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Verizon revenue up on mobile, broadband growth

Mobile data revenue up more than 21 percent compared to the first quarter of 2011, the company says

Verizon Communications posted revenue and net income gains for the first quarter of 2012, with mobile and broadband customer additions driving the numbers.

Verizon on Thursday reported revenue of US$28.2 billion for the first quarter, up 4.6 percent from the first quarter of 2011. Net income was $3.9 billion, up 19.7 percent, with $1.7 billion of the net income attributable to Verizon, and the rest to Verizon Wireless partner Vodafone. Net income attributable to Verizon was up 17.2 percent from a year ago.

Verizon reported a 21.1 percent increase in mobile data revenue, compared to the first quarter of 2011 and an increase of 734,000 retail mobile customers during the quarter. The company also reported additions of 193,000 Fios broadband customers and 180,000 Fios television customers.

Verizon Wireless produced "both great growth and great margins," Lowell McAdam, Verizon chairman and CEO, said in a statement.

Earnings per share for Verizon's cut of the net income was $0.59, beating analyst estimates of $0.58.

The company's mobile service revenue was $15.4 billion for the quarter, up 7.7 percent from the first quarter of 2011. Mobile data revenue was $6.6 billion. Forty-seven percent of Verizon's postpaid retail mobile customers have smartphone plans, up from 43.5 percent at the end of the fourth quarter of 2011.

At the end of the quarter, Verizon had 93 million mobile retail customers, up 5.2 percent from a year ago.

During a conference call, Fran Shammo, Verizon's executive vice president and CFO, detailed Verizon's plans, announced Thursday, to sell 24MHz of spectrum in the lower 700MHz block if federal regulators approve the company's request to buy other spectrum from a group of cable providers.

The proposed sale of the A and B blocks of the 700MHz band isn't the result of a "roadblock" at the U.S. Federal Communications Commission on Verizon's deal with the cable firms, Shammo said. The cable spectrum fits better with Verizon's C block holdings in the 700MHz band for providing 4G LTE service, he said.

"We think it's the prudent thing to do to sell these licenses off to the rest of the industry for the benefit of their customers and to enhance their ability to build out 4G LTE," Shammo said. "We would say we're being good stewards."

Shammo disputed reports that Verizon was conducting a spectrum "fire sale." Verizon will only sell the A and B blocks if it gets the price it wants, he said. "We would be prudent to our shareholders to make sure we get a return on the investment," he said.

In Verizon's wireline division, revenue was $9.9 billion for the first quarter, down 2 percent from a year earlier. But Verizon officials pointed to Fios customer growth as a positive sign. Verizon added a net 104,000 broadband customers during the quarter, bringing its total number of broadband customers to 8.8 million. Fios broadband customers totalled 5 million.

Technology Business Research, an independent analyst firm, called Verizon's mobile results "strong."

"Across all metrics, including web, email, and messaging, total data services revenues increased by double-digits year-to-year," Ken Hyers, a senior analyst for the firm, said in an email. "The steady growth in uptake of wireless data plans is a direct result of Verizon Wireless’ steady buildout of its LTE network and broad portfolio of smartphones."

Verizon should see more smartphone subscriber growth as it adds Windows smartphones to its portfolio, Hyers said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.


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