Verizon Wireless Sees Record Q4, While Co-Owner Verizon Posts Loss

Verizon Wireless had $20 billion total revenue for the quarter, up 9.5 percent from 2011, including $16.4 billion in service revenue. The carrier also confirmed that it added a net 2.1 million subscriptions during the quarter; Verizon Communications CEO Lowell McAdam had announced that figure at an investor conference earlier this month, noting that about 30 percent of Verizon Wireless’s net adds were new to the carrier (CD Jan 9 p10).

Verizon Wireless’s revenue growth was due in part to a rise in a subscriber’s average monthly bill, which averaged $146.80 per month during the quarter -- up 6.6 percent from the same time in 2011, Verizon Communications said. That was in part due to Verizon Wireless’s “Share Everything” shared data plans -- 23 percent of the carrier’s postpaid subscribers were on the plans within six months of their June 28 introduction, said Verizon Communications Chief Financial Officer Fran Shammo during an investor conference call Tuesday. “Customers are quickly recognizing the value proposition,” he said. “Adoption is ahead of our expectations and we continue to see customers adding devices to their plans and increasing” the amount of data they can use per month.

Verizon Wireless sold 12.5 million postpaid devices during Q4, more than 90 percent of which were phones, Shammo said. The carrier activated 9.8 million smartphones during the quarter, including 6.2 million iPhones; a majority of the remaining phones used the Android operating system, Shammo said. Smartphone penetration reached 58 percent by the end of the quarter, up from 44 percent a year earlier, Verizon said. The carrier’s high sales figures also impacted its service revenue profit margin as a result of smartphone sales subsidies, Shammo said.

About 65 percent of the smartphones Verizon Wireless activated during the quarter were using the carrier’s 4G LTE service, driving up 4G LTE smartphone sales to $6.4 million; total 4G LTE device sales stood at $7.4 million, Shammo said. Those figures showed customer adoption of 4G LTE was “really gaining momentum,” he said, saying almost half of its total data traffic was on the 4G LTE network. The carrier’s 4G LTE service is now available in 476 markets, covering 89 percent of the U.S. population -- more than 273 million people, Shammo said. “We intend to continue leveraging our advantage and expanding coverage, with the goal of having a nationwide 4G LTE footprint similar to our 3G network by mid-year 2013,” he said.

Verizon Communications’ wireline business’s revenue dropped to $10 billion for the quarter, down 1.5 percent from 2011. The company said it added a net 144,000 FiOS Internet subscribers and a net 134,000 FiOS TV subscribers during the quarter.

Superstorm Sandy had a “dramatic” effect on Verizon’s overall business, but particularly on wireline because of damage in the New York City metropolitan area, Shammo said. Verizon lost $319 million as a direct result of the storm, he said. The company said it spent $135 million on Sandy-related recovery efforts. “Our challenge was to restore service to customers as quickly as possible while still managing to meet the demand for new services,” Shammo said. “We also made a strategic decision to use storm restoration as an opportunity to accelerate fiber migrations in both the enterprise and FiOS markets."

Verizon said it spent $16.2 billion on capital expenditures over the course of 2012, flat with its capex spending in 2011. The company expects to keep its capex spending flat again in 2013, Shammo said. In addition to unexpected Sandy-related expenses, “we also proactively spent another $300 million on the wireless side to preposition our AWS spectrum that we originally planned for 2013 and we advanced that into 2012 and that was because we were coming off such a strong third quarter and we knew that by investing in the growth for the fourth quarter, that we were going to need to preposition this,” he said.