Verizon Communications appears to be shrugging off increased pricing competition in the US mobile market as its wireless division continues to shine, helping it make double-digit leaps in both operating income and earnings per share during Q1.
The group results include five weeks of ‘full’ Verizon Wireless (the closing of the $130 billion transaction to acquire full ownership of the wireless division took place on 21 February).
“Verizon has delivered double-digit earnings growth in eight of the past nine quarters, and in first quarter 2014 we posted our strongest consolidated revenue growth in five quarters,” said Lowell McAdam, Verizon CEO. “With the wireless transaction now behind us, we have great confidence in our ability to sustain these strong results. We are already seeing the expected earnings accretion from the transaction.”
At a group level, Verizon Q1 sales were up 4.8 per cent – year-on-year – to $30.8 billion, but revenues at Verizon Wireless (which accounts for around two-thirds of group turnover) were up a more eye-catching 6.9 per cent, to $20.9 billion.
Retail post-paid ARPA (average revenue per account) grew 6.3 per cent, to $159.67 per month, while Verizon Wireless managed to add 539,000 net retail post-paid customers to take the total to 97.3 million.
At the end of Q1, smartphones accounted for more than 72 per cent of Verizon Wireless’ retail post-paid customer base, up from 70 per cent three months previously (and 61 per cent a year ago).
LTE devices numbered 47.9 million at the end of the quarter, up from 42.7 million at the end of 2013
And with a post-paid churn of around 1 per cent, Verizon Wireless is clearly showing resilience to the recent barrage of ‘un-carrier’ initiatives launched by T-Mobile US.
Profit margins widened, too. Wireless operating income margin was 35 per cent in the first three months of 2014, while EBITDA margin on service revenue was 52.1 per cent. That compares favourably with 32.9 per cent and 50.4 per cent, respectively, in the same quarter the previous year.
On the wireline side of the business, revenue was flat at $9.8 billion, but there was a 15.5 per cent increase in revenue from FiOS, Verizon’s broadband service.
At a group level, net income was up 23 per cent, to $5.99 billion.