Verizon Wireless 2014 Annual Report Download - page 4

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model, the strength of our culture and the profoundly
important role we play in the lives of our customers
and communities.
In the process, we showed that Verizon has what it takes to
succeed over the long haul in a rapidly changing industry.
Growing customer demand
The most fundamental reason for our confidence in the
future is that, for all its competitive intensity, our industry
is strong and growing, with customers using wireless and
broadband more—and in more ways—than ever before.
Verizon is well positioned to capitalize on these trends.
From a strategic perspective, our most notable
accomplishment of 2014 was completing the transaction
for full ownership of Verizon Wireless, which we believe to
be the best wireless asset in the world. Our performance in
2014 bears out our confidence in the U.S. wireless market.
We generated $87.6 billion in wireless revenues, an
increase of 8.2 percent over 2013, and added 5.5 million
retail connections. We ended the year with 108.2 million
retail connections, a year over year increase of 5.3 percent.
While higher-than-usual upgrades and new customer
activations in the fourth quarter impacted our margins, we
had a very profitable year, with wireless EBITDA service
margin of 48.5 percent for the full year.
Just as important as the number of customers is the quality
of those customers. We lead the industry in retail postpaid
connections, with a year-end total of 102.1 million, and are
focused on moving more of these loyal, high-value
customers to devices that take advantage of our 4G LTE
network leadership. Smartphones now account for 79
percent of our retail postpaid phone base, up from 70
percent at the end of 2013, and we ended the year with 7.2
million 4G LTE tablets. Average revenue per retail postpaid
account grew by 3.9 percent in 2014, as customers
consume more and more data and video services on their
mobile devices. All of this sets us up well for 2015.
Our wireline broadband business had a solid year as well,
driven by strong consumer demand for video and Internet
services. Total wireline revenues were $38.4 billion for
2014, down 0.5 percent from 2013. Consumer revenues
grew at a healthy 5 percent rate for the year, and wireline
EBITDA margin expanded to 23.2 percent, reflecting our
commitment to improving wireline’s profitability. The
centerpiece of our wireline business is FiOS, our 100
percent fiber network that has transformed consumer
wireline into a growth business. FiOS revenues for 2014
were $12.7 billion, up 13.6 percent compared with 2013,
and made up more than three-quarters of all our revenue
from the consumer retail business in 2014. Thanks to
FiOS, consumer revenues have grown more than 4 percent
in each of the last ten quarters.
We ended the year with 6.6 million FiOS Internet and 5.6
million FiOS Video customers, for a market penetration of
41 percent and 36 percent, respectively. We’re winning the
competitive battle by delivering new features and
functionality that leverage the superior FiOS architecture,
Wireless
Highlights
$75.9 $81.0
$87.6
  
Wireless
Revenues
()
98.2 102.8 108.2
12 13 14
Wireless Retail
Connections
()
$144.04
$153.93 $159.86
12 13 14
Wireless Retail
Postpaid ARPA
2