Sunday, July 26, 2009

Verizon Sees Continued Consumer Spending as Business Weakens

Despite the U.S. recession, consumer demand for wireless, broadband and video products continued to grow in Q2 at Verizon Communications, while sales at Verizon Business weakened.


Verizon's total operating revenues grew 11.3 percent to $26.9 billion, compared with the second quarter 2008, including revenues from Alltel Corporation, which was acquired in January 2009. On a pro forma basis (determined by consolidating the operating results of Verizon and the former Alltel as though the acquisition had occurred on Jan. 1, 2008), operating revenue growth was 1.9 percent. Verizon reported diluted earnings per share (EPS) of 52 cents in the second quarter 2009, compared with 66 cents per share in the second quarter 2008. On an adjusted basis (non-GAAP), second-quarter 2009 earnings were 63 cents per share, compared with second-quarter 2008 earnings of 67 cents per share.


"Verizon posted continued strong wireless revenue growth and new levels of sales success with FiOS in the second quarter," said Verizon Chairman and CEO Ivan Seidenberg. "This resilience in consumer demand for our wireless, broadband and video products has again produced overall revenue growth despite cyclical impacts, especially in business markets. Verizon's continued strong cash flow reflects the exceptional focus and disciplined execution across our business."


Some operational highlights:


Wireless


Wireless retail (non-wholesale) gross customer additions were up 26.0 percent over the second quarter of 2008. On a pro forma basis, retail gross customer additions were down slightly, by 0.6 percent, due in part to fewer additions in the business market.

Verizon Wireless had 87.7 million customers at the end of the quarter, an increase of 27.7 percent year over year and 7.9 percent on a pro forma basis.

Wireless revenues totaled $15.5 billion, up 27.7 percent year over year and up 7.6 percent on a pro forma basis. Service revenues were $13.3 billion, up 27.2 percent year over year and up 9.0 percent on a pro forma basis, as demand continued to grow for data services. Data revenue grew to $3.9 billion, up 52.6 percent and up 33.2 percent on a pro forma basis.

Service ARPU (average monthly service revenue per user) decreased 0.8 percent year over year to $51.10. On a pro forma basis, service ARPU was up 0.6 percent. Total data ARPU was $14.96, up 18.9 percent year over year and up 22.8 percent on a pro forma basis.

In the second quarter, data revenues grew to 29.3 percent of all service revenues, up from 24.0 percent in the second quarter 2008 on a pro forma basis.

During Q2, Verizon Wireless customers sent or received nearly 146 billion text messages. Customers also sent more than 2.5 billion picture/video messages and completed 40 million music and video downloads during the quarter.


Wireline


  • Verizon added 303,000 net new FiOS Internet customers, a record number for the second consecutive quarter. By the end of the second quarter, the company had 3.1 million FiOS Internet customers, an increase of 56.1 percent compared with June 30, 2008.


  • FiOS Internet sales penetration (sales as a percentage of potential customers) increased to 28.1 percent, compared with 23.5 percent at June 30, 2008. FiOS Internet was available for sale to 11.0 million premises by the end of the quarter.


  • Verizon added 300,000 net new FiOS TV customers. The company had 2.5 million FiOS TV customers by the end of the quarter, an increase of 82.1 percent compared with June 30, 2008.


  • FiOS TV sales penetration increased to 24.6 percent, compared with 19.7 percent as of June 30, 2008. FiOS TV service was available for sale to 10.3 million premises by the end of the quarter.


  • Revenue growth from broadband and video services boosted consumer ARPU to $72.59 in the second quarter 2009, a 13.7 percent increase year over year. FiOS ARPU remained strong at more than $135.


  • Sales of strategic business services -- such as IP, managed services, Ethernet and security solutions -- generated $1.5 billion in revenue in the quarter, up 3.0 percent from the second quarter 2008.


  • Broadband connections totaled 9.1 million in the second quarter, a 9.4 percent increase year over year and a net increase of 186,000 from the
    first quarter 2009. This includes a decrease of 117,000 DSL-based Verizon High Speed Internet connections from the first quarter, which
    was more than offset by the 303,000 increase in FiOS Internet customers.


  • During the quarter, Verizon installed 26 Private IP edge switches for a total of 705 across 59 countries. It also expanded its global mesh networks, completed 1,488 miles of ultra-long-haul network in Europe, expanded remote access services to India and had suppliers begin laying cable for the 15,000-kilometer (9,000-mile) Europe India Gateway submarine cable.


On Tuesday, July 28, Verizon Wireless will host a Verizon Developer Community conference and webcast to facilitate application development for use on the Verizon Wireless 3G and 4G networks.
http://www.verizon.com

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