Verizon Communications (NYSE:VZ) reported earnings slightly below analyst expectations today, but had some good news as well: subscriptions to its FiOS TV service continued to grow, as did wireless subscriptions, almost 75 percent of them tied to smartphones.
Verizon said revenues were off nearly 3 percent to $26.4 billion from $27.1 billion a year ago. The company said the sale of equipment and wireline services in rural areas were primary reasons for the decline. Income, meanwhile, was $2.64 billion, or 93 cents a share, up from $617 million (22 cents a share) last year.
Verizon said its wireless business drew 827,000 new contract customers in the quarter, somewhat of a surprise as many observers expected customers to sit on the sidelines until Apple's iPhone went on sale in February. Analysts say Verizon could sell as many as 9 million iPhones this year, close to 40 percent of its overall smartphone sales.
The fourth quarter saw Verizon add 197,000 net new FiOS Internet customers and 182,000 net new FiOS TV customers. By year-end, Verizon had 4.1 million FiOS Internet and 3.5 million FiOS TV customers. The growth continues a string of FiOS TV adds as the cable industry continues to lose subscribers.
FiOS revenues, meanwhile, made up more than half (about 53 percent) of the wireline revenue for the quarter, Verizon said, an increase from 50 percent in the previous quarter.
Total wireline broadband and video revenues--including FiOS Internet, FiOS TV and HSI (DSL-based high-speed Internet)--were $1.8 billion in the quarter, up 18.4 percent a year ago.
Consumer ARPU for wireline services was $88.85 in fourth-quarter 2010, up 10.7 percent compared with fourth-quarter 2009. ARPU for FiOS customers is more than $146.
"Verizon ended 2010 with strong results, driven by solid execution across all our businesses," said CEO and Chairman Ivan Seidenberg. "Verizon Wireless produced another quarter of impressive growth, with record-high profitability, as we continue to drive higher smartphone adoption and data use. Following another solid quarter in our wireline businesses, we are optimistic about opportunities to continue to expand wireline margins."
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