By Sinead Carew
NEW YORK, Jan 21 (Reuters) - Verizon Communications Inc reported faster subscriber growth and stronger profitsthan expected at its Verizon Wireless venture with VodafoneGroup Plc, easing some concerns about intensifyingcompetition if only temporarily.
Investors are worried market leader Verizon Wireless, whichis paying $130 billion for Vodafone's 45 percent share in theirventure, will cut prices as discounts from No. 4 U.S. mobileservice T-Mobile U.S. have drawn responses from No. 2service AT&T Inc and No. 3 ranked Sprint Corp.
While investors still worry about competition in 2014,Verizon's ability to beat profit and subscriber estimates forthe fourth quarter show that it did not overpay to keepcustomers from switching to rivals so far at least, analystssaid.
Verizon, which also announced a small acquisition of themedia assets of Intel Corp on Tuesday, saw its sharesfall more than 2 percent, despite the strong results.
Some investors appeared to be selling their Verizon sharesto hedge their investments ahead of the Vodafone deal, which isexpected to close Feb. 21, according to Wells Fargo analystJennifer Fritzsche. She said that others, while happy with thefourth quarter, sold from frustration that Verizon has to waituntil after the deal close to set financial targets for 2014.
"Nothing in this quarter's results made me worry theyweren't holding their own versus the competition," Fritzschesaid. But she noted that investors may have wanted morereassurance Verizon will not get roped into a price war.
Chief Financial Officer Fran Shammo said Verizon wouldrespond to competitive pressure when it needs to, and that ittends to set its pricing agenda for the year in January andFebruary, but declined to provide further details.
"What he said adds fire to the worry rather than calmingit," Fritzsche said.
Verizon Wireless added 1.6 million subscribers in thequarter, compared with the 1.5 million average estimate of fiveanalysts contacted by Reuters. This beat subscriber growthnumbers at T-Mobile US for the quarter.
Its profit margin was 47 percent in the quarter based onearnings before interest, tax, depreciation and amortization, asa percentage of wireless service revenue beat the expectation offour analysts for a margin closer to 46 percent.
Verizon, which also competes with cable operators for videoand internet customers, agreed to buy Internet TV technologyfrom chip maker Intel but did not disclose the deal terms.
It plans to use Intel's technology to improve search anddiscovery features for Verizon's wireline FiOS video service andto help it build a platform to deliver video to mobile devices,Shammo told analysts on the company's conference call.
EARNINGS, REVENUE BEAT
Verizon Communications said it earned $5.07 billion, or$1.76 per share, in the fourth quarter, compared with a loss of$4.23 billion, or $1.48 per share, in the year-ago period,including pension-related charges in both quarters.
Excluding unusual items, its earnings per share of 66 centsbeat Wall Street expectations by a penny.
Revenue increased to $31.1 billion from $30.05 billion ayear earlier. Wall Street expected $31.02 billion, according toThomson Reuters I/B/E/S.
The company said wireless customer defections, known in theindustry as churn, increased slightly from the year-ago quarterbut fell from the third quarter.
On the wireline side, it added 92,000 FiOS video customersand 126,000 net new FiOS Internet connections in the quarter.
Verizon shares were down $1.02, or 2 percent, at $47.36 inafternoon trading on the New York Stock Exchange after fallingas low as $46.77 earlier in the session.
AT&T shares were down 26 cents at $33.44 while T-Mobilestock was up 50 cents, or 1.5 percent, at $33.01 and Sprintstock was up 2 cents at $8.99, also on NYSE.
Vodafone (VOD)
