Verizon (VZ -0.8%) had 1.52M wireless retail postpaid net adds in Q3, up from 941K a year ago and indicating further share gains in spite of tough price competition; the total base is at 100.1M. Retail prepaid net adds totaled just 9K; the base is at 6.1M.
Price competition is affecting wireless service revenue growth: Though still better than AT&T/Sprint's, growth slowed to 4.8% from 5.9% in Q2 and 7.5% in Q1. Meanwhile, Edge smartphone upgrade plan adoption contributed to a 28.9% increase in equipment revenue, which in turn contributed to a 190 bps drop in wireless op. margin to 31.9%.
Retail postpaid churn rose slightly to 1.00% from 0.94% in Q2 and 0.97% a year ago. Retail postpaid ARPA +1% Q/Q and +3.5% Y/Y to $161.24.
Smartphone users made up 77% of the retail postpaid base at the end of Q3, up from 75% at the end of Q2. Postpaid smartphone sales rose 21% Y/Y.
Wireline revenue (30% of total revenue) fell 0.8%. Consumer retail revenue +4.5% thanks to FiOS growth and strategic services +1% due to data growth, but small business -4.1% and core -11.7% due to voice declines. Wireline op. margin rose to 2.3% from 1.5% a year ago.
114K FiOS video and 162K FiOS Internet subs were added; those figures are up from Q2 levels, but down from year-ago levels. Verizon now has 5.5M FiOS video and 6.5M FiOS Internet subs. Wireline voice connections fell 6.4% Y/Y to 20.1M.
Verizon still expects 4% 2014 revenue growth; consensus is at 4.6%. Capex guidance has been narrowed to $17B from $16.5B-$17.5B.
Net income of $531M, or $1.28 per diluted share vs. $452M, or$ 0.90 per diluted share in the same quarter a year ago.
Total revenues grew 3.5% to $3.7B and operating income increased 14% to $772M, the highest quarterly operating income total in the Company's history. Organic revenues grew 3.5%, with North American and international growth of 4% and 3%, respectively.
Record operating margins of 20.9% increased 190 bps, with enterprise initiatives contributing 120 bps. All segments produced operating margin improvement, with five segments growing operating margins by more than 200 bps.
The Company is raising its full-year EPS guidance range to $4.57-$4.65 from $4.50-$4.62.
For Q4, the Company is forecasting EPS to be in a range of $1.07-$1.15, on 2-3% percent organic revenue growth. Total revenue growth in Q4 is projected to be flat due to currency translation effects.