Verizon Wireless posts robust Q4 results ahead of iPhone launch

With the impending launch of Apple Inc.’s (AAPL) iPhone on its network looming, Verizon Wireless (VZ) made a case that it’s doing just fine sans the industry’s most iconic eye candy.
The nation’s largest operator said it added a robust 955,000 net customers during the final three months of 2010 pushing its “customer” base to 94.1 million subscribers and its total network connections to 102.2 million. While the Q4 growth was significantly below the more than 2.1 million customers the carrier added in 2009, it was well ahead of most estimates of around 650,000 net additions.
The carrier said its Q4 growth included 872,000 direct postpaid subscribers that was somewhat offset by the loss of 69,000 direct prepaid subscribers that resulted in total direct growth of 803,000 customers for the quarter. The remainder of its growth came from network partners and resellers that contributed 152,000 customer additions during the quarter.
Helping bolster its customer growth was a slight reduction in customer churn, which dipped to 1.34% during the fourth quarter and to 1.33% for the entire year.
For the year Verizon Wireless added more than 4.8 million customers to its network, which was a dip from the 5.65 million it added in 2009. Direct customer additions showed a more serious drop from more than 4.3 million in 2009 to just short of 2 million direct net additions for 2010.
Verizon Wireless also reported that it added 186,000 “other” connections during the quarter, which typically include non-traditional devices like machine-to-machine, e-readers or telematics. The carrier ended the quarter with 8.1 million other connections on its network.
As for the impact of smart phones, Verizon Wireless noted that 75% of direct postpaid net additions during the fourth quarter were for the advanced devices and that smart phone ownership from its customers increased from 15% at the end of 2009 to 25% last year. Those devices, which require more expensive data plans, helped improve average revenue per user up more than 2.4% year-over-year to $51.84 with postpaid data services accounting for $19.97 in ARPU.
The carrier noted that its cash cost per user dropped more than $1 year-over-year to $26.59 during the fourth quarter of last year.
Verizon Wireless’ revenues increased 5.7% during the fourth quarter from $15.275 billion in 2009 to $16.148 billion last year, while full-year revenues jumped 5.1% from $60.3 billion in 2009 to $63.4 billion in 2010. Verizon Communications Inc.’s wireless division accounted for 61.2% of its total revenues for the fourth quarter and nearly 60% for the entire year.
While revenues were up, more than 5%, Verizon Wireless managed to keep a lid on spending posting an increase of less than 1% during the fourth quarter and just a 2.3% increase for the year. This resulted in total operating income surging 18.9% for the fourth quarter to $4.854 billion and 12.5% for the year to $18.724 billion.
Verizon Wireless also reported that it spent more than $2.2 billion on capital expenditures during the fourth quarter and $8.4 billion for the full year, a 10.7% and 18% increase respectively compared with 2009 spending.