Verizon earnings ride mobile data, FiOS penetration

Verizon Communications still doesn’t have the iPhone, and company officials concede that its biggest wireless competitor still offers more smartphones and has been more focused on that segment. Yet, in announcing Verizon’s second quarter 2010 earnings Friday, John Killian, executive vice president and CFO, insisted that Verizon continues to be well-positioned in the smartphone market.

Killian added that wireless now accounts for almost 60% of Verizon’s total revenue, and that the company’s wireless subscriber base grew by 1.4 million during the quarter. That’s a bit lower than the growth AT&T reported during the same period, but Killian noted that Verizon’s rich growth in postpaid accounts—about 665,000 during the quarter, almost 170,000 more than AT&T—actually puts Verizon in a better position to win ongoing smartphone customer business.

“That competitor,” Killian said in a presumed reference to AT&T, “has been more focused on smartphones, but we are in as good or better position than anybody when it comes to the smartphone business.” Verizon recently announced the Droid X and had impressive sign-ups for the Droid Incredible and the original Droid smartphone released last year.

Demonstrating its confidence in the segment, Verizon’s mobile data revenues continued to pop during the second quarter, growing more than 23% since the second quarter last year. Despite growing mobile data activity, Killian said Verizon has no current plans to move to usage-based data service plans. The company’s current disinterest in tiered plans refutes rumors that Verizon would be quick to move to tiered data plans after AT&T moved in that direction—though Killian said Verizon is still studying the possibility.

Meanwhile, on the wireline side, Verizon not long ago announced it was beginning to curb expansion of its FiOS wireline broadband infrastructure, but second quarter figures made it clear that the telco is still exploiting customer opportunities in its existing markets. Verizon added 196,000 FiOS broadband customers during the quarter, and 174,000 FiOS TV customers. Though both numbers lagged those posted by AT&T in those segments, both demonstrated growth over Verizon’s own numbers for the first quarter of this year.

Killian said FiOS TV market penetration now stands at 2%, and that FiOS-related revenues overall were up more than 30% during the second quarter. FiOS-related average revenue per user was up about $3 over the first quarter to $145 per month.

Overall quarterly wireline unit revenue dropped slightly about $4 million since the second quarter of last year to $11.1 billion, though the rate of decline appeared to slow sequentially, as revenue reported for the first quarter this year was $11.2 billion.

Killian also said enterprise and global business revenues grew less than 1% of the second quarter of last year, but were down just over 1% from the first quarter this year.

Yet, despite ongoing strength in wireless and FiOS, Verizon still reported a loss of about 7 cents per share for the second quarter, and it is clear that cost-cutting moves, including early retirement packages, kept the picture from worsening. “Ability to drive cost out of both our wireline and wireless businesses has never been better,” Killian said. Though Verizon was able to unload about 9,000 wireline-side employees through its recent sale of properties to Frontier Communications, Killian hinted that more job-related cost-cutting looms for the wireline unit.