Verizon Communications Inc. (NYSE: VZ) reported first quarter earnings this morning, and the US’s second-largest wireless carrier mostly met or slightly exceeded expectations. The company’s EPS came in at $0.59 compared with a consensus estimate of $0.58 and revenues totaled $28.2 billion, essentially equal to the estimate of $28.17 billion.
The nation’s largest wireless carrier, AT&T Inc. (NYSE: T) reports earnings next week and the consensus estimate calls for EPS of $0.57 on revenue of $31.85 billion. AT&T has more than 100 million subscribers to Verizon Wireless’ total of about 93 million. Verizon Wireless, a joint venture with Vodafone Group plc (NASDAQ: VOD), added 734,000 retail subscribers in the first quarter.
Conventional wireline subscriber numbers continue to fall, down -17.7% year-over-year to 9.3 million. High-speed digital fibre optic connections now total 11.7 million, up nearly 31% year-over-year.
Revenue from data contracts rose 21% to $6.6 billion and the average revenue per user rose 16% to $23.80. As a percentage of services, Verizon’s data services now comprise nearly 43% of revenue, up about 5% from the same period a year ago.
The rise in data services is directly tied to the rise in smartphone usage. Verizon reported that nearly 47% of the company’s retail wireless subscribers now use smartphones, up from about 32% in the same period a year ago. More than 72% of wireless phones sold in the quarter were smartphones.
As more customers switch to smartphones and more expensive data plans, Verizon and the other wireless carriers will continue to see revenues rise. At some point, though, when the market for smartphones is saturated, the giants will get some pressure from smaller carriers (and each other) provided that regulators don’t allow the giants to gobble up all the available wireless spectrum.
Paul Ausick
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