Verizon Posts Strong Revenue Growth in 2nd Quarter Earnings

Verizon Communications reported strong revenue growth in its second quarter (Q2) and earnings in line with estimates.

Verizon’s reported total operating revenues of $23.3 billion for Q2 reflects growth of 6.3% from $21.9 billion in the same period in 2006. Total operating expenses increased 2.4%, to $19.1 billion. Operating income was up 29%, to $4.1 billion, and the operating income margin rose to 17.8% compared with 14.7% in Q2 2006. Reported Q2 earnings were $1.7 billion or $0.58 in diluted earnings per share compared $0.43 reported in Q2 2006 (before discontinued operations).

Within the company’s wireline business, data service revenues (including FiOS and high speed DSL) jumped 11.6% to $4.4 billion. Wireline broadband connections increased 1.6 million to 7.7 million, a 25.5% increase compared with Q2 2006.

Revenues in Verizon Telecom’s consumer market (which focuses on domestic residential and small-business customers) decreased 2.1%, to $4.2 billion, versus Q2 2006, but rose 3.4%, to $3.8 billion, in Verizon legacy markets (excluding former MCI consumer markets). Average revenue per unit in the legacy markets was up 10.9%, to $57.47.

Verizon’s net FiOS TV customer additions for the quarter were 167,000, averaging 2,600 customer additions per business day. The total FiOS TV customer base rose to 515,000. Availability of FiOS TV was 3.9 million premises by the end of the second quarter, up from 3.1 million at the end of Q1 and penetration for the service at the end of Q2 was at 13%. At the end of 2006, penetration was 9% of a potential 2.4 million customer base.

The company’s total video customers, including satellite customers through its partnership with DIRECTV, reached nearly 1.3 million at the end of the second quarter.