Wireless and the Fios fiber-to-the-home broadband network continue to fuel growth for Verizon Communications.
On Monday, the second-largest phone company in the U.S. reported profits were up 3.9 percent for the fourth quarter of 2007, as it added more wireless subscribers in its joint venture with Vodafone and nearly hit the 1 million subscriber mark for its Fios TV service.
Earnings met analyst expectations with net income coming in at $1.07 billion, or 37 cents a share. That was up from $1.03 billion, or 35 cents, a year ago. Profit, excluding items such as severance pay for laid-off workers, was 62 cents a share.
Verizon added 2 million wireless subscribers during the fourth quarter, likely scooping up subscribers who were leaving Sprint Nextel's service. Sprint, the third-largest cell phone operator in the U.S., lost about 683,000 subscribers during the quarter. In total, Verizon Wireless now has 65.7 million cell phone subscribers.
The company also increased wireless revenue about 13.3 percent with a 53 percent increase in revenue generated from wireless data services.
But Verizon still faces stiff competition from AT&T, the largest wireless operator in the U.S. Last week, AT&T reported a net addition of 2.7 million new users, widening its lead in the market to 70.1 million wireless subscribers.
Verizon also grew its Fios subscribers. Fios is the fiber-optic network that the company is spending roughly $23 billion over seven years to build. The network takes fiber directly to people's homes, providing almost limitless bandwidth. Verizon is building the network so that it can offer a "triple play" of services that include TV, broadband, and phone in an effort to compete more directly with cable companies like Comcast and Time Warner Cable.
Verizon added 226,000 TV subscribers for a total of 943,000 at the end of 2007. The company said it now has more than 1 million Fios TV customers. Verizon hit the 1 million subscriber mark for its Fios broadband service in late June. Back then it reported it had 500,000 Fios TV subscribers. The company said it added about 245,000 Fios broadband subscribers in the fourth quarter, bringing its total broadband customer base to 8.2 billion at the end of the year.
Even as Verizon grows, it is seeing a slowdown in its traditional long-distance business. The company plans to tighten its belt as it continues to focus on its wireless and Fios broadband businesses.
Verizon began cutting jobs during the fourth quarter of 2007 and will continue to do so, said CEO Ivan Seidenberg. The company wouldn't say how many people would lose their jobs, but they will likely be employees in the company's traditional telephone business. The company has been trying to get regulatory approval to sell about 1.6 million phone lines in the Northeast to regional carrier FairPoint Communications. The deal is worth about $2.7 billion.
Verizon's executives also reiterated that the company is not seeing any impact on its business from a slowing U.S. economy. Doreen Toben, Verizon's chief financial officer, said during the conference call with analysts Monday that the company is monitoring the situation, but "has not seen a change of sales expectations through January." She said she expects a solid 2008.
AT&T's CEO said earlier this month that a slowing economy was impacting its business, costing it home phone subscribers during the fourth quarter of 2008. But Verizon has maintained that it isn't feeling the same pinch.