Verizon Communications Inc. watched its first quarter profits fall 8.4 percent after investing more than $22 million in its high-speed fiber optic network during the three month period that ended March 31.
The RBOC saw its net income drop from $1.63 billion, or 56 cents a share, to $1.5 billion, or 51 cents a share, from the same period a year earlier. Sales, on the other hand, rose 6.4 percent to $22.6 billion. Bloomberg News said that surpassed analysts expectations.
The fiber-optic network carries Verizons FiOS TV and Internet service. The second-largest phone company in the United States is trying to compete against cable operators; its rollouts mostly have been relegated to affluent urban and suburban areas. Verizon said it added 141,000 new FiOS TV subscribers in the first quarter, serving a total of 348,000 by the end of the quarter.
Verizon made some key strides with its FiOS initiative in the first quarter.
In February, it made a deal with Internet video site Revver Inc. That announcement came on the heels of Comcast Corp.s deal with Facebook. The rivals plan to air user-generated content.
In early March, it snagged another statewide video franchising agreement, this time with California.
Verizon also has a satellite partnership with DirecTV; that service has attracted 618,000 customers.
Meanwhile, Verizon Wireless added 1.6 million new users in the first quarter and watched churn fall by a 10th of a percent from the same quarter a year ago. Verizon Wireless is owned by Verizon and Vodafone Group Plc. The divisions gains this quarter beat those of competitor AT&T (formerly Cingular Wireless LLC), which netted 1.2 million new customers in the first quarter.
On the wireline side, Verizon lost nearly 408,000 residential landline users.
But the carrier made inroads with Verizon Business, the former MCI Inc. That unit reported revenue growth of 2.3 percent in the first quarter, marking the second consecutive quarter of growth. Verizon said that growth was driven by the sales of IP and managed services.
Verizon also sold two business units in 2006, further reducing the companys profits.
Verizon Communications Inc. www.verizon.com