July 28, 2008, 1:04 PM — Verizon reported net income of US$4.5 billion for the second quarter of 2008, up 9.6 percent from a year ago, due largely to growth in mobile and data services, the company said.
Verizon Wireless added 1.5 million customers in the quarter, bringing its total customer numbers to 68.7 million. Mobile revenue was up 11.8 percent and mobile data revenue up 45.3 percent, Verizon said Monday.
In addition, Verizon added 176,000 new customers to its Fios fiber-based television service and 187,000 new Fios Internet customers. Verizon now has about 1.4 million Fios TV customers and 2 million Fios Internet customers, company officials said.
Verizon's revenue for the quarter was $24.1 billion, up 3.7 percent from $23.3 billion during the second quarter of 2007. Adjusted earnings per share for the quarter, which ended June 30, were $0.67, beating the $0.65 per share expected by analysts polled by Thomson Financial.
The telecom giant sees minimal effects of the slumping U.S. economy and the launch this month of a new version of Apple's iPhone, which exclusively uses the mobile network of Verizon's rival AT&T in the U.S.
Verizon executives "feel very comfortable with our business plan, despite some of the concerns that others have expressed about the economy," said Dennis Strigl, Verizon's president and chief operating officer. "Although we may see some softening in some of our volumes, we do not expect any significant economic impact on our results for the second half of the year."
Asked during a conference call about the new iPhone 3G, Strigl called it a "minimal, short-term impact" on Verizon Wireless. The new iPhone was launched after the second quarter ended.
Verizon Wireless revenue was $12.1 billion for the quarter. The company reported a turnover, or churn, rate of 1.12 percent, a record low for the company. The average monthly revenue per customer was $51.53, up 0.9 percent from last year, and up for the ninth consecutive quarter.
Verizon reported broadband and video revenue from the consumer market at $1 billion for the quarter, up 52.9 percent from a year ago. Verizon began rolling out its Fios service in late 2004. Verizon posted a net increase of 54,000 broadband connections for the quarter, with the numbers reflecting a decrease of 133,000 DSL (Digital Subscriber Line) customers.
During the quarter, Verizon gained approval to offer Fios in New York City, and the company launched its marketing efforts there on Monday.
Total wireline revenue was down 1.8 percent to $12.1 billion, with losses coming from traditional telephone service.
Independent telecom analyst Jeff Kagan said Verizon posted "strong results" for the quarter, but the affect of the U.S. economy on the company bears watching. Verizon's combination of mobile, Internet and TV services gives the company a strong offering, he said.
"Verizon is a very different company from the phone company we followed 10 years ago," he said. "Verizon is in the middle of a major transition. Moving out a few years it will be an entirely different company. Verizon has shown continued strength in wireless and their Fios business."
Verizon will have to pay attention to the cost of its services in coming months, Kagan added in an e-mail. "One worry is about how the soft economy will affect Verizon," he said. "Many of these services are easy to avoid if they cost more."