Verizon Q1 Revenue Growth Helped by Alltel Acquisition

Verizon Communications announced that, despite a difficult economy and tightening consumer purse strings, its saw continued revenue and earnings growth in the first quarter of 2009.  

On April 27, the company announced first quarter 2009 total operating revenues of $26.6 billion, a growth of 11.6 percent compared to the first quarter of 2008. Verizon has added revenues from its acquisition of Alltel in January 2009.  
On a pro forma basis — determined by consolidating the operating results of Verizon and the former Alltel, as though the acquisition had occurred on Jan. 1, 2008 — revenue growth was 3.3 percent.
 
Verizon reported cash flow from operations totaling $6.4 billion for the first three months of 2009; capital expenditures totaling $3.7 billion; and free cash flow totaling $2.7 billion.
 
At $0.58 per share, up from $0.57 a share a year ago, Bloomberg reports that Verizon’s first quarter net income rose to $3.21 billion, up from $1.64 billion.
 
In both wireline and wireless markets, the carrier reported successes.  

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Verizon Wireless customers totaled 86.6 million by the end of the first quarter, up 28.8 percent year over year. This included 13.2 million net total customer additions, after conforming adjustments, from the Alltel acquisition.
 
Wireless retail customers reached 84.1 million, up 29.0 percent. Verizon reported 1.3 million net customer additions, “excluding acquisitions and adjustments, almost all retail.”
 
Regarding its wireline business, Verizon added 299,000 net new FiOS TV customers, for a total of 2.2 million FiOS TV customers — an increase of 83.8 percent compared with the first quarter of 2008 — and 2.8 million FiOS Internet customers.
 
Reaching out to SMBs in March, Verizon announced that midmarket companies can get FiOS TV for Business for $12.99 a month, or as part of a bundle that includes high-speed FiOS Internet and voice services for $99.99 per month.
 
“A highlight of the quarter was our successful completion of the Alltel acquisition. We quickly began integration efforts, and we are aggressively pursuing synergies,” said Ivan Seidenberg, Verizon chairman and CEO, in a prepared statement.
 
Seidenberg continued, “We are tapping into new market opportunities in wireless, broadband, video and global enterprise, and we already have the assets and capabilities to sustain our cash flows and grow total shareholder returns.”
 
LTE is expected to be the primary 4G technology in the United States and beyond, despite expected growth of 4,500-plus percent by competitor WiMax this year.
 
On Feb. 18, Verizon Wireless announced that Ericsson and Alcatel-Lucent will be the primary vendors of its initial LTE network deployments in the United States, targeted for 2010.
 
Verizon plans to offer IMS-based IP converged applications and services, and Nokia Siemens and Alcatel-Lucent will be the key suppliers for its IP Multi-Media System (IMS).
 
Verizon is building a Wireless LTE Innovation Center in Waltham, Mass., which will open this summer. It will serve as a base for developers interested in LTE, and offer a lab for product testing and development.
 
With partner Vodafone, and network infrastructure providers, Verizon has been testing 4G LTE networks throughout the United States and Europe.
 
“Our balance sheet is healthy, and we are in a strong financial position,” said John Killian, during financials announcement.
 
Enterprise and wholesale revenue were one weak point, however. Verizon’s global enterprise revenue showed a loss of 3.4 percent for the quarter, it’s global wholesale revenue showed a loss of 9.2 percent for the quarter.
 
Killian explained the declines were due, in part, to its domestic and international telecom business, and that Verizon increased pricing “on some routes,” which resulted in a numbers decline.
 
Regarding recent talk that Verizon is interested in an iPhone of its own, Verizon Chief Operating Officer Denny Strigl responded, “We have said in the past that we are always open to discussions with any suppliers. We have no announcements to make relative to Apple today. We historically have not been dependant on any one device. … We believe we currently have a strong phone lineup.”
 
By the end of the first quarter, Verizon had 19.3 million integrated devices, not counting Alltel. “That’s double what we had in the same quarter of last year," Strigl said, adding again, “We’re always open to talking to suppliers.”
 
In his closing remarks Strigl remarked, “I’d say we’re weathering the effects of the economy very well.”