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Verizon Wireless adds over 1.35 million new subscribers in Q2

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July 24, 2010

Verizon Wireless posted second quarter results that showed that while the industry’s largest mobile carrier fell short of the customer growth reported by rival AT&T, the company did manage to add more direct subscribers willing to sign a contract, viewed as the most valuable in the wireless industry.

The mobile service operator said it added 1.351 million customers during the quarter, which was an 18.4 percent increase from what it added during the same quarter of last year, but just shy of the 1.562 million AT&T Mobility said it added.

Verizon Wireless did note however that it added about 665,000 direct postpaid customers, which was well ahead of the 496,000 contract customers AT&T Mobility attracted during the quarter.

A loss of direct prepaid customers during the quarter cut Verizon Wireless’ total direct customer growth to just 454,000 subscribers during the quarter.

On average, customer churn dropped year-over-year from 1.37 percent to 1.27 percent, which the wireless carrier said was its lowest in 2 years.

ARPU (average revenue per user) from direct customers increased almost one percent year-over-year to $51.56 during the quarter with data services accounting for $17.85 of that total.

Wireless service revenues increased about 5.1 percent from $13.349 billion during the second quarter of last year to $14.046 billion in 2010, with total wireless revenues up 3.4% to $16 billion for the quarter.

Wireless expenses increased just 1.6 percent year-over-year, which pushed operating income up 8.6 percent to $4.842 billion, overall.

A majority of new subscriber activations on Verizon's network were through third-party channels with Verizon Wireless reporting 896,000 customer additions through its partners. The carrier also subtracted 2.1 customers from its network during the quarter due to divestitures that resulted in a drop in total customers from 92.8 million at the end of the first quarter to 92.1 million at the mid-point of the year.

The results kept Verizon Wireless about 2 million customers larger than at AT&T Mobility.

Verizon Wireless added that it gained 264,000 new connections to its network during the quarter, including e-book readers, M2M (machine-to-machine) devices and telematic devices propping up that segment to 7.7 million total new connections on its network.

However, Verizon Wireless reported that capital expenditures jumped 21 percent year-over-year during the quarter to $2.262 billion and that wireless 'capex' spending topped $4 billion for the first half of the year. The wireless carrier is in the process of building out its LTE network with plans to cover 100 million potential new customers by the end of 2010.

On average, Verizon Wireless’ parent company Verizon Communications posted mixed results as flat year-over-year revenues combined with a $2.3 billion charge associated with workforce reductions resulted in the company posting losses of 7 cents per share for the quarter compared with a return of 52 cents per share last year.

In June, Verizon and Motorola said they are getting ready to showcase their latest Droid variation that will be officially powered by Google's popular Android operating system.

Verizon was scheduled to unveil what it termed “The next generation of Droid” at a mid-day event that the wireless carrier has been writing on its website as “coming soon.”

While some specifications were very scarce leading up to the unveiling, Verizon did note on its site that the Motorola Droid X would feature a 4.3-inch screen, capture 720 pixel video and include HDMI output capabilities.

All of these features mirror what is already available on HTC's recently launched Evo 4G with Sprint Nextel. The new mobile handset is also rumored to continue offering a slide-out Qwerty keyboard, trumping the on-screen only keyboard offered on the iPhone 4 and Evo 4G.

It's also expected that the Droid X will feature the latest version of Google's operating system as well as support for Adobe System's recently unveiled Flash version 10.2 that is targeted specifically at mobile devices.

Make no mistake-- Motorola has a lot riding on the continued success of its Android-powered mobile devices and continues to make headway supplying devices to both domestic and international wireless carriers.

It is hoped that the latest Droid variation continues in that same direction. Perhaps more importantly, some of the specs of the latest iPhone 4 – which is still available exclusively through AT&T Mobility – that maintains its 3.5-inch screen and lacks HDMI output capabilities.

But from the sounds of it, AT&T Mobility may not be the best outlet for those trying to acquire the new device, we keep hearing from various sources. AT&T and Apple will officially start selling the iPhone 4 tomorrow, but only to people that have already pre-ordered the phone at least two weeks ago. Those that haven't pre-ordered it will have to wait about 2 to 3 weeks to get their shiny new phone.

The Droid X will ship with the 2.1 version of the Android OS, but will be upgradeable to the 2.2 version later in mid-August. The upgrade will also come with support for Adobe's Flash 10.2 as well as support for Microsoft's Exchange Server and Gmail for business.

In addition to helping bolster Verizon Wireless against the inevitable iPhone onslaught, the Droid X should reinsert Motorola as top seller amongst Verizon Wireless' rapidly growing arsenal of Android-equipped smartphones. The original Droid that launched in 2009 was accompanied by a massive advertising campaign that helped push strong sales of the wireless device during the holiday season and into the new year.

Motorola's CEO Sanjay Jha noted this week that the Droid continues to sell well despite increased competition at Verizon Wireless from the recently launched HTC-built Droid Incredible. Verizon Wireless announced that the Droid X would be available beginning July 15 for $200 after rebates, a two-year contract and rate plans starting at around $70 a month.

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Source: Verizon Wireless.

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