Verizon reports strong 3Q results propelled by wireless customer growth

Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported strong third-quarter 2019 results highlighted by increased cash flow and the most third-quarter phone gross additions in five years.

"Verizon continued its momentum in the third quarter by driving strong wireless volumes in both our Consumer and Business segments, while delivering solid financial results, highlighted by continued wireless service revenue growth, increased cash flow, and EPS growth," said Chairman and CEO Hans Vestberg. "We are focused on our 5G rollout strategy, looking to deploy next-generation networks while enhancing our industry-leading 4G LTE network. Going into the fourth quarter, we are energized by the strong performance of the business and we are confident in our strategy to drive value for our customers and growth for our shareholders."

For third-quarter 2019, Verizon reported EPS of $1.25, compared with $1.19 in third-quarter 2018. The company's reported earnings include a minimal net impact from special items: a net pre-tax gain of $261 million from dispositions of assets and businesses that was offset by a pension re-measurement pre-tax charge of $291 million. On an adjusted basis (non-GAAP), third-quarter 2019 EPS, excluding special items, was $1.25, compared with adjusted EPS of $1.22 in third-quarter 2018.

In third-quarter 2019, Verizon's results included the effects of a reduction in benefits from the adoption of a revenue recognition standard, primarily due to the deferral of commission expense, and the adoption of a lease accounting standard. The combined net impact was a 4 cent headwind in third-quarter 2019, and 13 cents year-to-date, which is included in the year-over-year increase in adjusted EPS.

Consolidated results

Total consolidated operating revenues in third-quarter 2019 were $32.9 billion, up 0.9 percent from third-quarter 2018. This growth was primarily driven by higher wireless service revenue, partially offset by lower wireless equipment revenue and declines in legacy wireline revenue, predominantly in the Business segment.

Year-to-date cash flow from operations totaled $26.7 billion, an increase of $504 million year over year. This growth was the result of operational improvements in Verizon's businesses and lower discretionary employee benefit contributions, offset by higher cash tax payments and cash payments related to the Voluntary Separation Program. In September 2019, Verizon’s Board of Directors declared a quarterly dividend increase for the 13th consecutive year. Through third-quarter 2019, the company’s cash dividend payments totaled $7.5 billion.

Year-to-date capital expenditures were $12.3 billion through third-quarter 2019. Capital expenditures continue to support the launch and build-out of Verizon's 5G Ultra Wideband network, the growth in data and video traffic on the company's 4G LTE network, the deployment of significant fiber in markets nationwide and the upgrade to Verizon's Intelligent Edge Network architecture.

Strong operational cash flow and capital spending efficiencies have enabled Verizon to decrease total debt by $3.5 billion year to date. The company remains focused on reducing its unsecured debt portfolio while continuing to actively manage its near-term maturities, optimize its overall funding footprint, and lower its cost of capital.

In 2018, Verizon announced a goal to achieve $10 billion in cumulative cash savings by 2021. This initiative has yielded $4.6 billion of cumulative cash savings since the program began. In third-quarter 2019, Verizon realized over $400 million of expense savings from the Voluntary Separation Program, producing approximately $900 million in expense savings year-to-date.

Net income was $5.3 billion in third-quarter 2019. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled approximately $12.2 billion. Consolidated operating income margin was 24.9 percent in third-quarter 2019, compared with 23.5 percent in third-quarter 2018. Consolidated EBITDA margin (non-GAAP) was 37.0 percent in third-quarter 2019, compared with 37.6 percent in third-quarter 2018. Adjusted EBITDA margin (non-GAAP) in third-quarter 2019 was 36.6 percent, and consolidated adjusted EBITDA (non-GAAP) in third-quarter 2019 was $12.0 billion.

Consumer results

• Total Verizon Consumer revenues were $22.7 billion, an increase of 1.4 percent year over year, driven by continued strong growth in wireless service revenue and Fios service offerings, offset by declines in wireless equipment and legacy wireline services.
• Verizon Consumer Group reported 193,000 wireless retail postpaid net additions in third-quarter 2019. This consisted of 239,000 phone net additions, more than double the 112,000 phone net additions in third-quarter 2018, and tablet net losses of 176,000, offset by 130,000 other connected device net additions, primarily wearables. Postpaid smartphone net additions were 372,000, an increase from 285,000 postpaid smartphone net additions in third-quarter 2018. This was driven by a 10 percent year over year increase in phone gross additions.
• Consumer wireless service revenues increased 2.1 percent in third-quarter 2019, driven by customer step-ups to higher-priced plans and an increase in connections per account.
• Total retail postpaid churn was 1.05 percent in third-quarter 2019, and retail postpaid phone churn was 0.79 percent.
• In third-quarter 2019, Verizon Consumer Group reported 30,000 Fios Internet net additions and 67,000 Fios Video net losses, reflecting the ongoing shift from traditional linear video to over-the-top offerings. Consumer Fios revenues increased by 1.7 percent, primarily due to the demand for broadband offerings.
• Segment operating income was $7.5 billion, an increase of 3.8 percent year over year, and segment operating income margin was 33.0 percent. Segment EBITDA (non-GAAP) totaled $10.3 billion in third-quarter 2019, an increase of 0.7 percent year over year. Segment EBITDA margin (non-GAAP) was 45.3 percent, which was down 30 basis points year over year, including approximately 80 basis points from the deferral of commission expense and the lease accounting standard.

