Verizon posts 15% Q4 earnings increase
While Verizon was able to post a 15 percent increase for the fourth quarter, the good news was somewhat tempered by a continued decline in its wireline customers and slower growth for its mobile phone business.
“From our perspective, the fourth quarter demonstrates that our business continues to perform well both operationally and financially,” said Chief Operating Officer Denny Strigl.
Strigl cited the 1.4 percent ARPU growth for Verizon Wireless and 14 percent ARPU increase in its consumer division as examples of a strong fourth quarter.
Verizon Wireless, which is jointly owned by Verizon and Britain’s Vodafone Group, added 1.4 million subscribers in the quarter, but that was down from the 1.5 million that signed on in the third quarter.
Verizon Wireless’s fourth quarter subscriber numbers included a net loss of 122,000 retail customers, resulting primarily from the closing of a previously announced exchange agreement with another carrier. Verizon Wireless had entered into this agreement to comply with conditions imposed in connection with regulatory approval of the company's acquisition of Rural Cellular Corp., which closed in August.
Verizon Wireless finished the year with 72.1 million customers, but it wrapped up its deal to purchase Alltel on Jan. 9 for its current total of more than 80 million customers, which tops AT&T’s subscriber base and makes Verizon Wireless the nation’s largest cellular carrier in terms of total subscribers.
On the wireline side of the ledger, Verizon lost 12.2 percent of its residential phone lines over the past year as former customers transitioned over to VoIP services provided by cable and other service providers, or elected to use their cell phones instead of traditional landline phones. Overall, revenues for the wireline division, which include local phone businesses and services to government and business customers, dropped 2.7 percent to 11.9 billion.
Verizon Wireline reported record growth in the number of new customers for its FiOS TV and FiOS Internet services. Verizon added 303,000 net new FiOS TV customers, compared with 226,000 in the fourth quarter of 2007. The company had 1.9 million FiOS TV customers at the end of the year, adding nearly 1 million FiOS TV customers since year-end 2007.
FiOS TV service was available for sale to 9.2 million premises by year-end 2008, which Verizon said represented a 57 percent increase in the availability of FiOS TV and, by extension, its triple-play bundles of FiOS TV, Internet and voice services, since year-end 2007.
Verizon added 282,000 net new FiOS Internet customers, compared with 244,000 in the fourth quarter 2007. The company had nearly 2.5 million FiOS Internet customers at year-end 2008, adding nearly 1 million FiOS Internet customers since year-end 2007.
The gains in Verizon’s fiber-optic data customers were partially offset by the decrease of 68,000 DSL-based Internet connections.
The company said FiOS Internet sales penetration increased to 24.9 percent, compared with 20.7 percent in the fourth quarter 2007. FiOS Internet was available for sale to nearly 10 million premises by year-end 2008.
Broadband and video revenues from consumer customers totaled nearly $1.2 billion in the fourth quarter 2008, representing year-over-year quarterly growth of 42 percent. The video and broadband services account for 31 percent of revenue for the consumer wireline division, compared with 22.7 percent in the fourth quarter 2007.
By the end of 2008, Verizon's FiOS fiber-to-the-premises network passed 12.7 million premises throughout the company's wireline service territory, which exceeded the company's target of 12 million by year-end 2008. Verizon’s fiber-to-the-home network now passes approximately 40 percent of the total households in Verizon's landline footprint.
For the quarter, Verizon earned $1.24 billion, or 43 cents per share, which was up from the $1.07 billion, or 37 cents per share, in the same quarter in 2007.
Revenue rose 3.4 percent to $24.6 billion, from $23.8 billion a year ago. Analysts were expecting revenues of $24.74 billion, according to the Associated Press.
For the full year, Verizon brought in $6.43 billion, or $2.26 per share, up from $5.52 billion, or $1.90 per share, in the previous year. Revenue increased 4.2 percent to $97.4 billion from 2007 to 2008.
While Verizon didn’t provide a forecast for 2009, Chairman and CEO Ivan Seidenberg expects the company to continue to perform well despite the downturn in the economy.
“To state the obvious, 2008 was a difficult economic environment, and there is more than the usual uncertainty as we try to plan for 2009,” said Seidenberg in this morning’s conference call. “I think the results reflect solid execution by each business unit, and in the context of 2009 indicate that we clearly have the potential to continue to perform well both absolutely and relatively in this very challenging market.”
Going forward, Chief Financial Officer Doreen Toben said the company plans to spend less on capital equipment than the $17.2 billion it spent last year, which will have an impact on Verizon’s vendors.