Verizon Earnings Edge Higher -- 2ndUpdate

By Chelsey Dulaney 

Verizon Communications Inc.'s profit edged in above Wall Street expectations in the second quarter, though mainstream wireless subscriber growth slowed and revenue came in below forecasts.

Shares fell 2.3% to $47 a share in premarket trading.

The wireless carrier said it added 1.1 million postpaid wireless subscribers in the quarter, coming in above the 1.06 million net additions Wells Fargo had expected. But growth slowed from a year ago, when Verizon logged 1.4 million net additions.

And Verizon again leaned heavily on tablets for growth in the latest quarter, continuing a recent trend for the industry. The company said it added a net 852,000 tablets.

Postpaid phone net additions were a net 321,000, as smartphone additions of 588,000 were offset in part by a decline of 266,000 basic phones.

Postpaid churn, or the rate at which customers cancelled service, edged down to 0.9% from 0.94% a year earlier. Verizon said it was its lowest churn rate in three years.

Verizon, the first big telecom company to report its earnings for the quarter, has faced tougher competition as rivals like T-Mobile US Inc. and Sprint Corp. have offered more generous deals and paid subscribers to switch.

Overall, Verizon posted earnings of $4.23 billion, or $1.04 a share, up from $4.21 billion, or $1.01 a share a year earlier. Revenue grew 2.4% to $32.2 billion.

Analysts polled by Thomson Reuters had forecast $1.01 a share in earnings and $32.5 billion in revenue.

Net additions for its FiOS services also slowed from a year earlier.

Verizon added a net 26,000 FiOS video subscribers, down sharply from 100,000 net additions a year earlier. Its FiOS Internet service added a net 72,000 subscribers, down from 139,000 a year earlier.

Verizon has been licensing programming aimed primarily at millennials and younger viewers ahead of the launch of its mobile video service later this year. Verizon's recent $4.4 billion acquisition of AOL Inc., which closed in June, was in part to support the advertising feature of its mobile video service.

Looking ahead, Verizon said it expects its revenue to grow 3% this year, while analysts expect 3.3% growth.

Write to Chelsey Dulaney at [e-mail]

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