Verizon quarterly profit rises

NEW YORK (Reuters) - Verizon Communications Inc. (VZ.N) said on Monday its second-quarter profit rose 4.5 percent as subscriber growth for its FiOS TV service accelerated while wireless growth remained steady.

Meanwhile, Verizon Wireless, the No. 2 U.S. wireless service which is a 55 percent-owned joint venture with Vodafone Group Plc (VOD.L), said on Monday it would buy Rural Cellular Corp for $757 million in cash to save on roaming costs and expand its customer base.

The No. 2 U.S. phone company said net profit rose to $1.68 billion, or 58 cents per share, from $1.61 billion, or 55 cents, a year earlier.

Operating revenue rose 6.3 percent to $23.37 billion.

Verizon's earnings per share matched the average analyst forecast, according to Reuters Estimates, though revenue was a touch above the average estimate of $22.997 billion.

Shares of the company edged 0.6 percent higher in pre-market trade to $42.25 from their Friday close of $42.00 on the New York Stock Exchange.

Strong sales of wireless and Internet services have helped phone companies like Verizon and AT&T Inc. (T.N) ease the impact of declining sales of fixed lines.

Verizon has been expanding its FiOS high-speed Internet and video service, which the company hopes will help it compete against cable operators' all-in-one packages of video, phone and Internet services.

It added 167,000 FiOS TV subscribers in the second quarter, taking the total to 515,000. UBS analyst John Hodulik said the additions were above his estimate of 160,000.

Verizon said it added an average of 2,600 FiOS TV customers per business day, showing its expansion was speeding up compared to the average of 2,200 net additions per business day in the first quarter.

The cost of deploying FiOS services hurt earnings by 10 cents per share, 1 cent less than in the first quarter. Verizon in September said it expects to invest $18 billion from 2004 through 2010 to deploy the FiOS network.

Most analysts have said the investment, while costly, was necessary to offset a decline in home phone subscribers.

Verizon said it had a total of 7.7 million high-speed Internet connections, up 25.5 percent from a year earlier, outpacing a 10.3 percent decline in residential access lines.

Verizon Wireless earlier this month said it added a net 1.3 million customers in the second quarter, ending the period with 62.1 million.

The rate of churn, the industry term for subscriber cancellations, was 1.1 percent among retail customers, compared with 1.0 percent a year earlier.