Verizon Wireless Sells 1.2 Million LTE Devices in Q2

Verizon Communications reported Q2 revenues of $27.5 billion in second-quarter 2011, up 6.3 percent compared with second-quarter 2010 (on a comparable basis adjusting for divested operations), marking the company's strongest quarter for consolidated revenue growth in 10 quarters. Verizon reported 57 cents in EPS in the quarter, compared with a second-quarter 2010 loss of 42 cents per share.


In first-half 2011, Verizon's capital expenditures totaled $8.9 billion, compared with $7.6 billion in first-half 2010. Verizon continues to expect full-year 2011 capital spending to be similar to its 2010 investment of $16.5 billion.


"In terms of earnings growth and the acceleration of revenue growth, this has been one of Verizon's best quarters since the 2008 economic downturn," said Chairman and CEO Ivan Seidenberg. "We expanded sequential margins in both our wireline and wireless businesses, and in the second half of the year we expect Verizon to build on this strong, positive momentum to continue to drive profitable, sustainable growth."


Seidenberg added: "We expect Verizon Wireless to gain share in the retail postpaid market and widen its network-quality lead throughout 2011. We also continue to see strong customer demand for FiOS Internet and TV, and for cloud and other strategic services. At the same time, we remain focused on our cost structure, as we deliver improvements in wireline margins quarter after quarter."


Some highlights of the quarter:


Verizon Wireless


Service revenues in the quarter totaled $14.7 billion, up 6.6 percent year over year. Data revenues were $5.8 billion, up $1.1 billion or 22.2 percent year over year, and represent 39.5 percent of all service revenues. Total revenues were $17.3 billion, up 10.2 percent year over year.


Retail postpaid ARPU grew 1.9 percent or $1.00 over second-quarter 2010, to $54.12. Retail postpaid data ARPU increased to $21.26, up 15.2 percent year over year. Retail service ARPU also grew 1.9 percent, to $52.49.
Wireless operating income margin was 27.1 percent. Segment EBITDA margin on service revenues (non-GAAP) was 45.4 percent.


Verizon Wireless added 2.2 million total connections, including 1.3 million retail postpaid customers, and 890,000 wholesale and other connections. These additions exclude acquisitions and adjustments.


At the end of the second quarter, the company had 106.3 million total connections, an increase of 6.6 percent year over year, including 89.7 million retail customers and 16.6 million wholesale and other connections.


At the end of the second quarter, smartphones were 36 percent of Verizon Wireless' retail postpaid customer phone base, up from 32 percent at the end of first-quarter 2011.


Retail postpaid churn was 0.89 percent, the lowest in the industry and the company's lowest since second-quarter 2008. Total retail churn was 1.22 percent, an improvement of 9 basis points year over year and 11 basis points sequentially.


During the second-quarter 2011, Verizon Wireless sold 1.2 million 4G LTE smartphones and Internet data devices.
Verizon Wireless continued to invest in and enhance its 3G network, the nation's largest and most reliable 3G network.


Wireline

Second-quarter 2011 operating revenues were $10.2 billion, a decline of 0.3 percent compared with second-quarter 2010. This is an improvement from a decline of 2.2 percent comparing first-quarter 2011 to first-quarter 2010. Verizon acquired cloud and managed IT infrastructure leader Terremark Worldwide in April, and the inclusion of Terremark results added $98 million in revenue, representing 100 basis points of wireline revenue growth, in second-quarter 2011.


Revenues for Verizon's FiOS fiber-optic services to consumer retail customers generated approximately 57 percent of consumer wireline revenues in second-quarter 2011, compared with approximately 48 percent in second-quarter 2010.


Consumer revenues grew 1.3 percent compared with second-quarter 2010. Consumer ARPU for wireline services was $92.44 in second-quarter 2011, up 9.4 percent compared with second-quarter 2010. ARPU for FiOS customers continues to be more than $146.


Global enterprise revenues totaled $4.0 billion in the quarter, up 3.6 percent compared with second-quarter 2010. Sales of strategic services -- including Terremark cloud services, security and IT solutions, and strategic networking -- increased 17.8 percent compared with second-quarter 2010 and now represent approximately 48 percent of global enterprise revenues.

Verizon added 189,000 net new FiOS Internet connections and 184,000 net new FiOS TV connections in second-quarter 2011. Verizon had a total of 4.5 million FiOS Internet and 3.8 million FiOS TV connections at the end of the quarter.


FiOS penetration (subscribers as a percentage of potential subscribers) is now 30 percent or more for both services. FiOS Internet penetration was 34 percent at the end of second- quarter 2011, compared with 30 percent at the end of second-quarter 2010. In the same periods, FiOS TV penetration was 30 percent, compared with 26 percent, respectively. The FiOS network passed 16.1 million premises at mid-year 2011.


Broadband connections totaled 8.6 million at the end of second-quarter 2011, a 3.3 percent year-over-year increase. FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 62,000 broadband connections from first-quarter 2011. Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.9 percent to 25.0 million -- the smallest year-over-year decline since second-quarter 2007.


Verizon installed 63 additional Private IP edge routers for a total of 915 edge routers in 245 sites throughout 63 countries, activated more than 1,500 kilometers (932 miles) of ultra-long-haul network across the southern part of the United Kingdom, and completed a joint fiber build in Singapore, which almost doubles the coverage of the Singapore fiber-optic network.


Verizon kicked off the expansion of 100G IP backbone capabilities in the U.S. to nine routes. http://www.verizonwireless.com