Verizon says economy not hurting its results

Verizon is seeing some domestic impact from cable competition at the low end of its small-to-medium sized business, but Verizon is responding to that with small business bundles that feature FiOS Internet and video services, especially to MDUs, Strigl said.

Verizon continues to lead the industry in another statistic, but a dubious one: access line loss, which hit 920,000 in the second quarter.

“Verizon continues to hemorrhage access lines at a stunning rate, with annual line losses now exceeding 11.4 percent,” wrote Sanford C. Bernstein analyst Craig Moffett in his initial review of Verizon’s second quarter earnings. Moffett had projected an 11.1 percent loss rate. Verizon’s wireline losses are “significantly worse than the rate at AT&T and the worst rate in Verizon's history,” Moffett noted.

Verizon suffered the first net loss of DSL lines for a quarter since the product was launched, losing 133,000 net subscribers, despite the fact that DSL is Verizon’s sole broadband offering in two-thirds of its local service footprint, Moffett said. .

Verizon added 176,000 net FiOS TV customers for 20% penetration of its FiOS footpring and 187,000 net FiOS Internet customers for 25% penetration, but those numbers are below expectations, Moffett said. He had projected 283,000 net FiOS Tv customers and 261,000 net video customers.

“FiOS was also disappointing,” Moffett wrote. “The gains for both video and broadband were both lower-than-expected, and also lower-than-Q1. That FiOS is already seeing a sequential deceleration is a startling development. Sequential growth in video slowed from 28% to
15%, and sequential growth in broadband slowed from 17% to 10%; indeed, broadband net additions for FiOS were just 6% higher than a year ago, despite a footprint that has grown 33% in the interim. Similarly, FiOS video grew by just 25% against a 33% footprint expansion.”

Some of the slowdown can be attributed to the end of a free HD-TV promotion and second quarter seasonality, Moffett said, but there is still cause for concern.