Business results

• Total Verizon Business revenues were $7.9 billion, approximately flat year over year, as growth in wireless service revenue and high quality fiber products was offset by declines in legacy wireline products.
• Verizon Business Group reported 408,000 wireless retail postpaid net additions in third-quarter 2019, an increase of 12.1 percent year over year. This consisted of 205,000 phone net additions, 112,000 tablet net additions and 91,000 other connected device additions.
• Total retail postpaid churn was 1.22 percent in third-quarter 2019, and retail postpaid phone churn was 0.98 percent.
• Segment operating income was $1.0 billion, a decrease of 15.3 percent year over year, and segment operating income margin was 12.4 percent. Segment EBITDA (non-GAAP) totaled $2.0 billion in third-quarter 2019, a decrease of 10.7 percent year over year. Segment EBITDA margin (non-GAAP) was 25.2 percent, down from 28.2 percent in third-quarter 2018, due in part to declines in high margin wholesale revenue and legacy wireline products. This includes headwinds of approximately 50 basis points from the deferral of commission expense and the lease accounting standard.

Media results

• Total Verizon Media revenues in third-quarter 2019 were $1.8 billion, down 2.0 percent year over year, continuing the improvement in revenue trends. Gains in native and mobile advertising continue to be offset by declines in desktop advertising, though the business is building momentum in key areas.

Outlook and guidance

As outlined in Verizon's second-quarter 2019 earnings release, the company expects the following:

• Low single-digit percentage growth in adjusted 2019 EPS, excluding the impact of the lease accounting standard.
• Low single-digit percentage growth in full-year consolidated revenues on a GAAP reported basis.
• Cash taxes to be $2 billion to $3 billion higher than in 2018 due to benefits that were realized in 2018 that are not expected to repeat in 2019.
• Capital spending for 2019 to be in the range of $17 billion to $18 billion, including the expanded commercial launch of 5G.
• Adjusted effective income tax rate (non-GAAP) for full-year 2019 to be at the lower end of its previously disclosed range of 24 percent to 26 percent.

NOTE: See the accompanying schedules and www.verizon.com/about/investors for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York City, generated revenues of $130.9 billion in 2018. The company operates America’s most awarded wireless network and the nation’s premier all-fiber network, and delivers integrated solutions to businesses worldwide. With brands like Yahoo, TechCrunch and HuffPost, the company’s media group helps consumers stay informed and entertained, communicate and transact, while creating new ways for advertisers and partners to connect. Verizon’s corporate responsibility prioritizes the environmental, social and governance issues most relevant to its business and impact to society.

VERIZON’S ONLINE MEDIA CENTER: News releases, stories, media contacts and other resources are available at www.verizon.com/about/news/. News releases are also available through an RSS feed. To subscribe, visit www.verizon.com/about/rss-feeds/.

Forward-looking statementsIn this communication we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words “anticipates,” “believes,” “estimates,” “expects,” “hopes” or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The following important factors, along with those discussed in our filings with the Securities and Exchange Commission (the “SEC”), could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: adverse conditions in the U.S. and international economies; the effects of competition in the markets in which we operate; material changes in technology or technology substitution; disruption of our key suppliers’ provisioning of products or services; changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks; breaches of network or information technology security, natural disasters, terrorist attacks or acts of war or significant litigation and any resulting financial impact not covered by insurance; our high level of indebtedness; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets affecting the cost, including interest rates, and/or availability of further financing; material adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or treaties, or in their interpretation; changes in accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; the inability to implement our business strategies; and the inability to realize the expected benefits of strategic transactions.

Media contacts:

Kim Ancin

908.559.3227

[e-mail]

Eric Wilkens

908.559.3063

[e-mail]

Verizon Communications Inc.
Condensed Consolidated Statements of Income
										(dollars in millions, except per share amounts)
	3 Mos. Ended				3 Mos. Ended						9 Mos. Ended				9 Mos. Ended
Unaudited	9/30/19				9/30/18				% Change		9/30/19				9/30/18				% Change
Operating Revenues
Service revenues and other	$	27,753			$	27,254			1.8		$	82,301			$	81,145			1.4
Wireless equipment revenues		5,141				5,353			(4.0)			14,792				15,437			(4.2)
Total Operating Revenues		32,894				32,607			0.9			97,093				96,582			0.5
Operating Expenses
Cost of services		7,902				7,842			0.8			23,396				24,022			(2.6)
Cost of wireless equipment		5,482				5,489			(0.1)			15,699				16,195			(3.1)
Selling, general and administrative expense		7,216				7,224			(0.1)			21,682				21,673			—
Depreciation and amortization expense		4,114				4,377			(6.0)			12,577				13,051			(3.6)
Total Operating Expenses		24,714				24,932			(0.9)			73,354				74,941			(2.1)
Operating Income		8,180				7,675			6.6			23,739				21,641			9.7
Equity in losses of unconsolidated businesses		(1	)			(3	)		(66.7)			(20	)			(250	)		(92.0)
Other income (expense), net		(110	)			214			*			(1,127	)			499			*
Interest expense		(1,146	)			(1,211	)		(5.4)			(3,571	)			(3,634	)		(1.7)
Income Before Provision For Income Taxes		6,923				6,675			3.7			19,021				18,256			4.2
Provision for income taxes		(1,586	)			(1,613	)		(1.7)			(4,450	)			(4,282	)		3.9
Net Income	$	5,337			$	5,062			5.4		$	14,571			$	13,974			4.3
Net income attributable to noncontrolling interests	$	143			$	138			3.6		$	401			$	385			4.2
Net income attributable to Verizon		5,194				4,924			5.5			14,170				13,589			4.3
Net Income	$	5,337			$	5,062			5.4		$	14,571			$	13,974			4.3
Basic Earnings Per Common Share
Net income attributable to Verizon	$	1.26			$	1.19			5.9		$	3.42			$	3.29			4.0
Weighted-average shares outstanding (in millions)		4,138				4,136						4,138				4,125
Diluted Earnings Per Common Share (1)
Net income attributable to Verizon	$	1.25			$	1.19			5.0		$	3.42			$	3.29			4.0
Weighted-average shares outstanding (in millions)		4,140				4,140						4,140				4,129
Footnotes:
(1) Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represents the only potential dilution.
* Not meaningful

