Verizon's FiOS TV Packs On 194,000 Subs In Q4
Telco Adds 201,000 FiOS Internet Despite DSL, Landline Losses
By Todd Spangler -- Multichannel News, 1/24/2012 10:53:29 AM
Verizon Communications pulled in a solid net gain of 194,000 FiOS TV customers in the last three months of 2011 to stand at 4.17 million total, while its legacy DSL and telephone businesses continued to falter.
On the broadband front, Verizon added 201,000 net new FiOS Internet connections -- for a total of 4.8 million at the end of 2011 -- offsetting a loss of 103,000 DSL connections in the period.
The telco continued to shed legacy landlines, losing a net 382,000 voice connections in Q4 to fall to 24.14 million total. However, Verizon pointed out that the 7.2% year-over-year decline in voice connections was the smallest since the first quarter of 2006.
FiOS revenue continued to expand, increasing 18.2% year over year and representing 61% of $3.4 billion consumer wireline revenues in the fourth quarter (up from 59% of $3.4 billion in the previous quarter). FiOS video penetration was 31.5% in Q4 versus 28.0% a year earlier, while FiOS Internet penetration was 35.5% at the end of 2011 up from 31.9% at year-end 2010. The FiOS network passed 16.5 million premises at year-end 2011, up more than 900,000 year-over-year.
Verizon is still the seventh-biggest multichannel video programming distributor in the U.S., nearing the size of Charter Communications. As of the end of September 2011, Charter had 4.37 million video subscribers, including 235,100 commercial video customers.
In announcing earnings Tuesday, Verizon chairman, president and CEO Lowell McAdam noted that wireline margins "recovered from third-quarter pressures," adding that "we expect wireline margin expansion in 2012."
In the fourth quarter, Verizon's wireline operating income margin (based on earnings before interest, taxes, depreciation, and amortization) was 23.8%, compared with 23.5% in Q4 2010 and 21.4% in the third quarter of 2011. Verizon blamed a two-week strike by 45,000 union workers and storm-related damage for hurting Q3 margins.
Overall, Verizon reported consolidated revenue of $28.4 billion, up 7.7% year over year, for the fourth quarter. The telco reported a net loss of $2.02 billion for the period versus net profit of $2.64 billion in Q4 2010, based primarily on a $3.4 billion after-tax charge based on an actuarial valuation of Verizon's pension benefit plans.
On the wireless side, Verizon Wireless -- the joint venture with Vodafone -- delivered the highest number of retail net additions in three years, with 1.0 million total net connections added in the fourth quarter. At the end of 2011, the carrier had 108.7 million total connections, a 6.3% increase year over year, comprising 92.2 million retail connections and 16.5 million wholesale and other connections.
Verizon Wireless continued to roll out its 4G LTE mobile broadband network, currently available to more than 200 million people in 195 markets across the U.S.
In December, Verizon Wireless announced agreements to purchase Advanced Wireless Services spectrum licenses from SpectrumCo -- a joint venture of Comcast, Time Warner and Bright House Networks -- as well as from Cox Communications covering 93% of the U.S. population. The purchases are subject to regulatory approval by the FCC and Department of Justice.
As part of the proposed AWS deals, Verizon Wireless and the MSOs entered into joint marketing and development deals. In the first of those, Comcast and the carrier last week kicked off a marketing program in Seattle and Portland, Ore., with incentives for customers who lock in with two-year contracts for Xfinity bundles and wireless plans.
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Correction: An earlier version of this story reported that FiOS TV had surpassed Charter's video business. However, the total reported for Charter in the third quarter of 2011 did not include its commercial video subscribers, which totaled 235,100 in the period.
Todd Spangler - 1/24/2012 5:05:20 PM EST
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