Verizon Wireless data revenue growth impresses

Thu Apr 19, 2012 2:00pm EDT
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By Sinead Carew

NEW YORK (Reuters) - Verizon Communications Inc posted first-quarter earnings and revenue that beat Wall Street expectations as customers increased their spending on services such as wireless data, sending its shares 1.6 percent higher.

While wireless customer growth slowed, Chief Financial Officer Fran Shammo said the company's mobile venture, Verizon Wireless, saw the fastest growth in mobile service revenue in three years as more customers used smartphones.

Any signs of data revenue growth would be a relief to carriers such as Verizon Wireless as they have been paying phone vendors such as Apple Inc hefty subsidies for every smartphone they sell and spending billions of dollars to upgrade their networks to support these smartphone users.

"It's critical they're able to increase revenue from all this upfront investment," said Credit Suisse analyst Jonathan Chaplin.

Verizon Wireless average monthly revenue per user (ARPU) for contract customers rose 3.6 percent in the quarter to $55.43 compared with expectations for growth closer to 3 percent from two analysts. This was helped by data service revenue that grew 16 percent to $23.80.

Shammo said the growth should continue as more people buy smartphones and the company starts to offer new shared data service plans under which customers will be able to connect more than one device under a single data service plan.

"We're confident we'll continue to accelerate our growth in this area," Shammo told analysts on a conference call.

Shammo told Reuters that customers using Verizon's fastest network are paying more for data services because the higher-speed data rates encourage them to spend more as they use additional services such as video streaming.   Continued...

Customers wait in line outside a Verizon Wireless store in New York, February 10, 2011. REUTERS/Mike Segar