Good know all the money being pumped into mobile devices is going somewhere. Verizon Communications (VZ) reported a solid second quarter with a profit of 73 cents per share after leaving out pension gains. More importantly, the carrier added 941,000 new contracts.
In sum total, the numbers aren’t bad: Verizon total operating revenues were $29.8 billion in the quarter, a 4.3% increase year-over-year. The 73 cents in adjusted EPS represents a 14% increase from the same quarter last year. The company had cash flow from operatins of $17.1 billion during the first half of 2013, compared with $15.3 billion in the first half of 2013.
These numbers should assure Verizon investors, who have been enjoying modest gains on a telecom services stock paying a nice 4% dividend. Verizon stock is up about 14% in the last year.
The results topped estimates all around an reinforced the idea that Verizon is the leading North American carrier. Wireless growth continues to power Verizon forward: In wireless, Verizon booked an 8.3 percent increase in service revenue and a 32.4 percent increase in operating income margin.
Verizon said that its 4G LTE service coverage now extends to 301 million people in 500 U.S. markets. These numbers show you why AT&T (T) is back on the M&A track to try to catch the leadering U.S. carrier. AT&T earlier this week announced it is buying Leap wireless (LEAP) to extend its footprint and beef up its 4G network.
AT&T said recently that its 4G network now extends to more than 225 million people, and it also claims that a third party has named it the “fastest” 4G network. When it snaps in Leap Wireless, it will add about 21 million 4G customers in addion to Leap’s total coverage base of 96 million. Leap focuses on pre-paid customers through its Cricket brand.
In a boost for communications vendors, Verizon announced it is increasing its capital spending guidance from $16.2 billion to between $16.4 billion and $16.6 billion for full-year 2013, as the “company anticipates higher demand for wireless data consumption and begins deployment of AWS (advanced wireless services) spectrum in second-half 2013.”
Here are some highights from Verizon’s second quarter earnings announcement:
- Total revenues were $20.0 billion in second-quarter 2013, up 7.5 percent year over year.
- Service revenues in the quarter totaled $17.1 billion, up 8.3 percent year over year.
- Retail service revenues grew 7.8 percent year over year, to $16.4 billion. ARPA (average revenue per account) increased 6.4 percent over second-quarter 2012, to $152.50 per month.
- Wreless operating income margin was 32.4 percent, compared with 30.8 percent in second-quarter 2012.
- Consumer revenues were $3.6 billion, an increase of 4.7 percent compared with second-quarter 2012.
- Consumer ARPU (Average Revenue Per Users) for wireline services increased to $109.67 in second-quarter 2013, up 9.4 percent compared with second-quarter 2012.
- FiOS revenues grew 14.7 percent, to $2.7 billion in second-quarter 2013, compared with $2.4 billion in second-quarter 2012.
- ARPU for FiOS customers continued to be more than $150 in second-quarter 2013.
- Sales of strategic services to global enterprise customers increased 4.8 percent compared with second-quarter 2012 and represented 57 percent of total enterprise revenues, compared with 52 percent in second-quarter 2012. Strategic services include cloud and data center services, security and IT solutions, advanced communications, strategic networking and telematics services.