Entries in FiOS (5)


U-Verse Outgains FiOS in 3Q11

3Q11 Connections: U-Verse vs. FiOS

The duo of AT&T (NYSE:T) and Verizon (NYSE:VZ) added a combined 314k U-Verse and FiOS subscribers in the third quarter, as fiber services continue to provide much needed support for the wireline divisions at both companies.  AT&T led the gains, adding 176k U-Verse subs, good for 5.2% QoQ growth, while Verizon’s grew its FiOS customer base 3.1% QoQ, adding 138k subscribers in 3Q11.  

While Verizon has dominated the headlines over the past week with its $3.6b spectrum purchase from a consortium of cablecos, ceo Lowell McAdam has also made recent statements regarding the future of the telco’s FiOS expansion. Speaking at the UBS Media and Communications Conference this past Wednesday, McAdam confirmed that Verizon will halt its expansion of FiOS services in 2012 after the completion of its current rollouts. Verizon currently passes around 13m homes with FiOS, and plans to reach 16m homes by the end of 2012.

Verizon shelved the idea of additional FiOS rollouts, but its wireline segment has relied on FiOS for top line stability and ARPU growth in recent quarters. FiOS customers generated 60% of Verizon’s wireline revenue in 3Q11, and ARPU for FiOS users was $146—55% greater than Verizon’s overall wireline ARPU of $94.20. Similarly, U-Verse has been the main bright spot for AT&T’s wireline business. The ARPU for U-Verse customers was $170 in 3Q11, and U-Verse subs accounted for over 50% of AT&T’s wireline revenue. U-Verse’s ARPU compares favorably to FiOS’ per customer take, thanks to the fact 75% of U-Verse customers opted for triple or quad play bundles in 3Q11.

While U-Verse measures up better on ARPU, FiOS continues to achieve better penetration. In 3Q11, FiOS’ penetration of homes passed was around 30%, while U-Verse’s penetration was around 25% in service areas in which it has marketed service for at least three years. With AT&T’s fiber builds nearly complete, and Verizon ready to halt FiOS rollouts after 2012, the telcos’ ability to improve penetration in their current markets will determine if their fiber customer bases will continue to grow.

Verizon’s McAdam commented on Wednesday that he’d like to see FiOS penetration around 50% in the future, but delivering an additional 20% of homes passed could prove more difficult after its recent spectrum deal. As part of its purchase, Verizon agreed to cross-market the video services of its competitors, namely Comcast (Nasdaq:CMCSA) and Time Warner (NYSE:TWC), allowing the cablecos to bundle Verizon’s wireless service with their video options, even in FiOS markets.


ILEC 3Q11 Results Summary: Verizon

iPhones and FiOS Continue to Fuel Verizon

The major trends in Verizon’s (NYSE:VZ) growth, financial and stock price performance over the past year can be summed up in two words: “FiOS” and “iPhones.”

Overall, wireless revenues rose 6.1% YoY in 3Q11, to $15b, at Verizon. Fueling the growth, data revenues shot up 20.5% YoY in the quarter to $6.1b. Verizon’s retail postpaid ARPU ticked up 2.4% YoY, but more significantly its postpaid data ARPU jumped 15.7% in 3Q11 to $22.22, moving in lockstep with the overall demand for mobile data.

While the increasing popularity of all smartphones has driven Verizon’s wireless gains, the iPhone is really what has pushed the needle for the company over the past few quarters.  Since unveiling the Verizon iPhone in February, the company has activated 6.5m of the smartphones in fewer than nine months, as it has grown its industry-leading wireless connections to near 108m.

In Verizon’s wireline segment, 3Q11 revenue was down 1.3% YoY to $10.1b, mainly due to a loss of 2m voice connections over the past year. On a positive note, FiOS’ contribution to wireline consumer revenues continues to grow, as it now accounts for 60% of wireline revenue. Verizon’s average take from FiOS customers was $146 for the quarter, 55% greater than the overall wireline ARPU of $94.20. It added 689k FiOS television and 731k FiOS Internet subs in the past year, driving wireline ARPU up 8.8% YoY in 3Q11.

