Cable Operators

Telcos Racking Up Video Subscribers

1/31/2009 8:55 AM Eastern

Together, Verizon Communications and AT&T added more than half a million video subscribers in the fourth quarter — but they also lost nearly 1.7 million voice connections.

Verizon ended the year with just over 1.9 million TV customers, more than doubling its base in a year, making it the ninth-largest U.S. video distributor after the six biggest cable operators and two satellite providers.

The FiOS network passed 12.7 million homes at the end of 2008 — about 40% of the homes in Verizon's territories — putting the company slightly ahead of plan on reaching 18 million homes passed by the end of 2010.

“We're clearly building momentum and gaining critical mass” with FiOS, Verizon chief financial officer Doreen Toben said on a conference call with investors last week.

During the quarter, Verizon ramped up sales of the TV and fiber-optic broadband services in New York City, where it would have mainly won share from Time Warner Cable. But Toben said FiOS's presence in New York “was only one factor in strong results across the board.”

The telco also posted a quarterly record of 282,000 net new FiOS Internet customers, but lost 68,000 DSL connections.

AT&T, meanwhile, tacked on 264,000 U-verse subscribers in the fourth quarter but video and other growth areas were more than offset by dropping wireline voice connections, and the telco also said it would scale back capital spending on building out the U-verse network. U-verse currently reaches 17 million living units, more than double the reach at the end of 2007. While AT&T expects to “make continued good progress on its U-verse network build in 2009,” it now expects to reach its previously announced target of 30 million living units in 2011, a year later than its original plan.

AT&T said it expects to cut total capital expenditures for 2009 by 10% to 15% compared with 2008. The telco's capex for last year was $20.3 billion.

One area AT&T is looking to expand U-verse is the Southeastern U.S. region, which was served by the former BellSouth. “You'll see us do much more build and turn up [U-verse TV and Internet] in the Southeast as we go forward over the next year or two,” AT&T chief financial officer Rick Lindner said on the telco's earnings call.

AT&T expects full-year 2009 revenue growth “in the low single-digit range,” led by gains in wireless and IP data services.


 Dropping Callers

 The biggest U.S. telcos reported TV and Internet gains but phone-line losses continued:


Verizon AT&T
4Q video adds303,000264,000
Video total1.9 million1.045 million
4Q broadband adds214,000*242,000**
Broadband total8.7 million*13.0 million**
4Q residential landlines lost  (670,000)(1.0 million)
Residential landlines total21.0 million30.8 million














Fourth-quarter add/loss figures are sequential.
* Includes DSL and FiOS Internet subscribers
** Includes DSL and satellite broadband subscribers
Source: Company reports


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