Verizon Wireless is starting to feel the effects of more than 90 percent of Americans owning a cellphone.
In the first quarter, Verizon added only 423,000 post-paid wireless subscribers, which was the lowest number in nearly a decade, AP reports. The number also fell short of already conservative Wall Street estimates. Analysts had forecasted postpaid additions of 582,000 postpaid additions, according to a Reuters poll. Verizon ended the quarter with 92.8 million customers.
Still, Verizon Wireless was able to increase revenues by 4.4 percent compared to the year-ago period, mostly due to a 26.4 percent increase in data revenues (which are being driven by the adoption of smartphones, like Verizon’s popular Droid and BlackBerry line-up). Verizon said during its conference call that 36 percent of sales from its direct channels were smartphones that carried a $30 monthly data plan and 24 percent were from multimedia devices, which have a $10 monthly data plan attached.
Verizon’s chief competitor AT&T (NYSE: T), which has the blockbuster iPhone at its disposal, also struggled to add customers now that cellphone penetration in the U.S. is nearing 100 percent. It added slightly more than Verizon, or 512,000 postpaid subscribers.
Both companies are trying to combat this trend by increasing revenues through data plan adoption and adding second and third lines through the adoption of other connected devices, like e-readers or other gadgets. Verizon’s CFO John Killian told Reuters (NYSE: TRI) he expects Verizon’s postpaid growth to improve, by luring customers away from rivals with the offer of the latest smartphones and higher-speed data services. “We don’t necessarily think we’ll be at 423,000 every quarter. We do think we have the ability to do better,” he said.
Verizon will have to work particularly hard to offset the declines on its wireline side of the business. In the first quarter, operating revenues for wireline totaled $11.2 billion, a decline of 2.9 percent compared to first-quarter 2009. The company continues to see demand for its FiOS broadband internet business. It had 9.3 million connections at the end of the quarter, increasing 4.3 percent year-over-year. The increase in FiOS Internet connections more than offset a decrease in DSL-based High Speed Internet connections.
The company earned a profit of $2.28 billion on total operating revenues of $26.9 billion. Compared to the year-ago quarter, profits fell 28.8 percent, and revenues gained 1.2 percent. Verizon’s wireless business recorded operating income of 4.6 billion on revenues of $13.8 billion.

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