Verizon posts strong earnings ahead of iPhone launch

If carriers were like sports teams, Verizon could be described as having a lot of momentum heading into its iPhone showdown with AT&T.

Although Verizon's 2010 earnings were not as strong as 2009, the carrier did finish the year with a bullish fourth quarter that saw it add 872,000 postpaid wireless subscribers to go with net income of $4.65 billion, nearly double the $2.37 billion reported in Q4 2009. On the year, Verizon posted a net income of $10.2 billion, or roughly 12 per cent less than the $11.6 billion reported in 2009.

In addition to solid earnings, Verizon's fourth-quarter report also highlighted the increase in investments it has been making in wireless. The company invested $8.4 billion in wireless capital expenditures in 2010, compared to $7.3 billion for wireline. In 2009, the company invested more money in wireline ($8.9 billion) than wireless ($7.15 billion).

LTE IN 2011: Curb your enthusiasm

Verizon's strong fourth-quarter earnings come at a time when the company has made two significant moves over the past six months. In December, the carrier commercially launched its 4G LTE network, becoming the first major carrier in the United States to offer LTE services. And earlier this month, Verizon announced that it would soon support a CDMA version of Apple's popular iPhone 4 on its 3G EV-DO Rev. A network.

A recent survey conducted by ChangeWave suggested that Verizon could peel off a significant number of customers from AT&T once its iPhone is fully operational, as 16 per cent of AT&T iPhone users said they wanted to switch to Verizon. Verizon is enticing iPhone users to switch by offering unlimited 3G data connectivity even as AT&T has enacted data caps for its 3G iPhone plans. Verizon's CDMA network does face limitations that don't exist on AT&T's GSM network, however, such as the inability to support simultaneous voice and data use.

On the LTE front, Verizon projects to have the most overall LTE coverage by yearend, as the company launched its network in 38 major markets late last year and is planning on adding several more in April. The carrier plans to have its entire current 3G footprint upgraded to LTE by the end of 2013. Although there are no concrete plans as of yet to launch an LTE-capable iPhone, Verizon did unveil ten different LTE-based devices earlier this year at the Consumer Electronics Show in Las Vegas, including the HTC ThunderBolt and Motorola DROID Bionic 4G smartphones, as well as the Motorola XOOM and LTE-capable Samsung Galaxy Tab tablets.

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Brad Reed

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