Verizon Wireless Drives Parent Firm's Profits - InformationWeek

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Verizon Wireless Drives Parent Firm's Profits

Monday's earnings report shows the firm's revenue for the quarter was $22.58 billion, up 6.4% over the same quarter in the previous year.

Verizon Wireless continued its stellar performance as Verizon Communications reported its first quarter results Monday. The firm's revenue for the quarter was $22.58 billion, up 6.4% over the same quarter in the previous year.

While Verizon, the nation's second largest phone carrier behind only AT&T, also cited growth in its fiber optics service (FiOS) and in its Verizon Business operation, the company's wireless unit recorded the most impressive results.

Verizon Wireless, which is a partnership with Britain's Vodafone Group, hit on multiple cylinders signing up 1.6 million net new retail customers, delivering an industry-low churn rate, and notching a 26.5% operating income margin.

"The company has the most retail customers in the industry: 58.5 million," the firm said. "Retail churn (was) at 1.08% for the quarter." Verizon said the low churn rate -- the percentage of customers who end their relationship with a company in a given time period -- was an indication of strong customer loyalty.

Verizon, like AT&T, has been rolling out fiber optical networks to compete with cable companies, which have been poaching on the former Baby Bells' traditional wireline services. Verizon said it added 141,000 net new FiOS TV optical cable customers in the quarter, bringing its total FiOS customers to 348,000. Combined with Verizon's 600,000-plus DirecTV Group customers, the firm counts nearly 1 million TV customers.

FiOS also combines with Verizon's DSL service to bring broadband to customers; in all Verizon said its wireline broadband connections total 7.4 million -- a 30% jump from the previous year.

Verizon has been losing traditional landline customers to cable and cell phone companies by attrition and by Verizon's outright sale of some landline units like its spin off of New England customer lines to FairPoint Communications.

Utilizing a strategy that calls for the disposal of various units like phone directories that it doesn't deem to be in its core future business, Verizon is concentrating on business areas in which it expects to see strong growth in the future.

"Our results show that across-the-board we have accelerated organic growth in key markets: retail wireless, broadband, data, video and global IP," said CEO and chairman Ivan Seidenberg in a statement. "Our investment in advanced network platforms has been a foundation for product innovations and operating efficiencies and we have divested non-strategic assets..."

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