Verizon Communications Inc. is seeing a big boost from the iPhone, adding more new subscribers on contracts in the second quarter than it has in two and a half years.
Yet AT&T Inc., which had been the exclusive seller of Apple Inc.'s iconic phone in the U.S. until February, still activates three iPhones for every two Verizon does.
Verizon added 1.26 million wireless subscribers under contract in the April-to-June period, a result that flies in the face of the slowdown in new subscribers across the industry in the last two years. Since nearly everyone already has a cellphone, gaining new subscribers is chiefly a matter of winning them over from other carriers. A year ago, Verizon added just 665,000 subscribers under contract.
Verizon activated 2.3 million iPhones, well below the 3.6 million AT&T reported for the same period. Verizon sells only the iPhone 4, starting at $200, while AT&T also sells the older iPhone 3GS for $49.
McAdam said iPhone sales haven't been quite as good as the company expected, chiefly because it believed a new iPhone model would arrive this summer, as it usually does. Apple hasn't said why there's no new phone yet.
"We expect it probably sometime in the fall. I think you'll see a significant jump there," McAdam told analysts.
Chief Financial Officer Fran Shammo defended the results, saying average monthly fees are being held back because many of the new devices being added to the network aren't phones but tablets or Internet modems, with lower monthly fees. But these are very profitable devices and show the way to industry growth beyond phones, he said.
"We're expanding the market," Shammo said.
Even with relatively slow iPhone sales, Verizon is handily outdoing AT&T, which recruited only 331,000 new contract subscribers in the quarter. The iPhone is AT&T's chief draw, while Verizon has other advantages on its side, like a broader "3G" data network and a new, ultra-fast "4G" network in many cities. In the quarter, Verizon sold 1.2 million devices that use the 4G network, including laptop modems and the HTC Thunderbolt smartphone.
Verizon ended the quarter with 106.3 million devices connected to its wireless network, making it the largest carrier in the country. No. 2 and chief rival AT&T is trying to leapfrog Verizon in size by buying No. 4 T-Mobile USA for $39 billion.
Verizon said its net income was $1.61 billion in the three months ended June 30. A year ago, it posted a loss of $1.19 billion, or 42 cents per share.
Source: www.delawareonline.com
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