Verizon touts third quarter performance

Led by its wireless operations, as well as growth in FiOS and s strategic business services, Verizon Communications Inc. (NYSE, NASDAQ: VZ) executives reviewed the company’s third quarter 2011 operations and proclaimed Verizon on track to meet its 2011 earnings and revenue guidance.

Verizon announced total consolidated operating revenues of $27.9 billion for the third quarter, up 5.4% versus third-quarter 2010. Total operating expenses increased 0.7% to reach $23.3 billion. Earnings per share were 49 cents in the quarter, more than twice the 23 cents per share attained in the year-ago quarter.

Non-GAAP earnings for the quarter reached 56 cents per share, which excludes 7 cents per share for a non-operational charge relating to a remeasurement, based on an actuarial valuation of pension plans. No adjustments were made for the $250 million (5 cents per share) hit in the quarter earnings took because of storm-related repair costs and the two-week strike of its East Coast wireline employees. Comparable adjusted third-quarter 2010 earnings were 55 cents per share, excluding the impact of non-operational charges, the largest of which was related to pension and benefits remeasurements.

Verizon reported consolidated EBITDA for the quarter of $8.8 billion, up 19.2% percent year on year.

Company executives said they were pleased with the quarter’s results. “Verizon emerges from the third quarter in a strong position to accelerate growth,” said Lowell McAdam, Verizon president and CEO. “We faced significant challenges in recent months, yet delivered results that keep us on track to meet our 2011 earnings and revenue guidance, with great momentum expected entering 2012. We continue to grow revenues from strategic products and to increase free cash flow through improved operating performance and disciplined capital spending.”

That 2011 guidance includes adjusted EPS growth of 5% to 8% from an adjusted base of $2.08 in EPS in 2010. Verizon has also targeted a 4% to 8 % revenue growth on a comparable basis with 2010.

As was the case with AT&T, which also recently announced its 3Q11 numbers (see “AT&T reports first wireline revenue growth in more than four years”), Verizon’s wireless operations were the big moneymaker. Service revenues for the quarter were $15.0 billion, up 6.1 percent year over year. Total revenues were $17.7 billion, up 9.1 percent year over year.

On the wireline end, Verizon reported $10.1 billion in operating revenues for 3Q11, down 1.3% versus the same quarter of 2010. However, consumer revenues grew 1.1 percent compared with the year-ago quarter.

FiOS remained a bright spot. Verizon added 138,000 net new FiOS Internet connections and 131,000 net new FiOS TV connections in the quarter. Verizon said that by the end of the quarter it had 4.6 million FiOS Internet and 4.0 million FiOS TV connections. The company expects these numbers to add at least 200,000 FiOS Internet and 200,000 FiOS TV customers in the upcoming quarter.

FiOS Internet penetration was 35% at the end of the quarter, up 4% over 3Q10. Meanwhile, FiOS TV penetration reached 31% up a similar 4% year over year. ARPU for FiOS customers continues to be more than $146, the company says.

The increased FiOS connections offset a decline in DSL-based high-speed Internet connections, resulting in a net increase of 20,000 broadband connections sequentially.