* EPS $0.59 vs Street view $0.58
* Rev $28.24 bln vs Street view $28.17 bln
* Wall Street impressed with wireless ARPU growth
* Shares up more than 2 pct
By Sinead Carew
NEW YORK, April 19 Verizon Communications Inc
posted first-quarter earnings and revenue that beat Wall
Street expectations as customers increased their spending on
services such as wireless data, sending its shares up more than
While wireless customer growth slowed, Chief Financial
Officer Fran Shammo said the company's mobile venture, Verizon
Wireless, saw the fastest growth in mobile service revenue in
three years as more customers used smartphones.
Any signs of data revenue growth would be a relief to
carriers like Verizon Wireless as they have been paying phone
vendors like Apple Inc hefty subsidies for every
smartphone they sell and spending billions of dollars to upgrade
their networks to support these smartphone users.
"Its critical they're able to increase revenue from all this
upfront investment," said Credit Suisse analyst Jonathan Caplin.
Verizon Wireless average monthly revenue per user (ARPU) for
contract customers rose 3.6 percent in the quarter to $55.43
compared with expectations for growth closer to 3 percent from
two analysts. This was helped by data service revenue that grew
16 percent to $23.80.
Shammo said the growth should continue as more people buy
smartphones and the company starts to offer new shared data
service plans this summer under which customers will be able to
connect more than one device under a single data service plan.
"We're confident we'll continue to accelerate our growth in
this area," Shammo told analysts on a conference call.
Verizon shares rose 2.4 percent to $38.65 in morning trade
on the New York Stock Exchange Wednesday.
REVENUE UP BUT CUSTOMER GROWTH SLOWS
ARPU growth is especially important since customer growth is
declining. Verizon Wireless added 501,000 contract customers in
the quarter, roughly in line with the average expectation for
just over 511,000 from five analysts polled by Reuters but down
from fourth quarter additions of 1.2 million.
Given that Verizon, the first of the big U.S. operators to
report first quarter results, typically posts the strongest
customer growth of its peers, its sluggish growth may foretell a
sharp slowdown in growth across the industry.
"People were upgrading but there doesn't seem to be as many
new people coming in to wireless," said Piper Jaffray analyst
Christopher Larsen, adding that Verizon's mobile growth was in
line with his recently lowered estimate.
However, Larsen was impressed with the company's financials.
"It looks like it was a good quarter over all. Earnings per
share was slightly ahead of the Street. Revenue was a little bit
better," Larsen said.
The slower customer growth also comes with a silver lining
as the Verizon Wireless profit margin rose to 46.3 percent from
42.2 percent in the fourth quarter, when an Apple Inc
iPhone fueled growth but also required hefty subsidies.
The company said that it sold 3.2 million iPhones in the
quarter and 2 million phones using its fastest network based on
Long Term Evolution (LTE) technology.
Verizon earnings rose to $1.69 billion, or 59 cents per
share compared with Wall Street expectations for 58 cents per
share according to Thomson Reuters I/B/E/S. In the year-ago
quarter it reported a profit of $1.44 billion, or 51 cents per
Revenue rose to $28.24 billion from $26.99 billion and
compared with analyst expectations for $28.17 billion.
Verizon Wireless is a venture of Verizon and Vodafone Group
Plc. Its biggest rival AT&T Inc and Sprint Nextel
, the No. 3 U.S. mobile service,report quarterly results