Verizon Hits 2M FiOS Subs

On the day it finally launched FiOS TV in New York City, Verizon Communications Inc. (NYSE: VZ) announced it has 1.4 million FiOS TV customers in total (one in five homes passed), and that it now has more than 2 million FiOS high-speed Internet access customers. (See FiOS TV Hits NYC and Verizon Reports 2Q08.)

The updated FiOS numbers were revealed as Verizon reported its second-quarter earnings. The carrier's net income increased 12 percent year-on-year to $1.88 billion, or 66 cents per share, on revenues of $24.12 billion.

In the same quarter last year, the company earned $1.68 billion, or 58 cents per share, on revenues of $23.27 billion. (See Verizon Has Marginal Concerns in Q2.)

Verizon's non-GAAP earnings (excluding one-time items) of 67 cents per share beat Wall Street's estimate of 65 cents.

Table 1: Verizon's 2Q08 Results
2Q08 2Q07 Y/Y Change
Revenue (millions) $24,124 $23,273 +3.7%
Earnings (millions) $1,882 $1,683 +11.8%
GAAP EPS $0.66 $0.58 +13.8%
Access Lines 38,264,000 41,832,000 -8.5%
Broadband Subscribers 8,330,000 7,471,000 +11.5%
FiOS TV Subscribers 1,382,000 515,000 +168.3%

Wireless was again the key revenue driver for Verizon this quarter. The company added 1.5 million wireless subscribers, nearly all of them monthly customers (as opposed to pay-as-you-go) -- more than the 1.3 million customer additions that iPhone operator AT&T Inc. (NYSE: T) managed in the same period. (See AT&T Hits 550K IPTV Subs.)

Wireless revenues, up 11.8 percent year-on-year at $12.1 billion, contributed half of all Verizon's second-quarter sales.

For the carrier's enterprise division, Verizon Enterprise Solutions , managed services continue to be a key growth area. Strategic services, which include managed services, IP services, and Ethernet services, recorded an 18.7 percent increase in revenues to $1.5 billion.

Despite Verizon's seemingly solid second-quarter performance, investors had been hoping for more: The carrier's stock dipped by $0.24, about 0.7 percent, to $34.21 in pre-market trading.

— Raymond McConville, Reporter, Light Reading

polo 12/5/2012 | 3:35:50 PM
re: Verizon Hits 2M FiOS Subs Any thoughts or expectations on VZ's plan to use the FiOS build out to deliver business services versus residential services?

If so, how many businesses will be served and when?

Also, any expectations on percentage of businesses to be served on BPON infrastructure versus GPON infrastructure?
Kreskin 12/5/2012 | 3:35:49 PM
re: Verizon Hits 2M FiOS Subs
VZ is already using FIOS to deliver services to SMB's. VZ Business delivers to large enterprises within and outside the ILEC territory.

Here is what they do ... they approach a customer that switched to a CLEC (that rents copper from VZ). VZ offers the same package they already have but with one twist. Instead of matching the copper capacity at 3 meg, VZ for the same price offers 20 meg. This pretty much assures that the CLEC can not win the customer back as copper is incapable of driving/holding 20 Mbps. Physics.

Once VZ wins the customer back over fiber, they remove the copper facilities serving that customer which is totally legal.

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