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Jan. 28, 2009

Verizon Wireless posted a 16 percent increase in net earnings for its fourth quarter, boosted in large part once again by its mobile division. However, there are some signs of slower growth among new wireless subscribers, Verizon warns.

Verizon Wireless continued with a low 'churn' rate, about 1.35 percent among all customers and ARPU (average revenue per user) increased year-over-year for the 11 th consecutive quarter.

Total service ARPU was $51.72, with data ARPU when compared with the results of 2008 for the same period.

“Verizon's postpaid retail customer churn rate increased by 11 basis points year-over-year to slightly over 1 percent in the fourth quarter, nearly all of which was attributed to corporate customers reclaiming data cards or disconnecting third or fourth lines as a result of layoffs and cost-cutting,” said Ken Hyers, a wireless industry analyst at Technology Business Research Inc.

He also noted Verizon Wireless’ attempt to unseat Apple's 3G iPhone with the introduction of the BlackBerry Storm. Though smartphone sales account for about 37 percent of retail devices sold in Q4 2008, Verizon’s sales numbers have not measured up to those posted by AT&T, he said.

However, Hyers sees some signs of weakness. “Verizon Wireless reported 1.37 million organic net adds in the fourth quarter, its lowest total since the second quarter of 2003 and its lowest fourth-quarter results since then end of 2002.”

According to various sources, the BlackBerry Storm sold only 500,000 units during its first month on sale in Nov. 2008, a diminutive figure compared to the iPhone’s sales, which sold 2.4 million during its first full quarter last year, when it went officially on sale in July 2008.

However, Hyers still sees a bright spot in Verizon’s data ARPU, noting it increased year-to-year by over 29 percent, to $13.99, the highest among U.S. wireless operators.

Verizon is now the U.S.’s largest wireless and mobile phone carrier in terms of customers, which reached 72.1 million in Q4 2008, 97.2 percent of whom are retail customers.

The increase marks almost a 10 percent boost over 2008, when the company had 65.7 million customers.

With the addition of Alltel, the wireless carrier has more than 80 million subscribers in the U.S. alone.

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Source: Verizon Wireless.