Feature Article

January 24, 2012

Smartphone Deployments, Strategic Initiatives Result in Verizon's Record Quarter

Thanks to the continued success of its 4G LTE mobile broadband network (the largest 4G LTE network in the U.S.), the introduction of six new 4G LTE devices in the fourth quarter of 2011, and the addition of 1 million total net connections in the fourth quarter of 2011, Verizon Wireless posted its highest year-over-year quarterly revenue growth in the company’s 11-year history in the fourth-quarter 2011.

“On a strategic front, we made some moves that will significantly improve our competitive position,” Fran Shammo, chief financial officer at Verizon, said today during a Verizon press briefing. He noted that moves like the acquisition of Terremark (which allowed Verizon to dip further into the cloud market), the completion of agreements to purchase additional spectrum, the decision to redirect attention on delivering solution to the consumers and markets Verizon serves, and the rapid development of the 4G ecosystem all helped Verizon maintain a competitive edge.

“2011 was a great year of solid execution,” Shammo added. “We posted record revenue growth in the fourth quarter… 2011 was an impressive year on a number of fronts giving us tremendous hope for long-term prospects.”

Verizon’s momentous fourth quarter was largely fueled by continued strong demand for Verizon services and handsets, FiOS fiber-optic services, and strategic business products and services.

The cellular giant reported $18.3 billion in total 4Q revenues, up 13 percent year over year; data revenues of $6.3 billion, up 19.2 percent, representing 41.6 percent of service revenues; and $15.1 billion in service revenues, up 6.4 percent. Moreover, Verizon enjoyed 1.5 million retail net additions, which marked the largest increase in three years; a 2.6 percent growth in retail service ARPU over 4Q 2010; and a 23.7 percent operating income margin.

With regards to its consolidated figures, Verizon noted a 7.7 percent year-over-year quarterly revenue growth in 4Q.

“Our 7.7 percent year over year growth was easily our highest quarterly growth of the year and since the formation of Verizon,” Shammo said.

The company also reported a loss of 71 cents in diluted earnings per share (EPS), impacted by non-cash pension items, compared with earnings of 93 cents per share in 4Q 2010. The carrier giant also noted 52 cents per share in adjusted EPS (non-GAAP), which excludes $1.23 per share in non-operational items, compared with 54 cents in adjusted EPS in 4Q 2010.

In fourth-quarter 2011, Verizon’s total operating revenues were $28.4 billion on a consolidated basis, which represented an increase of 7.7 percent compared with fourth-quarter 2010.  For full-year 2011, revenues reached $110.9 billion, a 4 percent increase compared with 2010, when results included revenues from operations that have since been divested.  On a comparable basis (non-GAAP), Verizon’s 2011 full-year revenues increased 6.2 percent compared with 2010.

Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $29.4 billion in 2011.  On an adjusted basis (non-GAAP), EBITDA increased by more than $950 million in 2011 compared with 2010, company officials said.

Cash flow from operating activities totaled $29.8 billion in 2011, and capital expenditures came in at $16.2 billion. Free cash flow (non-GAAP, cash flow from operations less capex) was more than $13.5 billion in 2011. From this total, Verizon returned $5.6 billion in quarterly dividends to shareholders in 2011, as the company’s Board of Directors approved a fifth consecutive year of dividend increases.

One of the highlights of the fourth quarter for Verizon was that the company delivered its highest number of retail net additions in three years thanks to successful smartphone penetration and increased retail postpaid ARPU (average monthly service revenue per user). Verizon enjoyed total revenue of 1$18.3 billion in the fourth quarter of 2011 for wireless, up 13 percent year over year. Data revenues were also up at $6.3 billion, which marked a 19.2 percent year over year increase. Service revenues were $15.1 billion. For full-year 2011, total revenues were $70.2 billion, up 10.6 percent over full-year 2010, and service revenues were $59.2 billion in 2011, up 6.3 percent year over year.

On the operational side, Verizon added 1 million total net connections in the fourth quarter and 1.5 million retail customers. Although the wholesale channel grew during the fourth quarter, a loss of telematics customers resulted in a net decrease of 490,000 wholesale and other connections in the quarter. 

Verizon also continued to expand its 4G LTE mobile broadband network, and as of Monday, Jan. 23, Verizon 4G LTE service was available to more than 200 million people in 195 markets across the U.S.

“We are by far the market leader in 4G LTE,” Shammo said, noting that this is largely because customers are quickly becoming aware about the speed of 4G. “… 4G LTE is really taking hold.”

“Clearly the Verizon 4g LTE network is becoming the network of choice,” he added.

On the wireline front, Verizon added 201,000 net new FiOS Internet connections and 194,000 net new FiOS Video connections in fourth-quarter 2011.  Verizon had a total of 4.8 million FiOS Internet and 4.2 million FiOS Video connections at year-end.

“Wireline margins recovered from third-quarter pressures, and we expect wireline margin expansion in 2012,” said Lowell McAdam, Verizon chairman, president and chief executive officer, in a statement. “With recent strategic moves and our investments in FiOS, LTE, and global IP and cloud-based strategic services, Verizon has set the stage for accelerated growth across our business units, and we look to continue to build significant value for shareholders in 2012.”

For more on Verizon’s latest quarter, click here.

Want to learn more about 4G wireless technologies? Then be sure to attend the 4GWE Conference, collocated with TMC’s ITEXPO East 2012 taking place Jan. 31-Feb. 3 2012, in Miami, FL. Co-sponsored by TMC Partner Crossfire Media the 4GWE Conference provides unmatched networking opportunities and a robust conference program representing the wireless ecosystem. The conference not only brings together the best and brightest in the wireless industry, it actually spans the communications and technology industry. For more information on registering for the 4GWE Conference click here.

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Carrie Schmelkin is a Web Editor for MobilityTechzone. Previously, she worked as Assistant Editor at the New Canaan Advertiser, a 102-year-old weekly newspaper, covering news and enhancing the publication's social media initiatives. Carrie holds a bachelor's degree in journalism and a bachelor's degree in English from the S.I. Newhouse School of Public Communications at Syracuse University. To read more of her articles, please visit her columnist page.

Edited by Tammy Wolf

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