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Verizon gets a big boost in customers from iPhone

Helped by the iPhone, Verizon Wireless is pulling in more high-paying customers than it has in a year, and 15 times more than rival AT&T.

Verizon Communications said Thursday that it added 906,000 wireless customers on contract-based plans in the January-to-March period, more than double the number from a year ago.

The increase corresponds neatly with the half-million iPhones that Verizon sold to new customers. Verizon started selling the iPhone on Feb. 10, ending AT&T's exclusive grip on the device in the United States.

In total, Verizon said it had activated 2.2 million iPhones, with most of them going to customers upgrading from other Verizon phones.

Wall Street analysts had expected slightly more. Verizon shares fell Thursday by 88 cents, or 2.33 percent, to $36.91, retreating from a three-year high of $38.95 hit three weeks ago.

Verizon Chief Financial Officer Francis J. Shammo defended the iPhone sales performance on a conference call with analysts.

"We really weren't 100 percent out there with distribution until mid-March," he said.

The true test, he said, will be when Apple launches its next phone, which will put Verizon on "an equal footing" with AT&T, he said. This confirms speculation that the next iPhone launch will be simultaneous for Verizon and AT&T customers. Apple has previously launched new iPhone models once a year in late June or early July, but analysts believe that the next model might be delayed a few months.

Shammo said Verizon is still basing its forecasts on the sale of 11 million iPhones this year.

Shammo also said the next Verizon iPhone will be a "global" device, implying that it would work on overseas "GSM" networks, just like AT&T's version. This also confirms speculation. Shammo's comment may have been inadvertent, given the secrecy that surrounds Apple devices. In a later interview, he said he didn't want to comment further on Apple's plans.

AT&T said Wednesday that it had added 3.6 million iPhones to its network in the first quarter, helped by the $49 price on the older iPhone 3GS, which Verizon doesn't sell. Verizon had less time to sell the phone, but the two carriers activated nearly the same number of iPhones every day -- about 40,000.

The difference appears to be that while AT&T was selling iPhones to people who were already customers, the phone drew new customers to Verizon. AT&T added a net of just 62,000 new subscribers under contract in the first quarter, a record low.

However, there was no sign that AT&T's iPhone customers were defecting to Verizon because of its more reliable network. Since most customers are tied up by two-year contracts, it may take some time for the full effects of Verizon's iPhone to show up in AT&T's numbers, but AT&T's chief financial officer, Richard G. Lindner, said he was confident that customers won't start bolting later this year.

Verizon said its net income climbed to $1.44 billion, or 51 cents per share, in the three months ended March 31, up from $443 million, or 16 cents per share, a year ago, when results were weighed down by a charge for costs associated with the health care overhaul.

Verizon's revenue edged up by 0.3 percent, to $26.99 billion, from $26.91 billion a year ago, and slightly exceeded analysts' average estimate of $26.87 billion.

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