NEW YORK -- Verizon Communications Inc. on Thursday said that its profit rose 16 percent in the latest quarter as wireless revenue kept rising at a rate that's the envy of the industry.
The New York-based phone company reported net income of $1.95 billion, or 68 cents per share, in the January to March period. That was up from $1.69 billion, or 59 cents per share, a year earlier.
Analysts polled by FactSet had on average expected earnings of 66 cents per share for the latest quarter.
First-quarter revenue rose 4 percent to $29.4 billion, just short of the average analyst estimate at $29.5 billion.
Service revenues at Verizon Wireless, the country's largest cellphone carrier, rose 8.6 percent to $16.7 billion, accounting for more than half of overall revenue. At its closest rival AT&T Inc., wireless service revenue has been rising just over 4 percent per year.
The first quarter was a season of profit-taking for Verizon Wireless, after heavy spending in the fourth quarter to put the new iPhone 5 into 3 million hands. Like most other phone companies, Verizon subsidizes new smartphones by hundreds of dollars to bring the price down to $199 or less, then makes the money back in service fees over the run of a two-contract.
Verizon activated 7.2 million smartphones in the first quarter, down 2.6 million from the fourth quarter. That helped keep subsidies down and boosted operating income by 34 percent to $6.4 billion.
Unfortunately for Verizon Communications, only 55 percent of Verizon Wireless' profits flow to its bottom line. The rest goes to joint-venture partner Vodafone Group PLC, the British cellphone carrier. Verizon Communications has a long-standing interest in buying out its partner, but so far, hasn't found a formula that makes that affordable.
Verizon Wireless added a net 677,000 new devices under contract to its rolls in the quarter, meeting analyst expectations. That was up from 501,000 in the same quarter a year ago but down from the record-breaking 2.1 million in the fourth quarter.
Verizon ended the quarter with 93.2 million devices under contract. That's nearly one for every U.S. household, and compares with 70.5 million at AT&T, as of the end of the year.
Verizon shares rose 91 cents, or 1.8 percent, to $50.45 in premarket trading. The shares are close to their 12-year high of $51.15, hit last week.