IP Democracy: Verizon FiOS TV Tops the Million Subscriber Mark

Verizon issued its Q1 08 earnings report this morning showing continued steep losses in local access lines but moderately healthy growth in broadband (although not DSL) and, to a lesser degree, wireless. The big news for Verizon is that its FiOS TV service topped the million subscriber mark for the first time.

During the quarter Verizon lost 890,000 access lines, bringing its total fixed voice line count down to 40.5 million. But Verizon added a net 266,000 broadband customers, down 36% from the net broadband adds during Q1 07 but still decent growth given the saturation in the broadband market.

Virtually all of the growth came from the telco's FTTH FiOS service, which accounted for 262,000 of those net adds. By quarter's end, Verizon served 8.5 million broadband subscribers, of which 1.8 million were FiOS high-speed customers.

The flip side of this story: Verizon's DSL service, which is the mostly widely available form of broadband service offered by the telco, added a mere net 2,000 customers during the quarter. During the company's earnings call, CFO Doreen Tobin said that Verizon plans to boost DSL speeds to 7 Mbps and step up marketing for the service in some areas during Q2 08.

In addition, Tobin said that Verizon will "move up pricing" on FiOS services during the Q2 08, although she didn't say by how much FiOS TV or high-speed service prices will increase.

Verizon continued to make gains on the wireless front, adding 1.5 million net new wireless customers during the quarter, down 12% from wireless net adds posted during Q1 07. By quarter's end, Verizon served 67.2 million wireless customers.

However, wireless revenues grew by 13% year-over-year to nearly $12 billion thanks to strong growth in wireless data customers and wireless data revenues. The number of wireless broadband capable devices served by Verizon soared 64% year-over-year to 38 million.

The unambiguously strong story for Verizon is its FiOS TV service, which wrapped up the quarter with 1.2 million customers, compared to 348,000 at the end of Q1 07, representing 19% of homes capable of buying the service. At the same time, DirecTV service sold by Verizon continued to make gains, almost reaching the million mark by quarter's end. Verizon added 57,000 net new DirecTV-affiliated customers during the quarter to reach 948,000 DBS subscribers.

Verizon's total revenues rose only 5.5% year-over-year to $23.8 billion (and were essentially flat on a sequential basis) but net income grew by nearly 10% to $1.64 billion due to decreased costs (including layoffs) and growth in the high-margin wireless and broadband businesses.

For more detailed historical and current financial and operating data on Verizon, download our spreadsheet. The download is free but registration is required.

Posted by Cynthia Brumfield on April 28, 2008 10:01 AM to IP Democracy