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Wireless Pumps Up Verizon in Q1

Michelle Donegan
LR Mobile News Analysis
Michelle Donegan
4/27/2009

Wireless stole the spotlight in Verizon Communications Inc. (NYSE: VZ)'s first-quarter earnings results today, driving revenue and subscriber growth for the operator. (See Verizon Closes Q1.)

And now it has been reported that the largest U.S. mobile operator -- since its acquisition of Alltel Corp. (NYSE: AT) -- is looking to muscle in on AT&T Inc. (NYSE: T)'s exclusive iPhone action. (See AT&T: Another Bumper iPhone Quarter, AT&T Seeks to Extend Exclusive iPhone Deal, and Updating the iPhone.)

Verizon Wireless added 1.3 million retail wireless customers in the first quarter this year, beating rival AT&T's 1.2 million net adds in the same period and bringing its total subscriber base to 86.6 million. AT&T had 78.2 million wireless subscribers at the end of the first quarter.

So having surpassed AT&T on subscriber numbers, Verizon reportedly now wants to have its rival's crown jewel -- Apple Inc. (Nasdaq: AAPL)'s iPhone. And here's a compelling reason why Verizon might want a bite of the Apple (so to speak): AT&T has said that revenue from iPhone users is 1.6 times that from its other wireless subscribers.

And with its proto-4G Long-Term Evolution (LTE) network underway, Verizon is already on a mission to eclipse AT&T's high-speed data packet access (HSDPA) mobile broadband network with LTE's faster download speeds. (See MWC 2009: Verizon Picks LTE Vendors.)

Even without Apple's iconic device, Verizon's mobile data revenues are growing at a fast rate. Data revenues were up 56.2 percent to $3.6 billion in the first quarter compared with the same quarter last year. Revenue from data services accounted for 27.4 percent of wireless service revenue in the quarter. Verizon's data ARPU (average revenue per user per month) was $14.16, up 25 percent compared with the same period last year.

Wireless service revenues in the first quarter were up 28.9 percent year-on-year to $13.1 billion. But service ARPU was down 0.3 percent from the year-ago quarter to $50.74.

Overall, Verizon's total wireless revenues for the quarter ($15.1 billion) accounted for 57 percent of Verizon Communications revenues and were up 29.6 percent year-on-year.

"We're weathering the effects of the economy very well," said Denny Strigl, Verizon's COO, on the conference call with analysts and media.

Update on FiOS
In the fixed-line business, Verizon added 299,000 FiOS TV customers in the quarter, bringing the total to 2.2 million. The service is available to 9.7 million premises.

And the operator added 298,000 FiOS Internet customers in the quarter, which takes the total to nearly 2.8 million customers for the high-speed broadband service.

— Michelle Donegan, European Editor, Unstrung

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