Verizon Executives Coy About iPhone Agreements During Financial Call

Verizon Wireless announced it is remaining resilient, despite a challenging economy, and on July 27 announced total operating revenues of $26.9 billion for the second quarter of fiscal year 2009, an increase of 11 percent from the same quarter a year earlier.
Diluted earnings per share for the second quarter were 52 cents, compared with 66 cents per share in the second quarter of 2008.
The largest wireless company in the United States, Verizon Wireless saw its wireless customer base grow by 27.7 percent year over year, for a total of 87.8 million total wireless customers by the end of the quarter. According to the carrier, its 3G broadband network now covers approximately 284 million people.
Competitor AT&T, by comparison – which had its best day ever, both online and in retail shops, when it launched the Apple iPhone 3GS on June 19 – added 1.4 million wireless subscribers in its second quarter, bringing its total to 79.6 million.
Verizon is said to be in talks with Apple regarding a CDMA iPhone, once AT&T’s U.S. exclusivity contract is up. Verizon Executive Vice President John Killian and CFO Denny Strigl were indirect regarding the likelihood of a Verizon iPhone, but insisted the iPhone is good for overall business and that Verizon isn’t losing customers as a result of AT&T’s current grip on it.
“Let me hit the iPhone head on, here,” said Strigl, in answer to a new-products question during the earnings conference call.
“Clearly, the iPhone has been a successful device. Which, for us, has expanded the overall smartphone market. … We’re still competing successfully in the marketplace and will continue to do so. I think that the [products we have in the pipeline] will put us in a strong position. Yes, we did see an uptick in the last couple of weeks of June, no question about that. But I think we’re extremely well-positioned going forward.”
Killian added, “We’re not losing business-to be candid with you-to competitors. We are positive, in terms of new customer contracts and very strong retention with existing customers. … Competitive activity really hasn’t been the issue, as it relates to us. It’s much more the economy and employment.”
Verizon recently sent a letter to the House of Representatives, vowing to limit handset exclusivity contracts to six months-a gesture some interpreted as a knock against AT&T.
Regarding the letter, Strigl explained, “We are attempting to be proactive there. Any new exclusivity arrangement we enter with handset makers will last no longer than six months for all manufacturers and all devices. We strongly believe [exclusivity arrangements] do promote competition and innovation in device development and design.”
He continued, “When you think about what Apple has done, in brining the iPhone into the marketplace, it truly has accelerated innovation. As we talk to all of our manufacturers, everyone has come out with their own iconic device, and I think that this has been very good overall for our customers.”
Beyond its product line, two other future areas of wireless expansion for the carrier are its planned deployment of the 4G technology LTE and the launch of a mobile application store.
Killian said there are plans to conduct LTE trials in Seattle and Boston later this year, with the goal of launching commercial LTE services in up to 30 markets next year.
“Our plan is to cover 100 million PoPs [point of presence]. In 2011 and 2012 we’ll continue to expand significantly, with the ultimate goal being to be to cover all of our PoPs with this great product by the end of 2013,” said Killian.
“The main point here is that we are leading the industry and the deployment of LTE, and we are the most proactive company in enabling and preparing for continued growth in wireless data.”
To complement a speedy 4G network, Verizon-following the examples of Apple, Google, Research In Motion, Nokia and Microsoft-is at work on a mobile application store that it hopes to have up and running by the end of the year.
“Tomorrow we’re holding our first-ever Verizon developer community conference in San Jose. … We will detail how developers can take advantage of new tools and resources to build great applications for our more than 87 million customers,” said Killian.
“We are intent on making Verizon the wireless platform of choice for developers.”