Verizon reported Q3 revenue of $30.3 billion, a 4.4 percent increase compared with third-quarter 2012. This is the fourth consecutive quarter of year-over-year revenue growth of more than 4 percent. Earnings came in at 78 cents in EPS in third-quarter 2013, compared with 56 cents per share in third-quarter 2012. Third-quarter 2013 results include a non-operational gain of 2 cents per share related to the sale of wireless spectrum, partially offset by 1 cent per share in incremental interest expense related to the financing of Verizon's planned purchase of Vodafone Group PLC's 45 percent stake in Verizon Wireless.
Lowell McAdam, Verizon chairman and CEO, said: "These strong third-quarter results reflect Verizon's long-term investment in reliable, high-quality networks to deliver value to customers. Our unwavering focus on wireless, FiOS and strategic enterprise services has produced consistent performance, and we've delivered double-digit earnings growth in six of the past seven quarters. Verizon's strategic networks form a powerful distribution platform for future growth and innovation."
Wireless Financial Highlights
- Total revenues were $20.4 billion in third-quarter 2013, up 7.2 percent year over year. Service revenues in the quarter totaled $17.5 billion, up 8.4 percent year over year. Retail service revenues grew 8.0 percent year over year, to $16.8 billion.
- Retail postpaid ARPA (average revenue per account) increased 7.1 percent over third-quarter 2012, to $155.74 per month.
- Verizon Wireless added 1.1 million net retail connections, including 927,000 retail postpaid net connections, in the third quarter. These additions exclude acquisitions and adjustments. The company expects customer growth to increase sequentially in the fourth quarter.
- At the end of the third quarter, the company had 101.2 million retail connections -- a 5.5 percent increase year over year -- including 95.2 million retail postpaid connections.
- Verizon Wireless had 35 million retail postpaid accounts at the end of the third quarter -- an average of 2.7 connections per account. Nearly 42 percent of retail postpaid accounts are now on a Share Everything Plan, which allows customers to share data among multiple devices.
- At the end of the third quarter, smartphones accounted for more than 67 percent of the Verizon Wireless retail postpaid customer phone base, up from 64 percent at the end of second-quarter 2013.
- Retail postpaid churn was 0.97 percent in the third quarter, up 6 basis points year over year. Retail churn was 1.28 percent in the third quarter, up 10 basis points year over year.
- Verizon Wireless has substantially completed deployment of its 4G LTE network, covering more than 99 percent of its current 3G network footprint.
- Verizon Wireless 4G LTE network is now available in more than 500 markets to 97 percent of the U.S. population and covers more than 303 million people, including those in areas served by the company's LTE in Rural America partners.
- Consumer revenues were $3.7 billion, an increase of 4.3 percent compared with third-quarter 2012. Consumer revenues have grown more than 4 percent year over year for five consecutive quarters. Consumer ARPU for wireline services increased to $112.86 in third-quarter 2013, up 8.7 percent compared with third-quarter 2012.
- FiOS revenues grew 13.4 percent, to $2.8 billion in third-quarter 2013, compared with $2.5 billion in third-quarter 2012.
- Wireline operating income margin was 1.6 percent in third-quarter 2013, up 120 basis points over third-quarter 2012. Segment EBITDA margin (non-GAAP) was 22.7 percent, compared with 21.7 percent in third-quarter 2012. Verizon continues to expect that full-year 2013 Wireline EBITDA margin will be similar to 2012 when excluding impacts of Superstorm Sandy from last year's results. The company also continues to target improved Wireline profitability and margin expansion in 2014.
- Sales of strategic services to global enterprise customers increased 5.2 percent compared with third-quarter 2012 and represented 58 percent of total enterprise revenues. Strategic services include cloud and data center services, security and IT solutions, advanced communications, strategic networking and telematics services. Earlier this month, Verizon announced its new cloud services strategy.
- In third-quarter 2013, Verizon added 173,000 net new FiOS Internet connections, up 27.2 percent from third-quarter 2012 -- and 135,000 net new FiOS Video connections, up 13.4 percent.
- Verizon had a total of 5.9 million FiOS Internet and 5.2 million FiOS Video connections at the end of the quarter, representing year-over-year increases of 12.6 percent for each.
- FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase. FiOS Internet penetration was 39.2 percent at the end of third-quarter 2013, compared with 37.0 percent at the end of third-quarter 2012. In the same periods, FiOS Video penetration was 34.9 percent, compared with 32.9 percent. The FiOS network passed 18.3 million premises by the end of third-quarter 2013.
- Verizon is enriching the FiOS Video customer value proposition by adding free anytime, anywhere mobile access to nine of the most popular TV channels via the FiOS Mobile app (iPad, iPhone, select Android tablets and smartphones, and Kindle Fire HD). Customers who download the app can also buy or rent more than 45,000 on-demand movie and TV show titles from Verizon FlexView. More live TV channels will be added in the coming months.
- By the end of third-quarter 2013, more than 40 percent of FiOS Internet customers subscribed to FiOS Quantum, which provides speeds ranging from 50 to 500 megabits per second, up from 35 percent at the end of second-quarter 2013.
- Broadband connections totaled nearly 9.0 million at the end of third-quarter 2013, a 2.6 percent year-over-year increase. Overall, net broadband customers increased 56,000 in the third quarter, as FiOS Internet net customer additions more than offset a decline in subscribers for DSL-based High Speed Internet services.
- Through the first nine months of 2013, Verizon migrated nearly 250,000 homes to fiber, on track to exceed a target of 300,000 migrations within FiOS markets in 2013. By year-end 2013, Verizon projects it will have less than 1 million remaining customers served by copper in FiOS markets.