The U.S. largest mobile service provider Verizon Communications Inc. (NYSE:VZ) generated double-digit earnings growth and added significant cash flow growth once again in its second quarter 2012. Second Quarter Review of Verizon’s adjusted earnings are reported as 64 cents. Verizon’s Revenue keep on improving with strong wireless, FiOS fiber-optic and strategic services. The strong revenue is generated through on the back of strong data revenues through wireless and subscriber growth.
Despite slow growth in the U.S. mobile market, there is a rapid expansion of 4G Long-Term Evolution (LTE) services, strong sales of Apple Inc.’s (Nasdaq:AAPL) iPhone and trend of increased adoption of Google Inc.’s (Nasdaq:GOOG) Android smartphones led to the growth in the sector of retail wireless subscribers. In the wireline sector, there is a momentum for FiOS fiber-optic network and sale of strategic service in the U.S. remained strong. Still the penetration rate of both FiOS Internet and FiOS TV accelerated to approximately 36.6% and 32.6%, respectively.
According to analysts, Verizon will see improved revenue and earnings in both wireless and wireline businesses. Verizon (NYSE:VZ) is experiencing a strong momentum in its wireless business, as subscriber additions remain strong with a low churn rate (customer switch to competitor), in fact the lowest in the industry. Verizon (VZ)’s is a way ahead of its major rival AT&T Inc. (NYSE:T) and Sprint Nextel Corp. (NYSE:S) in terms of 4G deployment, which reached 337 markets covering more than 200 million people (nearly 75% of the U.S. population) as of July 19.
Verizon Communications Inc. (VZ) will continue to expand its 4G network and expects to reach the entire nationwide 3G footprint by the middle of next year. Further, the company will sustain a continuity to achieve wireless growth and profitability from its focus on gaining share in the retail post-paid market by increasing the penetration of smartphones, and selling more Internet devices such as tablets.
Verizon has adopted a new shared data strategy, which is also considered to be the biggest innovation in wireless pricing over the past several years. The new strategy to Share Everything will also maximize the carrier’s revenue over the long term.
All these developments and operating efficiencies would help Verizon to reduce $2 billion in costs this year, thereby driving more profitability in the business. In the wireline business, Verizon continues to improve long-term profitability through product streamlining and process simplification initiatives as well as cost management actions.