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7/22/2011
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Verizon Trails AT&T On New iPhone Activations

Posting strong second-quarter financial report, Verizon Wireless trounces AT&T in net subscriber additions, but lags on key metric.

Slideshow: Verizon iPhone 4 Teardown
(click image for larger view)
Slideshow: Verizon iPhone 4 Teardown
Verizon Communications delivered its second quarter earnings report Friday, and the numbers from its wireless unit look pretty good. The company added a total of 2.2 million subscribers, including 1.3 million postpaid subscribers, making for a grand total of 106.3 million connections. This equates year-over-year growth of 6.6%.

That beats AT&T's numbers. AT&T's subscriber base grew by 1.1 million (only 331,000 net postpaid additions) to reach 98.6 million customers. Verizon said its total churn--or customer turnover--was its lowest in three years, at 0.89%.

Notably, the percentage of smartphone users on Verizon's network is far smaller than AT&T's. AT&T reported that 49.9% of its postpaid subscribers are now using smartphones. Verizon's smartphone usership is much lower at 36%, up from 32% last quarter. The actual numbers, however, show that Verizon isn't that far behind. Verizon has 32.29 million smartphone users compared to AT&T's 34.2 million.

When it comes to iPhones, Verizon Wireless also trailed rival AT&T. Verizon Wireless activated 2.3 million iPhones during the second quarter, compared to 3.6 million activated by AT&T. Together, Verizon Wireless and AT&T accounted for 5.9 million--or about 30%--of Apple's total quarterly iPhone sales.

The more important story being told by Verizon Wireless is the status of its Long Term Evolution 4G network deployment. By July 21, Verizon's LTE network blanketed 102 markets with 4G service, covering some 160 million points of presence (POPs). Verizon says it is on track to expand to 175 markets covering 185 million POPs by the end of the year. This far outpaces AT&T's LTE deployment, which will cover a maximum of 75 million POPs by the end of the year.

During the quarter, Verizon introduced a number of LTE-compatible devices, including smartphones such as the Samsung Droid Charge and the LG Revolution, and mobile hotspot products such as the Novatel Wireless MiFi 4510L. The company activated a respectable 1.2 million LTE devices during the quarter, and more are on the way. Verizon expects the LTE-enabled Samsung Galaxy Tab 10.1 will reach the market by the end of July.

Verizon Wireless' service revenue amounted to $14.7 billion, up 6.6% year over year. Data revenue accounted for $5.8 billion, which is up $1.1 billion, or 22.2% year-over-year. Postpaid average revenue per user climbed 1.9% to $54.12 per month. Data accounted for $21.26 of that total, up 15.2% from a year ago.

Verizon said that guidance for the rest of the year is on target.

"In terms of earnings growth and the acceleration of revenue growth, this has been one of Verizon's best quarters since the 2008 economic downturn," said chairman and CEO Ivan Seidenberg in a statement. "We expanded sequential margins in both our wireline and wireless businesses, and in the second half of the year we expect Verizon to build on this strong, positive momentum to continue to drive profitable, sustainable growth."

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