Defying the shaky economic climate, Verizon Communications Inc.'s wireless division helped to increase the carrier's third-quarter profits.

Despite the worldwide recession, Verizon Wireless has expressed confidence that it will continue to grow in 2009. The carrier's profits increased 31 percent to $1.67 billion in the third quarter of this year, compared with third-quarter 2007 profits of $1.27 billion.

"We are all very pleased with our third-quarter results," said Ivan Seidenberg, chairman/CEO of Verizon, New York, in a conference call. "Base demand and interest in our products and services remain very strong.

"We were able to meet competitive challenges head on without deviating from our strategic business model and make progress in delivering value to shareowners," he said. "We also learned quite a bit during the quarter to help sharpen our focus even further."

Verizon Wireless reported 59 cents in diluted earnings per share in third-quarter 2008, compared with 44 cents per share in third-quarter 2007.

On an adjusted non-GAAP basis, third-quarter 2008 earnings were 66 cents per share, compared with 63 cents per share in the third quarter 2007.

Verizon Wireless added 1.5 million retail customers, in addition to 630,000 customers from its acquisition of Rural Cellular, for a total of 2.1 million new customers.

That brings the grand total of Verizon Wireless subscribers, new and old, to 70.8 million, making it the number-two wireless carrier in the U.S.

Higher usage of data services, including e-mail, text messaging and mobile Internet browsing, helped Verizon's wireless sales grow approximately 12 percent to $12.7 billion.

Verizon Wireless subscribers spent an average of $52.18 per month.

In comparison, AT&T also experienced strong wireless gains, led by 2.4 million 3G iPhone activations in the third quarter of 2008.

The number-one wireless carrier said that of the 2.4 million iPhone activations, 40 percent were to wireless customers who were new to AT&T, delivering a rapid growth in wireless data (see story).

In fact, the one less-than-ideal finding from Verizon Wireless' third-quarter report was its churn rate, which was affected negatively in large part by customers going over to AT&T because of Apple's iPhone 3G.

Verizon saw its total churn rate increase from 1.12 percent in the second quarter to 1.33 percent in the third quarter of this year, whereas it was 1.27 percent during third-quarter 2007.

Despite the slight increase, Verizon Wireless still has the lowest churn rate of any U.S. carrier.

Verizon Wireless' total operating revenues grew 4.1 percent to $24.8 billion in the third quarter 2008, from $23.8 billion in the third quarter 2007.

This is an increase of 5.4 percent when adjusted for the spinoff of non-strategic local exchange and related Wireline business assets earlier this year -- non-GAAP.

Total operating expenses increased 5.2 percent to $20.6 billion, or 5.4 percent on an adjusted basis, comparing third-quarter 2008 with third-quarter 2007.

Cash flows from continuing operations were $19.1 billion through the first nine months of 2008, up 5.9 percent compared with the same period last year.

Capital expenditures were $12.6 billion through the first nine months of 2008, down more than $200 million over the same period last year.

Verizon Wireless is on track to deliver lower overall capital spending in 2008, compared with 2007. Total debt was $44.8 billion, compared with $43.1 billion at the end of the second quarter 2008.

Adjusted earnings in the third quarter 2008 excluded $164 million after-tax, or 6 cents per share, for severance, pension and benefit charges recognized primarily as a result of workforce reductions; and $32 million after-tax, or 1 cent per share, for merger integration costs.

Adjusted earnings in the third quarter 2007 excluded charges of 19 cents per share in special items: 16 cents per share for international taxes, 2 cents per share for costs related to the spinoff of non-strategic Wireline assets and 1 cent per share for merger integration costs.

"We believe that based on our results this quarter, that you can see our business has shown remarkable stability and strength," Mr. Seidenberg said.

"Now since we are about three-quarters of the way through the year, we can offer some outlook for the rest of 2008: We expect for the full year 2008 our earnings per share will be somewhere around the 8 percent level, which is consistent with the targets we actually set for ourselves at the beginning of this year with our board.

"It is also consistent with the fact that we raised our dividend recently to 7 percent starting on Nov. 1, and we consider the combination of an 8 percent full-year 2008 along with the 7 percent increase in dividend as a good result for the year in light of this economy," he said.

"We believe our business has the underlying strength to continue making progress along the lines of our three key business units."