Verizon sees profit rises on pension gain, adds 1M customers

Excluding the pension benefit, Verizon posted per-share earnings that slightly topped expectations, although revenue was a hair on the light side.

Verizon's imposing booth at CES 2012
Verizon at CES 2012. Jessica Dolcourt/CNET

Verizon posted a 21 percent gain in its second-quarter profit thanks to a one-time benefit from the recalculation of its pension plan and continued strength in its wireless business.

Big Red posted a second-quarter profit of $5.2 billion, or 78 cents a share, compared with a year-earlier profit of $4.29 billion, or 64 cents a share. The company's net income attributable to Verizon (excluding the stake of Verizon Wireless that Vodafone owns) was $2.25 billion, or 23 percent higher than a year ago.

Excluding the one-time pension benefit, per-share earnings were actually at 73 cents a share. Revenue rose 4.3 percent to $29.79 billion.

The results were roughly on par with the per-share earnings of 72 cents and revenue of $29.83 billion analysts had expected, according to Thomson Reuters.

The company added a net 1 million new subscribers over the quarter, with 941,000 subscribers signing a long-term contract. It activated 7.5 million new smartphones in the second quarter, with 27 percent of those buyers new to the carrier. The company said it expects to see improvement in customer growth over the next two quarters.

Verizon's customer growth comes in spite of a broader slowdown in the industry as fewer customers are up for grabs. The industry increasingly has to contend with customers leaving for a more aggressively priced alternative such as T-Mobile or one of the prepaid carriers.

To combat that, Verizon touts its Share Everything family plan for data services, which the company calls a success with 36 percent of accounts on such a plan. The family plan makes it tougher for individuals to break out and switch to another carrier.

The wireless business saw revenue rise 7.5 percent to $20 billion, as the average revenue per account rose 6.4 percent to $152.50.

The customer turnover rate, however, inched up slightly, rising 12 basis points to 1.23 percent, while the contract turnover rate rose 9 basis points to 0.93 percent. Verizon ended the quarter with 100.1 million customers, with 64 percent of its contract customer base owning a smartphone.

Verizon is largely a wireless company, despite Vodafone owning a 45 percent stake in Verizon Wireless. Wireline consumer revenue, meanwhile, rose 4.7 percent to $3.6 billion.

The company's landline business still serves customers with a bundle of home Internet, phone, and TV services under its FioS brand. In the second quarter, it added 161,000 FioS Internet customers and 140,000 net new FioS TV customers. Overall, net broadband customers only increased 45,000 in the period, as DSL customers continue to drop the service.

 

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