Verizon Sees Jump in Wireless Subscribers, Tablet Sales in Q2

The largest U.S. carrier also sees its wired business grow for the first time in seven years thanks to FiOS.


Verizon Communications saw a significant rise in wireless subscribers, record numbers of new tablet users and the first increase in seven years in revenues for its fixed-line business to help drive the company's strong second-quarter financial results.

Looking ahead, the company also will have its much-anticipated LTE broadcast network in place in the third quarter, and will officially launch it next year, according to Verizon CFO Fran Shammo.

Overall, Verizon, the largest wireless carrier in the United States, saw revenues increase 5.7 percent over the same three months in 2013, to $31.5 billion. While net profit dropped from $5.2 billion last year to $4.3 billion in the second quarter, some of that had to do with the $130 billion buyout of Vodafone's 45 percent share in Verizon Wireless, Shammo said during a conference call with analysts and journalists July 22. The portion of the profit that Verizon accounted for was $4.2 billion, a jump from the $2.2 billion in the second quarter of 2013.

The second-quarter numbers helped Verizon rebound from a somewhat mixed first quarter that saw wireless subscriber numbers come in lower than expected, due in large part to competition from the likes of T-Mobile and AT&T, and an increasing churn rate.

The carrier's efforts to lure people to Verizon through such programs as its renamed More Everything data plan and reduced monthly charges for adding a smartphone to some plans and other discounts and changes to its Edge upgrade strategy appeared to work in the second quarter, as the company added 1.4 million net new retail connections and reduced its postpaid churn to 0.94 percent. In all, Verizon added 104.6 million retail connections and 98.6 million retail postpaid connections.

During the quarter, Verizon added a net of 304,000 postpaid phone additions, and smartphones accounted for almost 75 percent of Verizon Wireless' retail postpaid customer phone base. That was a jump from 72 percent in the first quarter. In addition, the company added 1.15 million postpaid tablets, the third consecutive quarter of record net tablet additions for Verizon.

Shammo said tablets are particularly good for all carriers, not only Verizon, because they tend to come with lower subsidies and create lower churn than smartphones, and 4G tablets generate more traffic than 3G smartphones.

"We see tablets as a highly profitable growth opportunity," he said.

The company also is seeing an increase in machine-to-machine (M2M) traffic over its network—up more than 50 percent—as the Internet of things (IoT) begins to grow. Shammo said that the overall M2M is relatively small now, but that "machine-to-machine will be a consistent future growth engine for us."

The CFO also noted that the carrier's XLTE bandwidth—4G LTE using AWS spectrum—is now available in more than 350 U.S. markets.

Verizon's FiOS efforts helped propel its wired business, which saw revenues hit $9.8 billion, an increase of 0.3 percent—the first year-over-year quarterly increase in seven years. Consumer revenues came in at $3.9 billion, a 5.3 percent jump, with revenues from FiOS accounting for 75 percent of that. Overall FiOS revenues grew 14.4 percent, to $3.1 billion. During the quarter, Verizon added 139,000 net new FiOS Internet connections and 100,000 net new FiOS Video connections, pushing the total connections for FiOS Internet to 6.3 million and FiOS Video to 5.4 million. Fifty-five percent of consumer FiOS Internet subscribers have signed up for FiOS Quantum, which offers faster speeds ranging from 50 to 500 megabits per second. In the first quarter, that percentage stood at 51 percent.

In addition, Verizon officials noted that starting this week, FiOS customers are getting symmetrical broadband speeds—where upload speeds equal download speeds—at no extra charge.

When it launches in 2015, Verizon's LTE multicast network will enable it to broadcast live and on-demand events to a larger number of subscribers than is possible via unicast streaming.