Wireless Growth Helps Boost Verizon
Verizon posted a 15% increase in fourth-quarter profit due to strong wireless growth, but a slowdown in spending by businesses took a toll on the company's landline operations. The telecom provider posted net income of $1.24 billion, or 43 cents per share, up from $1.07 billion, or 37 cents a year ago. Revenue rose 3.4% to $24.65 billion. Verizon Wireless reported a revenue increase of 12.3% year-over-year to $12.8 billion, partly because of growth in data services like text messaging, email and Internet access. That helped drive the unit's adjusted operating margin to 47.2%, up from 43.6% a year ago. Verizon added 1.2 million net new wireless customers in the quarter, bringing its total to 72.1 million, not including those it added through the acquisition of Alltel. The tough economic environment impacted the unit that markets phone and broadband services to businesses, which saw sales slide 2.2% from last year to $3.6 billion. The company said businesses are delaying purchasing decisions and require fewer services as they lay off employees. Overall, the landline unit reported a 6% operating margin, down from 9.7% in the year-earlier quarter. A longstanding trend of customers dropping landline phone service to replace it with cable or wireless service continued. Verizon lost 911,000 landline customers in the fourth quarter and 3.7 million lines for the year, a 9.3% decline. Verizon's digital subscriber line, or DSL, broadband service continued to struggle, with a net loss of 68,000 customers in the quarter. Still, that was more than offset by growth in the company's faster FiOS fiber-optic broadband network, which added 282,000 high-speed Internet customers in the quarter. The FiOS TV service added 303,000 customers, bringing the total user base to 1.9 million. The FiOS Web and TV network now reaches 12.7 million premises and users have an average service bill of $133. Capital expenditures for 2008 were $17.2 billion or 17.7% of Verizon's revenue, down from 18.8% in 2007. Chief Financial Officer Doreen Toben said the company is expecting to bring that figure down even further in 2009, part of a cautious approach to spending while the economy is unstable.