Telecoms Race Ahead of Slumping Economy

By Roy Mark  |  Posted 2008-04-28 Print this article Print

Driven by booming wireless services, Verizon reports strong profits just days after AT&T reported the same.

The economy may be slumping, but don't tell that to the nation's top two telecom companies.

Verizon, the No. 2 U.S. carrier, reported April 28 first-quarter profits that jumped 9.8 percent over the first quarter of 2007.

Verizon's revenue rose 5.5 percent to $23.8 billion in the quarter ending March 31, up from $22.6 billion in the first quarter of 2007, while net income rose to $1.64 billion, compared with $1.50 billion a year ago.

Click Here to Watch the Latest eWEEK Newsbreak Video.

Verizon's strong earnings follow the April 22 announcement that AT&T, the country's top carrier, posted earnings of 22 percent over last year's first-quarter earnings.

Driving the profits of both carriers is the continuing U.S. migration to wireless services. Verizon signed up 1.5 million new wireless customers in the first quarter while reporting landline connections fell by 920,000. AT&T added 1.3 million wireless customers in the first quarter.

"Verizon has weathered the current economic uncertainty with strong first-quarter results," Verizon Chairman and CEO Ivan Seidenberg said in a statement. "In a larger sense, Verizon is leading an industry transformation.  In wireless, we are changing the game with our open development initiative, our plans for next-generation technology deployment and our strategic investment in spectrum for nationwide broadband services."

Last month, Verizon Wireless, in a partnership between Verizon and Vodafone, walked off with the top prizes in the Federal Communications Commission's recent 700MHz auction, capturing prime swaths of spectrum for the carrier's next-generation wireless broadband service.

Read more here about Verizon Wireless winning prized spectrum. 

Verizon Wireless paid more than $6.5 billion for six large regional licenses that are the equivalent of a national license. In addition, Verizon Wireless won 24 regional licenses located in most of the country's metropolitan areas and another 77 smaller licenses.

AT&T dropped $6.64 billion for licenses in the 700MHz auction in addition to another $2.5 billion for licenses when it purchased Aloha Partners in October 2007.

Both companies are betting big on their rollouts of fiber-optic television services to compete with cable company offerings. Verizon reported adding 263,000 new customers for its FIOS service in the first quarter. Verizon plans to spend $23 billion over the next seven years to build out a national FIOS network.

AT&T, which is using a mix of fiber and copper for its service, plans to spend $7 billion over the next five years to revamp its network for TV service.


Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel