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* 4th qtr EPS 38 cents vs Street view 50 cents
* 4th qtr revenue $30.05 bln vs view $29.83 bln
* Wireless margin 41.4 pct vs 42.2 pct year ago
* Says could buy back shares at any time
* Eyes $2 billion in wireless cost cuts
By Sinead Carew
Jan 22 (Reuters) - Verizon Communications Inc posteda weaker-than-expected wireless operating profit margin due tohefty costs from smartphones like Apple's iPhone, but the U.S.telephone company promised a big improvement this year as itcuts costs.
While Verizon's fourth-quarter bottom line was weaker thananticipated, investors were encouraged when Chief FinancialOfficer Fran Shammo said on Tuesday that the company could be ina position to buy back shares sooner than expected and thatwireless margins could rise this year to as high as 50 percent.
Shammo said the numbers will be helped by $2 billion in costcuts at Verizon Wireless, Verizon's mobile venture with VodafoneGroup Plc, on top of $5 billion in cuts there in thelast three years.
The cuts at Verizon Wireless - the biggest U.S. mobileservice provider - will not require extensive layoffs and willcome in areas such as call center consolidation and increasedefficiency in logistics, Shammo told Reuters.
Shammo also hinted that Verizon may not have to wait untilthe end of 2013 to buy back shares as he had previouslyindicated, thanks to the strength of its balance sheet.
"We could do share buybacks at any point in time right now,"he told analysts, without giving a specific time frame.
Verizon shares were up 0.6 percent at $42.80 on Tuesdayafternoon.
But while some analysts were impressed with the 2013 margintarget, others questioned whether it is realistic, consideringthe prospect of stiffer competition from rivals. PivotalResearch Group analyst Steve Sweeney said the target is"aggressive."
Softbank Corp is seeking to buy 70 percent of No. 3U.S. mobile service provider Sprint Nextel Corp, andSprint is looking to buy out Clearwire Corp. Also, No.4 U.S. mobile service T-Mobile USA, a Deutsche Telekom AG unit, is merging with rival MetroPCS CommunicationsInc.
"2013 will have a much different competitive landscape,"Sweeney said in a research note. "Both new entities will belarger and better capitalized companies than they were in 2012and represent incremental competition for both Verizon andAT&T."
Verizon Wireless reported a fourth-quarter service profitmargin of 41.4 percent based on earnings before interest, taxes,depreciation and amortization, compared with analyst hopes for42 percent, and with 42.2 percent in the year-ago quarter.
The lower fourth-quarter margin was due tohigher-than-expected subsidies paid to smartphone makers such asApple Inc so that Verizon Wireless could offer a phonediscount to customers who sign a long-term contract. Rival AT&TInc has also warned that high smartphone sales hurt itswireless profit margins because of subsidies.
While Shammo was bullish about the wireless business andVerizon's FiOS home Internet and television services, he warnedthat the best he could hope for in the company's enterprisebusiness is that 2013 revenue and profit margins stay flat with2012 because of a lack of clarity on U.S. economic issues.
"In Enterprise, we still see uncertainty around the debtceiling, deficit reduction, and tax reform," Shammo toldanalysts on a quarterly earnings conference call where he alsocited worries about international economic growth.
The company's fourth-quarter net loss widened to $4.23billion, or $1.48 per share, from a loss of $2.02 billion, or 71cents per share in the year-ago quarter.
Excluding unusual items such as the charge from SuperstormSandy and pension liabilities, Verizon would have earned 45cents per share, well below Wall Street expectations of 50 centsper share, according to Thomson Reuters I/B/E/S.
Operating revenue rose 4.5 percent to $30.05 billion,compared with expectations of $29.83 billion, according toThomson Reuters I/B/E/S.
Capital spending for the year was $16.2 billion, including$135 million related to Sandy recovery efforts, and was in linewith 2011 spending. Shammo said he expects 2013 capital spendingto be flat with 2012.
Verizon said it added 144,000 net customers to its FiOShigh-speed Internet service and 134,000 net FiOS TV customers inthe quarter. It had already announced 2.1 million net additionsof wireless contract customers in the fourth quarter.
AT&T, The No. 2 U.S. mobile service provider, is set toreport results on Jan. 24 and Sprint is due to report Feb. 7.
