2Q11 Connections: FiOS versus U-Verse

U-Verse Growth Outpaces FiOS in 2Q11

AT&T (NYSE:T) and Verizon (NYSE:VZ) continued to increase their fiber-based subscriber base in 2Q11, combining to add a net 391k U-Verse and FiOS subs. The net customer gains for both were down slightly from 1Q11, but remained steady compared to quarterly adds over the past two years. The increased penetration of their FTTX services continues improve overall top line growth and ARPU at AT&T and Verizon.

AT&T added 202k U-verse subs in 2Q11, slightly more than what FiOS gained. In its 2Q11 conference call AT&T referenced that U-Verse revenue is growing 57% YoY. It has achieved 25% penetration of U-Verse in service areas in which it has marketed service for three years, and will complete its fiber expansion by the end of 2011. The ARPU from U-Verse subs rose to $170 in 2Q11, up 8% YoY, driven by the fact that 75% of U-Verse video customers opt for either three or four services. U-Verse broadband gains (439k subs) more than doubled television adds (202k subs) in the quarter. 

Verizon’s FiOS customer base grew 4.4% in 2Q11 to 4.5m subs. FiOS customers provided a monthly ARPU of over $146, about 15% less than U-verse’s ARPU, but still well above Verizon’s average consumer ARPU of $92.44. In terms of consumer revenue, FiOS accounted for 57% of Verizon’s consumer revenue in 2Q11, up from 48% in 2Q10.

FiOS’ video penetration of homes passed in 2Q11 was greater than U-Verse’s at 30%, partially attributable to the fact FiOS has had a presence in many of its markets for a longer period of time. With AT&T completing its fiber expansion later in 2011, the key to future FTTX growth for both companies will focus on improving penetration. Currently Verizon has the edge, but with more time in its markets AT&T looks to narrow that gap.