Data up, net adds down at Verizon Wireless

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Data up, net adds down at Verizon Wireless

Familiar patterns were seen in Verizon Wireless’ solid fourth quarter results, including the struggle to attract new, high value subscribers as the ma

By CAROLINE GABRIEL

Published: 26 January, 2011

Familiar patterns were seen in Verizon Wireless’ solid fourth quarter results, including the struggle to attract new, high value subscribers as the market saturates, and the surge in mobile data usage.

The cellco added less than one million net new customers in the quarter (955,000), which was disappointing when it scored 2.16m in the year-ago holiday period. Of its additions this time, 872,000 were postpaid and 75% of those were smartphone users.

It will hope that its iPhone launch on February 10 will boost those figures during the current quarter, and that the second half of this year will be improved by the first LTE handsets. Verizon is offering various incentives - such as the $30 flat data plan and a trade-in for AT&T customers - to lure customers to its iPhone in the first few months. After that it will be pushing subscribers towards its more efficient LTE network with new devices from Motorola, Samsung, HTC and LG.

Even without phones, Verizon is seeing some growth from LTE already. It added 65,000 4G customers in the first three weeks of the service’s availability in December. Its total base now comprises 94.1m plus 8.1m ‘other connections’ for non-human devices such as machine-to-machine systems.

Smartphones are a rising proportion of the postpaid base, up from 15% to 25% in a year, and Verizon expects this figure to hit 50% by year end. This has helped to drive data revenue upwards by almost 23% to $5bn, in a quarter when total sales rose by only 5% year-on-year, to $16.1bn. Retail service revenues were up 5% to $13.5bn. Data ARPU grew by almost 20% to $19.97 while overall retail postpaid ARPU only grew marginally, to $53.50. Total churn was better, at 1.34%, with retail postpaid churn, the key metric for a high end carrier like Verizon, at 1.01%.

Verizon steered clear of iPhone forecasts, though Fran Shammo, CFO of co-parent Verizon Communications, said he broadly agreed with the consensus analyst estimate of 11m iPhone sales for 2011, and added that such a figure could improve per-share profits by 5% to 8%.

Verizon executives said the carrier had sold 86,000 tablets since October. Around 37,000 of these were iPads, and the rest were a mixture of Samsung Galaxy Tabs and iPad/MiFi bundles.