Amid Strong iPhone Sales, Verizon Supportive of Windows Phone

Thu, 04/19/2012 - 7:04am
Maisie Ramsay

Verizon Wireless voiced support for Microsoft's Windows Phone today even though it carries just one smartphone using the operating system and has not yet said it will carry any Nokia devices running on the platform.

"It is important that there is a third ecosystem brought into the mix here," CFO Fran Shammo said during Verizon's first-quarter earnings call with analysts today. "We are fully support of that with Microsoft."

Shammo said Verizon was "looking to do the same thing" with Windows Phone as it did with Android. The operator was a main proponent of the Android platform before it got the iPhone and formed its popular Droid franchise with Motorola Mobility. 

However, Shammo did not talk specifics about launching new Windows Phone devices. Nokia has staked its turnaround on Windows Phone and recently launched its Lumia 900 with AT&T and the Lumia 710 with T-Mobile USA. Verizon has yet to say it will carry Nokia's new Windows Phone devices and is rumored to have turned down the smartphones over concerns they would not work correctly with its LTE network.

The iPhone continues to dominate Verizon's device lineup. The operator sold 3.2 million iPhones during the first three months of this year, Shammo said, down slightly from the 4.2 million it sold in the fourth quarter, when sales were buoyed by the holiday season. Overall smartphone sales totaled 6.3 million. Smartphones now comprise about 47 percent of Verizon's customer base, from just 32 percent last year.

Verizon also sold 2.9 million LTE smartphones, tablets and USB modems during the first quarter, bringing its total number of LTE customers to 8 million. Two-thirds of its LTE customers own smartphones, Shammo said. 

Verizon has been working to move customers over from its legacy 3G network to its new LTE network. About 9 percent of its customer base now uses the LTE network, up from less than a percentage point shortly after the service's launch last year. 

The influx of lucrative new iPhone customers over the last two quarters helped grow retail service revenue at its highest rate in three years. Retail service revenue grew 8.9 percent year-over-year to $14.89 billion, contributing to total wireless sales of $18.27 billion. The rise in sales boosted operating income, which rose nearly 20 percent to $5.2 billion. 

Postpaid ARPU rose to $55.43 on a 16 percent increase in data ARPU, which rose to $23.80. Total data revenues continued their upward momentum, coming in at $6.6 billion. Data now comprises nearly 43 percent of Verizon's service revenue. 

The one dark spot on Verizon's otherwise healthy earnings was a dip in the number of new customers signing up for service. The company added just 734,000 net new customers, a 16.5 percent drop from the 879,000 it added during the same period last year.

Its number of new postpaid customers dropped 44 percent to 501,000, from the 906,000 net postpaid customers it added last year. The decline was offset by the addition of 233,000 net new prepaid customers. Postpaid churn came in at less than a percentage point at 0.96 percent.

Net adds have been slowing down for many providers amid higher saturation in the wireless market. Even so, Verizon managed to eke out a 5 percent increase in its overall customer base, which now numbers about 93 million.

Aside from his kind words for Microsoft, Shammo also discussed shared data plans and its decision yesterday to sell off some of its precious 700 MHz spectrum. 

Bucket plans for data will launch around "mid-summer," Shammo said, confirming earlier statements made by Verizon executives. The new family-style data service will allow customers to "easily connect other devices to that plan," he said.

Shammo also attempted to clarify Verizon's reason for deciding to sell off some of the 700 MHz spectrum it purchased in 2008. "As company policy, we will not hoard spectrum," he said. After forging a deal to buy AWS spectrum from four cable companies last year, Verizon decided its lower 700 MHz A block and B block "does not fit as nicely into our spectrum holdings as it may for others."

As for the fact that the 700 MHz sell-off is contingent on the closing of the AWS deal, Shammo said that without the AWS spectrum, it would still need its A block and B block assets. "We didn't just wake up yesterday and decide to sell spectrum because we're running into roadblocks at the FCC," Shammo said, voicing confidence the AWS sale would be receive government approval by mid-summer.


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