Wireless keeps Verizon growing

Buoyed mostly by its Verizon Wireless unit, Verizon today reported a 25% increase in revenues and a 2.8% increase in profits that also reflected broadband and data sales. The revenue increase reflects its integration of MCI, which is proceeding on schedule, Chief Financial Officer Doreen Toben said today.

Verizon Wireless is now the largest U.S. wireless company based on revenues, which grew 18% from the previous year’s quarter, including a near doubling of data revenues year-over-year and the addition 1.9 million net customer additions for a total customer base of 56.7 million. The company lowered churn to 1.24% including .95% retail postpaid churn.

In talking with industry financial analysts, Toben and Verizon Chairman and CEO Ivan Seidenberg stressed the company’s organic growth and future opportunities, as well as efforts to improve shareholder value by spinning off its directories unit and selling Latin America holdings.

Verizon added 448,000 new broadband connections, Toben said, including 147,000 new Internet access customers for its FiOS fiber-to-the-home service for a total of 6.6 million total broadband connections, up 45.1 percent over last year’s third quarter. Data revenue was $4.1 billion, up 89.3%, reflecting the inclusion of MCI services in Verizon Business revenues.

“We continue to build a deep and profitable relationship with our customers,” Toben said.

“The headlines for us are pretty clear,” Seidenberg said. “This is an important quarter for us not only in delivering results but because we are beginning to see expansion of top line, organic growth across the board.”

Customers are responding to Verizon’s multi-billion dollar FiOS initiative, which is achieving 14% market penetration in data services in the 3.8 million homes that are now “open for sale” and 10% market penetration in the 1.2 million homes that are now “open for sale” in video, Toben said. “Customer acceptance is ahead of schedule,” she commented.

While Verizon’s primary voice lines were down 419,000 this quarter, due to wireless substitution and VoIP competition, “our bundling and broadband initiatives are starting to take hold, and are creating an expanded relationship, which will increase revenue per household and improve retention,” Toben said.

Quarterly earnings were $1.9 billion or 66 cents per share, or $2 billion or 68 cents on an adjusted basis, excluding pension settlement charges and the costs of the MCI merger. Consolidated revenues were $23.3 billion up 25.8% over the third quarter of 2005.

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