In the first nine months of 2013, Verizon increased capital expenditure to USD 11.8 billion from USD 11.3 billion in the year-earlier period. The company said it had largely completed its 4G roll-out, with coverage now available to 99 percent of its 3G footprint and 97 percent of the population. This supports the growing base of smartphone customers, which accounted for 67 percent of the retail postpaid base at the end of Q3.
Free cash flow was still up 23.3 percent over the nine-month period to USD 16.6 billion. Verizon said it had also successfully arranged the financing to buy out Vodafone's stake in Verizon Wireless, with a USD 49 billion debt offering and an agreement for up to USD 12 billion in term loans.
Growth in the third quarter was again driven by Wireless, with service revenues up 8.4 percent year-on-year to USD 17.5 billion. The EBITDA margin on service revenues rose by 110 basis points to 33.8 percent, and Verizon said it was on track to deliver a margin of 49-50 percent for the full year, after a result of 50.4 percent in the first nine months.
The retail mobile customer base increased by a net 1.1 million lines in the three months, including 927,000 postpaid subscribers, to a total 101.2 million at the end of September. The company expects customer growth to increase sequentially in the fourth quarter.
While Verizon had a total 95.2 million postpaid retail lines, it counted just 35 million customer accounts, as customers averaged 2.7 lines per account. Nearly 42 percent of retail postpaid accounts are now on a Share Everything Plan, which allows customers to share data among multiple devices. Average revenue per account was up 7.1 percent year-on-year to USD 155.74 per month.
At the wireline division, consumer revenues rose 4.3 percent to USD 3.7 billion, helped by an 8.7 percent annual increase in ARPU and growing penetration of the Fios services. Verizon added 173,000 Fios internet subscribers and 135,000 new Fios video customers in the three months, for respectively 5.9 million and 5.2 million total. The operator is approaching 40 percent penetration of the 18.3 million households passed by the Fios services.
Growth in Fios is offsetting the loss of DSL subscribers, with the total broadband base at almost 9.0 million at the end of September, or a net 56,000 more than in June. The oeprator has migrated nearly 250,000 homes to fibre this year and targets 300,000 new homes passed by Fios this year. By year-end, Verizon expects it will have less than 1 million homes on copper remaining in its Fios markets.
Wireline revenues from the Global Enterprise division were still down 3.0 percent to USD 3.7 billion, and wholesale revenues fell 6.3 percent to USD 1.7 billion. Overall, the wireline EBITDA margin rose to 22.7 percent from 21.7 a year ago, and Verizon expects the full-year margin will be similar to 2012, excluding the impact from Superstorm Sandy.
