Verizon Wireless 2007 Annual Report Download - page 22

2007 Compared to 2006
Consolidated revenues in 2007 increased by $5,287 million, or 6.0% com-
pared to 2006. This increase was primarily the result of continued strong
growth at Domestic Wireless.
Wireline’s revenues in 2007 decreased $412 million, or 0.8% compared
to 2006, primarily driven by lower demand and usage of our basic local
exchange and accompanying services, partially offset by continued
growth from broadband and strategic services. During 2007, we added
1,253,000 new broadband connections, an increase of 17.9%, including
854,000 for FiOS, for a total of 8,235,000 lines at December 31, 2007. In
addition, we added 736,000 FiOS TV customers in 2007, for a total of
943,000atDecember31,2007.RevenuesatVerizonBusinessincreased
during 2007 compared to 2006 primarily due to higher demand for stra-
tegic products. These increases were offset by a decline in voice revenues
at Verizon Telecom due to a 3.6 million decline in subscribers resulting
from competition and technology substitution, such as wireless and
VoIP, including those subscribers who have migrated to our other service
offerings.
Domestic Wireless’s revenues in 2007 increased by $5,839 million, or 15.3%
compared to 2006 due to increases in service revenues, which include
data revenues, and equipment and other revenue. Equipment and other
revenue increased principally as a result of increases in the number of
existing customers upgrading their wireless devices. Total data revenues
increased by $2,911 million, or 65.0% in 2007 compared to 2006. There
were approximately 65.7 million total Domestic Wireless customers as
of December 31, 2007, an increase of 11.3% from December 31, 2006.
Domestic Wireless’s retail customer base as of December 31, 2007 was
approximately 63.7 million, a 12.2% increase from 2006, and represented
approximately 97% of its total customer base. Average total service rev-
enuepercustomer(ARPU)increasedby2.3%to$50.96in2007compared
to 2006, primarily attributable to increases in data revenue per customer
drivenbyincreaseduseofourmessagingandotherdataservices.Retail
ARPUincreasedby2.2%to$51.57in2007comparedto2006.
2006 Compared to 2005
Consolidated revenues in 2006 were higher by $18,664 million, or 26.8%
compared to 2005 revenues. This increase was primarily the result of sig-
nificantly higher revenues at Wireline and Domestic Wireless.
Wireline’s revenues in 2006 increased by $13,112 million, or 34.9% com-
pared to 2005 primarily due to the acquisition of MCI and, to a lesser
extent, growth from broadband and long distance services. We added 1.8
million new broadband connections, for a total of 7.0 million lines in ser-
vice at December 31, 2006, an increase of 35.7% compared to 5.1 million
lines in service at December 31, 2005. The number of retail service plans
continued to stimulate growth in long distance services, as the number
of packages reached 7.9 million at December 31, 2006, representing a
44.1% increase from December 31, 2005. These increases were partially
offset by declines in wholesale revenues at Verizon Telecom due to sub-
scriber losses resulting from technology substitution, including wireless
and VoIP. Wholesale revenues at Verizon Telecom declined by $748 mil-
lion, or 8.2% in 2006 compared to similar periods in 2005 primarily due to
the exclusion of affiliated access revenues billed to the former MCI mass
marketentitiesin2006.RevenuesatVerizonBusinessincreasedprimarily
due to the acquisition of MCI.
Domestic Wireless’s revenues increased by $5,742 million, or 17.8% com-
pared to 2005 due to increases in service revenues (which include data
revenues) and equipment and other revenue. Data revenues increased
by $2,232 million or 99.5% compared to 2005. Domestic Wireless ended
2006 with 59.1 million customers, an increase of 15.0% over 2005.
Domestic Wireless’s retail customer base as of December 31, 2006 was
approximately 56.8 million, a 15.9% increase over December 31, 2005,
andrepresentedapproximately96.2%ofourtotalcustomerbase.ARPU
increased by 0.6% to $49.80 in 2006 compared to 2005, primarily attribut-
able to increases in data revenue per customer driven by increased use
ofourmessagingandotherdataservices.RetailARPUincreasedby0.7%
to $50.44 for 2006 compared to 2005.
The $180 million decrease in revenues from Hawaii operations from 2006
to 2005 resulted from the sale of our wireline and directory businesses in
Hawaii during 2005. Verizon Hawaii Inc., which operated approximately
700,000 switched access lines, as well as the services and assets of Verizon
Long Distance, Verizon Online, Verizon Information Services and Verizon
Select Services Inc. in Hawaii, were sold to an affiliate of The Carlyle Group
for $1,326 million in cash proceeds. In connection with this sale, we
recorded a net pretax gain of $530 million ($336 million after-tax, or $.12
per diluted share) during the second quarter of 2005.
20
Management’s Discussion and Analysis
ofFinancialConditionandResultsofOperations continued
Consolidated Revenues
(dollars in millions)
Years Ended December 31, 2007 2006 % Change 2006 2005 % Change
Wireline
Verizon Telecom $ 31,926 $ 32,938 $ 32,938 $ 31,694
Verizon Business 21,236 20,678 20,678 7,771
Intrasegment eliminations (2,846) (2,888) (2,888) (1,849)
50,316 50,728 (0.8) 50,728 37,616 34.9
Domestic Wireless 43,882 38,043 15.3 38,043 32,301 17.8
Corporate & Other (729) (589) 23.8 (589) (579) 1.7
RevenuesofHawaiioperationssold –– – – 180 (100.0)
ConsolidatedRevenues $ 93,469 $ 88,182 6.0 $ 88,182 $ 69,518 26.8