Verizon Sees Continued Gains in Smartphones and FiOS

Verizon Communications reported quarterly revenues of $27.9 billion on a consolidated basis, an increase of 5.4 percent compared with third-quarter 2010. Driven by Verizon Wireless and continued growth in FiOS and strategic business services,Verizon posted 49 cents in EPS in the quarter, compared with 23 cents per share in third-quarter 2010.


"Verizon emerges from the third quarter in a strong position to accelerate growth," said Lowell McAdam, Verizon president and chief executive officer. "We faced significant challenges in recent months, yet delivered results that keep us on track to meet our 2011 earnings and revenue guidance, with great momentum expected entering 2012. We continue to grow revenues from strategic products and to increase free cash flow through improved operating performance and disciplined capital spending."


Verizon Wireless Operational Highlights


Verizon Wireless added 1.3 million total connections in third-quarter 2011, including 882,000 retail postpaid customers, and 367,000 wholesale and other connections. These additions exclude acquisitions and adjustments.


At the end of the third quarter, the company had 107.7 million total connections, an increase of 6.5 percent year over year, consisting of 90.7 million retail customers and 17.0 million wholesale and other connections.


At the end of the third quarter, smartphones accounted for 39 percent of the Verizon Wireless retail postpaid customer phone base, up from 36 percent at the end of second-quarter 2011.


Rollout of Verizon Wireless' LTE mobile broadband network is ahead of schedule and has already exceeded the company's 2011 target of covering a population of 185 million.


Service revenues in third-quarter 2011 totaled $15.0 billion, up 6.1 percent year over year. Data revenues were $6.1 billion, up more than $1.0 billion or 20.5 percent year over year, and represent 40.6 percent of all service revenues. Total revenues were $17.7 billion, up 9.1 percent year over year.


Retail postpaid ARPU grew 2.4 percent over third-quarter 2010, to $54.89. Retail postpaid data ARPU increased to $22.22, up 15.7 percent year over year. Retail service ARPU also grew 2.4 percent, to $53.21.


Some Wireline Operational highlights


Verizon added 138,000 net new FiOS Internet connections and 131,000 net new FiOS TV connections in third-quarter 2011. Verizon had a total of 4.6 million FiOS Internet and 4.0 million FiOS TV connections at the end of the quarter. With the clearing of FiOS installation backlogs caused by the storms and strike, Verizon expects to add at least 200,000 FiOS Internet and 200,000 FiOS TV customers in fourth-quarter 2011.


FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase. FiOS Internet penetration was 35 percent at the end of third-quarter 2011, compared with 31 percent at the end of third-quarter 2010. In the same periods, FiOS TV penetration was 31 percent, compared with 27 percent, respectively.


Broadband connections totaled 8.6 million at the end of third-quarter 2011, a 2.8 percent year-over-year increase. FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 20,000 broadband connections from second-quarter 2011. Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.6 percent to 24.5 million - the smallest year-over-year decline since fourth-quarter 2006.


Consumer ARPU for wireline services was $94.20 in third-quarter 2011, up 8.8 percent compared with third-quarter 2010. ARPU for FiOS customers continues to be more than $146. Revenues for Verizon's FiOS services to consumer retail customers generated nearly 60 percent of consumer wireline revenues in third-quarter 2011, compared with approximately 50 percent in third-quarter 2010.


Global enterprise revenues totaled $3.9 billion in the quarter, up 2.1 percent compared with third-quarter 2010. Sales of strategic services - including Terremark cloud services, security and IT solutions, and strategic networking - increased 15.6 percent compared with third-quarter 2010 and now represent nearly 50 percent of global enterprise revenues. Terremark achieved record new sales bookings in third-quarter 2011. International revenue, which makes up approximately 15 percent of global enterprise, grew 9.8 percent year over year. http://www.verizon.com