Verizon can really hear FiOS now

Video, Internet service subscribers blossom in 3rd qtr.

Telecommunications giant Verizon Communications continues to ramp up subscriber growth for its FiOS TV video service, which has started putting pressure on cable operators like Cablevision.

Reporting its third-quarter earnings Monday, Verizon said that it added 202,000 net FiOS TV customers in the latest quarter, bringing its total to 717,000.

The subscriber growth in the quarter came in ahead of any previous periods and trounced the slight uptick the company recorded a year ago when the FiOS video service was getting started.

Verizon highlighted that it has expanded its FiOS TV user base by about 600,000 within the past year.

Including satellite TV customers served in partnership with industry giant DirecTV Group, Verizon now serves more than 1.5 million video customers overall. The DirecTV partnership added a net of 85,000 video subscribers in the third quarter.

Verizon has been rolling out its video service more smoothly than AT&T, which last week reported 75,000 net user adds to reach a total of 126,000 subscribers for its U-verse service.

The slower rollout has in recent weeks led to intensified market talk that AT&T could make a bid by year's end for one of the satellite TV giants, with the main target EchoStar Communications, but DirecTV also a possible target, analysts said.

In the meantime, cable stocks have come under even more pressure since Comcast last week reported disappointing subscriber momentum for its third quarter (HR 10/26).

Verizon on Monday also reported 229,000 net FiOS Internet customers, bringing its total high-speed Web user base to 1.3 million. The company said it now has 8 million broadband connections, when including its DSL service that added 56,000 net users in the period. Its overall broadband user figures are up 21.3% compared with a year ago.

"Our third-quarter results show that we have hit our stride as a leading wireless, broadband and enterprise company," Verizon chairman and CEO Ivan Seidenberg said. "In recent years, we have transformed our business model and revenue base. Our results throughout 2007, and especially in the third quarter, show that our strategy has been successful. We expect to build on these results in the fourth quarter and beyond."

Verizon management said in a conference call that the FiOS fiber optic service overall is on track to yield a profit before interest, taxes, depreciation and amortization next year.

The telecom giant has said it will spend about $23 billion to build the fiber infrastructure for the FiOS video and broadband services.
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