(Adds analyst comments, background details on Vodafone, shareprice update) By Sinead Carew April 18 (Reuters) - Verizon Communications Inc posted a higher-than-expected quarterly profit on theperformance of its wireless business, which reined in costswithout slowing growth. Verizon also ramped up the pressure on Vodafone Group Plc, which owns 45 percent of the Verizon Wireless unit.Verizon has been seeking to buy that stake and take full controlof the top U.S. mobile company. During the quarter Verizon Wireless was helped by lowercosts and the popularity of its data share plans, under whichsubscribers can more easily add cellular service to devices liketablets. That represent lower costs for Verizon than smartphonessuch as Apple Inc's iPhone. "It just feels like they're tightening the circle aroundtheir customers," Evercore analyst Jonathan Schildkraut said,referring to Verizon's ability to retain customers and add moredevices through its data share plans. Schildkraut said investors were equally excited about Verizon's comment that it was "extremely confident" it could buyVodafone's stake in the wireless unit without major taximplications for Vodafone shareholders. The tax question is seen by some analysts as one of thebiggest barriers to a deal. Vodafone declined to comment. "We actually are confident that in such a transaction we'vea structure that could be created in a very tax efficientmanner," Verizon Chief Financial Officer Fran Shammo toldReuters. Guggenheim analyst Shing Yin said Shammo did not appear tobe indicating a deal was imminent but making a public plea toVodafone to sell the stake by contradicting the tax worries. "I see that as putting a little bit of pressure on Vodafoneto do something," Yin said. Shammo said that Verizon's long-stated desire to buy therest of the wireless venture had not changed. Earlier thismonth, Verizon denied it had any intention of buying Vodafoneoutright as a way to gain control of the wireless business. SUBSCRIBER STRENGTH Verizon Wireless added 677,000 retail subscribers in thefirst quarter, slightly higher than Wall Street expectations forabout 634,000, according to eight analysts contacted by Reuters. The operator said its wireless service margin of 50.4percent based on earnings before interest, taxes, depreciationand amortization was a record high. Expectations had ranged from48.5 percent to 49.9 percent, according to four analysts polledby Reuters. In comparison, its biggest rival AT&T Inc, whichreports first-quarter 2013 results on April 23, posted awireless margin of 41.6 percent in the year-ago quarter. Verizon also stuck by its previous forecast for a full-year2013 wireless margin of 49 percent to 50 percent. "They clearly had very good cost control on wireless. Thelower upgrades helped but it looked like they were also able toget cost out of the network," said Guggenheim's Yin. GROWTH IN TV, PHONES While Verizon activated 4 million iPhones in the quarter, upfrom 3.2 million in the year-ago quarter, it said that half ofthose activations were for older, cheaper iPhones. Apple shareshave been sliding on fears of weakening demand for the iPhone. On the plus side for Apple, though, its share of Verizon'ssmartphone activations rose to 56 percent from about 51 percentin the year-ago quarter, according to Guggenheim's Yin. "To Apple's credit the iPhone continues to gain share" atVerizon Wireless, Yin said. Aside from the wireless business, Verizon Communicationsalso saw improved growth in its FiOS home Internet andtelevision service 188,000 net new FiOS Internet customers and169,000 FiOS television subscribers in the quarter. HudsonSquare analyst Todd Rethemeier had expected 150,000 Internetcustomers and 125,000 FiOS TV customers. "Across the board subscriber numbers in both wireline andwireless looked pretty good," said Rethemeier. Verizon's Shammo also confirmed that Verizon had put in anoffer to Clearwire Corp to buy wireless airwaves in abid to expand capacity. Verizon's earnings rose to $1.95 billion, or 68 cents pershare, compared with $1.69 billion or 59 cents per share in theyear-earlier quarter. Analysts expected earnings of 66 cents pershare, according to Thomson Reuters I/B/E/S. Revenue rose to $29.42 billion from $28.24 billion andcompared with Wall Street estimates of $29.55 billion. Verizon shares were up $1.63 at $51.14 in early afternoontrade, after rising as high as $51.67 percent earlier on the NewYork Stock Exchange. AT&T shares rose 6 cents to $37.84. Apple shares were downabout 2 percent, or $8, at $394.80 on Nasdaq. (Additional reporting by Kate Holton in London; Editing byGerald E. McCormick, Sofina Mirza-Reid and Richard Chang)
Vodafone signs $1.5 bln Microsoft deal for AI, cloud and IoT
LONDON, Jan 16 (Reuters) - Vodafone has agreed a 10-year partnership with Microsoft to bring generative AI, digital, enterprise and cloud services to more than 300 million businesses and consumers across its European and African markets.
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