Verizon Communications Inc.
Condensed Consolidated Balance Sheets
									(dollars in millions)
Unaudited	9/30/19				12/31/18				$ Change
Assets
Current assets
Cash and cash equivalents	$	3,020			$	2,745			$	275
Accounts receivable, net		24,713				25,102				(389	)
Inventories		1,538				1,336				202
Prepaid expenses and other		5,624				5,453				171
Total current assets		34,895				34,636				259
Property, plant and equipment		260,053				252,835				7,218
Less accumulated depreciation		171,204				163,549				7,655
Property, plant and equipment, net		88,849				89,286				(437	)
Investments in unconsolidated businesses		628				671				(43	)
Wireless licenses		94,433				94,130				303
Goodwill		24,570				24,614				(44	)
Other intangible assets, net		9,264				9,775				(511	)
Operating lease right-of-use assets		22,218				—				22,218
Other assets		10,018				11,717				(1,699	)
Total assets	$	284,875			$	264,829			$	20,046
Liabilities and Equity
Current liabilities
Debt maturing within one year	$	7,830			$	7,190			$	640
Accounts payable and accrued liabilities		19,566				22,501				(2,935	)
Current operating lease liabilities		2,959				—				2,959
Other current liabilities		8,854				8,239				615
Total current liabilities		39,209				37,930				1,279
Long-term debt		101,769				105,873				(4,104	)
Employee benefit obligations		18,236				18,599				(363	)
Deferred income taxes		34,592				33,795				797
Non-current operating lease liabilities		18,214				—				18,214
Other liabilities		12,543				13,922				(1,379	)
Total long-term liabilities		185,354				172,189				13,165
Equity
Common stock		429				429				—
Additional paid in capital		13,418				13,437				(19	)
Retained earnings		50,595				43,542				7,053
Accumulated other comprehensive income		1,104				2,370				(1,266	)
Common stock in treasury, at cost		(6,822	)			(6,986	)			164
Deferred compensation – employee stock ownership plans and other		197				353				(156	)
Noncontrolling interests		1,391				1,565				(174	)
Total equity		60,312				54,710				5,602
Total liabilities and equity	$	284,875			$	264,829			$	20,046
Consolidated - Selected Financial and Operating Statistics
(dollars in millions, except per share amounts)
Unaudited	9/30/19				12/31/18
Total debt	$	109,599			$	113,063
Net debt	$	106,579			$	110,318
Net unsecured debt	$	97,779			$	100,242
Net debt / Consolidated Adjusted EBITDA(1)	2.2x				2.3x
Net unsecured debt / Consolidated Adjusted EBITDA(1)	2.1x				2.1x
Common shares outstanding end of period (in millions)		4,136				4,132
Total employees (‘000)		135.4				144.5
Quarterly cash dividends declared per common share	$	0.6150			$	0.6025
Footnotes:
(1) Consolidated adjusted EBITDA excludes the effects of non-operational items and special items.

Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
					(dollars in millions)
	9 Mos. Ended				9 Mos. Ended
Unaudited	9/30/19				9/30/18				$ Change
Cash Flows from Operating Activities
Net Income	$	14,571			$	13,974			$	597
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		12,577				13,051				(474	)
Employee retirement benefits		(105	)			(886	)			781
Deferred income taxes		1,070				2,023				(953	)
Provision for uncollectible accounts		1,131				699				432
Equity in losses of unconsolidated businesses, net of dividends received		64				291				(227	)
Net loss on sale of divested businesses		94				—				94
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses		(3,902	)			(1,944	)			(1,958	)
Discretionary employee benefits contributions		(300	)			(1,679	)			1,379
Other, net		1,548				715				833
Net cash provided by operating activities		26,748				26,244				504
Cash Flows from Investing Activities
Capital expenditures (including capitalized software)		(12,332	)			(12,026	)			(306	)
Acquisitions of businesses, net of cash acquired		(29	)			(39	)			10
Acquisitions of wireless licenses		(299	)			(1,307	)			1,008
Proceeds from dispositions of businesses		27				—				27
Other, net		476				236				240
Net cash used in investing activities		(12,157	)			(13,136	)			979
Cash Flows from Financing Activities
Proceeds from long-term borrowings		8,360				5,932				2,428
Proceeds from asset-backed long-term borrowings		3,982				3,216				766
Repayments of long-term borrowings and finance lease obligations		(12,486	)			(9,776	)			(2,710	)
Repayments of asset-backed long-term borrowings		(5,273	)			(2,915	)			(2,358	)
Dividends paid		(7,474	)			(7,283	)			(191	)
Other, net		(1,410	)			(1,595	)			185
Net cash used in financing activities		(14,301	)			(12,421	)			(1,880	)
Increase in cash, cash equivalents and restricted cash		290				687				(397	)
Cash, cash equivalents and restricted cash, beginning of period		3,916				2,888				1,028
Cash, cash equivalents and restricted cash, end of period	$	4,206			$	3,575			$	631

