Wireline Losses Drain Verizon's Profits
Telecom giants records 10 percent third quarter profit decline despite healthy growth in wireless services that saw 1.2 million new wireless subscribers and wireless revenue jumping 24.4 percent to $15.8 billion.Despite layoffs and a growing wireless segment, Verizon Communications reported Oct. 26 a 10 percent decline in third quarter profits. Verizon said net income for the quarter totaled $2.89 billion, down from $3.20 billion in the third quarter last year as customers continued to cut their wireline services.
But Verizon did add 1.2 million mobile customers and wireless revenue climbed 24.4 percent to $15.8 billion percent over last year. Average monthly spending by Verizon mobile customers improved slightly (0.8 percent) to $51.04 while its churn rate rose to 1.49 percent overall and to 1.13 percent for postpaid customers.
"Verizon continues to generate strong cash flow, which we have used in building the foundation for sustainable, long-term shareowner value," Verizon Chairman and CEO Ivan Seidenberg said in a statement. "Even through the worst of the recession, we have continued to raise our dividend and to add new customers, expand markets and grow revenues based on the power and innovation of Verizon's wireless, broadband and global networks."
In another area of growth, Verizon also added 191,000 customers for its FIOS fiber-TV service and 198,000 for its fiber-Internet service. Verizon now serves 2.7 million fiber-TV and 3.3 million fiber-Internet accounts.
"The Verizon network is now an engine for next-generation communications services that will create new short- and long-term opportunities for us. As the U.S. economic and employment picture improves, and as we accelerate reductions in our own cost structure, we are well-positioned to quickly and significantly improve our growth profile," Seindenberg said. Seidenberg also noted that a simplified organizational structure announced earlier this month will allow Verizon to achieve improved levels of productivity. The realignment has combined two former Wireline business groups, Verizon Telecom and Verizon Business, into one organization.
The gain in FIOS television customers represents a 49.2 percent gain year-over-year while FIOS Internet gains saw a 67.7 percent jump from last year.