Verizon 1Q Net Up 9.8%, Aided by Wireless Growth

Verizon Communications posted a 9.8% rise in first-quarter net income as wireless growth continued, overcoming the faltering U.S. economy and difficulties in its land-line business.

The second-largest U.S. telephone company behind AT&T, Monday reported net income of $1.64 billion, or 57 cents a share, for the quarter, compared with $1.5 billion, or 51 cents a share, a year earlier. Earnings excluding items and discontinued operations rose to 61 cents from 54 cents.

Revenue rose 5.5% to $23.83 billion.

Analysts polled by Thomson Reuters had expected earnings, excluding items, of 61 cents a share on revenue of $23.86 billion.

Shares traded at $37.50 in premarket activity Monday, compared with Friday's close of $37.04.

"Verizon has weathered the current economic uncertainty with strong first-quarter results," said Chairman and Chief Executive Ivan Seidenberg. "I am also confident of our position over the long term because we have further opportunities to drive revenue growth and further opportunities to eliminate costs.

In March, Verizon Chief Financial Officer Doreen Toben reassured Wall Street that the telecom giant was on track to duplicate its solid performance from last year, but hinted that an economic slowdown was making a small dent in its wireless business. In the past several months, telecom operators signaled to various degrees they were being affected by broader economic problems as consumers pulled back on spending. Cable operators and satellite operators have also have blamed lackluster results partly on the souring economy.

The wireless business has been an engine of growth for major telecom carriers in the past several years.

Verizon Wireless, a joint venture with Vodafone Group and the second-biggest U.S. wireless carrier after AT&T, had a revenue increase of 13%. Total churn - or customer cancellation rate - rose to 1.18% from 1.08% a year earlier. Average monthly revenue per customer rose 1.3%.

New-subscriber growth dipped 12% to 1.5 million, still the industry's top mark, putting total subscribership at 67.2 million.

Revenue at Verizon's wireline segment fell 1.4%. The number of primary residential landlines fell 11%, with Verizon's total base of phone lines falling 8.2%.

Broadband connections stood at 8.5 million as of March 31, up 15%. 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 added 263,000 FiOS TV customers, taking the total to 1.2 million on March 31. Verizon is using FiOS as its weapon to fight back cable-television operators, which also offer the all-in-one packages of video, phone and Internet services.

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

(END) Dow Jones Newswires

Posted to the site on 28th April 2008