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Verizon Earnings Rise on Wireless Data Strength

Verizon and AT&T
Verizon Communications (NYSE: VZ) today reported that earnings grew 5 percent in the first quarter, bolstered by strong demand for its wireless services as well as by its acquisition of Alltel.

The telecom giant saw net income of $3.2 billion or 58 cents a share, compared to earnings of $3 billion, or $0.58 per share, from a year ago. Minus one-time items, earnings rose to $0.63 per share from $0.61 cents, ahead of Wall Street estimates of 59 cents, according to Reuters Estimates.

Revenue grew about 12 percent to $26.6 billion, largely due to the acquisition of regional wireless provider Alltel, and topped analysts estimates of $26.3 billion, company executives said during an earnings call.

Verizon Wireless, which is a joint venture with Vodafone, posted a 29.6 percent rise in revenue, growing to $15.12 billion. Verizon Wireless added 1.3 million net customers during the quarter, more than rival AT&T's 1.2 million, to total 86.6 million. Verizon's total customer base also includes 13.2 million customers from Alltel.

"Our wireless business continues to do well in a challenging environment, there are pockets of pressure due to the economy, but we continue to see growth on the data side, there's no evidence of customers trading down on plans or features," Denny Strigl, Verizon's chief operating officer, said during the earnings call with analysts.

In other wireless news for the quarter, Verizon's average revenue per user (ARPU) dipped by .3 percent while the rate at which subscribers switch services, or churn rate, rose slightly to 1.47 percent from 1.19 percent.

Strigl highlighted the telecom's numbers on wireless data, namely the average monthly revenue per user (ARPU) as a bright spot in the company's portfolio both presently and for the future.

"Our total data ARPU is very solid, it grew by 20 percent to $14.16, up 25 percent over a year ago, and I think there's more penetration to be mined in data devices, we have a robust lineup and I think with the introduction of LTE and our open developer initiative, things will continue to do well in data."

The news comes at a time when telecom businesses appear to be bucking the recession by posting gains in wireless figures and surpassing Wall Streets estimates, due in part to the increase in demand for wireless data and mobile applications.

Rival AT&T (NYSE: T) recently reported solid wireless numbers for the quarter, and the addition of 1.2 million new wireless customers, primarily due to its exclusive iPhone deal with Apple (NASDAQ: AAPL), set to expire at the end of the year.

While rumors abound that Verizon is talking with Apple about its own iPhone deal, the company declined to comment.

"We have no announcement to make relative to Apple today," Strigl said, though he added that the company is always open to talking to suppliers.

Meanwhile, wireline revenue dropped 3.8 percent to $11.6 billion, but executives boasted that the company added 299,000 subscribers to its fiber-television service, FiOS, which now totals 2.2 million.