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Verizon tops 5M FiOS video subs in Q2

Thu, 07/18/2013 - 4:42pm
Brian Santo

Verizon reported that for its second quarter, it netted gains of 161,000 FiOS Internet and 140,000 FiOS video subscribers. Those video adds push Verizon’s video subscriber total up above 5 million.

The company now has 5.8 million FiOS Internet subscribers. Total broadband connections totaled 8.9 million at the end of second-quarter 2013, a 1.9 percent year-over-year increase. Overall, net broadband customers increased 45,000 in the second quarter, as FiOS Internet net customer additions more than offset a decline in DSL subscribers.

Consumer revenues grew 4.7 percent driven by FiOS, which now represents 71 percent of consumer revenue, according to the company.

CFO Fran Shammo said, “In addition to the customer growth and increased penetration, we are also gaining traction with our FiOS Quantum offers for higher broadband speeds. Sales of our FiOS internet product, at speeds in excess of 50 MB per second, increased during the quarter, and existing customers continue to buy up in the speed. At the end of the quarter, one-third of FiOS internet customers subscribed to Quantum, with speeds ranging from 50- to 300 megabits per second.”

The company last year announced a plan to convert up to 300,000 copper connections to fiber. Verizon reported that in the second quarter it converted more than 86,000 customers.

“Through the first half, our total was 169,000, so we are more than halfway to our target of 300,000 for the year,” Shammo said, according to a transcript of the company’s call with analysts provided by SeekingAlpha.

In response to a question about relying on cable to offload cellular traffic, Shammo said, “From a wi-fi perspective, obviously we always like people to offload when they’re in their home on a secured wi-fi network. You’ve heard me talk before about wi-fi networks are not secure in the public domain. They have a purpose for us in certain instances around major sporting events and so forth, but our customers are very concerned about their privacy and security. That’s why they ride the LTE network as much as they do.

“But we do want offload in certain circumstances, and so that does relieve some of the spectrum,” Shammo continued. “We obviously, just from a utilization standpoint, for people that are in their homes, it’s not good and efficient to run off the LTE network. They should shift over to their wifi network in their house. So we do encourage that, but again, not major, massive, public wifi is interesting for our customers, at least at this point in time, from a security standpoint.”

Verizon added more wireless devices than expected to its network in the latest quarter, continuing a strong run for the country's largest cellphone carrier.

Verizon Wireless added 941,000 devices to its contract-based plans in the April to June period and boosted service revenues by 8.3 percent from a year ago. Its closest rival, AT&T, is seeing revenue increases of around 4 percent.

Almost all of the gains on the wireless side were due to customers upgrading to higher-priced plans or adding more devices to their plans, as opposed to an influx of new customers. Now that nearly every adult American has a cellphone, easy growth in the wireless industry has ended. Carriers are looking to tablets and other devices to keep revenue rising.

Net income at Verizon Communications was $2.25 billion, or 78 cents per share, up 23 percent from a year ago, the company said Thursday. Excluding a pension-related gain, earnings were 73 cents per share. That beat the average estimate of analysts polled by FactSet by a penny.

Revenue was $29.79 billion, up more than 4 percent from a year ago and in line with analyst expectations.

Verizon shares fell 49 cents, or 1 percent, to $50.25 in premarket trading. The shares hit a 12-year high of $54.31 on the last day of April.

New York-based phone company Verizon Communications owns 55 percent of Verizon Wireless, which means that only that percentage of its profits flow to its bottom line. The rest goes to joint venture partner Vodafone Group PLC, a British cellphone company with wide-ranging international interests.

Verizon Communications has a long-standing interest in buying Vodafone out of Verizon Wireless, and analysts expect a deal could be reached later this year.

The Associated Press contributed to this article.

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