Verizon 3Q profit soars as number of devices grows
Verizon's third-quarter net income jumped 40 percent as the largest U.S. mobile phone carrier continued to add more wireless devices to its network.
Verizon earned $2.23 billion, or 78 cents per share, up from $1.59 billion, or 56 cents per share, in the same quarter of 2012. Excluding one-time items, the company posted an adjusted profit of 77 cents per share for the recent quarter.
Revenue rose 4 percent to $30.28 billion from $29.01 billion.
The results Thursday beat Wall Street predictions. Analysts polled by FactSet expected a profit of 74 cents per share on $30.15 billion in revenue.
The New York company added 1.1 million net retail wireless connections during the quarter. Of that total, 927,000 were connections that involved monthly service contracts.
As of Sept. 30, the company had 101.2 million retail wireless connections, representing a 6 percent increase over the same day a year ago.
Revenue at the wireless division rose 7 percent to $20.4 billion. That growth included an 8 percent increase in service revenue to $17.5 billion.
Verizon announced last month that it would spend $130 billion to buy the 45 percent stake in its wireless division that was owned by Vodafone Group PLC. Once that deal closes, it will no longer have to share its wireless revenue with the British cellphone company.
Shares of Verizon Communications Inc. rose 2 percent to $48.40 in premarket trading.
The company racked up 173,000 new FiOS Internet subscribers, for a total of 5.9 million subscribers, representing 39 percent penetration. Overall, accounting for DSL subscriber losses, Verizon reported a net addition in broadband subscribers of 56,000. The company said more than half of its FiOS Internet sales in the quarter were at speeds in excess of 50 Mbps.
In FiOS video, the company added 135,000 new subscribers in the quarter, up 13.4 percent. The total of FiOS video customers reached 5.2 million, representing 35 percent penetration.
Verizon CFO Fran Shammo said "For the last five quarters, consumer revenues have grown in excess of 4 percent. In the third quarter, revenues were up 4.3 percent, driven of course by FiOS, which now represents about 72 percent of consumer revenue." Her quote was taken from a transcript of the company's conference call with analysts provided by SeekingAlpha.
The company said it converted about 80,000 customers away from copper. By year end, Verizon estimates that fewer than 1 million consumer customers will be remaining on copper services within its FiOS footprint.
Shammo said, "as we do 80,000 migrations from our Copper, who are voice and DSL only over to FiOS, you are getting voice and FiOS Quantum adds. And as I have talked before, we really don't approach these customers on a TV product for about five to six months and then it takes us about another three to four months of marketing to actually see some success in conversion and we see about a 30% conversion once we do that.
"They are really interested in the broadband speed and of course what you see in the Wireline segment today is, as we migrate these customers from the Copper product to the FiOS product, we are bringing them over at the same price," Shammo continued. "But what we see is almost immediately with the speeds that they are getting in the FiOS Quantum, they themselves are choosing to upgrade right into that 50 megabits and at times now even into the 75 megabit products. So their ARPU is going up which is generating some of this Wireline increase that you see. So TV net adds were up 13% year-over-year.