Verizon Beats AT&T Wireless Revenue Despite Adding Fewer Subscribers
Verizon had strong Q4 revenue growth despite falling short of AT&T’s record-setting wireless net adds (CD Jan 26 p10). The Bell boosted total Q4 operating revenue 5.5 percent year-over-year to $23.8 billion. Total 2007 revenue was $93.5 billion, $5.3 billion more than 2006’s. The carrier isn’t seeing ill effects from the economy, officials said Monday in a conference call.
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Verizon added fewer customers Q4 than AT&T but stayed ahead of it in turnover and wireless revenue. Verizon Wireless added 2 million net subscribers in the quarter, 700,000 fewer than AT&T. At 2007’s end, Verizon had 65.7 million customers. AT&T had 70.1 million. But Verizon still led in wireless churn, at 1.2 percent, vs. AT&T’s 1.7 percent for the quarter. Verizon churn on retail postpaid customers was even lower at 0.94 percent. About 1.6 million Verizon additions were postpaid.
Verizon wireless revenue rose 13.3 percent year-over- year to $11.44 billion, eclipsing AT&T’s $11.35 billion. Service revenue grew 13.7 percent to $9.9 billion, driven by customer growth and data demand. Revenue per user rose 1.4 percent year-over-year to $51.49 monthly. For retail data it jumped 36 percent to $11.06. Verizon sees “enormous potential” to boost data revenue “for years to come,” said Chief Financial Officer Doreen Toben.
Wireline revenue fell 1.4 percent year-over-year to $12.5 billion. But Verizon cut costs 2.3 percent to $11.3 billion through staff reduction, outsourcing and other efforts, Toben said. Verizon added 226,000 net FiOS TV subscribers in Q4. It had 943,000 at year-end and hit a million subscribers in January, it said. Verizon also added 63,000 DirecTV video subscribers in the quarter. The Bell added 264,000 net broadband subscribers -- 245,000 on FiOS, 19,000 on DSL.
Verizon expects to add 3 million homes to its FiOS territories in 2008, Strigl said. The Bell is winning major city franchises, and the results will be visible this year, he said. Verizon also is making “significant progress” in reducing FiOS installation time, down 2 to 3 hours last year, said Dennis Strigl, chief operating officer. “I'm still not satisfied, but I'm confident we can be more efficient,” he said.
Revenue growth for Verizon’s corporate business slowed, growing just 0.5 percent to $5.4 billion. The results were “frankly kind of annoying to me,” Strigl said, calling it a “timing issue.” Verizon lost a “large cable company” and a few other major customers, and couldn’t offset the loss “fast enough,” he said. Growth will be “back on trend” in the first half of this year, he said.
The slowdown isn’t affecting Verizon, Toben said. “We have not seen a change in sales expectations through January.” The carrier is monitoring the situation but is “very confident in [its] outlook for 2008,” she said. Verizon has protection against recession, Toben said: A large number of contract customers, significant international business, high wireless credit standards and continued customer need for broadband. FiOS markets are seeing less effect than others, she added.
If Verizon starts feeling the slowdown, it “can take steps to avoid material disruptions,” including headcount and overtime reductions, said Strigl. Verizon already is reducing staff to improve wireline results, Toben said. It killed 4,000 jobs in 2007 and plans to drop 5,000 in 2008.