IP Democracy: Verizon Reveals More Detail About FiOS
Incumbent telco Verizon released its Q2 06 earnings report this morning showing accelerated switched access line losses, strong broadband and wireless growth and middling year-over-year revenue and net income changes. And for the first time ever, Verizon offered some data on the performance of its fiber-to-the-home FiOS initiative.
Taking the financials first, Verizon’s year-over-year adjusted revenue (taking into account Verizon’s acquisition of MCI and comparing the data for both companies combined for both time periods) ticked up by 2.3% to $22.7 billion, while net income dipped 2% to $1.87 billion.
Line losses increased during the quarter, with Verizon losing 1.02 million access lines, up from its Q1 06 line loss of 830,000. During the company’s earnings call, CFO Doreen Tobin conceded that line losses will just go on and on. “Given the increased technology substitution, I think it’s fair to say access lines will go down,” she said.
Comcast was fingered as a key contributor to Verizon’s access line loss (AT&T also blamed the nation’s top operator for its market share erosion) given that the cable company ramped up its VoIP deployments during the first half of 2006. “We did see increased competition in those areas that Comcast turned up,” Tobin said.
Offsetting the loss of voice customers was the continued strong growth in broadband. During the quarter, Verizon added 440,000 net new high-speed customers, a run-rate 58% higher than the net adds in Q2 05, wrapping up Q2 06 with 6.1 million broadband customers.
Of these, 375,000 were FiOS-based high-speed customers, marking the first time that Verizon has revealed this statistic. During the earnings call, Tobin said that this reflected approximately 12% penetration of FiOS-capable homes, a strong showing in a short period of time.
Verizon is still withholding hard data about its FiOS TV services but promises to reveal more in the months ahead. Tobin did say that penetration of FiOS TV is 7% at three months, and 10% at six months, following initial deployment. Around 4.5 million homes were passed by FiOS plant (not all capable of receiving high-speed or video services) by the end of Q2 06.
The telco hopes to gain more traction with FiOS TV as it adds new bells and whistles to the service. Tobin said that one new feature that will be introduced next month is “home media DVR” that provides access to all video recordings and photos and music stored on PCs to any digital set-top in the house.
| Verizon Selected Metrics | 2Q05 | 3Q05 | 4Q05 | 1Q06 | 2Q06 |
| Total access lines (mil.) | 50.70 | 49.69 | 48.80 | 47.97 | 46.95 |
| Change | (0.80) | (1.01) | (0.89) | (0.83) | (1.02) |
| Broadband Customers (000)* | 4,142 | 4,530 | 5,144 | 5,685 | 6,125 |
| % of total lines | 8.2% | 9.1% | 10.5% | 11.9% | 13.0% |
| Quarterly adds (000) | 278 | 388 | 614 | 541 | 440 |
| FiOs Homes Passed (mil.) | 1.5 | 2.5 | 3.0 | 3.6 | 4.5 |
| FiOS Data (000) | na | na | na | 264.0 | 375.0 |
| Penetration of Capable HH | na | na | na | na | 12% |
| Customers (mil.) | 47.4 | 49.3 | 51.3 | 53.0 | 54.8 |
| Video Customers, DBS (000) | 250 | 300 | 349 | 415 | 485 |
| Total adjusted revenue (bil.) | $ 22.17 | na | na | $ 22.97 | $ 22.68 |
| Operating Income (bil.) | $ 3.44 | na | na | $ 3.94 | $ 4.01 |
| Net income (bil.) | $ 1.91 | na | na | $ 1.63 | $ 1.87 |
| Cash Flow (bil.) | $ 6.0 | na | na | $ 6.10 | $ 5.40 |
| Verizon Wireless Subs. (mil.) | 47.4 | 49.3 | 51.3 | 53.0 | 54.8 |
| Net Adds (000) | 1,921 | 1,918 | 2,046 | 1,683 | 1,815 |
| Penetration | 19.2% | 19.9% | 20.5% | 20.8% | 21.5% |
| *Includes FiOS data customers for Q1 06 and Q2 06. | |||||
| Source: Emerging Media Dynamics, Inc. analysis of company data. © 2006. | |||||
Posted by Cynthia Brumfield on August 1, 2006 2:02 PM to IP Democracy