Verizon Communications (VZ) reported lower-than-expected earnings as a record number of new wireless customers led to higher subsidies paid to smartphone makers like Apple (AAPL). Verizon said it sold 6.2 million iPhones during the fourth quarter, but fewer than half of those (3.1 million) were the iPhone 5.
Fourth quarter adjusted earnings came in at 45 cents a share, excluding a charge of 7 cents per share related to the costs of restoring service after Hurricane Sandy. But actual earnings were much lower due to one-time items. Verizon lost $1.48 a share, or $4.23 billion, due to charges related to severance, pension and benefit charges, early debt retirement and other restructuring activities.
A record 2.1 million customers signed new contracts with Verizon Wireless during the fourth quarter, bringing the carrier’s total number of postpaid connections to 92.5 million. Total retail connections were 98.2 million at the end of the quarter, and Verizon says its churn rate was below 1%.
The average monthly bill for Verizon customers rose 6.6% to $146.80. The company has started reporting average revenue per account (ARPA) instead of average revenue per user (ARPU) because many accounts now cover multiple devices through its shared data plan. The average number of connections per account rose 4.3% in 2012, to 2.6. Smartphones represented well over half of those connections; Verizon says 58% of its retail postpaid customers were using them by the end of 2012.
For all of 2012, Verizon’s total revenue was $115.8 billion, up 4.5% year-on-year. Wireless revenue was $75.9 billion, up 8.1% from 2011. Verizon Communications does not book all of Verizon Wireless’ revenue since it owns just 55% of the unit; the other 45% is owned by Great Britain’s Vodafone.
Capital expenditures were $16.2 billion as the company continued to invest heavily in next generation wireless networks. Verizon says its LTE service is now available to 273 million people in 476 markets across the United States.
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