Verizon 2Q Net Up; Wireless Arm to Buy Rural Cellular

Verizon Communications said second-quarter net income rose 4.5% as the company's wireless business continued a trend of strong performances.

The results came as Verizon Wireless, Verizon Communications' joint venture with Vodafone Group, said it will buy Rural Cellular in a deal valued at about US$757 million.

Verizon Communications, the New York telecommunications company, said net income rose to $1.68 billion, or 58 cents a share, from $1.61 billion, or 55 cents, a year earlier.

On an adjusted basis, year-ago earnings were 52 cents a share.

Verizon's revenue rose 6.3% to $23.27 billion from $21.89 billion a year ago.

On average, analysts polled by Thomson Financial expected earnings of 58 cents a share and revenue of $23 billion.

The company added 167,000 net new FioS TV customers during the quarter. Verizon said second-quarter earnings were cut by 10 cents a share, due to the FiOS program.

Verizon said dataline revenue in its wireline segment rose 12%, to $4.4 billion, due to increases in revenue from consumer broadband, such as FiOS services and high-speed Internet users.

Verizon Wireless posted a 17% revenue increase to $10.8 billion. The second-quarter churn - or customer cancellation rate - was 1.08%.

Verizon business had second-quarter revenue of $5.3 billion, up 2.4% from a year ago.

Under Verizon Wireless' deal with Rural Cellular, Rural Cellular shareholders will receive $45 a share for a total equity price of $757 million. The price per share is a 41% premium to Friday's closing price of $31.88.

In recent premarket trading, Rural Cellular shares rose 17% to $37.37. Verizon Communications shares were at $42.16, up 16 cents from Friday's close, and Vodafone shares were at $30.12, versus Friday's close of $30.64.

As cable competitors and other Internet companies are entering the phone business, Verizon is fighting back with new high-tech services. At the same time, the company is trying to prevent phone customers from disconnecting landline service in favor of wireless or Internet-based phone service.

Verizon has been focusing on the upgrade of its network to fiber lines in the U.S., which it hopes will help offset the deterioration in its landline business.

-By Mike Barris and Josee Rose; Dow Jones Newswires; 201-938-5658; mike.barris@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 30th July 2007