Verizon Communications Inc.
Consumer - Selected Financial Results
										(dollars in millions)
	3 Mos. Ended				3 Mos. Ended						9 Mos. Ended				9 Mos. Ended
Unaudited	9/30/19				9/30/18				% Change		9/30/19				9/30/18				% Change
Operating Revenues
Service	$	16,433			$	16,193			1.5		$	49,042			$	48,066			2.0
Wireless equipment		4,257				4,508			(5.6)			12,326				13,029			(5.4)
Other		2,016				1,698			18.7			5,481				4,934			11.1
Total Operating Revenues		22,706				22,399			1.4			66,849				66,029			1.2
Operating Expenses
Cost of services		4,035				3,850			4.8			11,761				11,465			2.6
Cost of wireless equipment		4,291				4,379			(2.0)			12,342				12,948			(4.7)
Selling, general and administrative expense		4,085				3,947			3.5			12,090				11,426			5.8
Depreciation and amortization expense		2,806				3,010			(6.8)			8,581				8,982			(4.5)
Total Operating Expenses		15,217				15,186			0.2			44,774				44,821			(0.1)
Operating Income	$	7,489			$	7,213			3.8		$	22,075			$	21,208			4.1
Operating Income Margin		33.0	%			32.2	%					33.0	%			32.1	%
Segment EBITDA	$	10,295			$	10,223			0.7		$	30,656			$	30,190			1.5
Segment EBITDA Margin		45.3	%			45.6	%					45.9	%			45.7	%
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing segment performance.
Certain intersegment transactions with corporate entities have not been eliminated.

Verizon Communications Inc.
Consumer - Selected Operating Statistics
Unaudited											9/30/19				9/30/18				% Change
Connections (‘000):
Wireless retail postpaid connections												89,739				89,062			0.8
Wireless retail prepaid connections												4,183				4,736			(11.7)
Total wireless retail connections												93,922				93,798			0.1
Fios video connections												4,203				4,423			(5.0)
Fios Internet connections												5,867				5,711			2.7
Fios digital voice residence connections												3,672				3,833			(4.2)
Fios digital connections												13,742				13,967			(1.6)
Broadband connections												6,469				6,452			0.3
Voice connections												5,904				6,480			(8.9)
	3 Mos. Ended				3 Mos. Ended						9 Mos. Ended				9 Mos. Ended
Unaudited	9/30/19				9/30/18				% Change		9/30/19				9/30/18				% Change
Gross Additions (‘000):
Wireless retail postpaid		3,020				2,850			6.0			8,459				8,101			4.4
Net Additions Detail (‘000):
Wireless retail postpaid (1)		193				151			27.8			118				243			(51.4)
Wireless retail prepaid (1)		(81	)			(96	)		15.6			(470	)			(667	)		29.5
Total wireless retail (1)		112				55			*			(352	)			(424	)		17.0
Wireless retail postpaid phones (1)		239				112			*			149				(24	)		*
Fios video		(67	)			(64	)		(4.7)			(174	)			(125	)		(39.2)
Fios Internet		30				48			(37.5)			106				146			(27.4)
Fios digital voice residence		(53	)			(30	)		(76.7)			(130	)			(72	)		(80.6)
Fios digital		(90	)			(46	)		(95.7)			(198	)			(51	)		*
Broadband		(5	)			5			*			9				11			(18.2)
Voice		(154	)			(151	)		(2.0)			(428	)			(448	)		4.5
Churn Rate:
Wireless retail postpaid		1.05	%			1.01	%					1.03	%			0.98	%
Wireless retail postpaid phones		0.79	%			0.77	%					0.77	%			0.75	%
Wireless retail		1.27	%			1.24	%					1.27	%			1.25	%
Revenue Statistics (in millions):
Wireless service revenue	$	13,533			$	13,257			2.1		$	40,346			$	39,260			2.8
Fios revenues	$	2,811			$	2,764			1.7		$	8,347			$	8,236			1.3
Other Wireless Statistics:
Wireless retail postpaid ARPA (2)	$	118.89			$	117.06			1.6		$	118.16			$	115.34			2.4
Wireless retail postpaid upgrade rate		4.9	%			5.1	%
Wireless retail postpaid accounts (‘000) (3)												33,898				34,005			(0.3)
Wireless retail postpaid connections per account (3)												2.65				2.62			1.1
Total wireless Internet postpaid base (3)												16.1	%			15.9	%
Footnotes:
(1) Connection net additions include certain adjustments.
(2) Wireless retail postpaid ARPA - average service revenue per account from retail postpaid accounts.
(3) Statistics presented as of end of period.
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing segment performance.
Certain intersegment transactions with corporate entities have not been eliminated.
* Not meaningful

Verizon Communications Inc.
Business - Selected Financial Results
															(dollars in millions)
	3 Mos. Ended				3 Mos. Ended						9 Mos. Ended				9 Mos. Ended
Unaudited	9/30/19				9/30/18				% Change		9/30/19				9/30/18				% Change
Operating Revenues
Global Enterprise	$	2,714			$	2,782			(2.4)		$	8,078			$	8,416			(4.0)
Small and Medium Business		2,899				2,729			6.2			8,392				7,905			6.2
Public Sector and Other		1,472				1,455			1.2			4,435				4,322			2.6
Wholesale		800				927			(13.7)			2,467				2,884			(14.5)
Total Operating Revenues		7,885				7,893			(0.1)			23,372				23,527			(0.7)
Operating Expenses
Cost of services		2,666				2,657			0.3			7,838				8,027			(2.4)
Cost of wireless equipment		1,190				1,110			7.2			3,356				3,247			3.4
Selling, general and administrative expense		2,042				1,900			7.5			5,984				5,694			5.1
Depreciation and amortization expense		1,010				1,072			(5.8)			3,098				3,190			(2.9)
Total Operating Expenses		6,908				6,739			2.5			20,276				20,158			0.6
Operating Income	$	977			$	1,154			(15.3)		$	3,096			$	3,369			(8.1)
Operating Income Margin		12.4	%			14.6	%					13.2	%			14.3	%
Segment EBITDA	$	1,987			$	2,226			(10.7)		$	6,194			$	6,559			(5.6)
Segment EBITDA Margin		25.2	%			28.2	%					26.5	%			27.9	%
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing segment performance.
Certain intersegment transactions with corporate entities have not been eliminated.

