By Sinead Carew
Verizon Communications (VZ) posted higher quarterly revenue on Thursday and added more new subscribers than Wall Street had expected as the company probably drew customers from its smaller rivals.
The company's Verizon Wireless venture with Vodafone Group (VOD) added 888,000 net new subscribers in the quarter, compared with the average expectation of about 666,000 from seven analysts.
The growth at the No. 1 U.S. mobile provider probably came at the expense of smaller rivals Sprint Nextel (S) and T-Mobile (DT) USA in particular, Roe Equity Research analyst Kevin Roe said.
"That's a terrific number," said Roe who noted that Wall Street does not expect No. 2 mobile provider AT&T (T) to add even half as many customers in the quarter.
Verizon Wireless is attracting customers with smartphones such as the Apple Inc iPhone.
Verizon's second-quarter profit rose to $1.83 billion, or 64 cents per share, from $1.61 billion, or 57 cents per share, a year earlier. The results were in line with analysts' estimates, according to Thomson Reuters.
Revenue rose to $28.552 billion from $27.54 billion, while analysts were expecting $28.558 billion.
The company said it was on track to increase full-year earnings in the double-digit percentage range, implying a rise of at least 10%.
Its wireless service margin based on earnings before interest, tax, depreciation and amortization was 49%, ahead of estimates from four analysts for just above 47%.
The company said it expected profit margins in its wireline business to continue to improve in the second half of the year after increasing in the second quarter from the first quarter.
However, Verizon shares fell 1.5% to $45.22 in premarket trading. At Wednesday's close, the stock had risen more than 14% so far this year.
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