Verizon's second quarter results were better-than-expected as the telecom giant added 1.4 million retail postpaid subscribers courtesy of 4G LTE tablet connections. Verizon's enterprise sales fell slightly.
The company reported second quarter earnings of $1.01 a share, which includes a gain of $434 million due to the sale of wireless spectrum. Non-GAAP earnings were 91 cents a share. Verizon's second quarter revenue was $31.5 billion, up 5.7 percent from a year ago. Non-GAAP earnings in the second quarter were a penny ahead of estimates. Revenue was also above expectations.
Meanwhile, Verizon reiterated its outlook for the year and targeted revenue growth of 4 percent.
As expected, Verizon's quarter was driven by wireless. Verizon added 1.4 million net retail connections to end the quarter with 104.6 million. Of that sum, 98.6 million were retail postpaid connections. Postpaid churn was 0.94 percent.
Among the figures:
- Wireless revenue was $21.5 billion, up 7.5 percent a year ago. Service revenue was $18.1 billion. Average revenue per account was $159.73 a month.
- The company added 304,000 postpaid phone net subscribers and 1.15 million tablets.
- A Verizon wireless account has 2.8 connections on average.
- Verizon added 139,000 FiOS Internet connections and 100,000 video subscribers. FiOS revenue was $3.1 billion, up 14.4 percent from a year ago.
- Enterprise revenue fell 1.9 percent.
The biggest takeaway from Verizon's results was that 4G LTE tablet connections are accelerating. When tablets first launched Wi-Fi access dominated, but LTE connections have been steadily picking up.
On a conference call with analysts, Verizon CFO Fran Shammo said:
I think tablets are extremely good for the industry, not just for Verizon. Tablets are a lower subsidy. They reduce churn in the account level so we see that when someone has a tablet in the account, their churn is lower than the overall churn of the normal customer base. This device drives incremental revenue from an access standpoint.