Verizon Communications Inc.
Business - Selected Operating Statistics
Unaudited												9/30/19				9/30/18				% Change
Connections (‘000):
Wireless retail postpaid connections													24,732				23,073			7.2
Fios video connections													77				74			4.1
Fios Internet connections													322				302			6.6
Fios digital connections													399				376			6.1
Broadband connections													492				506			(2.8)
Voice connections													5,058				5,529			(8.5)
		3 Mos. Ended				3 Mos. Ended						9 Mos. Ended				9 Mos. Ended
Unaudited		9/30/19				9/30/18				% Change		9/30/19				9/30/18				% Change
Gross Additions ('000):
Wireless retail postpaid			1,302				1,163			12.0			3,644				3,405			7.0
Net Add Detail (‘000):
Wireless retail postpaid (1)			408				364			12.1			995				1,063			(6.4)
Wireless retail postpaid phones (1)			205				183			12.0			496				494			0.4
Fios video			1				1			—			3				3			—
Fios Internet			6				6			—			16				17			(5.9)
Fios digital			7				7			—			19				20			(5.0)
Broadband			(2	)			(3	)		33.3			(9	)			(12	)		25.0
Voice			(105	)			(110	)		4.5			(341	)			(364	)		6.3
Churn Rate:
Wireless retail postpaid			1.22	%			1.17	%					1.22	%			1.16	%
Wireless retail postpaid phones			0.98	%			0.95	%					0.99	%			0.95	%
Revenue Statistics (in millions):
Wireless service revenue		$	2,850			$	2,687			6.1		$	8,319			$	7,803			6.6
Fios revenues		$	243			$	222			9.5		$	725			$	657			10.4
Other Operating Statistics:
Wireless retail postpaid upgrade rate			4.5	%			4.8	%
Total wireless Internet postpaid base (2)													33.5	%			33.1	%
Footnotes:
(1) Connection net additions include certain adjustments.
(2) Statistics presented as of end of period.
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing segment performance.
Certain intersegment transactions with corporate entities have not been eliminated.

Verizon Communications Inc.
Supplemental Information - Wireless Historical Financial Results
The following supplemental schedule contains historical wireless segment results and is provided to help investors understand trends in our new segment results.
(dollars in millions)
Unaudited		3 Mos. Ended 9/30/19				3 Mos. Ended 9/30/18				% Change		9 Mos. Ended 9/30/19				9 Mos. Ended 9/30/18				% Change
Operating Revenues
Service		$	16,398			$	15,966			2.7		$	48,714			$	47,122			3.4
Equipment			5,141				5,353			(4.0)			14,792				15,437			(4.2)
Other			2,030				1,654			22.7			5,445				4,763			14.3
Total Operating Revenues			23,569				22,973			2.6			68,951				67,322			2.4
Operating Expenses
Cost of services			2,583				2,350			9.9			7,461				6,900			8.1
Cost of equipment			5,482				5,489			(0.1)			15,699				16,195			(3.1)
Selling, general and administrative expense			4,462				4,169			7.0			13,061				12,052			8.4
Depreciation and amortization expense			2,259				2,454			(7.9)			6,840				7,341			(6.8)
Total Operating Expenses			14,786				14,462			2.2			43,061				42,488			1.3
Operating Income		$	8,783			$	8,511			3.2		$	25,890			$	24,834			4.3
Operating Income Margin			37.3	%			37.0	%					37.5	%			36.9	%
Segment EBITDA		$	11,042			$	10,965			0.7		$	32,730			$	32,175			1.7
Segment EBITDA Margin			46.8	%			47.7	%					47.5	%			47.8	%
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items.
Certain intersegment transactions with corporate entities have not been eliminated.

Verizon Communications Inc.
Supplemental Information - Wireless Historical Operating Statistics
The following supplemental schedule contains historical wireless segment results and is provided to help investors understand trends in our new segment results.
Unaudited												9/30/19				9/30/18				% Change
Connections (‘000)
Retail postpaid													114,471				112,135			2.1
Retail prepaid													4,183				4,736			(11.7)
Total retail													118,654				116,871			1.5
Unaudited		3 Mos. Ended 9/30/19				3 Mos. Ended 9/30/18				% Change		9 Mos. Ended 9/30/19				9 Mos. Ended 9/30/18				% Change
Net Add Detail (‘000) (1)
Retail postpaid			601				515			16.7			1,113				1,306			(14.8)
Retail prepaid			(81	)			(96	)		15.6			(470	)			(667	)		29.5
Total retail			520				419			24.1			643				639			0.6
Account Statistics
Retail postpaid accounts (‘000) (2)													35,371				35,309			0.2
Retail postpaid connections per account (2)													3.24				3.18			1.9
Retail postpaid ARPA (3)		$	139.01			$	136.58			1.8		$	137.83			$	134.28			2.6
Churn Detail
Retail postpaid			1.09	%			1.04	%					1.07	%			1.02	%
Retail			1.26	%			1.22	%					1.26	%			1.23	%
Retail Postpaid Connection Statistics (2)
Total smartphone postpaid phone base													93.5	%			91.7	%
Total Internet postpaid base													19.8	%			19.4	%
Footnotes:
(1) Connection net additions include certain adjustments.
(2) Statistics presented as of end of period.
(3) Wireless retail postpaid ARPA - average service revenue per account from retail postpaid accounts.
The segment financial results and metrics above are adjusted to exclude the effects of special items.
Certain intersegment transactions with corporate entities have not been eliminated.

