Verizon Wireless may not have had the iPhone, but it managed to pull off an impressive quarter in terms of subscriber additions. The operator added 1.5 million new post-paid subscribers, while prepaid, wholesale and acquisitions chipped in another 600,000. And like AT&T, much of VZW’s growth was in the high-end smartphone line, where data revenues and high-dollar contracts helped boost average revenue per user.
While AT&T launched a single iconic device, the iPhone 3G, which sold more than 2.4 million units in three months, Verizon Wireless spread the wealth around among several devices. In total, though, smartphones accounted for 30% of all devices sold last quarter, said Doreen Tobin, chief financial officer, on Verizon’s earnings call. “There’s plenty of momentum and upside here to increase penetration,” she added.
Increased smartphone sales also are leading to higher data ARPU. Year-over-year, third-quarter data revenues increased 42.5% — just under AT&T’s 50.5% increase. Verizon, however, is still slightly ahead of AT&T in its data strategy, with data accounting for 25.5% of its total service revenues as opposed to 24.2% from AT&T. AT&T was much further behind Sprint and VZW in launching its 3G data network, but as most data revenues for the last few years came from low-bandwidth messaging and e-mail services, AT&T was able to keep pace behind its competitors. Now that Internet browsing and broadband access services are starting to take hold among consumers, data revenues are surging. Two-thirds of VZW’s data growth is coming from non-messaging services.
VZW’s churn rate veered upwards from 1.12% to 1.33% in the third quarter, after three quarters of consecutive improvement. Denny Strigl, president and chief operating officer for Verizon, acknowledged that bump in churn was due to the iPhone — AT&T claimed 1 million new subscribers in the second quarter from the iPhone alone — but he pointed out that VZW has the best churn rate in the industry. The iPhone’s success in Q3 doesn’t have Verizon worried, though, and it has no plans to change its business model in reaction to it, Strigl said.
“Our plan is certainly to continue to grow at the kinds of numbers you have seen in this quarter,” he said. “We meet the competition head on. We’re not wedded to just any one iconic device. We’re pleased with our result, and I think you can continue to see similar results.”
VZW is set to surpass AT&T in one all-important category this quarter: total wireless subscribers. Since Cingular merged with AT&T Wireless in 2004, AT&T has held the top spot in the U.S. VZW has been on AT&T’s heels ever since, several times threatening to overtake the GSM juggernaut only to have AT&T fend off the challenge with impressive quarters. Next week, though, the FCC is set to vote on Verizon’s acquisition of Alltel, which would add some 11 million customers to its subscriber base, helping it to overtake AT&T’s current count of 75 million. The recent Wall Street collapse and credit crisis have led to speculation that Verizon may be reconsidering acquiring Alltel, but CEO Ivan Seidenberg stifled those rumors today.
“Obviously financing costs for the deal will be somewhat higher than we thought, and there are a few regulatory issues under consideration by the FCC as we speak,” Seidenberg said. “In our view, absent a surprise or an unexpected condition, we still view this deal as very compelling. We believe it will be accretive in year 1, and we are very focused on trying to complete this transaction as soon as approvals are done.”
source: telephonyonline.com
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