Verizon Sees Shifting Business

Digital subscriber line gains helped Verizon offset slipping traditional wireline business during the third quarter, the regional telecom said this morning.

The New York company netted 185,000 new broadband subscribers during the three-month period, bringing its total to 2.1 million, a 27 percent increase since January 1.

Many new consumer and small business DSL customers were attracted by bundles, which combine high-speed Internet with local, long-distance and wireless services.

Bobbi Henson, a Verizon spokeswoman, said 74 percent of the company’s lines now can carry DSL. The goal is to reach 80 percent by year’s end, she said.

In addition, the company will add new services on its own and through its content partner, Microsoft’s MSN network, to retain existing customers and win new ones, Henson said. For example, Verizon Online customers can use the
latest version of MSN at no additional charge.

DSL, combined with growth in wireless and enterprise network services, contributed to Verizon’s fifth consecutive quarter of revenue growth. The company logged $17.2 hillion in revenue, up slightly from the same period last year.

But Verizon’s third-quarter earnings were $1.9 billion before special items, down from $2.1 billion in third quarter 2002. The
third quarter 2003 reflects a special item of $0.1 billion relating to pension settlements.

The biggest culprit in declining earnings was domestic telecom revenues, which were $9.9 billion — a decline of 4.1 percent compared with third quarter 2002 and flat compared with last quarter.

Verizon said it would continue to try and reduce costs in this segment and is offering fourth-quarter employee buyouts — to both mangers and union emplouyees — to reduce headcount in the unit.

As the shift from traditional wireless services continues, Verizon hopes to soften the blow with services such as text messaging, high-speed wireless data and other paid service that will boost average revenue per user — a key metric in the industry.

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