10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2010
	OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from              to

Commission file number: 333-160446

Cellco Partnership

(Exact name of registrant as specified in its charter)

Delaware	22-3372889
(State of organization)	(I.R.S. Employer Identification No.)
One Verizon Way Basking Ridge, New Jersey	07920
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (908) 306-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ¨  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

Table of Contents

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Income		2
	Three and nine months ended September 30, 2010 and 2009
	Condensed Consolidated Balance Sheets		3
	At September 30, 2010 and December 31, 2009
	Condensed Consolidated Statements of Cash Flows		4
	Nine months ended September 30, 2010 and 2009
	Notes to Unaudited Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		26
Item 4.	Controls and Procedures		27
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		28
Item 1A.	Risk Factors		28
Item 6.	Exhibits		28
Signature			29
Certifications

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Part I - Financial Information

Item 1. Financial Statements

Condensed Consolidated Statements of Income

Cellco Partnership (d/b/a Verizon Wireless)

	Three Months  Ended September 30,						Nine Months  Ended September 30,
(dollars in millions) (unaudited)	2010			2009			2010			2009
Operating Revenue (including $25, $24, $74 and $75 from affiliates)
Service revenue	$	14,168		$	13,525		$	41,801		$	39,949
Equipment and other		2,082			2,272			5,970			6,450
Total operating revenue		16,250			15,797			47,771			46,399
Operating Costs and Expenses (including $425, $411, $1,308 and $1,216 from affiliates)
Cost of service (exclusive of items shown below)		2,112			1,920			6,137			5,751
Cost of equipment		2,997			3,184			8,660			8,923
Selling, general and administrative		4,585			4,642			13,890			13,759
Depreciation and amortization		1,861			1,854			5,553			5,466
Total operating costs and expenses		11,555			11,600			34,240			33,899
Operating Income		4,695			4,197			13,531			12,500
Other Income (Expenses)
Interest expense, net		(43	)		(226	)		(299	)		(958	)
Interest income and other, net		22			19			62			58
Income Before Provision for Income Taxes		4,674			3,990			13,294			11,600
Provision for income taxes		(240	)		(291	)		(988	)		(733	)
Net Income	$	4,434		$	3,699		$	12,306		$	10,867
Net income attributable to the noncontrolling interest		77			76			217			213
Net income attributable to Cellco Partnership		4,357			3,623			12,089			10,654
Net Income	$	4,434		$	3,699		$	12,306		$	10,867

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Condensed Consolidated Balance Sheets

Cellco Partnership (d/b/a Verizon Wireless)

(dollars in millions) (unaudited)	September 30, 2010		December 31, 2009
Assets
Current assets
Cash and cash equivalents	$	2,264	$	607
Receivables, net of allowances of $327 and $356		6,023		5,721
Due from affiliates, net		172		58
Inventories, net		949		1,373
Prepaid expenses and other current assets		585		3,335
Total current assets		9,993		11,094
Plant, property and equipment, net		31,855		30,850
Wireless licenses		72,566		72,005
Goodwill		17,379		17,303
Other intangibles and other assets, net		2,529		3,100
Total assets	$	134,322	$	134,352
Liabilities and Partners’ Capital
Current liabilities
Short-term debt, including current maturities	$	3,999	$	2,998
Due to affiliates		—		5,003
Accounts payable and accrued liabilities		7,290		6,123
Advance billings		2,023		1,695
Other current liabilities		781		415
Total current liabilities		14,093		16,234
Long-term debt		12,538		18,661
Deferred tax liabilities, net		10,390		10,593
Other non-current liabilities		1,529		1,877
Total liabilities		38,550		47,365
Commitments and contingencies (see Note 9)		—		—
Partners’ capital
Capital		93,756		84,886
Accumulated other comprehensive income		43		113
Noncontrolling interest		1,973		1,988
Total Partners’ capital		95,772		86,987
Total liabilities and Partners’ capital	$	134,322	$	134,352

