Verizon posts higher revenue as consumers use more data

WASHINGTON (Reuters) - Verizon Communications Inc posted higher third-quarter revenue on Tuesday as it attracted more customers after cutting prices and as data-hungry consumers watched more videos on its network and used more devices, boosting their monthly bills.

Verizon's quarterly profit per share missed Wall Street estimates by a penny. Still shares edged up 0.5 percent.

Verizon, the largest U.S. wireless carrier, added 1.5 million postpaid subscribers, or those who pay for service after use, beating Wall Street estimates of about 1 million customers.

Subscribers are connecting to more than just phones, plugging in tablets, vehicle consoles and other devices to Verizon's network. In fact, postpaid customers connected nearly three devices per account, an increase of 3.7 percent

"It is not just about a smartphone customer, it is about how we build a base of revenue," Fran Shammo, the chief financial officer, told investors.

As subscribers watch more videos on their phones, the amount of data they consume is increasing. Customers on Verizon's "More Everything" shared-data plan, which accounts for over one-half of its customers, are using 50 percent more data than a year ago.

Subscribers were also drawn to the carrier by cheaper prices. Verizon has been cautious in cutting prices in a hyper-competitive environment, but recently launched a series of promotions following price cuts by rivals.

"Quite honestly, this puts us back in the market. Given all the pricing moves, we were quite honestly out of the market," said Shammo.

Revenues per postpaid account grew 3.5 percent in the quarter versus a year ago, Verizon said.

Wireless carriers have replaced traditional two-year contracts with equipment financing plans that charge lower service fees but do not subsidize devices.

Verizon has been reluctant to dump the two-year contract. The carrier saw a tepid rise in customers subscribing to the plan in the most recent quarter, but expects the percentage of those signing up to double in the fourth quarter.

Still, the growing number of customers on equipment financing plans resulted in lower service revenue, as the plans charges lower service fees.

Customer defections, known as churn, rose slightly to one percent.

Verizon reported third-quarter profit of 89 cents per share, up from 78 cents per share a year earlier. Revenue rose 4.3 percent to $31.6 billion.

Analysts, on average, expected a profit of 90 cents per share on revenue of $31.58 billion, according to Thomson Reuters I/B/E/S.

Total revenues for Verizon's wireless business grew 7 percent year over year, while falling 0.8 percent for its broadband internet and video product. The unit that connects businesses around the world to its broadband network continued to be weak due to a softening in the global economy, Shammo said.

Verizon shares rose 22 cents to $48.69.

(Reporting by Marina Lopes; Editing by Lisa Von Ahn and Jeffrey Benkoe)