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Verizon hit as customers delay purchases

28 января 2009

Verizon Communications, the second-largest US telecommunications company, reported on Tuesday that revenue from its corporate business fell in the fourth quarter as companies delayed purchases, while its wireless subscriber growth slowed.

The company reported a marked slowdown in the rate at which Verizon Wireless, the mobile joint venture between Verizon and Britain’s Vodafone group, added subscribers in the quarter. Analysts were also surprised by a decline in Verizon Business, which mostly serves corporate customers, demonstrating the group is feeling the effects of the recession.

Verizon blamed delayed corporate decision-making for a 2.3 per cent decline in revenue in the business division, which accounts for slightly less than a quarter of overall revenue. “The downturn in enterprise was steeper and worse than we expected,” Craig Moffett of Sanford Bernstein Research said, warning that “things could get much worse in

Ivan Seidenberg, chief executive of Verizon, said the results proved that the company “is able to compete effectively in this economic environment”, but admitted that “there is more than the usual uncertainty as we try to plan for

The company declined to give a forecast for this year amid mounting job losses and pricing pressure from business customers. Verizon said pension and other post-retirement expenses would reduce 2009 earnings by 9 to 11 cents per share.

Verizon reported a 7 per cent increase in fourth-quarter net income to $1.2bn, as customer gains in its fibre-based FiOS broadband internet and TV services offset the weakness in wireless and its corporate business. Revenue increased by 3.4 per cent to $24.6bn.

Verizon’s share price fell by as much as 6.5 per cent before regaining some of their losses to close at $29.96, down 3.3 per cent.

Analysts noted that the results showed Verizon, the first of the major US telecommunications groups to announce its fourth-quarter results, is not immune to the recession and that the industry as a whole is likely to face a tough 2009.

Mr Seidenberg confirmed Verizon Wireless had accelerated plans for the deployment of next-generation LTE technology. “We will do market trials later this year with commercial availability within first half of
2010,” he said.

Verizon Wireless, the largest US mobile network operator following the recent acquisition of Alltel, added 1.4m net new customers excluding acquisitions in the final quarter, down from 2m in the same quarter a year ago.

The wireless unit ended the year with 72.1m customers including 70m retail customers – a number that has jumped to about 80m following the Alltel purchase.

Wireless revenues increased by 12.3 per cent, fuelled by a 41.4 per cent increase in data revenues. Average revenues per user increased by 1.4 per cent to $51.72, reflecting strong growth in total data ARPU, which was up 27.9 per cent over the year-ago period.

In contrast, Verizon lost 460,000 access lines in the quarter, mainly reflecting wireless substitution.

Overall, Verizon has lost 1.75m residential fixed-line customers in the last two years.

Источник: Financial Times

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