Wireless growth pushes Verizon revenue jump

Verizon Communications today reported third-quarter 2004 earnings of $1.8 billion or 64 cents per diluted share on revenue of $18.2 billion, pushed largely by a 23% jump in year-over-year wireless revenues.

Verizon Wireless, which contributed more than 40% of Verizon's total revenues for the first time, reported revenue of $7.3 billion. On the wireline side, the company added 309,000 net new DSL lines in the quarter bringing its total to 3.3 million. Total data revenues, which represent 21% of the company’s domestic telecom operating revenue, hit $2.0 billion in the quarter, up from 18% in the third quarter 2003. Long-distance revenue also increased 8.7% year over year to $1.1 billion in the quarter.

Despite the generally upbeat tone of the report, access lines continued to slide with the company reporting 53.68 million lines at the end of the quarter. That’s down 4.9% from the same time last year.

Wireless made up some of the slack, though, with the company focusing much of its earnings call this morning on the future of wireless broadband. Last month, Verizon Wireless announced an expansion of its EV-DO network to include 14 markets and 24 airports.

"Broadband promises to do more for wireless than any service yet, save for SMS," Dennis Strigl, executive vice president of Verizon Communications and president and CEO of Verizon Wireless told analysts this morning. "Broadband changes the whole game. Whole new forms of content and delivery will be possible."

The company is now working with 1200 independent developers for content and applications over it wireless network, he added. Additionally, Verizon is counting on an early expansion of EV-DO to bring a significant jump in enterprise customers.

"We think our first-to-market advantage will be sustainable for quite some time," he said. "We hear a lot from our competitors but we see very little."

And speaking of competitors, today’s earnings report also represents the last in which Verizon Wireless will be the biggest wireless carrier, having been recently passed by the consolidated Cingular/AT&T Wireless. Strigl said the company isn’t about to change strategy based on its new position.

"I think Cingular is somebody we should be watching closely," he said. "They have great opportunity, but that’s not the focus of our game. I don’t think what’s happened in the way of consolidation over the past couple of years has had much impact on our results."