FiOS TV subscriber growth slows

Q4 adds of 153,000 bring total to 2.9 mil

NEW YORK -- Verizon showed slower FiOS TV subscriber growth in the fourth quarter in a possible sign that the weak economy and a maturing business are keeping a lid on gains.

The company said Tuesday it added 153,000 FiOS video customers on a net basis, compared with 303,000 in the year-ago period. The firm had already posted user gains than in the year-ago period in the third quarter (HR 10/26).

The FiOS TV service ended 2009 with 2.9 million total users, up from 1.9 million as of the end of 2008.

Verizon said it added 153,000 net new FiOS high-speed Internet customers in the fourth quarter, compared to 282,000 in the year-ago period, bringing its total Web user base to 3.4 million. That was up from about 2.5 million as of the end of 2008.

Sanford C. Bernstein analyst Craig Moffett called the results "a bad miss" for FiOS with the video subscriber gains 32% below Wall Street consensus.

Asked in a conference call with analysts about the weaker subscriber trends, Verizon CFO John Killian said: "We feel very good that there is still a lot of opportunity."

While he said there may have been "a little bit of an impact from the economy" late in 2009, Verizon is "pleased with our overall FiOS performance." He cited continued growth in penetration, low churn, customer satisfaction, "very good" average revenue per user and overall profitability trends.

A follow-up question raised the question if FiOS is focusing more on profitability of users than subscriber gains these days, Killian said Verizon feels it can boost profit "and at the same time sustain (user) growth."

Verizon chairman and CEO Ivan Seidenberg also said FiOS "is doing fine," but its marketing focus is changing and at times becoming less aggressive, because Verizon is "more confident we'll get the market without overheating it."

Killian mentioned that the firm has changed consumer promotions in the first quarter from a $150 cashback offer to an $89 lead offer that allows Verizon to up-sell.

FiOS TV penetration was 24.5% at the end of 2009, with the product available for sale to 11.7 million premises. This compares with 20.8% penetration and 9.2 million premises as of the end of 2008.

Total broadband and video revenue amounted to $1.7 billion in the fourth quarter, up 25.5% from the year-ago period.

FiOS average revenue per user stood at more than $140, driven primarily by triple-play bundles of phone, Internet and TV services. Triple-play customers rose from 1.6 million in the fourth quarter of 2008 to 2.4 million in the latest quarter.
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