Verizon Wireless posts strong 1Q, parents still fighting for control

[TNDan21]

Verizon Wireless posts strong 1Q, parents still fighting for control
By Kelly Hill
May 2, 2006

NEW YORK—Verizon Wireless continued its run of strong quarterly results, boosting its service revenues by double-digits and squeezing its churn rate below 1.2 percent.

The carrier added 1.7 million new customers, about 3 percent more than 2005's first quarter. Verizon reported that 1.6 million of those new customers this year were retail net additions, which includes both prepaid and postpaid plans. Verizon does not break out prepaid vs. postpaid subscribers. The nation’s second-largest carrier continued to lead the industry in churn, with its overall churn rate at 1.18 percent and postpaid churn at a record low of 0.92 percent.

In contrast, Cingular Wireless L.L.C. posted a growth rate of 20 percent in new customers due to an overall churn rate of 1.9 percent. Cingular also landed 1.7 million net customer additions for the first quarter.

Verizon Wireless managed to slow the pace by which its average revenue per user dropped; ARPU was at $48.67, down less than 1 percent from $49.03 in the first quarter of last year. Data made up 11.5 percent of service revenues, and data ARPU grew almost 80 percent from the same period in 2005. According to Verizon Wireless, the company had 26.1 million data customers and 6.2 million customers with CDMA 2000 1x EV-DO capable devices at the end of the first quarter.

Wireless service revenues overall were up 16 percent to $7.6 billion.

“Our financial performance in the first quarter was on target, and we are focused on driving revenue growth in each of our business segments,” said Ivan Seidenberg, chairman and chief executive officer of Verizon Communications Inc. “We expect Verizon Wireless and our wireline segment … to lead the industry, not necessarily in size but in profitable growth.

“Verizon Wireless is already there, and this quarter it has once again enhanced its position,” Seidenberg said.

During a call with analysts, Seidenberg acknowledged that Verizon still is interested in purchasing the 45-percent stake in Verizon Wireless that is owned by Vodafone Group plc. However, he added that the decision is more Vodafone’s now than Verizon’s.

Verizon’s stock was up less than 1 percent in midday trading.

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