Verizon adds tablet customers and defends new cable packages

Verizon Communications, the largest U.S. wireless provider, added more than half a million subscribers, mainly tablet users, and reported better-than-expected earnings in its first quarter.

Verizon, which also provides Internet and cable service, also defended its new cheaper cable packages, which for $55 a month give customers a core of 35 channels plus two of its seven other groups of channels. ESPN last week contended that offering its popular sports channels apart from the core channels violated its contract with Verizon. And on Tuesday, Fox Sports and NBCUniversal made similar claims.

But Francis Shammo, Verizon’s chief financial officer, said in a conference call Tuesday that the new packages were allowed “under our existing contracts” with its content providers.

In its earnings report, the company said it added 565,000 Verizon Wireless subscribers in the quarter, up 4.8 percent from the same quarter a year ago. It has more than 108 million retail wireless subscribers.

Analyst Mike McCormack at Jefferies LLC said the gain came from customers adding tablets to the network and Verizon saw a decline of 138,000 phone customers during the quarter. He said it was only the second time Verizon’s handset count fell.

Verizon reported first-quarter net income of $4.22 billion, or $1.02 per share. Revenue rose 4 percent to $31.98 billion in the period. Verizon Communications stock closed Tuesday at $49.17, down 21 cents.

No. 2 U.S. wireless provider AT&T will report earnings Wednesday. Sprint is scheduled to report its results May 5. T-Mobile US has not announced an earnings release date.

Verizon also said it added 133,000 FiOS Internet customers, up 36 percent from a year ago. It added 90,000 FiOS cable customers, up 58 percent from a year ago.

On Sunday, Verizon began offering its Verizon Custom TV package in a break with the industry’s longstanding strategy of forcing customers to pay more than $80 a month for hundreds of channels, including many that few consumers watch.

The dispute threatens to derail efforts by Verizon, one of the largest pay TV providers, to offer a narrower, lower-priced service at a time when companies like Netflix are drawing viewers away from costly pay TV bundles.

“Most people only, on average, watch 17 channels,” Shammo said. “So this is a way to give consumers what they want.”

This story was originally published April 21, 2015 at 10:20 AM with the headline "Verizon adds tablet customers and defends new cable packages."