VERIZON WIRELESS MAY LAG BEHIND larger rival AT&T Mobility in total customers, but the industry’s No. 2 players continues to hold a financial lead.
Verizon Wireless posted an 11.8% increase in total revenues during the second quarter, reaching $12.1 billion, which was $85 million more than AT&T Mobility posted during the quarter. Data revenues continued to post strong growth for Verizon Wireless, surging more than 45% year-over-year.
The carrier added 1.5 million net customers in the quarter, putting Verizon Wireless at 68.7 million total customers. The customer growth was slightly above AT&T Mobility’s 1.3 million net additions for the period, but Verizon Wireless still trails AT&T Mobility’s customer base of nearly 73 million subscribers.
The growth was seen as good news for Verizon Wireless, which during the final six months of 2007 was trumped by AT&T Mobility’s Apple Inc. iPhone-fueled growth.
“Clearly we are gaining share,” said Doreen Toben, CFO of Verizon Wireless’ parent company Verizon Communications Inc. “Throughout last year we took between 50% and 55% of retail post-paid net adds among the top four carriers. In the first quarter we took 78%. Since only two of us have reported so far, we don’t know
what the percentage will be in this quarter, but we believe this will be a very impressive number once again.”
That continued growth could ebb for the final six months again this year as AT&T Mobility is again expected to receive a boost from iPhone sales, this time the recently launched 3G model.
iPhone raising awareness
Apple’s uber-device was brought up during Verizon’s conference call; company President and COO Denny Strigl said the iPhone is a minimal short-term impact and that the device has caused a stimulation of sales of smartphones at Verizon Wireless.
“And as you can see from our net add results over the last three or four quarters, since the iPhone hit the market we continue to be well positioned,” Strigl said.
Verizon Wireless did get a bit of a break during the second quarter as the first-generation iPhone was virtually absent from sales channels during June as both Apple and AT&T Mobility wanted to clear stock ahead of the 3G iPhone’s launch. Further pressure could come from a rejuvenated Sprint Nextel Corp., which despite recent struggles and expectations to post another quarter of significant customer losses, is thought to be close to turning the operational corner. Strigl even recently told an investors conference that Sprint Nextel’s performance had picked up during the final month of the second quarter. Sprint Nextel is scheduled to release second quarter numbers this week.
Staying busy
It’s been a busy year already for Verizon Wireless. The carrier paid billions for 700 MHz spectrum earlier this year to help with its eventual deployment of Long Term Evolution technology; and, with its pending purchases of Rural Cellular Corp. and Alltel Communications L.L.C., Verizon Wireless is set to become the industry’s largest operator by year’s end.
The borrowings necessary for the hefty spectrum purchase and the acquisition of Alltel is the reasoning behind Verizon Wireless’ higher debt balance, Toben said.
“These two strategic investments strengthen our overall growth outlook and provide the opportunity to further expand our wireless market leadership,” Toben said. “We have made the determination to capitalize the interest on the wireless licenses while they are being readied for commercial use. As a result, we incurred no incremental interest expense in the quarter related to these borrowings.”
Toben also said the acquisitions of both Alltel and RCC will provide the company with further growth opportunities in 2009. Converged service applications and product integrations between wireless and the FiOS platform are expected to be announced later this year, Toben said.
