Telecom investment warning: Verizon Capex may be flat or down in 2012

Telecom Lead America: Verizon Wireless has spent $7.4
billion as Capex in first-half 2012.

For full-year 2012, capital expenditures are expected to
be flat to down compared with 2011 capital expenditures of $16.2 billion.

This will create ripples in the telecom infrastructure

The Capex warning from Verizon Wireless is despite
marginal growth in both profit and revenue.

The American mobile operator’s Q2 profit rose to $1.83
billion from $1.61 billion.

Revenue rose to $28.552 billion from $27.54 billion, growing 3.7 percent.

“Verizon delivered another strong quarter of
earnings growth and cash generation, and we remain on track to meet our
financial objectives and produce solid double-digit earnings growth for the
year,” said Lowell McAdam, Verizon chairman and CEO. 

Consolidated operating income was $5.7 billion in
second-quarter 2012, compared with $4.9 billion in second-quarter 2011. 

Service revenues in the quarter totaled $15.8 billion, up
7.3 percent year over year. 

Retail service revenues grew 8.6 percent year over year,
to $15.2 billion.

Data revenues were $6.9 billion, up $1.1 billion year
over year, and represent 43.6 percent of all service revenues.  Total
revenues were $18.6 billion, up 7.4 percent year over year.

Retail postpaid ARPU grew 3.7 percent over second-quarter
2011 to $56.13. 

Retail postpaid data ARPU increased to $24.53, up 15.4
percent year over year. 

Retail service ARPU grew 3.4 percent year over year to

Verizon Wireless added 1.2 million retail net customers
in the second quarter, including 888,000 retail postpaid net customers. 

At the end of the second quarter, the company had 94.2
million retail customers, a 4.9 percent increase year over year, including 88.8
million retail postpaid customers.

At the end of the second quarter, smartphones constituted
50 percent of Verizon Wireless’ retail postpaid customer phone base, up from 47
percent at the end of first-quarter 2012.

Retail postpaid churn was 0.84 percent, the lowest in
four years, and an improvement of 5 basis points year over year. Total retail
churn was 1.11 percent, an improvement of 11 basis points year over year.

Verizon Wireless continued to roll out its 4G LTE mobile
broadband network, the largest such network in the U.S.  As of today,
Verizon Wireless 4G LTE service is available to more than 230 million people in
337 markets across the U.S. nearly 75 percent of the population.

Second-quarter 2012 operating revenues from wireline were
$9.9 billion, a decline of 3.1 percent compared with second-quarter 2011. 
Wireline operating income margin was 1.9 percent, compared with 1.6 percent in
first-quarter 2012 and 3.1 percent in second-quarter 2011. 

Wireline consumer revenues grew 2.5 percent compared with
second-quarter 2011.

Consumer ARPU for wireline services reached more than
$100 for the first time, increasing to $100.26 in second-quarter 2012, up 8.5
percent compared with second-quarter 2011.

ARPU for FiOS customers increased to more than $149 in
second-quarter 2012.  FiOS services produced 65 percent of consumer
wireline revenues in second-quarter 2012.  Approximately 70 percent of
FiOS consumer customers have purchased a triple play of phone, Internet and TV

Global enterprise revenues totaled $3.8 billion in the
quarter, down 3.4 percent compared with second-quarter 2011. 

Sales of strategic services increased 4.4 percent
compared with second-quarter 2011 and represented 52 percent of global
enterprise revenues in second-quarter 2012.

Verizon added 134,000 net new FiOS Internet connections
and 120,000 net new FiOS Video connections in second-quarter 2012. 
Verizon had 5.1 million FiOS Internet and 4.5 million FiOS Video connections at
the end of the quarter.

FiOS Internet penetration was 36.6 percent at the end of
second-quarter 2012, compared with 33.9 percent at the end of second-quarter
2011.  In the same periods, FiOS Video penetration was 32.6 percent,
compared with 29.9 percent.  The FiOS network now passes more than 17
million premises.

Broadband connections totaled 8.8 million at the end of
second-quarter 2012, a 2.6 percent year-over-year increase.

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