Verizon’s 2Q11 additions of 184,000 FiOS video subs and 189,000 FiOS broadband subs aren’t as good as the numbers were a year ago, but when they’re added to that carrier’s early 4G LTE success and increasing number of bundled customers, the story is a good one.
“The FiOS strategy has proven itself by taking share and gaining revenue,” comments Verizon President/COO Lowell McAdam, who will replace Ivan Seidenberg as president/CEO as of Aug 2. The FiOS revenue jump (+20.7 percent) was expected, and it achieved a 24-percent year-over-year increase in triple-play subs, adds CFO Fran Shammo, noting “broadband penetration continues to improve in all of our FiOS markets.”
During the quarter, Verizon shut off some 130,000 DSL customers, but it maintained a positive broadband result at a time when the cable industry is bent on leveraging higher speeds. Miller Tabak’s David Joyce says the similarity in the telco’s voice and video net adds could indicate it’s “not necessarily focusing on migrating up their DSL subscribers to FiOS high-speed data.”
If that’s the case, Verizon’s wireless results help provide a reason or two. “There can be little argument that Verizon has virtually all the momentum in telecom today,” notes Sanford Bernstein’s Craig Moffett. “They are first out of the gate (and by a wide margin) in LTE, where they have now far eclipsed Sprint for the perception of first mover.”
But it appears data is where it’s at when it comes to Verizon’s bottom line. Data revenues jumped 22.2 percent, and 69 percent (1.2 million) of Verizon’s net wireless adds stemmed from 4G LTE devices and the iPhone (2.3 million).
Even with these good numbers, they could be better. “We don’t see great improvement in the economic outlook,” complains McAdam, noting cost-reduction plans of businesses – and not expansion — as the commercial growth driver.
Concludes Miller Tabak’s Joyce, “So far, the trends seem to be footing with our channel checks, that second-quarter low seasonality, continued high unemployment and a low-level but stabilizing housing formation market are resulting in price-sensitive consumers seeking promotions and considering dropping landline voice access (going wireless-only).”