Ever since the AT&T/T-Mobile saga came to a grinding halt, you’d think that Verizon would be enjoying its reign in peace. But it would seem that the company has posted a net loss of $2.02 billion in the fourth quarter of 2011. At the same time a year earlier, Verizon was seeing a profit of $2.64 billion.
According to Bloomberg, the loss can be attributed to a pension charge and higher subsidy costs for rising iPhone sales. But there have been gains, as well. Verizon lured in 1.2 million new subscribers — probably thanks in large part to the iPhone — and hopes that the high subsidy costs will eventually be paid off by consumers as they spend on calling and data.
Bloomberg enlisted the help of James Ratcliffe, an analyst at Barclays Capital in New York, who said that “the average smartphone customer will spend about $2,000 over the two-year contract. If the subsidy is $400, you’re still getting $1,600, and that’s very cash-flow positive.” It would appear that smartphones are, indeed, where it’s at for Verizon, as the company reported that 44 percent of its customer base is now using a smartphone.
The carrier announced a total revenue of $18.3 billion for the quarter, representing a 13 percent year-over-year increase. Not surprisingly, data played a major role in bringing in the big bucks for ol’ Big Red.
In fact, 42 percent of all revenue for the quarter was made up of the $6.3 billion in data revenue, up 19.2 percent from the same time last year.
Verizon Communications Inc. delivers broadband and other wireline and wireless communication innovations to mass market, business, government and wholesale customers. Verizon Wireless operates America’s largest wireless network that serves nearly 102 million customers nationwide. Verizon’s Wireline operations include Verizon Business and Verizon Telecom, which brings customers converged communications, information and entertainment services over Verizon’s fiber-optic network.