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Verizon adds few contract customers in Q1

Thu, 04/22/2010 - 8:30am
Peter Svensson, AP Technology Writer

NEW YORK (AP) – Verizon Communications Inc., the largest wireless carrier in the country, is finding there's an end to the number of people who'll sign two-year contracts for cell phone service.

Verizon said Thursday that it signed up a net of just 423,000 customers under contract in the first three months of the year. That was the lowest number in years, and below analyst expectations.

Its chief competitor, AT&T Inc., also reported a relatively low number of contract customers for the first quarter when it reported first-quarter results the day before. But AT&T did somewhat better, signing up 512,000 with help from the iPhone.

The results demonstrate that the engine that has kept the wireless industry booming for more than a decade is now running out of steam, as nearly everyone has a cell phone.

To keep revenue growing, the carriers are now looking at other avenues. One is prepaid service, which is usually cheaper than contract plans and available to consumers without credit. Verizon lost 139,000 prepaid customers under its own brand in the quarter, but added 1.3 million through resellers.

In total, Verizon added 1.55 million wireless customers in the quarter, comparable to the 1.3 million it added in the same quarter last year. But since far fewer are signed contracts, they're worth much less to Verizon. It ended the quarter with 92.8 million subscribers.

Wireless service revenues still grew 5.9 percent from a year ago, to $13.8 billion, helped by the fact that more people are signing up for data plans. But AT&T managed to grow revenues by 10 percent, again with help from the iPhone, which comes with hefty service fees.

Overall, Verizon said its earnings fell by three-quarters in the first three months of the year, brought down in large part by the one-time tax effect of the health care reform bill.

The New York company earned $409 million, or 14 cents per share, in the quarter, down from $1.645 billion, or 58 cents per share, a year ago.

The results included a previously announced charge of 34 cents per share, to reflect a change in the health care reform package regarding the tax treatment of benefits.

Excluding that and other one-time items, Verizon said it earned 56 cents per share, matching the average analyst estimate as polled by Thomson Reuters.

Revenue rose 1.2 percent to $26.9 billion, matching analyst expectations.

In pre-opening trading, Verizon shares fell 51 cents, or 1.7 percent, to $29.05.

More Broadband Direct 4/22/10:
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•  IPv6 gear almost ready for Comcast trials
•  Bright House Networks' Lightning D3 service to hit central Fla.
•  CenturyTel, seeking scale, to buy Qwest for $10.6B
•  Verizon adds few contract customers in Q1
•  CMC brings Latin American video content to U.S.
•  Report: Hulu plans test of subscription service
•  Qualcomm shares down despite profit
•  SCTE hands out '09 Chapter Awards
•  Netflix's Q1 profit rises with 1.7M more subs
•  Broadband Briefs for 04/22/10

 

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