(Corrects paragraph 14 to reflect that 50 cents/shr compareswith 45 cents/shr, not 38 cents/shr)
* Q4 EPS 38 cents vs Street view 50 cents
* Q4 revs $30.05 bln vs view $29.83 bln
* Wireless margin 41.4 pct vs 42.2 pct year ago
* Says could do share buybacks 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.Stelephone 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 that the numbers will be helped by $2 billion incost cuts at Verizon Wireless, Verizon's mobile venture withVodafone Group Plc, on top of $5 billion cuts there inthe last three years.
The cuts at Verizon Wireless - the biggest U.S. mobileservice provider - will not require a lot of 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, due to 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 0.7 percent to $42.83 in afternoontrading on the New York Stock Exchange after Shammo's comments.
"Guidance appears strong for 2013," Stifel Nicolaus analystChristopher King Said.
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 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 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 that he expects 2013 capitalspending to 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 No. 3 rival, Sprint Nextel Corp, is due to report Feb. 7. (Additional reporting by Sayantani Ghosh in Bangalore; Editingby Jeffrey Benkoe, Maureen Bavdek and Tim Dobbyn)
Vodafone (VOD)