Data ARPU, churn up at Verizon Wireless: Carrier revenue ticks up 12.4% for year

The disgruntled economy finally hit Verizon Wireless where it hurts, in its customer growth during the fourth quarter. The carrier posted 1.4 million net adds during its fourth quarter, but that’s the fewest subscribers the No. 1 wireless provider added since the second quarter of 2003, said Ken Hyers, senior analyst at Technology Business Research Inc.
Hyers also noted that churn, one of Verizon’s typical shining achievements, rose to 1.05%, an 11 basis point increase year-over-year. The carrier posted .94% churn during last year’s fourth quarter, and since every .01% risen equals 1 basis point, Hyers said the change is worth noting.
“Verizon Wireless’ increase in churn is significant because it indicates that the weakening economy is having an effect on subscriber retention,” Hyers said. “In this case, it appears that while consumer churn remains low for Verizon Wireless, they are seeing indications in the corporate sector that businesses are cutting back on their wireless spending as they reduce headcount. Data cards accounted for about 5 of those basis points, which isn’t surprising since you’d expect companies, as they cut back on travel, to have less need for cellular modems for laptops. So apparently businesses are turning those in.”
Verizon Wireless is still on track to hold its position as the largest U.S. mobile operator. The carrier counted 72.1 million customers at the end of 2008, not including the 13 million subscribers recently inherited thanks to the completed acquisition of Alltel Communications L.L.C. On another bright note, Verizon Wireless did see revenue growth in the fourth quarter, reporting $12.8 billion in wireless alone, a 12.3% increase from last year. Full-year revenues came in at $49.3 billion, up 12.4 percent. The parent company, Verizon Communications Inc., tallied $1.24 billion in income for 2008.
“The gains (in wireless) showed continued resilience for the company’s wireless business and indicate that subscribers remain committed to wireless even as they cut back on spending in other discretionary areas,” Hyers said.
Storm’s impact mild
The release of Verizon Wireless’ latest 3G iPhone killer, the BlackBerry Storm, likely didn’t meet expectations for Verizon Wireless and device manufacturer Research in Motion Ltd. When the 3G iPhone hit shelves during the third quarter of 2008, AT&T Mobility reported more than 1 million activations of the device, in its introductory quarter alone.
“Verizon Wireless indicated sales numbers have not measured up to those posted by the 3G iPhone,” Hyers said. “While 3G iPhone sales were down sequentially in 4Q08, that device continues to set the bar for smartphone sales in the U.S., and to bolster AT&T’s wireless subscriber numbers.” AT&T Mobility posts its fourth-quarter results tomorrow and Sprint Nextel Corp. is set to share its numbers in late February.
But Verizon Wireless must be doing something right when it comes to smartphones and accompanying plans; Fourth-quarter data average revenue per user (ARPU) increased by almost 30% from last year at this time, to $13.99. Total ARPU came in at $51.72, a 1.4% increase from last year.