After good news from AT&T earlier this week, Verizon Communications is also proving that smartphones are the future growth vehicle for telecom. Verizon's operating revenue was $27.5 billion in the second quarter, an increase of 2.8 percent from a year ago.
But like AT&T's results, one of the big story lines is mobile broadband growth.
A Services Boom
Service revenue for Verizon Wireless rose 6.6 percent to $14.7 billion. Data accounted for $5.8 billion of that total -- up $1.1 billion, or 22.2 percent. Postpaid average revenue per user grew 1.9 percent to $54.12 per month. Data made up $21.26 of that total, a 15.2 percent boost from a year ago.
Verizon Wireless is a joint venture between Verizon Communications and United Kingdom-based Vodafone.
"In terms of earnings growth and the acceleration of revenue growth, this has been one of Verizon's best quarters since the 2008 economic downturn," said Verizon Communications Chairman and CEO Ivan Seidenberg, who stepped down on Friday and handed the reins to Verizon President and COO Lowell C. McAdam. Seidenberg will remain chairman during the transition.
"We expect Verizon Wireless to gain share in the retail postpaid market and widen its network-quality lead throughout 2011," Seidenberg said. "We also continue to see strong customer demand for FiOS Internet and TV, and for cloud and other strategic services. At the same time, we remain focused on our cost structure as we deliver improvements in wire-line margins quarter after quarter."
The iPhone Wars
Verizon added 2.2 million subscribers, including 1.3 million postpaid subscribers, giving it 106.3 million customers. That equals 6.6 percent year-over-year growth -- and it also tops AT&T's 1.1 million new subscribers and 98.6 million total. Still, AT&T beat Verizon in the iPhone wars.
In fact, AT&T has more smartphone users than Verizon. AT&T reported that about 50 percent of its postpaid subscribers are using smartphones. That compares to 36 percent at Verizon. And for iPhones, Verizon Wireless activated 2.3 million iPhones in the second quarter, compared to 3.6 million at AT&T.
"The earnings report shows how the smartphone has gone from a business tool to a mass-market consumer device. Verizon had a really nice array of Android devices and of course all of that multiyear pent-up demand for a Verizon iPhone that finally came true. Verizon was able to capitalize on that in a big way," said Michael Gartenberg, an analyst at Gartner.
The Next-Gen Network
"The fact that new iPads have a Verizon option as well all serves to fuel this growth. It also shows that phones for consumers are not just for talking anymore," Gartenberg added. "They are about a lot more. We will continue to see more of this growth going forward."
Future competitiveness may hinge on speed. Verizon Wireless continued to roll out its 4G LTE mobile broadband network during the second quarter. Verizon's 4G LTE service is available in 102 markets across the country, covering a population of more than 160 million. By year-end, Verizon's LTE network is expected to be available in more than 175 markets across the country, covering a population of more than 185 million. Verizon continues to expect full-year 2011 capital spending to be similar to its 2010 investment of $16.5 billion.
Mike Kent also contributed to this story.
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