Verizon Wireless shines, brushing off iPhone effect
Published: 28 October, 2008
The iPhone effect is still boosting AT&T's performance, but most of the churn is coming from smaller carriers, not Verizon Wireless. Verizon group CEO Dennis Strigl admitted there was some impact from the iPhone, but insisted his company would not be "wedded" to one device.
Verizon has improved its lacklustre handset range in recent months, with keynote models like Samsung Instinct and the new BlackBerry Storm, but many would argue that, while the carrier has kept most users happy with attractive new price plans in some areas, and a range of media services, it really needs to accelerate its open access program, and add more high profile midrange and high end devices.
The second largest US cellco reported 1.5m net organic additions to its subscriber base in the third quarter (plus 630,000 from the acquisition of Rural Cellular), and its total now stands at 70.8m. Its churn was up slightly on Q2 (1.03% as against 0.83% in postpaid, and 1.33% overall, equating to loss of about 690,000 contracts), but far less than AT&T's 1.7%, or the even higher levels at Sprint Nextel.
Total wireless revenue rose 12.5% year-on-year to $12.7bn, just ahead of AT&T on $12.6bn. This was just over half of Verizon Communications' total revenues, up 4.1% to $24.75bn. Group net income rose 31% year-on-year to $1.67bn. In wireless, operating margins grew slightly to reach 27.3%. This was also ahead of AT&T, whose margins have been hit hard by iPhone subsidies, and which reported a slip in Q3 from 26.4% a year earlier, to 22.8%.
However, Verizon is still trailing its largest rival on ARPU, reporting a rise from $51.53 in the second quarter to $52.18, while AT&T nudged $59. Verizon Wireless' total service revenue was $10.9bn, still well behind AT&T's $11.3bn. Data ARPU was $13.30, just over 25% of the whole, and Verizon said 30% of the devices it sold in Q3 were smartphones.
Of course, all these comparisons will change significantly once Verizon completes its acquisition of number three US CDMA operator, Alltel.
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