Verizon Account Revenue Rose, Though Phone Sales Fell in Q4

Verizon beat Wall Street revenue estimates during Q4. But more tellingly, smartphone activations were down 10 percent year on year.

Verizon Wireless has done its best to stay a step removed from the public brawling between AT&T and T-Mobile—the latter of which has made clear its intentions to aggressively steal AT&T's customers, and more agreeably everyone else's.

Verizon's fourth-quarter 2013 results, though, showed that despite beating Wall Street's estimates for revenue and profit, the company was unable to avoid the stresses of an increasingly competitive mobile marketplace.

Revenue for the quarter was $31.1 billion, with earnings of $7.92 billion, Verizon announced Jan. 21.

During the quarter, Verizon added 1.7 million retail wireless customers (1.6 million of which were postpaid). This was up from 1.1 million from the quarter before, but down from 2.2 million, or by 25.1 percent, from a year ago. (T-Mobile, emphasizing its positive momentum during a press event Jan. 8, shared ahead of its earnings call that it added 1.6 million customers during the fourth quarter—compared with the 800,000 it lost a year earlier.)

Smartphone activations fell to 8.8 million units, from 12.9 million a year ago. Verizon declined to share how many of the new devices it activated were Apple iPhones.

CFO Fran Shammo, while calling 2013 a "great year for Verizon Wireless, from both a strategic and financial perspective," acknowledged that Verizon is losing a segment of (value-minded) customers to competitors and that it continues to work to address this.

To this point, Verizon's average revenue per account increased by 7.1 percent over a year ago, to $157.21.

"Our Share Everything plans are doing everything we expected," Shammo said.

Verizon announced Sept. 2 that it had reached an agreement to buy Vodafone's 45 percent share of Verizon Wireless for $130 billion—and end the practice of essentially handing over half the income from its most profitable asset each quarter.

Shammo said the company is looking forward to having "sole ownership of the best wireless asset in the industry."

The deal is expected to close Feb. 21.

Verizon also shared that it has "substantially completed" the rollout of its LTE network, which now covers more than 500 markets and 97 percent of the U.S. population.

Shammo said that as more people move from 3G to 4G phones, Verizon will be able to re-appropriate more of its 3G network to 4G, putting it in "very good shape from a spectrum position." Still, the carrier plans to participate in the upcoming wireless spectrum auctions that the Federal Communications Commission (FCC) will host.

"We have to build out our portfolio for the next 10 years," Shammo explained.

Along with slowing smartphone activation, another pain point during the quarter was Verizon's enterprise business, which was down 5.2 percent year over year. Shammo blamed a number of factors that he said were "putting enterprises back on their heels" and sending them "searching for cost-cutting measures."

Still, the carrier was overall bullish about its future, particularly with its Vodafone deal nearing its close.

"Our industry has a very healthy competitive environment," Shammo said in conclusion. "We are very excited about the future, and we will continue to invest … and deliver for our customers, our shareholders and our employees."

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