Verizon FiOS adds 36K pay-TV subs in Q1, says Custom TV is now 38% of video sales

Verizon's (NYSE: VZ) FiOS service added 36,000 pay-TV subscribers and 98,000 broadband subscribers as total FiOS revenues continued to grow, up another five percent to $3.5 billion. But those numbers fell well short of results from the year-ago quarter.

In the first quarter of 2015, FiOS added a net 133,000 broadband and 90,000 pay-TV subscribers and total revenues grew 10.2 percent year-over-year.

Verizon CFO Fran Shammo said that the operator's skinny Custom TV bundles represented 38 percent of FiOS video sales during the quarter, adding that Custom TV customers generate less revenue but higher margins.

During Thursday's first-quarter earnings call, Shammo said there is some top-line pressure from Custom TV but that is offset by lower content costs.

"I don't think we're going to change any of our approach to in-home video," Shammo said.

Shammo added that Verizon is heading toward a mobile-first strategy, which he said is different than the current authenticated TV Everywhere options that exist for mobile TV viewers.

He pointed toward recent deals with AwesomenessTV and Hearst around Complex as ways that Verizon will differentiate on content and approach going forward.

At the end of the first quarter in 2016, Verizon said about 78 percent of consumer FiOS internet customers subscribed to data speeds of 50 megabits per second or higher.

Shammo discussed FiOS's recently announced Boston fiber expansion, which will put FiOS in direct competition with Comcast (NASDAQ: CMCSA). He said that the focus is on network densification ahead of 5G deployments was the emphasis point for that expansion but that wireline capex will only run up an incremental $300 million over the next five years because of the build so it made sense as a FiOS market as well.

Shammo mentioned both Alexandria, Virginia and Baltimore as potential future fiber buildout targets but didn't commit to anything else beyond the current work in Boston. But he did confirm that Verizon hopes to have a fixed wireless deployment for 5G in place by 2017.

For more:
- see this earnings release

Related articles:
Verizon FiOS to take on Comcast in Boston
Verizon needs to accelerate growth of its FiOS video subs to avoid scale issues, analyst says
Verizon ads highlight FTTH advantages over cable

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