Verizon 3rd Quarter 2006 Results Up - Largest Carrier by Rev

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Verizon Wireless brought in 1.9 million net subscribers for the quarter, compared with Cingular’s 1.4 million net additions. Verizon Wireless’ churn rate was 1.24 percent overall, a slight decrease from the 1.3 percent churn rate of 2005’s third quarter. Among retail postpaid customers, the churn rate was 0.95 percent. The No. 2 national carrier ended the quarter with 56.7 million customers, an increase of about 15 percent from the same time last year.
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Reported earnings in the third quarter 2006 include a charge of 2 cents per share for special items, including pension settlement charges and Verizon Center relocation and merger integration costs. Reported earnings in the third quarter 2005 had included a net gain of 1 cent per share in special items, principally from gains on a real estate sale and tax benefits, partially offset by asset impairments. In the third quarter 2006, Verizon recognized an $85 million favorable tax benefit at Vodafone Omnitel.

Before special items (non-GAAP), Verizon's third-quarter 2006 earnings were $2.0 billion, or 68 cents per share. This is an increase of 7.5 percent compared with earnings of $1.8 billion, or 66 cents per share, in the third quarter 2005.

Consolidated third-quarter 2006 operating revenues were $23.3 billion, a 25.8 percent increase compared with the third quarter 2005. Consolidated total operating expenses were $19.3 billion, a 29.0 percent increase compared with the third quarter 2005. Verizon's third-quarter 2006 reported results include revenues and expenses from the former MCI.

Comparing third quarter 2006 with third quarter 2005 on a pro-forma (non-GAAP) basis:
- Adjusted operating revenues increased 3.6 percent, supported by increasing sales volumes in markets that the company has been growing organically rather than through acquisition.
- Adjusted cash expenses increased 4.4 percent.
- Adjusted operating income increased 6.6 percent.

Adjusted operating income margins, including the effects of net pension and OPEB costs, were 17.3 percent in third quarter 2006, compared with 16.8 percent in third quarter 2005. Pro-forma, adjusted information presents the combined operating results of Verizon and the former MCI on a comparable basis.

Verizon Wireless is now claiming the title of “largest U.S. wireless company by revenue;” the carrier brought in $9.9 billion in revenue for the quarter, an increase of more than 18 percent compared with the same period last year. In comparison, Cingular brought in $9.6 billion in revenue and No. 3 operator Sprint Nextel Corp. claimed revenues for the third quarter of $9.1 billion.

Verizon Wireless averaged revenue per user of $50.59, up less than 1 percent from 2005’s third quarter, but an increase of almost 2 percent sequentially. Retail service ARPU was $51.21, up 1.2 percent compared with the third quarter of last year. Data revenues made up more than 14 percent of all service revenues, nearly doubling from the 8.4 percent of the third quarter of 2005. Verizon Wireless said it has nearly 32 million data customers, a jump of 43 percent from the year-ago period, and that more than half of its data revenue growth came from non-messaging services.

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