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Verizon CEO and Chairman Lowell McAdam. Source: Verizon.

Verizon Communications (VZ 2.85%) this morning reported results for the first quarter of 2015. The report beat Wall Street's bottom-line earnings expectations but fell slightly short against revenue estimates, making for a mixed quarter.

First-quarter sales increased 3.8% year over year, landing at $32.0 billion. Earnings rose 21.4% to $1.02 per share, backing out non-operational gains from the company taking full ownership of Verizon Wireless in the year-ago period. Analysts were looking for earnings of roughly $0.95 per share on $32.3 billion in top-line sales.

Verizon's operating cash flows increased 42% to $10.2 billion, including a $2.4 billion one-time payment from American Tower (AMT 1.09%). Verizon thinks of that tower sale and leaseback deal as a move to monetize its tower infrastructure; American Tower sees it as a growth vehicle and addressable market expansion.

Excluding that payment, Verizon's operating cash flows grew a more modest 9.9% year over year.

The company pointed to its Verizon Edge installment payment plan as a driver of hardware sales. "This pricing makes it easy to buy a new device with a low upfront cost and simple monthly installments," Verizon said, explaining how and why wireless device sales spiked $1.5 billion higher while service revenues remained flat.

At the start of the quarter, 25% of Verizon's new wireless activations took the Edge plan. By the end of the quarter, that ratio had jumped to 39%. Today, just three weeks later, the Edge percentage of new activations "approaches 50%," and Verizon expects this trend to continue.

During the quarter, Verizon added 565,000 net postpaid subscribers for a grand total of 102.6 million retail postpaid connections. The company also manages about 6 million prepaid accounts.

Sales growth for 4G devices and connected tablets more than made up for dwindling business in 3G devices and basic phones. 72% of Verizon's retail postpaid customers now wield a 4G phone or tablet, driving a 54% year-over-year increase in mobile data usage.

Source: Verizon.

Verizon also reported 10.2% growth in FiOS wireline revenues, including a 9.4% boost in FiOS Internet subscribers and 7.9% more FiOS video accounts. These figures include FiOS subscribers in Texas, Florida, and California, who are on their way to becoming Frontier Communications (FTR) customers. When that agreement closes in the first half of 2016, Verizon will receive $10.5 billion in cash in exchange for losing 27% of its FiOS video and Internet subscribers.

"We expanded our base of customers seeking a premium experience, and we grew revenues, earnings and cash flow during a quarter in which we also took significant steps to sharpen our strategic focus," said Verizon Chairman and CEO Lowell McAdam, summarizing a complicated quarter.