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Wireless Winner: Verizon profit up on wireless gains
By Jeffry Bartash, CBS.MarketWatch.com
Last Update: 8:28 AM ET Oct. 28, 2004
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WASHINGTON (CBS.MW) - Verizon Communications on Thursday said third-quarter profit rose slightly, as the company added 1.7 million wireless customers.

The nation's largest phone carrier posted profit of $1.796 billion, or 65 cents a share, up from $1.791 billion, or 64 cents, a year ago.

Revenue climbed 6.7 percent to $18.21 billion from $17.06 billion a year ago, with the wireless segment accounting for more than 40 percent of total revenue for the first time in company history.

Adjusted for pension-related costs, the local phone giant recorded income of $1.82 billion, or 65 cents a share, compared with year-ago profit of $1.87 billion, or 67 cents. That was a penny ahead of the 64-cent consensus of analysts surveyed by Thomson First Call.

The wireless segment added 1.7 million net subscribers - a record quarterly increase -- to bring its total to 42.1 million. The unit generated a 23 percent increase in sales to $7.3 billion from $5.9 billion.

Monthy "churn" - customers switching or terminating service - registered just 1.5 percent, one of the lowest rates in the industry. Subscribers paid, on average, $51.58 for services each month. That was up 3.1 percent from a year ago.

Earlier this week, Verizon Wireless, a joint venture with U.K.-based Vodafone Group (VOD: news, chart, profile), lost its position as the nation's largest wireless phone company. The newly merged entity of Cingular Wireless and AT&T Wireless has leapfrogged Verizon to seize the No. 1 spot.

Along with wireless, growth in corporate data services, long-distance and high-speed Internet access also contributed to growth. Verizon said those four areas accounted for 55 percent of total revenue, up from 49 percent a year earlier.

Verizon added 525,000 long-distance lines in the quarter, bringing its total to 17.3 million. It also added 309,000 subscribers to its high-speed DSL Internet service, for a total of 3.3 million.

The company's traditional businesses, mainly local phone service, posted a 2.1 percent decline in revenue to $9.6 billion, though sales actually rose slightly from the prior quarter.

Verizon had 53.68 million local access lines in service at the end of September, down 4.4 percent from a year earlier. The carrier has been losing lines as customers switch to rival carriers, rely on wireless phones or disconnect second lines when adding DSL service.

Favorable regulatory rulings, however, could slow or even reverse the loss of local lines to rivals, which will no longer be able to use every part of Verizon's network at discount rates.

Verizon ended the quarter with $40.5 billion in debt, down from $45.4 billion in the year-ago quarter.

On Wednesday, shares of Verizon (VZ: news, chart, profile) rose 40 cents to $39.40.


Jeffry Bartash is a reporter for CBS.MarketWatch.com in Washington.

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