Verizon: Q1 earnings up 16%, FiOS subs increase by 180,000

Verizon (NYSE:VZ) continued to see strong uptake of its FiOS TV and Internet products in the first quarter, adding 193,000 Internet subscribers to top 5 million U.S. users, and another 180,000 TV subs, taking it to 4.4 million subscribers, the company has reported.

Those numbers helped ease the effect of continued declines in its wireline business, which saw a 2 percent decline in revenue for the quarter from a year ago to $9.9 billion.

Overall, Verizon saw EPS of 59 cents, up 16 percent from 51 cents per share a year ago, the company said Thursday.

"We built momentum coming out of 2011, and our results show that we continue to execute in the key growth areas of our business," said Lowell McAdam, Verizon chairman and CEO. "... And we produced another strong quarter of FiOS growth. We are confident we will improve Wireline margins for the full year."

During the company's earnings call, CFO Fran Shammo said Verizon increasingly would look to increase FiOS ARPU, increasing the cost of its service and rebundling products. Shammo also said Verizon would continue to work to get customers off copper and onto FiOS where possible, saying it was "better for us long-term."

Verizon has stopped selling naked DSL in FiOS covered area and "we started to convert a number of customers in this quarter over to our FiOS network from a voice perspective," he said.

The move is aimed at reducing Verizon's repair and maintenance costs and will give the company increased upsell capability, which has so far seen success in trials, Shammo added.

"We're starting to see a 30 percent sale upgrade on those customers, but it does take us three to six months to convince those customers to upgrade," he said. "So this is a longer-term type strategy."

Verizon, he said, will also start to roll out some "price-ups in strategic areas."

"We've also started that in April but over the next 2 quarters, we're going to have several priced-ups in our FiOS packages," he said. "In addition, we're going to rebundle certain of our packages to better bundle our content in order to make it more profitable based on the Tier that you picked for us.

"Obviously, the business needs a cost restructure and that's what that is about."

AT&T (NYSE:T), meanwhile, reported its profits were up 5.2 percent in the first quarter and said it had added 200,000 U-verse TV subs, bringing it to 4 million overall.

For more:
- see this release
- see this Seeking Alpha earnings call transcript

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