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Verizon’s video additions slow down in Q2

MUMBAI: US telecom major Verizon has added 26,000 new subscribers for Fios video service in the second quarter compared to 100, 000 subscriber additions a year ago.
  • In the second quarter of 2015, Verizon added 72,000 net new FiOS Internet connections and 26,000 net new Fios Video connections. Verizon had totals of 6.8 million FiOS Internet and 5.8 million FiOS Video connections at the end of the second quarter, representing year-over-year increases of 8.1 per cent and 6.4 per cent respectively.
  • Fios Internet penetration (subscribers as a percentage of potential subscribers) was 41.4 per cent at the end of second-quarter 2015, compared with 40.1 per cent at the end of second-quarter 2014. In the same periods, FiOS Video penetration was 35.7 per cent, compared with 35.3 per cent.
  • Verizon saw higher-than-anticipated demand for its new Custom TV packages, with more than one-third of Fios Video gross customer additions opting for Custom TV and migration demand from existing customers. While Custom TV adoption has an initial negative impact on revenue growth, it is expected to improve profitability.
  • By the end of second-quarter 2015, 64 per cent of consumer Fios Internet customers subscribed to Fios Quantum, which provides speeds ranging from 50 to 500 megabits per second. The highest rate of growth is in the 75-megabit-per-second tier, to which 23 per cent of Fios customers subscribe.
Overall, for the company operating revenues in second-quarter 2015 were $32.2 billion, a 2.4 per cent increase compared with second-quarter 2014. Excluding second-quarter 2014 revenues from a business that has since been sold, the comparable year-over-year growth rate (non-GAAP) would have been 2.8 per cent.
In second-quarter 2015, Verizon announced and completed the acquisition of AOL to further drive the company’s expansion into digital media, including its OTT mobile video strategy. This acquisition closed on 23 June and Verizon’s balance sheet at the end of the quarter includes the assets and liabilities of AOL. Verizon’s second-quarter income statement does not reflect any results from AOL operations since these were immaterial for the last seven days of the quarter. AOL financial results will be fully included in Verizon’s third-quarter 2015 results.
Verizon’s $5 billion accelerated share repurchase programme was completed in early June, resulting in an overall reduction of 101.6 million shares.
Verizon chairman, CEO Lowell McAdam said, “Verizon has delivered another quarter of strong financial and operational results, based on consistent network reliability and superior value that continues to attract new customers. In the second quarter, we again balanced quality Verizon Wireless connections growth with low churn and profitability, and we announced and completed our acquisition of AOL. We’re now poised to offer customers exciting new over-the-top (OTT) mobile video services, and we look forward to a very positive second half of 2015.”
Verizon CFO Fran Shammo said, “We are committed to building the business for future growth. In the first half of this year, we invested approximately $18 billion in spectrum licenses and capital for future network capacity. We also invested more than $4 billion to acquire new capabilities with the AOL transaction, which supports our longer-term video strategy. In addition, we returned more than $9 billion to our shareholders in the form of dividends and share repurchases. Meanwhile, we’ve kept our leverage ratio essentially unchanged, and we remain on track with our deleveraging plan.”