Mobile, Fios push Verizon income up

by Grant Gross

April 28, 2008 —

Verizon Communications
posted net income of US$4.3 billion in the first quarter of 2008, up 14.1 percent
from a year earlier, driven by customer demand for its mobile voice and fiber-based
Internet and television services.

Verizon on Monday reported revenue of $23.8 billion, up 5.5 percent from the
first quarter of 2007. Earnings per share were $0.57, or $0.61 not including
one-time charges. That met expectations of analysts polled by Thomson Financial.

"Results for the first quarter were strong and demonstrate we weathered
the economic uncertainty," Doreen Tobin, Verizon's chief financial officer,
said during a conference call. "We have built positive momentum in all
key growth areas."

The company trumpeted the performance of mobile telephone and fiber-based Fios
products.

Verizon's mobile phone revenue was $11.7 billion, up 13.2 percent from the
first quarter of 2007. The company reported 1.5 million net customer additions
during the quarter, which ended March 31.

Mobile data revenue was up 48.9 percent over 2007, totalling $2.3 billion,
Verizon said in a news release.

Verizon is in position to increase mobile revenue, Tobin said. The company
won a nearly nationwide block of wireless spectrum, plus 102 licenses for individual
markets around the country, in the recently completed 700MHz auctions at the
U.S. Federal Communications Commission. The company increased its wireless spectrum
inventory by about 60 percent in the auctions, Tobin said.

Verizon's Fios product line added a net of 263,000 television customers. The
company had 1.2 million Fios TV customers at the end of the quarter, and it
has added 850,000 Fios TV customers since the end of the first quarter of 2007.

The company added a net of 266,000 broadband connections, with 262,000 of the
additions coming from Fios as opposed to the older DSL (Digital Subscriber Line)
technology. Verizon now delivers 8.5 million broadband connections, with 1.8
million of them Fios. The number of broadband connections has increased nearly
15 percent over the first quarter of 2007.

Wireline data revenue was $4.9 billion, an increase of 14.8 percent over a
year earlier. Wireline data revenue, including consumer broadband services,
wholesale data transport and sales of Verizon Business data services, now represents
nearly 40 percent of all wireline revenue, the company said.

Revenue for all of Verizon's wireline products was $12.3 billion, down 1.4
percent from the first quarter of 2007. Driving that decrease was revenue for
Verizon's traditional telecom division, which dropped 2.5 percent. The company
cut about 6,500 wireline employees in 2007 and expects job cuts to continue
this year, Tobin said.

Elsewhere, Verizon reported that its business division, focused on large business
customers, had revenue of $5.2 billion, up 0.4 percent compared with last year's
first quarter. Key strategic services, including IP (Internet Protocol), managed
services, Ethernet and optical ring services, generated $1.4 billion in revenue,
up 23.5 percent from a year earlier.

Last week, Verizon competitor AT&T reported net income $3.5 billion for
the first quarter on total revenue of $30.7 billion.

Based on quarterly reports from Verizon and AT&T, the telecom sector is
"performing well," said Jeff Kagan, an independent telecom analyst.
"Performance still does not show weakness due to the weaker economy,"
he wrote in an e-mail. "Will that continue as the economy softens, is a
question we have to follow."

Kagan pointed to strong mobile and Fios results from Verizon. "The soft
spot is telephone, as they face strong new competitors, including the cable
television companies," Kagan said.

IDG News Service