UPDATED: Verizon Wireless iPhone sales numbers added.
In what might be a trend for several operators, Verizon Wireless failed to meet postpaid growth expectations, which some cited was linked to a pause in sales leading up to the launch of Apple’s latest iPhone model.
Verizon Wireless added a robust 882,000 net postpaid customers during the third quarter, which was more than double those added by largest rival AT&T Mobility and likely to lead the entire industry, but failed to meet analysts’ forecasts of around 1 million net postpaid customer additions. Verizon Wireless’ results were also a 51% increase from the 584,000 subscribers the carrier added during the third quarter of 2010.
Postpaid customers are looked at as being the most valuable for carriers as they are typically tied to a long-term contract and all the revenues pour into the carrier’s coffers. Analysts were expecting a slowdown in postpaid net additions for the third quarter linked to Apple pushing back the launch of its latest iPhone variant to the first week of Q4.
In addition to its postpaid growth, Verizon Wireless added 367,000 customers through “wholesale and other connections” and 86,000 net customer additions through its direct prepaid channel ending the quarter with 1.3 million net adds. By comparison AT&T Mobility managed to add 2.1 million new “connections” to its network during the quarter thanks to strong growth in connected devices and wholesale partners.
On the big board, Verizon Wireless ended the quarter with 107.7 million total connections on its network compared with just over 100 million for AT&T Mobility.
Beyond the customer growth results, Verizon Wireless reported that its direct customer churn across its postpaid and prepaid operations dropped from 1.43% in 2010 to 1.26% this year.
Verizon Wireless also reported that nearly 60% of new devices sales during the quarter were smartphones, compared with just under 43% last year. Those devices along with their required data packages helped boost postpaid average revenue per user up 2.4% year-over-year to $54.89, with data services surging 15.7% to $22.22. Data services accounted for 40.6% of total ARPU during the quarter.
Verizon Wireless said it sold around 2 million iPhones during the quarter, which was short of the 2.7 million sold by AT&T Mobility during the quarter, but a narrower margin than the 1.3 million difference posted in the second quarter.
The ARPU accretion helped push total wireless revenues up 9.1% year-over-year to $17.7 billion for the third quarter. Operating expenses also increased, up 10.4% year-over-year, though operating income still squeaked out a 6.1% increase to just over $5.1 billion. Verizon Wireless noted that operating income margins dipped slightly from 29.9% last year to 29% this year, while earnings before interest, taxes, depreciation and amortization margins increased from 47.2% to 47.8% over the same time period.
While Verizon Wireless continues to rapidly expand its LTE network, the carrier noted that capital expenditures for the quarter actually dropped nearly 18% to $1.8 billion, though full-year capex was running 15.8% ahead of 2010 at nearly $7.2 billion.
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