DSL, Wireless Nudge Verizon's Profit

The ILEC notes that Sep. 11 events destroyed or disrupted key infrastructure elements in Manhattan, but said there was good news in the DSL, cell phone, and wireless data sectors.

@NYStaff [October 31, 2001]

Telco giant Verizon Communications (NYSE:VZ) said the Sept. 11 tragedy that destroyed or disrupted 200,000 telephone lines in Manhattan was part of the reason for a 46 percent drop in third quarter net income.

Excluding one-time charges, Verizon said net income in the quarter ending Sept. 30th reached $1.9 billion (69 cents per share), almost 50 percent below the $3.5 billion, $1.27 per share, posted in the same year-ago period.

On a diluted basis, the company's adjusted net income increased 2 percent to $2 billion, or 75 cents per share. Overall revenues were $17 billion, up about 2.8 percent from the $16.6 billion it took in last year.

The company said it suffered a drop of 3 cents per share as a result of the Sept. 11 attacks on New York City and Washington, DC that crippled parts of Verizon's network operations, disrupted phone service, data circuits and 10 cellular towers.

During the quarter, Verizon continued gaining ground in the growth of its digital subscriber line (DSL) service. The company signed up 135,000 new subscribers during the period to reach 975,000 lines in service—a 625,000-line year-over-year increase.

Earlier this month, the company's DSL subscriber base passed the 1 million mark, representing an 85 percent year-to-date growth. By the end of 2001, Verizon is projecting DSL sign-ups to reach 1.2 million to 1.3 million.

Verizon claimed that about 32 million of its 62 million access lines in the U.S have been DSL-qualified. Verizon Online, the company's ISP subsidiary, reported a 37 percent jump in customer sign-ups.

The Verizon Wireless subsidiary, which runs the cellular phone operations, added 752,000 new customers in the third quarter. The company's total subscriber base now exceeds 20 million, the largest in the U.S.

Verizon Wireless ended the quarter with 1.2 million subscribers to its Mobile Web and Mobile IP data services.

While Verizon has been pushing hard for the rollout of DSL, high-speed wireless Web access and other Internet-based services, the company still depends heavily on revenues from basic telephone services.

In this area, the company saw its actual revenues dip almost 2 percent to $10.7 billion. In the fourth quarter, Verizon said profits are projected in the range of 77 cents to 80 cents per share. That number includes costs related to the repair and restoration of its lines disrupted on September 11. It expects revenues to increase by 3 percent.

For the full fiscal year, the company has projected profits to be in the range of $3.00 per share.

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