With higher-margin FiOS offerings making up a larger percent of its wireline revenues, and consumers spending more on wireless data, Verizon grew its OIBDA margins 8% YoY in 3Q11, up to 31.6%. It appears poised to finish out 2011 with its second straight year of margin growth, although its OIBDA margins did stumble 3% QoQ in 3Q11 thanks to a $250m impact due to storms and the workers strike over the summer.   

The market has rewarded Verizon’s performance over the past eighteen months, as its stock price has increased 18% over its 1Q10 close. During the same time frame, the S&P 500 has given back 3.4%. Verizon experienced its most significant stock price appreciation in the quarters before and after its iPhone release, jumping 18% from its 3Q10 close to $38.54 a share at the close of 1Q11. It has lost about 5% since, ending 3Q11 at $36.80.

While Verizon remains the top wireless provider in the U.S., some threats to its wireless market share do exist. AT&T posted better gross (5.9m to 5.4m) and net (2.1m to 1.4m) customer adds than Verizon in 3Q11, appearing to have weathered the storm after the Verizon iPhone frenzy in 1Q11 and 2Q11. And armed with the iPhone 4S and unlimited data packages, Sprint also could steal some market share from Verizon.

Preliminary numbers on iPhone 4S users bear out these concerns. According to a Localytics study, Verizon maintains 40% of the iPhone 4 market, but its share of the iPhone 4S has dropped to 32%. Meanwhile Sprint has taken 12% of the 4S market, a majority of which it took at Verizon’s expense.


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.


1Q11 Connections: U-verse versus FiOS

Penetration Increasing Steadily

Growth in both FiOS and U-verse continued apace in 1Q11; combined, Verizon (NYSE:VZ) and AT&T (NYSE:T) added 425k net new customers, in line with the number of net adds for most of  the past eight quarters.  On a percentage basis, U-verse is still adding customers more rapidly than FiOS, due to its smaller base; combined, the two carriers have increased the U-verse/FiOS customer base by nearly 27% to almost 7.5m.

Verizon noted in its 1Q11 financial report that FiOS customers continue to drive growth in average revenue per customer and overall revenue growth, and said that the average monthly bill for a FiOS customer was more than $146 per month compared with about $90 for its average wireline consumer.  Verizon also reported that FiOS penetration of potential customers was more than 33% and that FiOS is available to more than 13m potential customers.  The company also said that growth in FiOS Internet connections offset a decline in DSL-based high speed Internet connections.

AT&T highlighted the fact that of its total 3.2m U-verse TV subscribers at the end of 1Q11, the “attach rate” for Internet and U-verse voice services were more than 90% and nearly 60%, respectively, and said that U-verse triple play customers generate $168 per sub per month in revenue.  U-verse service now reaches 28m “living units” and its penetration in markets in service for more than 30 months is 23.8%. 


4Q10 U-Verse vs. FiOS

AT&T and Verizon Report Steady Growth in U-Verse and FiOS

AT&T (NYSE:T) and Verizon (NYSE:VZ) have been reporting strong growth in video connections during recent quarters, largely as a result of the companies’ U-Verse and FiOS offerings.  AT&T’s U-Verse added between 200k-300k subs in every quarter of 2010 (248k in 4Q10 alone) and is growing at 44.7% annually.  Verizon’s FiOS has been growing somewhat more slowly than rival U-Verse (adding 197k during 4Q10), partially as a result of Verizon’s sale of lines to Frontier (NYSE:FTR) back on July 1, 2010.  Still, FiOS maintains a nearly 1.1m customer lead over U-Verse, ending 4Q10 with approximately 4.1m subs and reporting 18.9% year over year growth.