Verizon Communications this morning said its third-quarter net income fell by 10 percent from last year as its fixed-line phone business continued to shrivel, offsetting gains by the company’s mobile and FiOS businesses. Verizon Wireless, the company’s joint venture with Vodafone Group, added 1.2 million mobile customers during the quarter, outperforming the average analyst estimate of 1 million. That’s short of the 2 million net additions reported by AT&T last week — thanks largely to the iPhone, of course — but Verizon Wireless still holds a healthy 8 million-customer lead over AT&T, at 89 million, and is well positioned to build on its lead in overall subscribers in the next few quarters (GigaOM Pro, sub. required).
Verizon also added 191,000 customers for its FiOS TV service and 198,000 for its FiOS web offering in its most recent quarter, upping its fiber-TV audience to 2.7 million and its FiOS web subscriber base to 3.3 million users. Those gains couldn’t offset losses in Verizon’s landline business, which continues to erode as the economy plods along and consumers and businesses look to mobile and Internet voice services to cut costs. Landline revenues fell nearly 5 percent to $11.6 billion and the number of consumer local phone connections fell 10 percent during the quarter.
And while Verizon has long been hindered by a lackluster portfolio of smartphones, the carrier is already backing its upcoming Droid device with an eye-catching marketing campaign, it will soon launch the BlackBerry Storm 2 and it has confirmed it will launch the Palm Pre early next year. I’ve been highly critical of Verizon’s go-it-alone strategy in the past, but the company’s alliance with Android — and its soon-to-be impressive smartphone lineup — could pay significant dividends in the next few quarters.
Unless Verizon has finally learned a lesson they’ve failed to learn many times in the past, namely that crippled, locked down handsets are not what consumers want, then I’m not very optimistic.
On the plus side perhaps Android can kick the dust loose since I definitely don’t see Apple opening up their walled garden on the iDon’t, errrr iPhone
Would VZ sell off the copper in the future? Will copper go the way of the payphone in many markets – private 3rd party providers once FIOS is in the neighborhood? FIOS and wireless is how VZ makes money today…and exclusively someday in the future…if they can deal with net neutrality and universal service.
VZ has really tested the patience of the loyal followers with their weak smartphone offering. the Storm is such a dog, and between that pushing people towards AT&A and the iPhone pulling people VZ is poised for a full frontal assault (with Droid anyway) this holiday season.
APPL seems to be in the middle of the S curve of iPhone additions: 3.2 million activations in Q3, 2.4 M in Q2, 1.6M in Q1, 1.9M in Q408 (Holiday). New subs are 40% of the Q3 activations, again, pushing churn down. If VZ times it right and plays it right they’ll be able to steal those subs back in 24 months during the 2011 summer/holiday season.