Verizon Communications Inc.
Supplemental Information - Wireline Historical Financial Results
The following supplemental schedule contains historical wireline segment results and is provided to help investors understand trends in our new segment results.
(dollars in millions)
Unaudited		3 Mos. Ended 9/30/19				3 Mos. Ended 9/30/18				% Change		9 Mos. Ended 9/30/19				9 Mos. Ended 9/30/18				% Change
Operating Revenues
Consumer Markets		$	3,124			$	3,138			(0.4)		$	9,397			$	9,420			(0.2)
Enterprise Solutions			2,085				2,172			(4.0)			6,309				6,623			(4.7)
Partner Solutions			1,044				1,166			(10.5)			3,162				3,594			(12.0)
Business Markets			795				840			(5.4)			2,443				2,561			(4.6)
Other			46				55			(16.4)			173				189			(8.5)
Total Operating Revenues			7,094				7,371			(3.8)			21,484				22,387			(4.0)
Operating Expenses
Cost of services			4,318				4,371			(1.2)			12,701				13,223			(3.9)
Selling, general and administrative expense			1,542				1,498			2.9			4,701				4,554			3.2
Depreciation and amortization expense			1,480				1,552			(4.6)			4,606				4,610			(0.1)
Total Operating Expenses			7,340				7,421			(1.1)			22,008				22,387			(1.7)
Operating Loss		$	(246	)		$	(50	)		*		$	(524	)		$	—			*
Operating Loss Margin			(3.5	)%			(0.7	)%					(2.4	)%			0.0	%
Segment EBITDA		$	1,234			$	1,502			(17.8)		$	4,082			$	4,610			(11.5)
Segment EBITDA Margin			17.4	%			20.4	%					19.0	%			20.6	%
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items.
Certain intersegment transactions with corporate entities have not been eliminated.
* Not meaningful

Verizon Communications Inc.
Supplemental Information - Wireline Historical Operating Statistics
The following supplemental schedule contains historical wireline segment results and is provided to help investors understand trends in our new segment results.
Unaudited												9/30/19				9/30/18				% Change
Connections (‘000)
Fios video connections													4,280				4,497			(4.8)
Fios Internet connections													6,189				6,013			2.9
Fios digital voice residence connections													3,672				3,833			(4.2)
Fios digital connections													14,141				14,343			(1.4)
Broadband connections													6,961				6,958			—
Voice connections													10,962				12,009			(8.7)
Unaudited		3 Mos. Ended 9/30/19				3 Mos. Ended 9/30/18				% Change		9 Mos. Ended 9/30/19				9 Mos. Ended 9/30/18				% Change
Net Add Detail (‘000)
Fios video connections			(66	)			(63	)		(4.8)			(171	)			(122	)		(40.2)
Fios Internet connections			36				54			(33.3)			122				163			(25.2)
Fios digital voice residence connections			(53	)			(30	)		(76.7)			(130	)			(72	)		(80.6)
Fios digital connections			(83	)			(39	)		*			(179	)			(31	)		*
Broadband connections			(7	)			2			*			—				(1	)		*
Voice connections			(259	)			(261	)		0.8			(770	)			(812	)		5.2
Revenue Statistics
Fios revenues (in millions)		$	3,054			$	2,986			2.3		$	9,072			$	8,893			2.0
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items.
Certain intersegment transactions with corporate entities have not been eliminated.
* Not meaningful

Verizon Communications Inc.
Non-GAAP Reconciliations - Consolidated Verizon
Consolidated EBITDA, Consolidated EBITDA Margin, Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA Margin
																					(dollars in millions)
Unaudited		3 Mos. Ended 9/30/2019				3 Mos. Ended 6/30/2019			3 Mos. Ended 3/31/2019				3 Mos. Ended 12/31/2018				3 Mos. Ended 9/30/2018				3 Mos. Ended 6/30/2018				3 Mos. Ended 3/31/2018
Consolidated Net Income		$	5,337			$	4,074		$	5,160			$	2,065			$	5,062			$	4,246			$	4,666
Add/(subtract):
Provision (benefit) for income taxes			1,586				1,236			1,628				(698	)			1,613				1,281				1,388
Interest expense			1,146				1,215			1,210				1,199				1,211				1,222				1,201
Depreciation and amortization expense			4,114				4,232			4,231				4,352				4,377				4,350				4,324
Consolidated EBITDA		$	12,183			$	10,757		$	12,229			$	6,918			$	12,263			$	11,099			$	11,579
Add/(subtract):
Other (income) expense, net*		$	110			$	1,312		$	(295	)		$	(1,865	)		$	(214	)		$	(360	)		$	75
Equity in losses (earnings) of unconsolidated businesses†			1				13			6				(64	)			3				228				19
Oath goodwill impairment			—				—			—				4,591				—				—				—
Severance charges			—				—			—				1,818				—				339				—
Product realignment charges‡			—				—			—				—				—				450				—
Acquisition and integration related charges‡			—				—			—				187				130				109				105
Net gain from dispositions of assets and businesses			(261	)			—			—				—				—				—				—
			(150	)			1,325			(289	)			4,667				(81	)			766				199
Consolidated Adjusted EBITDA		$	12,033			$	12,082		$	11,940			$	11,585			$	12,182			$	11,865			$	11,778
Consolidated Operating Revenues - Quarter to Date		$	32,894														$	32,607
Operating Income		$	8,180														$	7,675
Operating Income Margin - Quarter to Date			24.9	%														23.5	%
Consolidated EBITDA Margin - Quarter to Date			37.0	%														37.6	%
Consolidated Adjusted EBITDA Margin - Quarter to Date			36.6	%
* Includes Pension and benefits mark-to-market adjustments and Early debt redemption costs, where applicable.
† Includes Product realignment charges, where applicable.
‡ Excludes depreciation and amortization expense, where applicable.

