Verizon reported third-quarter operating revenues up 5.0 percent year-on-year to UD 33.2 billion, helped by its takeover of AOL from July and continued expansion in mobile and fibre customers. Excluding AOL, revenues rose 3.1 percent, and after also adjusting for disposals, Verizon expects full-year revenue growth to reach at least 3 percent in 2015.
Operating profit rose to USD 7.5 billion from USD 6.9 billion a year ago, and EPS increased to 99 cents from 89 cents, impacted in part by a 5-cent charge for pensions accounting. Operating cash flow in the year to date rose to USD 28.4 billion from USD 23.2 billion a year earlier, helped by a gain of USD 2.4 billion on selling tower assets. After spending USD 12.5 billion on capital equipment in the first nine months, Verizon maintained its full-year budget at USD 17.5-18.0 billion, up slightly from last year.
In the mobile market, Verizon reported service revenues down 4.1 percent to USD 17.6 billion in Q3, while equipment revenues jumped to USD 4.3 billion from USD 2.5 billion a year ago due to more customers opting for devices with installment pricing. About 58 percent of new phones activated in the quarter, equal to around 5.6 million devices were bought on installment in Q3, and Verizon expects this to rise to 70 percent in Q4. Mobile EBITDA rose to USD 9.9 billion from USD 9.1 billion a year ago, and the margin jumped to 43.2 percent from 41.6.
The retail postpaid customer base increased by 1.289 million in the three months to 105.02 million, up 4.9 percent from a year earlier. Over three-quarters of retail postpaid customers were using 4G devices, leading to 89 percent of total data traffic running over the 4G network in the quarter. Overall mobile traffic is up about 75 percent in the past year. After adding 889,000 4G smartphones to its network in Q3, Verizon said it will continue to focus on upgrading the remaining customers to LTE. Its mobile capital spending, up 8.4 percent in the year to date, will focus on improving coverage indoors and in congested areas.
In the wireline market, Verizon's revenues fell 2.3 percent year-on-year to USD 9.4 billion, as continued weakness in enterprise and wholesale offset 2.8 percent growth in the consumer market. The latter was led by Fios revenues, which accounted for 75 percent of consumer sales and rose by 7.5 percent year-on-year to USD 3.4 billion. EBITDA from wireline was largely stable at USD 2.3 billion, and the margin rose half a percent point to 23.5 percent. The results include still the activities up for sale to Frontier; this transaction is expected to close in Q1 2016.
Verizon added 114,000 Fios broadband customers in the quarter, just offsetting the loss of DSL subscribers, for a total broadband base of 9.22 million at the end of September. Fios TV subscribers grew by 42,000 to 5.81 million, and Fios telephony users also were up by 42,000, to 4.70 million. Total voice connections were still down by 339,000 to 18.74 million.
