Verizon 3Q profitability rises on subscribers, data growth

iPhone Boost

Verizon sold 6.8 million smartphones in the third quarter boosting the proportion of retail contract phone connections to 53 percent from 39 percent a year earlier. The company sold 3.4 million phones running on Google Inc.’s Android software and 3.1 million iPhones. More specifically, Verizon sold 651,000 iPhone 5 models in the quarter, a total curbed by supply constraints, said Shammo.

“‘This is a stellar set of Verizon Wireless results,’’ said John Karidis, an Oriel Securities Ltd. analyst . ‘‘I would expect Vodafone to do better because of that.’’

Vodafone, the second-biggest mobile-phone company, closed up 1.2 percent in London trading.

‘‘They really jacked up their advertising in the past few months,’’ said Colby Synesael, an analyst at Cowen & Co. in New York. ‘‘Verizon has been very aggressive with marketing and it helped with sales.’’

Wireless Users

Verizon Wireless has also began to extract more money from renewing customers. Starting April 22, it imposed a $30 upgrade fee on all customers buying new smartphones. which has helped slow down the upgrade rate to 6.8 percent. Phil Cusick, an analyst with JPMorgan Chase & Co. expected an 8 percent upgrade rate. AT&T charges $36 for upgrades, and Sprint Nextel Corp. has an $18 fee plus an additional $10 monthly smartphone charge.

Total revenue for the land-line business in the third quarter was $9.9 billion, down 2.3 percent from a year ago.

Capital spending in the first nine months was $11.3 billion, compared with $12.5 billion in the year-earlier period.

‘‘Some expect us to go up substantially in capital spending, and I don’t see that happening,’’Shammo said in an interview. ‘‘2013 will be flat with 2012,’’ .

Verizon yesterday said it’s transferring about $7.5 billion in pension obligations, or one-fourth of the total, to Prudential Financial Inc. in a drive to remove risk from its balance sheet. Prudential, the second-largest U.S. life insurer, will take on responsibility for making future annuity payments to certain management retirees of the phone company.

Verizon follows General Motors Co. in paying Prudential to assume the risk that market returns are inadequate or that beneficiaries live longer than expected. Transferring obligations can reduce swings in earnings tied to securities and relieve companies of the need to manage large pools of money.

Bloomberg News

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