Prepaid defections hit Verizon Wireless' branded Q3 growth

Verizon Wireless (VZ) continued to maintain its position as the nation’s largest wireless operator at the end of the third quarter, but its year-over-year customer growth took a substantial hit allowing its largest rival to inch ever closer.
During the recently completed third quarter, Verizon Wireless said it added 997,000 new customers to its network, which was a 16% drop from the 1.185 million the carrier added during the third quarter of 2009. That growth included 447,000 direct customer additions, or those that signed up for the carrier’s branded service, a drop of more than 51% compared with the third quarter of 2009. That branded growth included adding 584,000 customers to contract plans that was countered by the loss of 137,000 customers to its branded prepaid service.
Resale partners made up the rest of the quarter’s total growth signing up 550,000 customers during the quarter and bringing the carrier’s total customer base to 93.2 million subscribers.
AT&T Mobility reported yesterday that it added 1.066 million direct customers (745,000 postpaid and 321,000 prepaid) to its network during the third quarter and 1.472 million total customers when adding in its resale partners.
Verizon Wireless also reported that it added 251,000 net “other connections” during the third quarter representing those services including machine-to-machine and telematics services bring that total base of connections to 7.9 million on its network. AT&T Mobility (T) had noted it added 1.2 million connected devices to its network during the third quarter.
Customer churn dropped from 1.46% during the third quarter of 2009 to 1.36% this year, while postpaid churn remained at 1.07%. Retail average revenue per user grew 1.8% year-over-year to $51.99 with data services surging 19% to $18.61.
Total wireless revenues increased 6% year-over-year to $16.25 billion, with service revenues increasing 7.7% to $14.168 billion. AT&T Mobility posted $13.7 billion in total revenues during the quarter.
Despite the increase in wireless revenues, Verizon Wireless’ parent company, Verizon Communications Inc. posted a slight drop in total revenues that the company said was impacted by since divested operations. Verizon’s wireless operations accounted for 61% of the company’s total revenues for the third quarter of 2010, an increase from the 56% during the third quarter of 2009.