Verizon: Wireless Data Grows as Other Areas Slow

Verizon Communications reported Q1 2010 financial results in line with expectations with its strongest area of growth in wireless data services, FiOS and broadband, as traditional services declined and subscriber growth slowed. Verizon Wireless recorded 1.5 million total net customer additions for Q1 2010.


Verizon's total operating revenues were $26.9 billion in the first quarter of 2010, an increase of 1.2 percent compared with the first quarter of 2009. Net income attributable to Verizon was $0.4 billion in the first quarter of 2010, compared with $1.6 billion in the first quarter of 2009.


Capital expenditures totaled $3.5 billion in the first quarter of 2010. Although this was down 6.8 percent from the first quarter of 2009, Verizon reiterated its guidance that total 2010 capital spending will range from $16.8 billion to $17.2 billion.


Highlights include:

Verizon Wireless

Added 423,000 retail postpaid and 284,000 total retail customers in the quarter, excluding acquisitions and adjustments. Nearly 95 percent of the company's customers are retail, the most retail customers of any U.S. wireless provider. The company had 87.8 million retail customers at the end of the first quarter, an increase of 4.4 percent year over year.


The total number of customers at the end of the quarter was 92.8 million, an increase of 7.2 percent year over year, with 1.5 million total net customer additions in the first quarter 2010. In addition, the company has 7.3 million other connections, including machine-to-machine (M2M), eReaders and telematics, bringing total connections to 100.1 million.


Retail postpaid churn, retail churn and total customer churn was 1.07 percent, 1.46 percent and 1.40 percent, respectively. All are improved year over year.


Retail service revenues in the quarter totaled $13.4 billion, up 5.0 percent year over year. Retail data revenue was up 25.6 percent to $4.5 billion. Service revenues in the first quarter were $13.8 billion, up 5.9 percent. Total revenues were $15.8 billion, up 4.4 percent year over year.


Retail service ARPU was flat at $50.95. Retail data ARPU increased to $17.06, up 19.6 percent year over year.


Wireless operating income margin was 28.9 percent, an increase of 0.7 percentage points year over year. Segment EBITDA (earnings before interest, taxes, depreciation and amortization) margin on service revenues (non-GAAP) was 46.0 percent, the same as first-quarter 2009.


Wireline

First-quarter 2010 operating revenues were $11.2 billion, a decline of 2.9 percent compared with first-quarter 2009. This is an improvement of 1.0 percentage point compared with the year-over-year revenue declines reported in the fourth quarter 2009.


First-quarter 2010 operating expenses were $11.1 billion, an increase of 1.7 percent compared with first-quarter 2009. In first-quarter 2010, savings from continued workforce reductions and other initiatives were more than offset by weather-related expenses in the Northeast, and incremental pension and retiree benefit expenses.


Broadband connections totaled 9.3 million at the end of the first quarter 2010, a 4.3 percent year-over-year increase. This is a net increase of 90,000 from the fourth quarter 2009, as the increase in FiOS Internet connections more than offset a decrease in DSL-based High Speed Internet connections.

As of the end of first-quarter 2010, the FiOS network passed 15.6 million premises. Verizon continues to target passing 18 million premises with FiOS. Since the company has already secured video franchises to meet this target, it is spreading the passing of remaining premises several years past 2010.



New Verizon offerings for multinational corporate and government customers included a cloud-based data backup service offered jointly with IBM; a managed mobility solution tailored to government customers; a managed immersive videoconferencing solution with Cisco; and new professional consulting services.


Continuing to broaden its global scope and capabilities, Verizon installed 11 additional Private IP edge routers for a total of 763 edge routers in 215 sites throughout 59 countries. The company also expanded its Private IP network into three additional Latin American locations -- Sao Paulo and Rio de Janeiro, Brazil; and Santiago, Chile. Additionally, Verizon enhanced its Trans-Atlantic global mesh network to eight-way diversity with the addition of the Atlantic Crossing-1 cable system.
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