Verizon's Profit Rises 16% as Margins Improve

Verizon Communications’ first-quarter profit rose 16% as its wireless business continued to add customers and reached its highest profitability ever.

The wireless operation, a joint venture with Vodafone Group, added 677,000 contract customers, in line with many analyst projections. The additions are the lowest since last year's first quarter but are still healthy compared with the 1.4 million that AT&T added for all of 2012 and the losses seen at Sprint Nextel and Deutsche Telekom AG's T-Mobile business. The first quarter was relatively quiet because of a lack of major phone launches after a busy fourth-quarter powered by holiday spending and strong sales of Apple’s iPhone 5, causing smartphone subsidies to weigh down margins. In the first quarter, Verizon Wireless activated 4 million iPhones, up from 3.2 million a year ago but down from 6.2 million in the previous quarter. About half of the iPhones activated in the quarter were the new iPhone 5, the carrier said, and iPhones overall represented 56% of the 7.2 million smartphones that Verizon Wireless activated in the quarter.