Verizon Wireless 2010 Annual Report Download - page 25

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2009 Compared to 2008
DomesticWireless’totaloperatingrevenueincreasedduring2009com-
pared to 2008 primarily due to the inclusion of the operating results of
Alltel, as well as growth in our service revenue from sources other than
the acquisition of Alltel.
Service revenue
Service revenue increased during 2009 compared to 2008 primarily due
to the inclusion of service revenue as a result of the 11.4 million net new
customers, after conforming adjustments and the impact of required
divestitures, which we acquired in connection with the acquisition of
Alltel. Since January 1, 2009, service revenue also increased as a result of
an increase in total customers from sources other than customer acquisi-
tions, as well as continued growth from data services.
The decline in retail customer net additions during 2009 compared to
2008 was due to an increase in churn partially offset by an increase in
customer gross additions due to the expansion of our sales and distri-
bution channels as a result of the acquisition of Alltel. The decrease in
total customer net additions for 2009 was due to the above mentioned
decline in retail customer net additions, partially offset by an increase
in customer gross additions from our reseller channels, primarily during
the fourth quarter of 2009. The increases in our total and retail postpaid
churn rates were primarily a result of increased disconnections of Mobile
Broadband service and business share lines, primarily attributable to eco-
nomic conditions.
Total data revenue during 2009 was $15.6 billion and accounted for
29.9% of service revenue compared to $10.6 billion and 24.9% during
2008. Total data revenue continues to increase as a result of increased use
of Mobile Broadband, e-mail and messaging.
ServiceARPUandretailserviceARPUdeclinedduring2009comparedto
2008 due to the inclusion of customers acquired in connection with the
acquisitionofAlltel,aswellascontinuedreductionsinvoiceARPU,par-
tiallyoffsetbyanincreaseintotaldataARPU.TotalvoiceARPUdeclined
$3.28, or 8.5% during 2009 compared to 2008 due to the on-going
impact of bundled plans and increases in the proportion of customers on
our Family Share plans as customers sought to optimize the value of our
offerings.TotaldataARPUincreasedby$2.26,or17.6%during2009com-
pared to 2008 as a result of the increased usage of our data services.
Customer acquisitions during 2008 included approximately 650,000 total
customer net additions, after conforming adjustments, acquired from
RuralCellularCorporation(RuralCellular).Asaresultofanexchangewith
AT&T consummated on December 22, 2008, Domestic Wireless trans-
ferred a net of approximately 122,000 total customers.
Equipment and Other Revenue
Equipment and other revenue increased during 2009 compared to 2008
primarily due to an increase in the number of both data and phone equip-
ment units sold, partially offset by a decrease in the average revenue per
unit. The increase in the number of equipment units sold was a result of
both the increase in customer gross additions as well as an increase in
the number of units sold to existing customers upgrading their wireless
devices. Other revenues increased primarily due to the inclusion of the
operating results of Alltel and an increase in our cost recovery rate.
Management’sDiscussionandAnalysis
ofFinancialConditionandResultsofOperations – As Adjusted continued
tially offset by the cumulative increase during the year in customer net
additions from our reseller channel as a result of the marketplace shift in
customer activations mentioned above.
Customers from acquisitions and adjustments at December 31, 2010
included approximately 106,000 net customers, after conforming adjust-
ments, that we acquired in a transaction with AT&T. Customers from
acquisitions at December 31, 2009 included approximately 11.4 million
total customer net additions, after conforming adjustments and the
impact of required divestitures, which resulted from our acquisition of
Alltel on January 9, 2009.
Total data revenue was $19.6 billion and accounted for 35.1% of service rev-
enue during 2010 compared to $15.6 billion and 29.9% during 2009. Total
data revenue continues to increase as a result of the increased penetra-
tion of data offerings, in particular for e-mail and web services resulting in
part from increased sales of smartphone and other data-capable devices.
Voice revenue decreased as a result of continued declines in our voice
ARPU,asdiscussedbelow,partiallyoffsetbyanincreaseinthenumber
of customers. We expect that total service revenue and data revenue will
continue to grow as we grow our customer base, increase the penetra-
tion of our data offerings and increase the proportion of our customer
base using smartphone and other data-capable devices.
ThedeclineinserviceARPUduring2010comparedto2009wasdueto
a continued reduction in voice revenue per customer and the impact of
changes in our customer mix as a result of increased reseller customer
netadditions,partiallyoffsetbyanincreaseindataARPU.Totalvoice
ARPUdeclined$2.69,or7.6%,duetotheongoingimpactofcustomers
seeking to optimize the value of our voice minute bundles. Total data
ARPUincreasedasaresultofcontinuedgrowthandpenetrationofour
data offerings, resulting in part from the above mentioned increase in
salesofoursmartphoneandotherdata-capabledevices.Retailservice
ARPU,theaveragerevenueper userfromretailcustomers,increased
during 2010 due to increases in our penetration of data offerings, which
more than offset declines in our voice revenues.
Equipment and Other Revenue
Equipment and other revenue decreased during 2010 compared to 2009
due to a decrease in the number of equipment units sold as a result of a
decrease in customer gross additions.