Verizon FiOS TV Gains Ground


Verizon Communications is now within shouting distance of Mediacom and Suddenlink Communications as one of the biggest video providers -- and stands to soon surpass them -- as the telecommunications giant continues to add FiOS TV customers by the thousands.

In the first three months of 2008, Verizon reeled in 263,000 net new FiOS TV customers and 262,000 net new FiOS Internet customers, for a total of 1.2 million FiOS TV customers and 1.8 million FiOS Internet customers.

Verizon previously announced passing the 1 million-subscriber mark in January.  It has added more than 850,000 FiOS TV customers over the past 12 months, making Verizon the ninth-largest cable operator just behind Mediacom and Suddenlink, both of which have about 1.3 million video subscribers. Factoring in DirecTV and Dish Network, FiOS ranks 11th among the nation's video distributors.

FiOS TV penetration also rose. Verizon's fiber-to-the-premises network passed 10.4 million premises by the end of the quarter. FiOS TV was available for sale to 6.5 million households by the end of the quarter, with penetration for the service an average of 18.7% across all markets, compared with 16% at the end of 2007.

Telecom industry analyst Jeff Kagan noted that Verizon’s “soft spot” remains the core voice service as it faces “strong new competitors including the cable television companies.”

“FiOS is still in the very early stages. There is quite a bit of competitive fighting to take place over the next several years,” he said in a research note. “However, their performance shows strong growth.”

Kagan noted that there appears to have been minimal fallout from Verizon’s delays in delivering the free 19-inch HDTV sets promised to new triple-play subscribers.

FiOS TV “seems to be weathering the storm they created by not having televisions ready as promised as a promotional giveaway for their television service,” he said. “Even though the company has goofed on important issues like this, they still seem to be showing growth.”

Earlier this month, Verizon filed an application for the New York City video franchise, covering 3.1 million homes. The telco said it already passes about 20% of these premises with fiber and expects to begin selling FiOS TV service in the city later this year.

As with AT&T, wireless was a major part of Verizon’s growth for the quarter. In the first quarter Verizon Wireless reported 1.5 million total net customer additions with churn an industry-leading 1.19%.

Wireless revenues totaled $11.7 billion, up 13.2% year over year, and wireless operating income margin was 27.9% -- the highest ever, according to the company.

Overall, Verizon's total operating revenue for the first quarter was $23.8 billion, up 5.5% compared with the first quarter of 2007. Operating income totaled $4.3 billion, up 14.1% year over year,

Verizon’s total debt as of March 31 was $35.8 billion, compared with $31.2 billion at year-end 2007, and the company ended the quarter with $5.5 billion in cash and equivalents. Most of that cash, along with $4 billion in capital raised through long-term borrowings in April, has been used to pay for the wireless licenses Verizon won in the Federal Communications Commission's 700 Megahertz spectrum auction,  the company said.