Verizon wireless data growth beats expectations

by Paul Wilson | Thursday, Apr 19, 2012 | 378 views

Verizon Communications Inc. , country’s leading wireless operator and mobile carrier , posted its first quarter results , revenue and earnings , both of which the expectations of the Wall Street by a margin . With customers increasing their spending on wireless data services , the shares soared up nearly two percent.

Even though the revenue increased the worrying factor could be the fact that the customer growth in the wireless sector slowed down . But Fran Shammo , Financial Officer of Verizon wireless , said that the revenue in the mobile services grew rapidly with more and more customers using smartphones.

The data revenue growth comes as a big relief to mobile carriers like Verizon , as these companies have been spending heavily in the hefty subsidies to vendors like Apple Inc. for the smartphones and in having to upgrade their networks to support applications on these smartphones. It was very critical for them to see revenue growth from upfront investment of this kind.

The average monthly revenue per user  or the ARPU grew by 3.6 % to $55.43 per user up from the analysts expectations of three percent. The increase in the revenue of data services, which increased by almost 16 perecnt to $23.80,  boosted this .

With more and more people buying smartphones and with the introduction of shared data service plans from this summer allowing customers to add multiple devices under one service data plan , is expected to take the growth further up . Shammo sounded confident about the acceleration in this sector.

The shares of Verizon are nearly up by 2.5 percent in day trading after the news hit the markets.

Given the decline in the customer growth , the ARPU growth becomes all the more important. In this quarter they added about only 501,00 new customers in line with the expected 511,00 . The numbers were down by a big margin from the fourth quarter addition of nearly 1.2 million  contract customers.

Verizon is amongst the major operators in the country and they typically post stronger customer growth compared to its peers . Therefore the retarded growth foretells the sharp slowdown that is to follow in growth throughout the industry.

Even though the company’s financials were able to impress a few analysts  , the fact that most people were seen upgrading rather than the new people coming into the wireless  is a bit of a concern.

Overall it turns out to be a decent quarter for  the firm with both earnings per share and the revenue ahead of expectations. The profit margin rose  by nearly 4 percent fueled by the Apple iPhones even though they came along with a price of heavy subsidies.

 

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