Quarterly profit fell to $1.5 billion, or 51 cents a share, from $1.6 billion or 56 cents a share a year earlier. The year-ago figures included a directories business that Verizon has since spun off and assets in the Dominican Republic and Puerto Rico that it has since sold.
Excluding discontinued operations and special items, earnings were 54 cents a share, compared to 46 cents a year ago and in line with the average analyst forecast, according to Reuters Estimates.
"Verizon's first quarter results highlight the accelerating growth we expect from both Verizon and AT&T, led by video and data services," Cowen and Co. analyst Tom Watts said in a research report.
Verizon, like its rival AT&T, has benefited from strong growth in Internet and mobile phone subscribers, which has helped ease the impact of declining fixed-line use.
Verizon Wireless, a 55% owned joint venture with Vodafone Group , added 1.7 million subscribers -- in line with analysts' expectations. It now has a total of 60.7 million customers, it said.
Churn, the industry term for customer cancellations, fell to 1.08% in the first quarter from 1.14% from the fourth quarter.
Wireless revenues totaled $10.3 billion, up 17.0%, it said.
Verizon has also been investing heavily in FiOS, the company's new high-speed Internet and video service, aiming to compete with cable television companies.
The cost of deploying FiOS services diluted earnings by 11 cents a share, as previously forecast.
Most analysts have said the investment, while costly, was necessary to offset a decline in traditional phone subscribers to wireless services and cable companies' packages of voice, wireless and television services.
Verizon said it had 348,000 FiOS TV customers as of the end of the quarter, and that growth was accelerating. It had an average of around 2,200 FiOS TV customer additions per business day in the first quarter, about 750 more per day than the fourth-quarter 2006.
Capital spending in the first quarter totaled $4.2 billion, in line with previously announced plans, compared with $4.0 billion in the same quarter a year earlier.
It also said it repurchased approximately $425 million in shares during the first quarter 2007, as part of a previously announced plan to repurchase $2 billion in shares over the course of the year.
Total debt at the end of the first quarter 2007 was $34.7 billion, down $7.7 billion from a year earlier, largely from the spin-off of the directories business.