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Verizon Wireless reports strong Q2 growth

Following up on comments earlier this month, Verizon Wireless said it added 1.427 million direct customers during the recently completed second quarter, made up entirely of lucrative postpaid subscribers. That growth was a 40% improvement over Q2 2013 results and was the strongest quarterly growth posted by the carrier since late 2012.
Verizon Wireless noted that it actually added 1.441 million postpaid customers during the latest quarter, but that it lost 14,000 direct prepaid subscribers. The prepaid defections could spell good news for rivals like AT&T Mobility, which recently re-launched its prepaid services under the Cricket banner, as well as Sprint, which has relied heavily on its numerous prepaid offerings to prop up operations. Verizon Wireless ended the quarter with 104.6 million total direct connections on its network.
Verizon Communications CEO Lowell McAdam earlier this month hinted at the company’s wireless customer growth.
Postpaid growth was spurred by tablet devices, with 1.15 million net additions coming from that device segment, with handset making up the rest of the growth. Verizon Wireless noted that tablet customers were proving more loyal than traditional device customers, highlighted by a sequential dip in postpaid churn from 1.07% to .94%. Overall churn also dropped sequentially from 1.37% to 1.25%, though it did increase from 1.23% year-over-year.
Financially, Verizon Wireless grew revenues by 7.5% year-over-year to $21.5 billion, with all of that revenue now going to parent company Verizon Communications following its $130 billion acquisition of Vodafone Group’s 45% stake in Verizon Wireless. Revenues were bolstered by both a larger customer base as well as increased spending per customer, with average revenue per connection up 57 cents to $57.05.
Expenses also increased, but by just 7.3%, with operating income reported at nearly $7 billion for the latest quarter. That was down slightly from the $7.3 billion posted during the first quarter.
Verizon Wireless continued to increase spending across its network, reporting nearly $2.8 billion in capital expenditures during the second quarter, which was up from the nearly $2.3 billion spent last year and just over $2.5 billion spent during the first quarter of this year. As part of that increase, Verizon Wireless said it had deployed additional spectrum from the 1.7/2.1 GHz bands as part of its XLTE initiative across 350 markets.
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