Verizon Communications Inc, the largest US telecommunications company, said on Tuesday its second-quarter earnings rose 18 percent on the sale of its Hawaii local telephone business. Verizon's earnings before one-time items were flat, as record growth at Verizon Wireless offset higher operating costs and lower revenues in Verizon's traditional telephone business.
Verizon raised its forecast for capital spending in 2005, citing the need to grow Verizon Wireless and launch its own video service over fiber-optic lines.
The company said it earned $2.11 billion, or 75 cents per share, compared with earnings of $1.8 billion, or 64 cents per share, in the same period a year earlier.
Excluding a $336 million gain from the Hawaii sale and other one-time items, Verizon said it earned $1.77 billion, or 63 cents per share, one penny less than analysts had expected on average, according to Reuters Estimates.
Revenues rose 4.6 percent to $18.57 billion.
The company said growth at Verizon Wireless, Verizon's joint venture with Vodafone Group Plc, set an industry record with 1.9 million net new customers added during the quarter, a 25 percent increase from the same period a year earlier.
While customer turnover at Verizon Wireless fell to 1.2 percent, the average monthly revenue per user also fell by 3 percent to $49.42. Some analysts had said Verizon Wireless appeared to be boosting growth by pushing lower-price family plans and pre-paid services.
Verizon's traditional business was hit not only by the second-quarter slowdown that affected its peers, but also the higher costs stemming from the roll-out of its Fios residential fiber-optic service.
The company said it lost 518,000 consumer telephone lines, as it faces competition not only from wireless services but cable companies such as Cablevision Systems Corp that are aggressively pursuing telephone customers. Verizon added 278,000 high-speed Internet lines, slightly below some analysts' forecasts.
Capital spending in the quarter rose 28 percent to $4.06 billion. Verizon raised its forecast for capital spending in 2005 to a 15 percent increase from the $13.3 billion spent in 2004, up from its prior estimate for a 10 percent increase.
The company did not immediately provide an update on its schedule for closing its $8.6 billion purchase of MCI Inc.
Verizon's shares have trailed not only the broader Standard & Poor's 500 index but also peers SBC Communications Inc and BellSouth Corp, in part over concerns about Verizon's capital spending and its purchase of MCI.
Comments
Comments are closed.