America’s second largest telecom incumbent, Verizon Communications, reported an 8.4% decline in first quarter profit yesterday, due to accelerated spending on its $22.9 billion fiber-optic network roll-out.

The company posted quarterly income of $1.5 billion, or $0.51 per share, down from $1.63 billion in the first three months of 2006. Total revenue for the period was up 6.4% to $22.6 billion, as Verizon Wireless beat its larger rival, Cingular, in cellular subscription growth.

Wireless was stronger than we expected, commented Jonathan Atkin, a San Francisco-based RBC Capital Markets analyst. They’ve started the year with a very solid result.

Verizon’s Wireless, which is a joint venture between Verizon and Vodafone Group, added 1.2 million new subscribers in the first quarter, for a total user base of 60.7 million customers.