Verizon Profit Rises 31% on Data, Wireless Customers

Verizon Profit Rises 31% on Data, Wireless Customers

Verizon Communications Inc., the second-largest U.S. phone company, posted a 31 percent increase in third-quarter profit after winning more wireless subscribers and selling pricier mobile e-mail and Web services.

Net income rose to $1.67 billion, or 59 cents a share, Verizon said today in a statement. Sales advanced 4.1 percent to $24.8 billion, beating the $24.5 billion average analyst estimate in a Bloomberg survey and sending the shares up 7.1 percent in early trading.

Subscriber gains beat analysts' projections and customers' monthly bills rose as Chief Executive Officer Ivan Seidenberg, 61, introduced handsets to encourage subscribers to surf the Web and access e-mail on the move. Verizon is set to become the largest phone company in the U.S. by the end of the year after completing its $28.1 billion acquisition of Alltel Corp.

``Verizon's been a juggernaut,'' William Power, an analyst Robert W. Baird & Co. in Dallas, said in an interview before the release. ``We'll continue to see robust data growth'' as sales of Web and e-mail phones increase. He rates Verizon shares ``neutral'' and doesn't own any.

Profit excluding costs to integrate acquisitions and to fire workers was 66 cents a share, matching the average estimate of analysts surveyed by Bloomberg. A year earlier, Verizon's net income was $1.27 billion, or 44 cents a share.

Verizon, based in New York, rose $1.78 to $26.86 in trading before U.S. exchanges opened. The shares fell $1.16 to $25.08 in New York Stock Exchange composite trading Oct. 24 and had dropped 42 percent this year before today.

Line Cuts

Verizon won 1.5 million wireless customers, excluding about 600,000 it gained through acquisitions, beating Sanford C. Bernstein analyst Craig Moffett's estimate for 1.2 million.

Wireless customers' average monthly bills increased by about 1 percent to $52.18 from a year earlier, as more subscribers paid extra to be able to browse the Web and send text messages. Customer turnover, or churn, was little changed at 1.3 percent.

Phone companies are losing land-line subscribers as people move to mobile handsets and phone services from cable-TV providers. Verizon gets more than half of its revenue from land lines. The company delivers wireless service as part of a partnership with Newbury, U.K.-based Vodafone Group Plc.

The economy ``clearly causes customers to look at payment trends and obligations,'' said Power. ``Moving to fewer telecom connections probably makes sense.''

About 1.19 million land-line customers cut their lines in the quarter. To offset those losses, Verizon is spending $23 billion over seven years to build out a fiber-optic network that will boost Internet speeds and deliver high-definition TV. The service, called FiOS, allows the company to offer bundles of Web, TV and phone service and compete with cable providers. Verizon added 233,000 new FiOS TV subscribers for a total of 1.6 million, in line with Moffett's 1.63 million forecast.