Verizon Wireless Q2 results - Business

Mobile Internet, The, August, 2003

In the second quarter 2003, Verizon Wireless continued its consistent, industry-leading performance, delivering strong profitability, strong ARPU (average revenue per user) and strong customer growth in the quarter. Retail gross additions were up 3.5 percent over the prior year. The total number of customers grew 14.2 percent, while churn levels were the lowest in the company's history. The retail customer base grew 15 percent year over year, and represented more than 96 percent of the base, or 33.4 million of the company's 34.6 million total customers, at the end of the quarter. Retail net customer additions in the quarter--up more than 10 percent over the second quarter 200--were 1.2 million of the company's approximately 1.3 million net additions. Retail chum, as well as total churn for both retail and reseller, was 1.7 percent. The retail post-pay segment--which is more than 90 percent of the company's base--had a churn rate of 1.4 percent for the second quarter.

Other Verizon Wireless highlights include:

--Average monthly service revenue per subscriber was more than $49, up 1.2 percent over the prior-year quarter and up more than $2 over the first quarter 2003.

--The company's low-cost structure continued to lead the industry, as cash expense per subscriber increased only 1.2 percent over the prior-year quarter, even with the record volume of new subscribers. The percentage of operating income before depreciation and amortization, divided by service revenues, remained strong at 38.7 percent.

--Quarterly operating income before depreciation and amortization increased 14.5 percent year over year to $1.9 billion.

--Virtually all of the company's national network, the most extensive in the country, is now equipped with Express Network 1XRTT service, providing higher data speeds and improved efficiency of spectrum use to accommodate growth in overall usage as well as in popular data services. The network now is poised for the company's launch of EVDO, which will enable the next generation of higher data speeds, in two cities this fail.

--Demand for the company's data and text services continued to build in the quarter. Text messaging grew to more than 300 million billed text messages a month, and 1.4 billion in the first half of this year. Usage on the company's Express Network has significantly increased over the preceding quarter. And the company's Get It Now BREW-based downloadable ringtones, games and exclusive content grew to 2.5 million revenue-generating downloads a month and 170 unique applications.

--The company continued to strengthen its position in the business market segment and now serves 70 percent of Fortune 100 companies and half of the Fortune 500, with nearly 25 percent of the wireless business market share. Driving this growth is the expanding suite of Wireless Office services launched earlier this year for voice tools, data access and customized solutions for the latest PDA, laptop and Blackberry devices on the company's national 1XRTT Express Network.

The company launched its easy-to-use picture messaging service for sending photos, with text and voice recordings added, to other Verizon Wireless handsets, or to any e-mail address. The service is available on the company's LG VX 6000 handset, one of the only camera phones in the market with a zoom control feature.

--Leading the industry on the issue of Wireless Local Number Portability (WLNP), the company announced plans for consumer-friendly porting of phone numbers when WLNP takes effect in November. The company called on the rest of the industry to adopt its plan and the Federal Communications Commission to issue its stamp of approval.