow its high-quality base, adding 1.0 million net retail customers in the quarter, excluding acquisitions and adjustments, for a total of 86.3 million retail customers.
- Total churn and retail postpaid churn were 1.49 percent and 1.13 percent, respectively.
- Revenues totaled $15.8 billion, up 24.4 percent year over year and up 4.9 percent on a pro forma basis. Service revenues were $13.5 billion, up 23.7 percent year over year and up 6.1 percent on a pro forma basis as demand continued to grow for data services. Data revenue grew to $4.1 billion, up 48.1 percent and up 28.9 percent on a pro forma basis.
- Total service ARPU decreased 2.2 percent year over year and 0.8 percent on a pro forma basis to $51.04. Total data ARPU increased to $15.59, up 17.2 percent year over year and 20.7 percent on a pro forma basis.
- Wireless operating income margin, adjusted for merger integration and acquisition costs, was 28.3 percent, up 1.0 percentage point year over year and up 1.4 percentage points pro forma. Adjusted on the same basis, EBITDA (earnings before interest, taxes, depreciation and amortization) margin on service revenues (non-GAAP) was 46.1 percent, an increase of 1.9 percentage points year over year and 1.3 percentage points on a pro forma basis.
Wireline
- Verizon added 198,000 net new FiOS Internet customers. The company served 3.3 million FiOS Internet customers by the end of the quarter, a 49.2 percent year-over-year increase.
- FiOS Internet penetration (customers as a percentage of potential customers) increased to 28.5 percent by the end of the third quarter, with the product available for sale to 11.5 million premises. This compares with a 24.2 percent penetration at the end of the third quarter 2008.
- Verizon also added 191,000 net new FiOS TV customers. The company served 2.7 million FiOS TV customers by the end of the quarter, a 67.7 percent year-over-year increase.
- FiOS TV penetration increased to 24.9 percent by the end of the third quarter, with the product available for sale to 10.9 million premises. This compares with a 19.7 percent penetration at the end of the third quarter 2008.
- Consumer broadband and video revenues in wireline mass markets (which include consumer and small-business customers) represented growth of 30.7 percent compared with the third quarter 2008. This increase contributed to 1.2 percent revenue growth in consumer markets served by Verizon's wireline network.
- Broadband connections totaled 9.2 million at the end of the third quarter, an 8.5 percent year-over-year increase. This is a net increase of 63,000 from the second quarter 2009, as the increase in FiOS Internet connections more than offset a decrease in DSL-based High Speed Internet connections.
- Revenue growth from broadband and video services boosted consumer ARPU to $75.04 in the third quarter 2009, a 12.6 percent year-over-year increase.
- FiOS ARPU is more than $137, driven primarily by "triple-play" bundles of voice, Internet and TV services.
- Worldwide sales of strategic business services -- such as IP, managed services, Ethernet and security solutions -- generated $1.6 billion in revenue in the quarter, up 1.0 percent from
the third quarter 2008.
