Verizon Wireless continued its domination of the postpaid wireless market and outpaced larger rival Cingular Wireless L.L.C. in net customer additions during the third quarter.
Verizon Wireless said it brought in 1.9 million net subscribers for the quarter, compared with Cingular’s 1.4 million net additions. Verizon Wireless’ churn rate stood at 1.24 percent, a slight decrease from the 1.3 percent churn rate of 2005’s third quarter. Among retail postpaid customers, the churn rate was 0.95 percent.
The No. 2 national carrier ended the quarter with 56.7 million customers, an increase of about 15 percent from the same time last year.
“We had an outstanding quarter of customer growth,” said Doreen Toben, Verizon Communications Inc.’s chief financial officer, during a phone call with analysts. “Our retail customer growth is, far and away, the best in the industry.”
In fact, Toben said, Verizon Wireless actually added about 2 million net new retail subscribers-but the overall number was dragged down by reseller churn that resulted in a net loss of about 70,000 reseller customers.
Analyst Albert Lin of American Technology Research noted in a research report that Verizon Wireless “remains on track to be the largest [carrier] in terms of subscribers in the next 12 to 18 months.”
Verizon Wireless is claiming the title of “largest U.S. wireless company by revenue;” the carrier brought in $9.9 billion in revenue for the quarter, an increase of more than 18 percent compared with the same period last year. In comparison, Cingular brought in $9.6 billion in revenue and No. 3 operator Sprint Nextel Corp. claimed revenues for the quarter of $9.1 billion.
Verizon Wireless reaped average revenue per user of $50.59, up less than 1 percent from 2005’s third quarter, but an increase of almost 2 percent sequentially. Retail service ARPU was $51.21, up 1.2 percent compared with the third quarter of last year.
Data revenues made up more than 14 percent of all service revenues, nearly doubling from the 8.4 percent of the third quarter of 2005. Verizon Wireless said it has nearly 32 million data customers, a jump of 43 percent from the year-ago period, and that more than half of its data revenue growth came from non-messaging services.
Asked if Verizon Wireless’ growth was sustainable, Verizon Chairman and Chief Executive Officer Ivan Seidenberg noted that Verizon Wireless’ results have been strong for several years.
“We think that the growth in wireless and the sustainability of our performance is really a function of how the team thinks about investing in their business” through the network, handsets, products and distribution, Seidenberg said. “My view of all of this is that as long as you see us making forward-looking investments in our capabilities that the growth should be sustainable.”
He added, “If you look at the results, we have actually widened the lead across the board” and went on to compare Verizon Wireless’ performance to “trying to catch the Kenyans in marathon running.”
“I think you can keep improving your numbers, but I have a feeling that the Kenyans keep getting faster,” Seidenberg said.
However, Lin pointed out that “Sprint’s execution issues and AT&T’s distractions from its major [merger and acquisition] activities have probably provided a better market environment for Verizon in 2006 than in the past. How long the major direct competitors to Verizon will remain relatively weaker is debatable.”