Verizon Communications Inc.
Non-GAAP Reconciliations - Consolidated Verizon
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio
																				(dollars in millions)
Unaudited																				9/30/19				12/31/18
Debt maturing within one year																				$	7,830			$	7,190
Long-term debt																					101,769				105,873
Total Debt																					109,599				113,063
Less Cash and cash equivalents																					3,020				2,745
Net Debt																				$	106,579			$	110,318
Net Debt to Consolidated Adjusted EBITDA Ratio																				2.2x				2.3x
Net Unsecured Debt and Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio
																				(dollars in millions)
Unaudited																				9/30/19				12/31/18
Total Debt																				$	109,599			$	113,063
Less Secured debt																					8,800				10,076
Unsecured debt																					100,799				102,987
Less Cash and cash equivalents																					3,020				2,745
Net Unsecured Debt																				$	97,779			$	100,242
Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio																				2.1x				2.1x
Adjusted Earnings per Common Share (Adjusted EPS)(1)
										(dollars in millions, except per share amounts)
Unaudited										3 Mos. Ended 9/30/19														3 Mos. Ended 9/30/18
	Pre-tax			Tax			After-Tax						Pre-tax			Tax				After-Tax
EPS										$	1.25													$	1.19
Pension remeasurement charge (credit)	$	291		$	(76	)	$	215			0.05		$	(454	)	$	119			$	(335	)			(0.08	)
Acquisition and integration-related charges		—			—			—			—			137			(34	)			103				0.02
Early debt redemption costs		—			—			—			—			476			(124	)			352				0.09
Net gain from dispositions of assets and businesses		(261	)		37			(224	)		(0.05	)		—			—				—				—
	$	30		$	(39	)	$	(9	)	$	—		$	159		$	(39	)		$	120			$	0.03
Adjusted EPS										$	1.25													$	1.22
(1) Adjusted EPS may not add due to rounding.

Verizon Communications Inc.
Non-GAAP Reconciliations - Segments
Segment EBITDA and Segment EBITDA Margin
Consumer		(dollars in millions)
Unaudited		3 Mos. Ended 9/30/19				3 Mos. Ended 9/30/18
Operating Income		$	7,489			$	7,213
Add Depreciation and amortization expense			2,806				3,010
Segment EBITDA		$	10,295			$	10,223
Year over year change			0.7	%
Total operating revenues		$	22,706			$	22,399
Operating Income Margin			33.0	%			32.2	%
Segment EBITDA Margin			45.3	%			45.6	%
Segment EBITDA Margin - Year Over Year Change		(30) bps
Business		(dollars in millions)
Unaudited		3 Mos. Ended 9/30/19				3 Mos. Ended 9/30/18
Operating Income		$	977			$	1,154
Add Depreciation and amortization expense			1,010				1,072
Segment EBITDA		$	1,987			$	2,226
Year over Year Change			(10.7	)%
Total operating revenues		$	7,885			$	7,893
Operating Income Margin			12.4	%			14.6	%
Segment EBITDA Margin			25.2	%			28.2	%

