updated 1/29/2007 9:21:43 AM ET 2007-01-29T14:21:43

Verizon Communications Inc. said Monday its fourth-quarter profit fell due to taxes on the sale of assets and costs related to a spinoff, but the results surpassed Wall Street estimates as the telephone company's cellular business added 2.3 million customers.

For the final three months of 2006, Verizon earned $1.03 billion, or 35 cents per share, down from $1.66 billion, or 59 cents per share, in the fourth quarter 2005.

Fourth-quarter revenue totaled $22.60 billion, a 26.1 percent increase compared with $17.93 billion in the same period in 2005.

The latest quarterly profit reflected a charge of $541 million, or 19 cents per share, for taxes owed due to the sale of Verizon operations in the Dominican Republic. It also included 8 cents worth of costs related to the spinoff of the company's phone book and online directories business, as well as severance, pension, merger integration and headquarters relocation expenses.

Excluding those charges, Verizon earned 62 cents per share in the just-ended quarter, edging past the average forecast of 61 cents among industry analysts surveyed by Thomson Financial.

Verizon Wireless blew past numerous forecasts once again, though for the first time in many quarters, the company's rapid customer growth was not enough to narrow the gap behind AT&T Inc.'s cell phone business, the biggest U.S. carrier by subscribers. Verizon's net gain of 2.3 million customers, at least 100,000 more than many analysts expected, left it with 59.1 million at the end of 2006. AT&T, formerly named Cingular Wireless, reported last week a net gain of 2.4 million customers during the holiday quarter, ending the year with nearly 61 million.

But Verizon Wireless, owned jointly with Vodafone Group PLC, continued to outperform its rivals on other fronts. Revenue grew 16.3 percent to a market-leading $10.10 billion compared with $8.69 billion a year earlier. And the "churn" rate, measuring the number of subscribers switching to rivals, came in lower than many forecasts, averaging 1.14 percent of the customer base per month.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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