Verizon activates 2.2M iPhones in Q1, sees strong ThunderBolt demand

With just two months of Apple (NASDAQ:AAPL) iPhone 4 sales in the first quarter, Verizon Wireless (NYSE:VZ) activated 2.2 million units of the popular device, the majority of which were upgrades for its existing customer base.

Click here for key stats from Verizon's first quarter.

Click here for key stats from Verizon's first quarter.

However, more surprising than the company's first quarter iPhone success is the traction it is having with its first 4G LTE smartphone, the HTC ThunderBolt. During the firm's first quarter earnings call with investors today, CFO Fran Shammo said Verizon activated 500,000 4G LTE devices in the quarter, including 260,000 HTC ThunderBolt smartphones. The ThunderBolt launched March 17. "From a pace perspective we are very pleased with the HTC handset launch," Shammo said. He added that the company will have up to three LTE smartphones launched by the end of the second quarter; the carrier also offers a number of LTE-capable USB modems and portable hotspots.

Shammo also hinted that the next iPhone will be a global phone; however, he would not confirm that it will be a 4G LTE iPhone, leading some investors to speculate that the next iPhone will be a dual-mode CDMA/GSM device.

Interestingly, Shammo said the company's wireless margins fluctuated in the quarter, but he expects they will end up in the mid-40 percent range. He added that the company will see further fluctuations in margins when Apple launches its next phone--but he said there will not be fluctuations in Verizon's second quarter. His comments could confirm news reports that the next Apple iPhone will be released in September instead of June. Apple has declined to comment on the rumors.

Finally, Shammo said the company will implement tiered data pricing for both 3G and 4G devices, but he refused to provide further details.

Verizon reported 1.8 million net adds for the quarter, which included 906,000 retail postpaid customers. This brings the company's total base to 104 million, with 88.4 million retail customers. Shammo said the company added 897,000 M2M and wholesale connections in the quarter.

Verizon's biggest competitor, AT&T (NYSE:T), announced yesterday that it ended the quarter with 2 million net adds, bringing its total connections to 97.5 million. However, AT&T only added 62,000 postpaid net customers. The majority if AT&T's growth came from the 1.3 million connected devices it added in the quarter.

Here's a breakdown of other first quarter metrics from Verizon:

LTE: Verizon launched 38 LTE markets late last year and now counts an additional 100 markets with LTE service. The company is on track to be in 175 markets by year-end, covering more than 185 million POPs.

Net adds: Verizon added 1.8 million connections in the quarter, including 906,000 retail postpaid customers. This brings the company's total base to 104 million, with 88.4 million retail customers.

Financials: Verizon's wireless service revenue was $14.3 billion, a 6.3 percent increase over the same quarter in 2010. The carrier's EBTIDA margin was 43.7 percent, which was a decline from 47.5 percent in the fourth quarter of 2010. The decline was attributed to higher subsidies and commission costs. The company's operating margin was 25.8 percent. Verizon's data revenue was $5.5 billion, an increase of 22.3 percent over the same quarter in 2010.

ARPU: Verizon's retail postpaid average revenue per user was $53.52, an increase of 2.2 percent over the first quarter of 2010. The carrier's data ARPU was $20.51, which was an increase of 17.3 percent over the same quarter in 2010.

Churn: Verizon's retail postpaid churn was 1.01 percent. The carrier's total retail churn was 1.33 percent.

For more:
- see this release
- see this ZDNet article
- see this FierceWireless Q1 earnings page

Related Articles:
Verizon nets 65,000 LTE subs, details iPhone data pricing
Unscathed by Verizon's iPhone launch, AT&T activates 3.6M iPhones in quarter
Appraising U.S. wireless operators in the fourth quarter

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