Verizon Communications Inc.
Supplemental Information  - VZ 2.0 to Historical Financial Results Reconciliation(1)
The following tables present a reconciliation of financial results for our current reportable segments, Consumer and Business, to our historical reportable segments, Wireless and Wireline.
	3 Mos. Ended 9/30/19
														(dollars in millions)
	VZ 2.0													Historical
	Consumer			Business			Total Reportable Segments		Adjustments(2)			Adjusted Total Reportable Segments		Wireless									Wireline													HistoricalTotalReportableSegments
Unaudited														Service		Equipment		Other		Total Wireless			Consumer Markets		Enterprise Solutions		Partner Solutions		Business Markets		Other		Total Wireline
External Operating Revenues
Total Operating Revenues	$	22,706		$	7,885		$	30,591	$	72		$	30,663	$	16,398	$	5,141	$	2,030	$	23,569		$	3,124	$	2,085	$	1,044	$	795	$	46	$	7,094		$	30,663
Operating Expenses
Cost of services		4,035			2,666			6,701		200			6,901								2,583													4,318			6,901
Cost of wireless equipment		4,291			1,190			5,481		1			5,482								5,482													—			5,482
Selling, general and administrative expense		4,085			2,042			6,127		(123	)		6,004								4,462													1,542			6,004
Depreciation and amortization expense		2,806			1,010			3,816		(77	)		3,739								2,259													1,480			3,739
Total Operating Expenses		15,217			6,908			22,125		1			22,126								14,786													7,340			22,126
Operating Income (Loss)	$	7,489		$	977		$	8,466	$	71		$	8,537							$	8,783												$	(246	)	$	8,537
Add Depreciation and amortization expense		2,806			1,010			3,816		(77	)		3,739								2,259													1,480			3,739
Segment EBITDA	$	10,295		$	1,987		$	12,282	$	(6	)	$	12,276							$	11,042												$	1,234		$	12,276
Operating Income (Loss) Margin		33.0	%		12.4	%															37.3	%												(3.5	)%
Segment EBITDA Margin		45.3	%		25.2	%															46.8	%												17.4	%
Footnotes:
(1) Information presented for VZ 2.0 and historical financial results includes intersegment transactions.
(2) Adjustment represents intersegment transactions that have been eliminated under the new structure net of the impact of VZ Connect and other early-stage development businesses previously included in Corporate.
	3 Mos. Ended 9/30/18
														(dollars in millions)
	VZ 2.0													Historical
	Consumer			Business			Total Reportable Segments		Adjustments(2)			Adjusted Total Reportable Segments		Wireless									Wireline													Historical Total Reportable Segments
Unaudited														Service		Equipment		Other		Total Wireless			Consumer Markets		Enterprise Solutions		Partner Solutions		Business Markets		Other		Total Wireline
External Operating Revenues
Total Operating Revenues	$	22,399		$	7,893		$	30,292	$	52		$	30,344	$	15,966	$	5,353	$	1,654	$	22,973		$	3,138	$	2,172	$	1,166	$	840	$	55	$	7,371		$	30,344
Operating Expenses
Cost of services		3,850			2,657			6,507		214			6,721								2,350													4,371			6,721
Cost of wireless equipment		4,379			1,110			5,489		—			5,489								5,489													—			5,489
Selling, general and administrative expense		3,947			1,900			5,847		(180	)		5,667								4,169													1,498			5,667
Depreciation and amortization expense		3,010			1,072			4,082		(76	)		4,006								2,454													1,552			4,006
Total Operating Expenses		15,186			6,739			21,925		(42	)		21,883								14,462													7,421			21,883
Operating Income (Loss)	$	7,213		$	1,154		$	8,367	$	94		$	8,461							$	8,511												$	(50	)	$	8,461
Add Depreciation and amortization expense		3,010			1,072			4,082		(76	)		4,006								2,454													1,552			4,006
Segment EBITDA	$	10,223		$	2,226		$	12,449	$	18		$	12,467							$	10,965												$	1,502		$	12,467
Operating Income (Loss) Margin		32.2	%		14.6	%															37.0	%												(0.7	)%
Segment EBITDA Margin		45.6	%		28.2	%															47.7	%												20.4	%
Footnotes:
(1) Information presented for VZ 2.0 and historical financial results includes intersegment transactions.
(2) Adjustment represents intersegment transactions that have been eliminated under the new structure net of the impact of VZ Connect and other early-stage development businesses previously included in Corporate.
	9 Mos. Ended 9/30/19
														(dollars in millions)
	VZ 2.0													Historical
	Consumer			Business			Total Reportable Segments		Adjustments(2)			Adjusted Total Reportable Segments		Wireless									Wireline													Historical Total Reportable Segments
Unaudited														Service		Equipment		Other		Total Wireless			Consumer Markets		Enterprise Solutions		Partner Solutions		Business Markets		Other		Total Wireline
External Operating Revenues
Total Operating Revenues	$	66,849		$	23,372		$	90,221	$	214		$	90,435	$	48,714	$	14,792	$	5,445	$	68,951		$	9,397	$	6,309	$	3,162	$	2,443	$	173	$	21,484		$	90,435
Operating Expenses
Cost of services		11,761			7,838			19,599		563			20,162								7,461													12,701			20,162
Cost of wireless equipment		12,342			3,356			15,698		1			15,699								15,699													—			15,699
Selling, general and administrative expense		12,090			5,984			18,074		(312	)		17,762								13,061													4,701			17,762
Depreciation and amortization expense		8,581			3,098			11,679		(233	)		11,446								6,840													4,606			11,446
Total Operating Expenses		44,774			20,276			65,050		19			65,069								43,061													22,008			65,069
Operating Income (Loss)	$	22,075		$	3,096		$	25,171	$	195		$	25,366							$	25,890												$	(524	)	$	25,366
Add Depreciation and amortization expense		8,581			3,098			11,679		(233	)		11,446								6,840													4,606			11,446
Segment EBITDA	$	30,656		$	6,194		$	36,850	$	(38	)	$	36,812							$	32,730												$	4,082		$	36,812
Operating Income (Loss) Margin		33.0	%		13.2	%															37.5	%												(2.4	)%
Segment EBITDA Margin		45.9	%		26.5	%															47.5	%												19.0	%
Footnotes:
(1) Information presented for VZ 2.0 and historical financial results includes intersegment transactions.
(2) Adjustment represents intersegment transactions that have been eliminated under the new structure net of the impact of VZ Connect and other early-stage development businesses previously included in Corporate.
	9 Mos. Ended 9/30/18
														(dollars in millions)
	VZ 2.0													Historical
	Consumer			Business			Total Reportable Segments		Adjustments(2)			Adjusted Total Reportable Segments		Wireless									Wireline													Historical Total Reportable Segments
Unaudited														Service		Equipment		Other		Total Wireless			Consumer Markets		Enterprise Solutions		Partner Solutions		Business Markets		Other		Total Wireline
External Operating Revenues
Total Operating Revenues	$	66,029		$	23,527		$	89,556	$	153		$	89,709	$	47,122	$	15,437	$	4,763	$	67,322		$	9,420	$	6,623	$	3,594	$	2,561	$	189	$	22,387		$	89,709
Operating Expenses
Cost of services		11,465			8,027			19,492		631			20,123								6,900													13,223			20,123
Cost of wireless equipment		12,948			3,247			16,195		—			16,195								16,195													—			16,195
Selling, general and administrative expense		11,426			5,694			17,120		(514	)		16,606								12,052													4,554			16,606
Depreciation and amortization expense		8,982			3,190			12,172		(221	)		11,951								7,341													4,610			11,951
Total Operating Expenses		44,821			20,158			64,979		(104	)		64,875								42,488													22,387			64,875
Operating Income	$	21,208		$	3,369		$	24,577	$	257		$	24,834							$	24,834												$	—		$	24,834
Add Depreciation and amortization expense		8,982			3,190			12,172		(221	)		11,951								7,341													4,610			11,951
Segment EBITDA	$	30,190		$	6,559		$	36,749	$	36		$	36,785							$	32,175												$	4,610		$	36,785
Operating Income Margin		32.1	%		14.3	%															36.9	%												0.0	%
Segment EBITDA Margin		45.7	%		27.9	%															47.8	%												20.6	%
Footnotes:
(1) Information presented for VZ 2.0 and historical financial results includes intersegment transactions.
(2) Adjustment represents intersegment transactions that have been eliminated under the new structure net of the impact of VZ Connect and other early-stage development businesses previously included in Corporate.