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Condensed Consolidated Statements of Cash Flows

Cellco Partnership (d/b/a Verizon Wireless)

	Nine Months Ended September 30,
(dollars in millions) (unaudited)	2010			2009
Cash Flows from Operating Activities
Net income	$	12,306		$	10,867
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,553			5,466
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses		893			(1,136	)
Other operating activities, net		750			1,613
Net cash provided by operating activities		19,502			16,810
Cash Flows from Investing Activities
Capital expenditures (including capitalized software)		(6,205	)		(5,134	)
Acquisition of businesses and licenses, net of cash acquired		(235	)		(4,881	)
Proceeds from dispositions		2,594			—
Other investing activities, net		(561	)		(313	)
Net cash used in investing activities		(4,407	)		(10,328	)
Cash Flows from Financing Activities
Net repayment of affiliate borrowings		(5,003	)		(4,007	)
Issuance of long-term debt		—			9,223
Repayment of long-term debt		(5,016	)		(17,026	)
Distributions to partners		(3,219	)		(2,396	)
Other financing activities, net		(200	)		(691	)
Net cash used in financing activities		(13,438	)		(14,897	)
Increase (decrease) in cash and cash equivalents		1,657			(8,415	)
Cash and cash equivalents, beginning of period		607			9,227
Cash and cash equivalents, end of period	$	2,264		$	812

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Notes to Unaudited Condensed Consolidated Financial Statements

Cellco Partnership (d/b/a Verizon Wireless)

1. Background and Basis of Presentation

Cellco Partnership (the Partnership), a Delaware partnership doing business as Verizon Wireless, provides wireless voice and data services and related equipment to consumers and business customers across one of the most extensive wireless networks in the United States. The Partnership has one segment and operates domestically only. References to “our Partners” refers to subsidiaries of Verizon Communications Inc. (Verizon), which own 55% of the Partnership, and U.S. subsidiaries of Vodafone Group Plc (Vodafone), which own 45% of the Partnership. We are the largest wireless service provider in the United States, as measured by total number of customers.

The accompanying unaudited condensed consolidated financial statements have been prepared based upon Securities and Exchange Commission (SEC) rules that permit reduced disclosure for interim periods. For a more complete discussion of significant accounting policies and certain other information, you should refer to the audited financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2009. These financial statements reflect all adjustments that are necessary for a fair presentation of results of operations and financial condition for the interim periods shown including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year.

During the second quarter of 2010, we recorded a one-time non-cash adjustment of $268 million primarily to reduce wireless data revenues. This adjustment was recorded to properly defer previously recognized wireless data revenues that will be earned and recognized in future periods. As the amounts involved were not material to our consolidated financial statements in the current or any previous reporting period, the adjustment was recorded during the second quarter.

Recently Adopted Accounting Standards

In January 2010, we adopted the accounting standard update regarding consolidation accounting for variable interest entities. This standard update requires an enterprise to perform an analysis to determine whether the entity’s variable interest or interests give it a controlling interest in a variable interest entity. The adoption of this standard update did not have a material impact on our condensed consolidated financial statements.

In January 2010, we adopted the accounting standard update regarding fair value measurements and disclosures which requires additional disclosures regarding assets and liabilities measured at fair value. The adoption of this standard update did not have a material impact on our condensed consolidated financial statements.

Recent Accounting Standards

In July 2010, the accounting standard update regarding disclosures for finance receivables and allowances for credit losses was issued. This standard update requires that entities disclose information at more disaggregated levels than currently required. We will adopt this standard update during the fourth quarter of 2010. The adoption of this standard update is not expected to have a significant impact on our consolidated financial statements.

In September 2009, the accounting standard update regarding revenue recognition for multiple deliverable arrangements was issued. This update requires the use of the relative selling price method when allocating revenue in these types of arrangements. This method allows a vendor to use its best estimate of selling price if neither vendor-specific objective evidence nor third party evidence of selling price exists when evaluating multiple deliverable arrangements. This standard update is effective January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. We are currently evaluating the impact that this standard update will have on our consolidated financial statements.

