Verizon reported fourth-quarter revenues up 3.4 percent year-on-year to USD 31.1 billion, led by continued strong growth at its mobile activities and Fios services. The net result was a profit of USD 1.76 per share, compared to a loss of USD 1.48 a year ago. The increase was mainly due to a gain of USD 1.29 per share for changes in its pension valuations, offset by USD 540 million or 19 cents a share in costs for the pending acquisition of Vodafone's stake in Verizon Wireless. On an adjusted basis, EPS rose to USD 0.66 from USD 0.38 a year ago, when it also had 7 cents a share in costs for Superstorm Sandy.
Verizon Wireless recorded quarterly sales up 5.7 percent to USD 21.2 billion, including a 7.5 percent increase in retail service revenue to USD 17.0 billion. The adjusted EBITDA margin rose 5.6 percent points year-on-year to 47.0 percent. The mobile operator added a net 1.7 million new retail customers in the three months to finish the year with a total 102.8 million, up 4.7 percent from the end of 2012.
Revenue growth was helped by a growing number of lines per account, reaching an average 2.8 lines per retail postpaid account at year-end. Each account averaged USD 157.21 in revenue in Q4, up 7.1 percent year-on-year. Smartphones accounted for 70 percent of the retail postpaid lines, up from 67 percent in Q3.
At the wireline activities, consumer revenues rose 6.4 percent to USD 3.8 billion, while business and wholesale revenues fell. The EBITDA margin improved to 22.4 percent from 18.0 percent a year ago, and Verizon said it expects further improvement in 2014. Growth in broadband connections slowed to 20,000 in Q4, for a total 9.015 million at year-end, as growth in Fios just offset the loss of DSL subscribers. TV net additions also slowed compared to previous quarters, to 92,000, for a total base of 5.262 million. Line loss was stable, at 372,000 voice connections ended in the three months. Consumer ARPU continued to increase, reaching USD 117.06, helped by more customers taking broadband speeds of 50 Mbps or higher.
Verizon said it exceeded its target of 300,000 new homes passed by Fios in 2013, adding a total 330,000 to the footprint by year-end. The company also largely completed its LTE roll-out, covering more than 99 percent of its 3G network footprint and 97 percent of the US population. The operator spent in total USD 16.6 billion on capital equipment last year, up from USD 16.2 billion in 2012. Verizon estimates flat to slightly higher capex this year, at USD 16.5-17.0 billion, while capex as a percentage of revenue will continue to decrease.
The company generated free cash flow (operating cash flow less capex) of USD 22.2 billion in 2013, an increase of 45.1 percent. Of the total, USD 5.9 billion was paid in dividends. The acquisition of Vodafone's stake in Verizon Wireless for USD 130 billion is expected to close 21 February and add around 10 percent to Verizon's earnings.
