RealTime IT News

Wireless, DSL Fuel VZ's Revenue Growth

Surging wireless and digital subscriber line demand propelled Verizon's revenue growth in the first quarter of the year. But pension and early retirement costs ate into profits.

The New York carrier reported overall first-quarter earnings dropped by 50 percent to $1.2 billion, or 43 cents per share, down from $2.4 billion, or 88 cents per share during the same period last year. Revenue increased 3.9 percent -- the highest growth rate since the first quarter of 2001 -- to $17.1 billion.

"(The results show) the continuing transformation of the company," Ivan Seidenberg, Verizon's president and CEO, said in a conference call with analysts Tuesday. "Fifty percent of revenues are now coming from what we consider the growth platforms."

Verizon's wireless arm added 1.4 million new customers, to finish the first quarter with nearly 39 million customers, up more than 66 percent over the same period last year. Wireless revenue jumped 21.2 percent over the same period last year thanks to the new customers and services.

On the DSL front, the telecom carrier added a record 345,000 digital subscriber lines to bring its total to nearly 2.7 million lines in service.

Consumers and businesses are moving to high-speed access and are buying broadband as part of a bundle of Verizon voice services. Approximately 51 percent of Verizon's residential customers combine local or long-distance service with DSL.

In addition, the company stepped up DSL advertising and promotions and improved call center support. Churn -- the loss of customers to other telecoms, ISPs or cable operators, is improving slightly, although is seen as an area that still needs improvement.

Other future growth areas are expected to be fiber to the premises and Voice over Internet protocol . Verizon said its plans for the rollout of both technologies later this year remain on track.

Verizon's enterprise service group showed some success. It inked an 11-year, $100 million deal with the State of Maryland and also closed its first multiprotocol label switching service to a consortium of New Jersey colleges and universities.

These units served to offset two areas that under performed compared to last year. Domestic telecom revenues also decreased 3.3 percent to $9.6 billion in the first quarter. Seidenberg cited stiff competition and regulatory issues among the factors affecting performance there.

And Verizon's international unit had revenues of $468 million down from $517 million. The declined was attributed to deteriorating foreign exchange rates in the Dominican Republic.