Verizon 3Q Net Down 34% on Charges, Divestitures

Verizon Communications's third-quarter net income dropped 34% amid charges and year-earlier earnings from discontinued operations as the company continued to see wireless growth and higher sales of its FiOS TV service.

The second-largest U.S. telephone company behind AT&T reported net income of $1.27 billion, or 44 cents a share, compared with $1.92 billion, or 53 cents a share, a year earlier.

Results included 19 cents a share in special items related to international taxes, a spinoff of access lines and MCI merger costs. Year-earlier results included $377 million in earnings from discontinued operations.

Revenue rose 5.8% to $23.77 billion.

Analysts' mean estimates were for per-share earnings of 62 cents on revenue of $23.67 billion, according to a poll by Thomson Financial.

Verizon Wireless posted a 14% revenue increase to $11.29 billion. Total churn - or customer cancellation rate - was 1.27% versus 1.24% a year earlier.

Verizon Wireless, which is jointly owned with Vodafone Group, added 1.6 million net new customers to bring its total to 63.7 million. AT&T has 65.7 million wireless customers, including 1.1 million iPhone users.

Verizon's wireline revenue fell 0.8% to $12.67 billion. The company lost 2.9 million primary residential landlines, with its total base of phone lines shrinking 8% to 42.3 million.

Verizon also added 285,000 net high-speed Internet residential and small business customers in the quarter, helped along by the FiOS fiber network. Sales of wireless and Internet services have helped phone companies like Verizon and AT&T ease the impact of declining sales of fixed lines.

Verizon also has been focusing on expanding its FiOS fiber optic service, which the company hopes will help it compete against cable operators' all-in-one packages of video, phone and Internet services. It added 202,000 FiOS TV subscribers in the third quarter, taking the total to 717,000.

Verizon is spending heavily to roll out the new FiOS service. The company has said it costs $842 to connect a home with FiOS, and that doesn't include Verizon's huge marketing budget for the program. Verizon also has to pay more to buy programming from TV networks than cable operators.

Verizon Business, formed by the merger of its business unit and MCI in January 2006, saw revenue rise 2.2% to $5.3 billion.

Verizon's shares closed at $45.60 on Friday. There was no premarket trading.

-Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 29th October 2007