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Apr. 28, 2009

Verizon Wireless' ARPU (average revenue per user) was up 21 percent in its first quarter after its earnings were buoyed by the company’s recent acquisition of Alltel Wireless.

On April 23, Verizon rival AT&T reported less rosy results after its first-quarter profit fell 9 percent on wireline defections and an underfunded pension fund.

The first-quarter results include almost a full billing cycle of wireless revenues related to the Alltel purchase, which closed on Jan. 9. The Alltel acquisition boosted revenue to $26.6 billion, an 11.6 increase over 2008’s numbers.

These results were helped by a rise in data revenue and Verizon’s fiber-optic-based TV and Internet access service, FiOS.

Verizon Wireless posted earnings of 58 cents per diluted share, a slight increase over 2008’s numbers of 57 cents per share. Data has become an important revenue driver for the wireless carrier as wireline customers continue to defect toward mobile phones.

Data revenue comprised nearly 28 percent of all service revenues after wireline sales fell nearly 4 percent on declines in enterprise and wholesale fixed line sales.

Verizon Wireless' subscriber base grew to 86.6 million on 1.3 million net new subscribers. Customer churn rates remained lower at only 1.47 percent, though it increased slightly from last quarter’s figure of 1.35 percent.

Verizon executives didn't make any comments about its rumored interest in carrying the iPhone. Although both Apple and AT&T have voiced their ongoing support for their exclusive agreement, rumors that the AT&T contract is ending shortly have raised questions about the possibility of the phone being sold by other mobile carriers.

Excluding its recent acquisition of Alltel, data ARPU grew nearly 21 percent, to $14.16. The increased use of Internet browsing, text messaging and various downloads offset a 0.3 percent slip in service ARPU, which fell to $50.74.

On a pro forma basis, service ARPU increased 1.1 percent and total data ARPU jumped 25.2 percent. Pro forma results were determined by consolidating the operating results of Verizon and Alltel as though the acquisition occurred on Jan. 1, 2008.

Julien Blin, CEO of JBB Research said “there's absolutely no doubt in our mind that Verizon is looking at the iPhone opportunity as it could help the wireless carrier sustain its lead in terms of wireless data services and total subscriber adds.”

“As Verizon continues to migrate toward its next generation LTE network and open-network initiative, as it improves its mobile Internet pricing strategy and introduce new advanced devices like Android phones, I expect it to really sustain its lead.”

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Source: Verizon Wireless.