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NEW YORK (Dow Jones)--Verizon Communications Inc. (VZ) posted a lower third-quarter profit as subscriber growth slowed in its wireless arm, likely clipped by the strength of the iPhone.
The number of net contract customers added in the period fell by more than half from a year ago, while the recent momentum found through its prepaid reseller partners also slowed.
Verizon Wireless, which is jointly owned by Verizon and Vodafone Group PLC (VOD), has been relentless in putting out a wave of high-profile smartphones under its Droid franchise. But its expanded offering of phones couldn't stand up to the momentum of Apple Inc.'s (AAPL) marquee device, which has an exclusive arrangement with rival carrier AT&T Inc. (T).
That dynamic could change with the prospect of AT&T losing its lock on the device. Verizon Wireless will sell Apple's smartphone early next year, The Wall Street Journal has reported. Signaling a working relationship between Verizon Wireless and Apple, the carrier will begin selling the iPad on Thursday.
In total, Verizon Wireless added 997,000 net new subscribers and 251,000 connected devices. AT&T reported on Thursday that it added 2.6 million total wireless customers.
Verizon reported a third-quarter profit of $881 million, or 31 cents a share, down from $1.18 billion, or 41 cents a share, a year earlier. Excluding one-time charges related to its pension settlement and M&A costs, per-share earnings came in at 56 cents a share. Revenue fell 2.9% to $26.5 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 54 cents on $26.35 billion in revenue.
Wireless revenue rose 6% to $16.3 billion. Like other carriers, Verizon Wireless is facing a slowdown in subscriber growth with fewer customers up for grabs and many opting for cheaper no-contract plans. A year ago, the carrier added 1.3 million subscribers.
Verizon Wireless instead has turned to its own base of customers for growth, encouraging them to upgrade to smartphones and pricier data plans. The carrier's wireless monthly data revenue per user rose 17.6% to $18.20.
A little less than a quarter of its base use smartphones, so the carrier points to the opportunity for growth.
"It's hard to believe we're in the early innings of this revenue growth opportunity," Chief Financial Officer John F. Killian told analysts during a conference call on Friday, adding he was encouraged by the concept of tiered pricing.
Killian said the carrier plans to introduce a cheaper--but limited--monthly data plan for $15 on Thursday.
The company has also pushed harder into prepaid through reseller partners such as Tracfone Wireless, which sells a Wal-Mart Stores Inc. (WMT) exclusive brand called Straight Talk. Initially using Verizon Wireless's network, Straight Talk has since expanded to include AT&T and T-Mobile USA.
While the iPhone could provide the carrier with a much needed boost, the company has done much to mitigate the impact, having built up its franchise of high-end phones using Google Inc.'s (GOOG) Android software.
The slowing wireline business, meanwhile, saw revenue fall 3.6% to $10.3 billion. Verizon has invested billions of dollars into turning around the wireline business. While fewer people are using traditional fixed-line phones, more people are signing up for its FiOS service, which benefits from a faster fiber-optic network. The company added 204,000 FiOS TV customers and 226,000 FiOS Internet customers.
Verizon has shifted the focus to signing up customers within its FiOS footprint, rather than further geographic expansion of the service, Killian said.
Verizon's global business arm posted revenue of $3.9 billion, down slightly from a year ago.
While Killian said he sees signs of stabilization, he doesn't expect much help from the economy this year, as the rate of unemployment remains high and usage of telecom services continues to be low.
Verizon shares fell 1.5% to $32.02 in recent trading.
The number of net contract customers added in the period fell by more than half from a year ago, while the recent momentum found through its prepaid reseller partners also slowed.
Verizon Wireless, which is jointly owned by Verizon and Vodafone Group PLC (VOD), has been relentless in putting out a wave of high-profile smartphones under its Droid franchise. But its expanded offering of phones couldn't stand up to the momentum of Apple Inc.'s (AAPL) marquee device, which has an exclusive arrangement with rival carrier AT&T Inc. (T).
That dynamic could change with the prospect of AT&T losing its lock on the device. Verizon Wireless will sell Apple's smartphone early next year, The Wall Street Journal has reported. Signaling a working relationship between Verizon Wireless and Apple, the carrier will begin selling the iPad on Thursday.
In total, Verizon Wireless added 997,000 net new subscribers and 251,000 connected devices. AT&T reported on Thursday that it added 2.6 million total wireless customers.
Verizon reported a third-quarter profit of $881 million, or 31 cents a share, down from $1.18 billion, or 41 cents a share, a year earlier. Excluding one-time charges related to its pension settlement and M&A costs, per-share earnings came in at 56 cents a share. Revenue fell 2.9% to $26.5 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 54 cents on $26.35 billion in revenue.
Wireless revenue rose 6% to $16.3 billion. Like other carriers, Verizon Wireless is facing a slowdown in subscriber growth with fewer customers up for grabs and many opting for cheaper no-contract plans. A year ago, the carrier added 1.3 million subscribers.
Verizon Wireless instead has turned to its own base of customers for growth, encouraging them to upgrade to smartphones and pricier data plans. The carrier's wireless monthly data revenue per user rose 17.6% to $18.20.
A little less than a quarter of its base use smartphones, so the carrier points to the opportunity for growth.
"It's hard to believe we're in the early innings of this revenue growth opportunity," Chief Financial Officer John F. Killian told analysts during a conference call on Friday, adding he was encouraged by the concept of tiered pricing.
Killian said the carrier plans to introduce a cheaper--but limited--monthly data plan for $15 on Thursday.
The company has also pushed harder into prepaid through reseller partners such as Tracfone Wireless, which sells a Wal-Mart Stores Inc. (WMT) exclusive brand called Straight Talk. Initially using Verizon Wireless's network, Straight Talk has since expanded to include AT&T and T-Mobile USA.
While the iPhone could provide the carrier with a much needed boost, the company has done much to mitigate the impact, having built up its franchise of high-end phones using Google Inc.'s (GOOG) Android software.
The slowing wireline business, meanwhile, saw revenue fall 3.6% to $10.3 billion. Verizon has invested billions of dollars into turning around the wireline business. While fewer people are using traditional fixed-line phones, more people are signing up for its FiOS service, which benefits from a faster fiber-optic network. The company added 204,000 FiOS TV customers and 226,000 FiOS Internet customers.
Verizon has shifted the focus to signing up customers within its FiOS footprint, rather than further geographic expansion of the service, Killian said.
Verizon's global business arm posted revenue of $3.9 billion, down slightly from a year ago.
While Killian said he sees signs of stabilization, he doesn't expect much help from the economy this year, as the rate of unemployment remains high and usage of telecom services continues to be low.
Verizon shares fell 1.5% to $32.02 in recent trading.
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