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Verizon Grows on Data Deluge, Even as Subs Fall

Even with slowing subscriber growth, Verizon Wireless reported its best ever quarter on the mobile Web, thanks to the launch of its Long Term Evolution (LTE) network and its growing smart-phone portfolio, even ahead of the launch of the iPhone and LTE smart phones. (See Verizon Finally Gets the iPhone 4 and CES 2011: Verizon Takes 10 With LTE.)

In the first three weeks after Verizon introduced LTE, it sold 65,000 dongles, 41 percent of which went to customers who were new to Verizon, CFO Francis Shammo told investors during Verizon's earnings presentation Tuesday. It also sold 86,000 tablets in the quarter, 36,000 of which were standalone iPads. The rest were iPads with Novatel Wireless Inc. (Nasdaq: NVTL) Mi-Fis attached or Samsung Corp. Galaxy Tabs. Of the tablet buyers, 96 percent were new to the category, Shammo said.

In terms of smart phones, 26 percent of Verizon's customers had the data-heavy devices, up 15 percent from the previous year. More than 75 percent of postpaid phones added in the fourth quarter were smart phones, and 16 percent of those were new to the category.

"I think we will be at 50 percent by the end of 2011, or even higher," Verizon COO Lowell McAdam told investors about his smart-phone expectations.

Overall, Verizon added 955,000 total wireless customers in the quarter, including 872,000 postpaid, down a full 1.1 million from last year. Total revenues were US$16.1 billion, up 5.7 percent year-on-year, and data revenues climbed 22.8 percent to $5 billion.

Why this matters
Verizon has historically lagged AT&T Inc. (NYSE: T) in its smart-phone selection, but that has started to change as it has focused on adding customers ahead of its LTE rollout. Verizon expects its smart-phone base to continue to grow as it adds LTE smart phones and takes on iPhone switchers and upgraders.

In fact, McAdam told The Wall Street Journal Tuesday that subscriber growth wasn't what he hoped it would be for the fourth quarter as subscribers waited to upgrade in anticipation of the iPhone.

McAdam, who has been using the iPhone himself, told investors Tuesday, "this is a terrifically performing device and we expect great things from it as we add it to the network."

He also confirmed to the WSJ that that the carrier will offer the iPhone on unlimited $30-a-month data plans. McAdam said he realized he has to offer the unlimited option to attract defectors from AT&T, who have two tiered data plan options to choose from. (See AT&T Intros Mobile Data Caps.)

For more
Verizon has been building its smart-phone lineup, but its portfolio has never gotten as much attention as it did when Big Red got the iPhone this month.



— Sarah Reedy, Senior Reporter, Light Reading Mobile

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