A solid quarter for Verizon (VZ): The no. 2 telco met analysts’ expectations on sales and EPS, and its wireless and fibre-optic TV/broadband businesses showed strong growth. Key points:
- Verizon Wireless added 1.5 million net new subscribers before acquisitions. Not bad, compared to larger rival AT&T, which grew by 1.7 million net new “retail, postpaid” subscribers, despite having exclusive access to Apple’s iPhone. (High value “retail, postpaid” subscribers sign long-term contracts and pay monthly bills.)
- Verizon added 233,000 net new FiOS TV subscribers for a total of 1.6 million subscribers. That makes Verizon the seventh-largest cable provider in the country. Verizon says it already has 10% FiOS TV penetration in NYC’s Staten Island, where service only went on sale in July.
- Broadband growth recovered from last quarter: Verizon signed up 129,000 subs during Q3, up significantly from 54,000 sub additions during Q2, but down significantly from 285,000 subscriber additions during Q3 2007. Leading growth: Its super-fast FiOS system, which accounted for 225,000 net additions, offset by a decrease of 96,000 DSL subscribers. Goldman’s Jason Armstrong notes that this was below his estimate of 145,000 net subscriber additions. We still expect the cable industry to take the bulk of new broadband subscribers as companies report Q3 results.
- CEO Ivan Seidenberg made a rare conference call appearance, and noted that the company’s $28 billion deal to purchase Alltel is still on track. He acknowledged forecasts for weak consumer and business spending in Q4 and next year, and said the company would give outlook in January.
- Verizon reported 66 cents of adjusted EPS on $24.8 billion of sales, in line with 66 cents/$24.5 billion consensus.