Verizon earnings tumble, but FiOS growth continues, topping 3 million
Just as AT&T (NYSE:T) reported yesterday, wireless subscriber growth at Verizon Communications (NYSE, NASDAQ:VZ) is slowing as the U.S. market starts to mirror the saturation that European operators are seeing, and it's hurting the operator's bottom line.
Verizon today reported first quarter earnings were down 29 percent, with profits slipping to $2.28 billion, or 14 cents per share, from $3.21 billion, or 58 cents per share a year ago. Revenues rose 1.2 percent to $26.92 billion.
But, just like AT&T, which reported it had added U-verse subscribers, Verizon said it added 185,000 net new FiOS Internet customers and 168,000 net new FiOS TV customers. Verizon has posted consecutive quarterly gains in the number of customers using fiber-optic-based FiOS services since FiOS Internet was introduced in 2004, and by the end of the quarter had 3.6 million FiOS Internet and 3.0 million FiOS TV customers.
"Our first-quarter results were in line with our expectations," said chairman and CEO Ivan Seidenberg. "Customer demand for broadband, such as a growing demand for wireless data, has improved revenue trends, and we are beginning to see signs of economic recovery, particularly in business markets. During the economic downturn, we continued to expand and invest in wireless data, FiOS and our global network. Now we have the opportunity to build momentum in these strategic areas and stimulate a new generation of industry growth. Our first-quarter 2010 results show good customer and revenue growth in FiOS and at Verizon Wireless, cost-reduction initiatives that are on track, and a disciplined approach to capital investment - all resulting in continued strong cash flow growth."
The company said FiOS TV penetration was 25.2 percent by the end of the quarter, with the product available for sale to 12 million premises. This compares with 22.9 percent and 9.7 million, respectively, in first-quarter 2009. As of the end of first-quarter, Verizon's overall FiOS network passed 15.6 million premises; it said it's goal is 18 million. Since the company has already secured video franchises to meet this target, it is spreading the passing of remaining premises several years past 2010.
Wireline broadband and video revenues were $1.7 billion in the quarter, up 22.0 percent from first-quarter 2009. This includes FiOS revenues, which grew approximately 40 percent year over year. Overall, there was 0.9 percent revenue growth in consumer markets served by Verizon's wireline network.