Verizon Q2: Cloud services and FiOS fuel the wireline engine

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Verizon (NYSE: VZ), much like its fellow RBOC counterpart AT&T (NYSE: T), saw its biggest wireline gains in the second quarter from ongoing consumer adoption of its Fiber to the Premises (FTTP)-based FiOS service and its continual bet on next-gen business cloud services.

While Q2 2011 wireline operating revenues declined 0.3 percent to $10.2 billion from Q2 2010, those losses were an improvement over the 2.2 percent Q1 2011 to Q1 2010 period, beating analyst expectations of $10.18 billion.

Ivan Seidenberg, Verizon's chairman said that the service provider continues "to see strong customer demand for FiOS Internet and TV, and for cloud and other strategic services," adding that "we remain focused on our cost structure, as we deliver improvements in wireline margins quarter after quarter."

Verizon Q2 2011 key figures

Click here for key figures from Verizon's second quarter results.

Here's a breakdown of Verizon's key wireline metrics:

Broadband growth: Once again, the star in Verizon's wireline broadband portfolio was FiOS, which generated about 57 percent of consumer wireline revenues in Q2 2011, up from the 48 percent it saw in Q2 2010. Consumer revenues overall were up 1.3 percent compared with the same period last year, while consumer wireline service ARPU was $92.44, up 9.4 percent compared with Q2 2010. In particular, FiOS customer ARPU continues to remain at more than $146. In Q2, Verizon added 189,000 net new FiOS Internet connections and 184,000 net new FiOS TV connections in Q2 2011. As of the end of the quarter, Verizon had a total of 4.5 million FiOS Internet and 3.8 million FiOS TV connections.

Consumer revenues: Verizon's consumer wireline revenues were up 1.3 percent when compared with Q2 2010. Likewise, consumer ARPU for wireline services was $92.44 in second-quarter 2011, up 9.4 percent compared with second-quarter 2010.  As expected, Verizon's wireline voice lines declined 7.9 percent year-over-year, but the decline was slightly below analysts' 8.1 percent forecast.

Business Services: Buoyed by its acquisition of cloud provider Terremark in April, which added $98 million in revenue, Verizon's global enterprise total global enterprise revenues were $4.0 billion in Q2, a 3.6 percent increase over Q2 2010. During the quarter, Verizon Business increased its sales of strategic services, including Terremark's cloud services, security and IT, and strategy networking by 17.8 percent.

Overall, Verizon's financial performance surpassed financial analyst expectations. During the quarter, Verizon reported total operating revenues of $27.5 billion, up 2.8 percent from Q2 2010.

Verizon's Q2 profit was $1.61 billion, or 57 cents a share. Financial analysts polled by Thomson Reuters I/B/E/S forecast Verizon would report earnings per share of 55 cents.

In related news, Verizon has also named Lowell McAdam as the company's new CEO. McAdam will take the reins on Aug. 1, while Ivan Seidenberg will continue in his role as company chairman. Before he became president of Verizon in 2010, McAdam is best known for the making Verizon Wireless the service provider's most profitable unit.

For more:
- see the earnings release
- Bloomberg has this article

Special Report: Wireline in the second quarter 2011

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