Verizon used its first quarter results call to cite progress in 5G, the Internet of Things (IoT) space and mobile video as characteristics that will set the US’ largest operator apart from rivals.
CFO Fran Shammo (pictured) said new revenue streams from the Internet of Things are growing, with sales of approximately $195 million in the quarter, a year-over-year increase of about 25 per cent, fuelled in part by its ThingSpace offering.
Meanwhile AOL – acquired by Verizon last year for $4.4 billion – enjoyed its best first quarter of revenue in the last five years. In fact, without its contribution of $669 million, revenue at Verizon would have declined 1.5 per cent instead of a 0.6 per cent increase (to $32.2 billion).
And it’s this digital media focus that the company is betting big on. Earlier this week Verizon joined with US media firm Hearst to acquire Complex Media, a “network of sites” focused on American popular culture for “the millennial male”. Complex will develop premium video content for distribution across Verizon’s digital platforms, including go90 and AOL.
The move comes less than two weeks after Verizon purchased a 24.5 per cent stake in AwesomenessTV, a multi-platform media firm which produces content for go90 and in which Hearst also has a stake. Verizon has also reportedly made a bid for Yahoo.
“So this is really where we’re taking the video product on mobile, which is very different than what everyone else is talking about,” commented Shammo. “And we believe that’s where we are going to be a differentiated brand with go90 and AOL, and everything else that we’re doing around that video platform.”
On the subject of mobile video app go90, Shammo declined to reveal specific user numbers. “We remain encouraged by the viewership of go90. But as we have said before, we are still in the very early stages of gaining traction and engagement. We look forward to expanding our go90 content to other media through our AOL brand and the Web later this year.”
However, he did tease the prospect of more detail on go90 and other millennial focused platforms later this year: “We will open the box at some point in time to give you more visibility to this. And I continue to say that that will be mid-year to maybe third quarter of this year, where we’ll start to produce some numbers around some of these more specific platforms that we talk about.”
The company’s efforts on development of 5G was also touched on during the call. Shammo reaffirmed intent to be the first US operator to launch 5G and said the company aims to have an initial fixed wireless pilot starting in 2017.
“I want to reiterate that. This is fixed wireless, which is really one of the first cases that we see. It’s really not about mobile. It’s really around fixed wireless.”
In terms of mobile numbers, the company ended the quarter with 112.6 million total retail connections, ensuring it maintains its number one spot against rivals AT&T, Sprint and T-Mobile. Postpaid net adds totaled 640,000.
Smartphone penetration increased to 85 per cent of total phones, while 4G devices now comprise more than 81 per cent of its retail postpaid connections base.
Approximately 92 per cent of the company’s total data traffic is now on its LTE network. The amount of data on the network increased at a rate of approximately 50 per cent over the prior year.
Total wireless operating revenues declined slightly though, by 1.5 per cent, in the quarter, to $22 billion.
Verizon as a whole reported a profit of $4.31 billion, up from $4.22 billion.
It reiterated that earnings may plateau this year and that labour negotiations, following recent strikes, could weigh on 2016 results.