Verizon Communications has seen its first quarter profits slide, despite the second largest telecoms company in the US adding more wireless customers in the period than its main rival.
For the first quarter, New York-based Verizon posted net income fell 8.4% to $1.49bn from $1.63bn a year earlier. Sales rose 6.4% to $22.58bn from $21.23bn in the year-ago quarter.
Verizon is off to a strong start in 2007, said chairman and CEO Ivan Seidenberg in a statement. Our results show that across-the-board, we have accelerated organic growth in key markets: retail wireless, broadband, data, video and global IP.
It was all good news at Verizon’s mobile joint venture, Verizon Wireless, which added 1.7 million customers during the quarter giving it a total customer base of 60.7 million. Verizon’s main rival, AT&T Inc said last week that it had added 1.2 million mobile customers during its first quarter to increase its total wireless customer base to 62.2 million.
Verizon Wireless is a joint venture between Verizon and Vodafone Group Plc, and during the quarter it recorded churn rates down from 1.2% to 1.1%, while retail service ARPU rose 2.8% $50.73. Sales at the mobile unit rose 17% to $10.3bn in the quarter.
Meanwhile, it was less good news at its fixed-line operation, which lost about 408,000 customers for residential landlines in the quarter. However, Verizon said it was seeing strong growth from broadband, video and strategic services. Indeed, it added 416,000 broadband connections in the quarter. Wireline revenues edged up 0.1% to $12.47bn in the quarter.
Meanwhile, Verizon continues to invest heavily in its FiOS fiber-optic network in order to protect its residential customer base from the cable operators. The investment needed for this $23bn fiber network is hurting Verizon’s bottom line, but it allows Verizon to take on the cable operators and offer its own converged offering of voice, internet, and pay-TV.
Verizon Telecom added 141,000 new FiOS TV customers in the quarter, serving a total of 348,000 FiOS TV customers in total. The carrier hopes to reach 9 million homes in the US with the FiOS network in 2007.
Shares in Verizon rose 1.19% to $38.34 on New York Stock Exchange on Monday.