Verizon's Q3 wireline earnings get a boost from consumer FiOS services

October 18, 2012 | By Sean Buckley

Verizon (NYSE: VZ) on Wednesday reported that it had its third consecutive quarter of double-digit growth year-over-year.

Click here for detailed slides from Verizon's Q3 presentation.

The service provider's total operational revenues in the third quarter were $29 billion, up 3.9 percent from Q3 2011. Verizon's earnings per share (EPS) were 64 cents per share, an increase of 14.3 percent.

On the wireline side, Q3 revenues totaled $9.9 billion, down 2.3 percent compared to the same period a year ago.

Despite seeing a decline in overall wireline revenues, the telco reported a strong rise in consumer wireline revenue. Consumer wireline revenue rose 4.6 percent year-over-year, while monthly consumer ARPU was up 10.3 percent year-over-year to $103.86.

Here's a breakdown of Verizon's key wireline metrics:

Landline Losses: Following the wireline industrywide trend, Verizon's traditional landline voice connections overall declined 6.8 percent from 24,519 in Q2 to 22,847 total lines in Q3 2012.

Broadband and video: During the third quarter, the star in Verizon's wireline portfolio was once again FiOS, which produced 66 percent of consumer wireline revenues. It added 136,000 FiOS Internet connections for a year-over-year increase of 14.4 percent, while FiOS video subscribers rose 15 percent by 119,000 for an increase of 15.4 percent. Likewise, FiOS customer ARPU was more than $150 in the quarter. What contributed to the higher APRU was that more than two-thirds of FiOS customers purchased a "triple play" of phone, Internet and video services. The telco ended the quarter with a total of 8.8 million broadband subscribers, up 2.3 percent year-over-year.

Business Services: Due to the ongoing weakness in various international economies, global revenues declined 3.6 percent year-over-year to $3.8 billion. However, strategic services sales such as cloud and Ethernet rose 4.4 percent over Q3 2011 and represented 53 percent of global enterprise revenues in third-quarter 2012.

Lowell McAdam, Verizon chairman and CEO, said in the earnings release that strong growth in consumer wireline and global enterprise revenues will enable it to fulfill its 2012 financial targets.

"In the third quarter, Verizon continued to deliver double-digit earnings growth and strong cash generation, and we remain solidly on track to meet our financial objectives for the year," he said. 

He added, "Based on the strength of our FiOS fiber-optic network, we reported the highest growth in U.S. consumer wireline revenues in 10 years" and said that "strategic services growth in our Enterprise business helped offset weaker revenues caused by global economic challenges."