Verizon Wireless total adds up, direct adds slow

Reports from analysts that the mobile industry would witness a sharp drop in postpaid customer additions during the first quarter held true this morning as Verizon Wireless posted results

 

The industry’s largest operator said it added 1.552 million customers to its network during the first quarter, which was ahead of the reduced estimate of 1.515 million net adds forecast by analysts and an increase compared with the 1.277 million customers Verizon Wireless added in 2009. The result did fall short of the 1.9 million net activations reported yesterday by the industry’s No. 2 operator AT&T Mobility. AT&T Mobility also reported a steep drop in direct postpaid net additions falling from 875,000 customers during the first quarter of 2009 to 512,000 subscribers this year.

 

Verizon Wireless’ year-over-year increase was driven by indirect customer addition, or those that signed up for services through a third-party that lease capacity on Verizon Wireless’ network. The carrier noted that direct customer additions plunged from 1.261 million during the first quarter of 2009 to just 288,000 this year, while 1.3 million customers were added through reseller partners. Verizon Wireless said it ended the quarter with 92.8 million subscribers on its network, including 87.8 million direct customers, and that it also counted 7.3 million “other” connections that include machine-to-machine, e-readers and telematics bringing the total number of connections on its network to 100.1 million.

 

Despite the drop in direct customer additions, Verizon Wireless reported that its retail churn rate improved slightly from 1.47% in 2009 to 1.46% this year, while overall churn dropped from 1.47% to 1.4%.

 

Retail service average revenue per user remained flat year-over-year at $50.95, though data revenues increased nearly 20% of that average to $17.06. This result indicates that Verizon Wireless’ average retail customer is paying less than $35 per month for voice services. The carrier’s cash cost per user improved slightly from $27.38 during the first quarter of 2009 to $27.09 this year.

 

Verizon Wireless’ service revenues crept up 5.8% year-over-year to $13.845 billion, nearly $1 billion more than the $12.85 billion posted by AT&T Mobility. Verizon Wireless’ total revenues, including equipment sales, was up 4.4% to $15.783 billion, and accounted for 58.6% of parent company Verizon Communications Inc.’s revenues for the quarter.

 

Data services accounted for one-third of the carrier’s total revenues, an increase from the 27.9% reported for the first quarter of 2009.

 

With the industry’s two largest carriers now having reported first quarter results, the wait now begins for the smaller players to post their numbers. There is some expectation that while the smaller carriers, including Sprint Nextel Corp., T-Mobile USA Inc., MetroPCS Communications Inc. and Leap Wireless International Inc., could see some slowing of customer growth, their overall greater reliance on the still robust no-contact segment could buffer some of the drop.