Wireless Strong

By Reuters  |  Posted 07-29-2008 Print Email

Wireless Strong

Despite the disappointment over FiOS, Verizon's wireless growth was solid and its wireless profit margin of 45.6 percent was ahead of expectations. Stifel Nicolaus analyst Chris King and Bank of America analyst David Barden both had expected a wireless margin of 44.9 percent.

King said Verizon's territory, which includes New York and New Jersey, has helped it weather the economic downturn more easily than industry leader AT&T, which serves areas such as Florida, hit hard by the housing crisis.

"You are clearly seeing some geographic differences in the areas they operate in with regards to economic pressures," King said, even as he noted that Verizon's FiOS growth was weaker than he had expected.

Verizon Wireless, owned by Verizon and Vodafone Group, said last week it added 1.5 million subscribers in the quarter, taking its total subscriber base to 68.7 million.

Verizon plans to buy rural wireless provider Alltel, a move that would replace AT&T as the top U.S. wireless provider. It reaffirmed plans to close the deal by the end of the year.

Strigl said the weaker U.S. economy is not hurting Verizon's business so far. Sales to clients in the financial sector could soften, but the impact would be small.

"Although we may see some softening in some of our volumes, we do not expect any significant economic impact on our financial results in the second half of the year," he said, adding the company would be "comfortable" considering a dividend increase in the fall.

Verizon also said it was positive it could resolve a dispute with union workers over a labor contract that is set to expire on August 2, thereby avoiding a strike.

A strike would be a blow as the company is ramping up its expansion of FiOS and beginning its New York City roll-out.

"I know that our employees know FiOS is creating new jobs and, also, plenty of work for our existing employees," Strigl said.

Verizon said it would offer 100 high-definition channels in New York City, although its main "triple-play" offer of video, Internet and phone would be a $95-a-month plan which comes with 54 HD channels and Internet download speeds of 20 megabits per second and upload speeds of 5 megabits per second.

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