The headline number that greeted�Verizon Communications Inc.‘s (NYSE: VZ) second quarter earnings report is a substantial loss of $2.3 billion. The loss is related to a one-time charge to pay for about 11,000 employee buyouts in 2010. Excluding that charge, Verizon posted EPS of $0.58 on revenues of $26.77 billion. In the same period a year ago the company posted EPS of $0.52 on revenues of $26.86 billion. Analysts expected EPS of $0.56 on revenues of $27.11 billion.
Verizon’s chief rival,�AT&T (NYSE: T) reported yesterday that it earned EPS of $0.68 on revenue of $30.81 billion. Analysts were expecting EPS of $0.57 on revenues of $30.9 billion. AT&T, the exclusive carrier of the iPhone�from Apple Inc. (NASDAQ: AAPL), said that it had activated 3.2 million iPhone 4 units, a number that reflects growth in new subscribers of 27%. Wireless data revenues were also up 27.2%, and the company said that the change to its data-service plans affected revenue “pretty much in line with expectations.”
In the competition for new subscribers, Verizon said it signed up 1.4 million new subscribers in the quarter, while AT&T reported 1.6 million new subscribers. Verizon’s total customer base now stands at 92.1 million, and AT&T ended the second quarter with 90.1 million customers.
Verizon continues to lose land-line customers, as did AT&T. However, Verizon added 28,000 broadband subscribers, with subscriptions to its fiber-optic service more than offsetting losses on its DSL lines. AT&T lost 92,000 broadband customers, a combination of 347,000 DSL customers who quit and 255,000 high-speed Internet customers who signed up.
Verizon’s total churn rate for wireless subscribers came in at 1.27%, the lowest number in two years. AT&T’s churn rate totaling 1.29%, also down from a year earlier.
One thing to watch going forward is if and how Verizon introduces a metered data service plan for its subscribers. If AT&T’s experience is any guide, subscribers haven’t defected in droves yet. Having an exclusive deal for the iPhone probably helps that. Verizon may have to maintain its unlimited data service to compete with AT&T, or it may decide that its Android-based phones can compete on flashy features and allow the carrier to meter its customers’ data usage as well.
All the growth in phone carriers is in wireless, and both Verizon and AT&T posted gains in subscriber growth, even if the gains were modest. AT&T gained more than 2% yesterday and is up nearly another 0.5% today. Verizon shares are trading up nearly 4% on very heavy volume so far today.
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