Verizon Wireless adds more customers than expected
Reuters, Monday January 27, 1:11 pm ET
biz.yahoo.com
NEW YORK, Jan 27 (Reuters) - Verizon Wireless, the largest U.S. wireless telephone company, added about 970,000 new customers in the fourth quarter, readily topping analysts' expectations, according to figures released by one of its parent companies on Monday.
Britain's Vodafone Group Plc (London:VOD.L - News), which has a 44.3 percent stake in Verizon Wireless, reported in London that it added about 430,000 net new customers in the last quarter of 2002 from its holding in the U.S. company.
Those figures would extrapolate to give Verizon Wireless about 970,000 customers, compared with analysts' expectations ranging from 800,000 to 850,000.
Analysts attributed the strong results to a combination of holiday promotions and Verizon Wireless' emphasis on its high quality network in its advertising.
"In the last six to eight months since they started running the 'Can You Hear Me Now?' promotion, we believe consumer perception has changed dramatically and Verizon is now perceived as the best network," said Ben Abramovitz, wireless analyst with Jefferies & Co.
At the end of the third quarter, Verizon Wireless, a unit of Vodafone and Verizon Communications (NYSE:VZ - News), had a total customer base of 31.5 million.
Shares of Verizon Communications rose 40 cents, or 1.1 percent, to $35.40 on the New York Stock Exchange in early afternoon trading. American Depository Receipts of Vodafone fell 2 cents to $18.38.
The fourth quarter is typically the strongest period of the year for wireless companies because consumers buy phones as holiday gifts.
However, Verizon Wireless, posted much stronger results than expected, helped by promotions that allowed customers to buy $300 Motorola Inc. (NYSE:MOT - News) phones for as little as $50.
"Verizon was really out there. I don't recall that the others were as aggressive with new fully featured replacement (phones)," said Jane Zweig, chief executive of Washington-based wireless consulting firm Shosteck Group.
Price competition in the industry has intensified as nearly half of Americans own cell phones, and it becomes harder to add new customers.
Lehman Brothers estimates that the industry added 12 million subscribers in 2002. However, the growth rate was about 35 percent below that of the previous year. Lehman expects even fewer customers to be added in 2003.
So far, Cingular Wireless (NYSE:BLS - News; NYSE:SBC - News), the nation's No. 2 wireless operator, lost customers for the quarter as it failed to keep up with its rivals' offers.
Analysts believe Verizon Wireless took market share from its rivals including Cingular Wireless.
Verizon Wireless will post its results on Wednesday as part of Verizon Communications' earnings report. |
