Verizon says its profit rose 16 percent in the latest quarter as revenue from wireless service kept rising at a rate that’s the envy of the industry.
Verizon Communications Inc. reported net income of $1.95 billion, or 68 cents per share, in the January to March period. That was up from $1.69 billion, or 59 cents per share, a year earlier.
Analysts polled by FactSet had on average expected earnings of 66 cents per share for the latest quarter.
First-quarter revenue was $29.4 billion, just short of the average analyst estimate at $29.5 billion.
Wireless service revenues rose 8.6 percent to $16.7 billion, accounting for more than half of overall revenue. At closest rival AT&T Inc., wireless service revenue has been rising just over 4 percent per year.
Citigroup analysts view the report as positive and maintain a buy rating: “We believe first quarter results support our thesis for Verizon (VZ) and we remain a Buyer of VZ shares, as we expect: 1) wireless fundamentals to remain solid over the next 12-months, despite the threat of rising industry competition; 2) wireline margin improvement remains a possible positive catalyst heading into 2014 and 2015,” the analysts write in a note to clients.
The analysts also believe that the company could benefit from buying out British Vodaphone’s 45 percent stake in Verizon Wireless.
“The accretion prospects from a possible leveraged buyout of Vodaphone’s ownership stake in Verizon Wireless can be meaningfully more accretive than what we believe is priced into the VZ share[s], based on our scenario analysis.”
“Verizon wants to control what is genuinely the best telecom asset on the planet,” Jonathan Chaplin, an analyst at New Street Research in New York told Bloomberg news. “Verizon Wireless just came off a phenomenal year where they capture all the growth in the industry with record high margins. And this year I would expect the same.”
Shares rose 3.19 percent to $51.12 in early New York trading April 18.
The Associated Press contributed to this report.
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