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Verizon Survived Apple iPhone Subsidy Pain, But...

Verizon, however, isn't out of the woods when it comes to concerns to margins.

The prospect of revived competitors could pressure the company's rising average revenue per user and account. Meanwhile, it's unclear whether current premium pricing can be sustained or rise further over the long-term.

Verizon's earnings come amid a frenzy of merger activity in the telecom sector that raises the prospect cost-competitive industry laggards Sprint (S), T-Mobile and MetroPCS (PCS) could revive their competitiveness.

In 2012, the weakness of Sprint and T-Mobile helped both Verizon and AT&T (T - Get Report) consistently pick up new subscribers and increase smartphone market share.

"Last year, postpaid subscriber losses at Sprint and T-Mobile equated to some 50% of postpaid net adds at Verizon and AT&T," Simon Flannery, a Morgan Stanley telecoms analyst, wrote in an April 17 note to clients.

"We believe that this trend may be peaking, and that consensus may be too optimistic on 2013 subscriber growth which will also allow DISH to pursue a more aggressive broadband/video strategy."

Consolidation could shore up the finances and services of Verizon's low-price competition, stemming revenue per account gains.

Verizon and AT&T also face tough year-over-year earnings comparables given sharp 2012 share price gains.

"While we expect a solid report, we maintain our Hold rating in light of Verizon's recent outperformance and given our views of limited upside potential to EPS estimates, overheated expectations for a near-term Vodafone and Verizon Wireless deal and the stock's steep premium to the S&P 500," Brett Feldman, a Deutsche Bank analyst wrote in an April 15 note to clients.

-- Written by Antoine Gara in New York.

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