Verizon profits up

28 Oct 2008

Verizon Communications, the second largest US telecommunications group, reported a 31 per cent increase in third-quarter profits, fuelled by continued growth in its Verizon Wireless joint venture with Britain's Vodafone group.

Net income increased to $1.67bn, or 59 cents a share, compared with $1.27bn, 44 cents a share, a year earlier when results were hurt by higher international taxes.

But Verizon's results - like those of the largest US mobile network operator AT&T last week - underscore the enormous shift taking place in US telecommunications as fixed-line residential customers abandon traditional lines in favour of wireless and lower-cost broadband telephone services offered by cable TV operators.

Like other telecommunications operators, Verizon gets more than half of its revenues from land lines. About 1.19m land-line customers cut their lines in the quarter. The company also lost 96,000 DSL customers and its total of switched access lines fell by 3.6m from a year ago, and now stands at 37.1m.

To offset those losses, Verizon is spending $23bn over seven years to build up a fibre-optic network that will enable the company to offer faster internet access and advanced TV services under its FiOS brand. Verizon added 233,000 new FiOS TV subscribers and now has a total of 1.6m.

Verizon Wireless is set to become the largest mobile phone network operator in the US when it completes its pending $28.1bn acquisition of Alltel, a regional wireless operator.

By Paul Taylor

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