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In September 2009, the accounting standard update regarding revenue recognition for arrangements that include software elements was issued. This update requires tangible products that contain software and non-software elements that work together to deliver the product’s essential functionality to be evaluated under the accounting standard regarding multiple deliverable arrangements. This standard update is effective January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. We are currently evaluating the impact that this standard update will have on our consolidated financial statements.

2. Acquisitions and Dispositions

Acquisitions

On August 23, 2010, the Partnership acquired the net assets and related customers of six operating markets in Louisiana and Mississippi in a transaction with AT&T Inc. (AT&T) for cash consideration of $235 million. These assets were acquired to enhance the Partnership’s network coverage in these operating markets. The preliminary purchase price allocation primarily resulted in $106 million of wireless licenses and $76 million in goodwill.

Dispositions

Alltel Divestiture Markets

As a condition of the regulatory approvals by the Department of Justice and the Federal Communications Commission to complete the acquisition of Alltel Corporation (Alltel) in January 2009, the Partnership was required to divest overlapping properties in 105 operating markets in 24 states (the Alltel Divestiture Markets). Total assets and total liabilities divested were approximately $2.6 billion and $0.1 billion, respectively, principally comprised of network assets, wireless licenses and customer relationships, and were included in Prepaid expenses and other current assets and Other current liabilities, respectively, on the accompanying condensed consolidated balance sheet at December 31, 2009.

On May 8, 2009, the Partnership entered into a definitive agreement with AT&T Mobility LLC (AT&T Mobility), a subsidiary of AT&T, pursuant to which AT&T Mobility agreed to acquire 79 of the 105 Alltel Divestiture Markets, including licenses and network assets, for approximately $2.4 billion in cash. On June 9, 2009, the Partnership entered into a definitive agreement with Atlantic Tele-Network, Inc. (ATN), pursuant to which ATN agreed to acquire the remaining 26 Alltel Divestiture Markets, including licenses and network assets, for $200 million in cash. During the second quarter of 2010, the Partnership received the necessary regulatory approvals and completed both transactions. Upon the completion of the divestitures, we recorded a tax charge of approximately $201 million for the taxable gain on the excess of book over tax basis of the goodwill associated with the Alltel Divestiture Markets.

3. Wireless Licenses, Goodwill and Other Intangibles, Net

Wireless Licenses

Changes in the carrying amount of Wireless licenses are as follows:

(dollars in millions)
Balance as of December 31, 2009	$	72,005
Wireless licenses acquired		106
Capitalized interest on wireless licenses		447
Reclassifications, adjustments and other		8
Balance as of September 30, 2010	$	72,566

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As of September 30, 2010 and December 31, 2009, approximately $12.2 billion of wireless licenses were under development for commercial service for which we are capitalizing interest costs.

Goodwill

The changes in the carrying amount of goodwill are as follows:

(dollars in millions)
Balance as of December 31, 2009	$	17,303
Acquisitions		76
Balance as of September 30, 2010	$	17,379

Other Intangibles, net

Other intangibles, net are included in Other intangibles and other assets, net and consist of the following:

	At September 30, 2010							At December 31, 2009
(dollars in millions)	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Customer lists (6 to 8 years)	$	2,139	$	(805	)	$	1,334	$	2,122	$	(497	)	$	1,625
Capitalized software (2 to 5 years)		937		(416	)		521		879		(377	)		502
Other (2 to 3 years)		382		(316	)		66		397		(235	)		162
Total	$	3,458	$	(1,537	)	$	1,921	$	3,398	$	(1,109	)	$	2,289

The amortization expense for other intangible assets was as follows:

(dollars in millions)	Three Months Ended September 30,		Nine Months Ended September 30,
2010	$	172	$	513
2009		201		599

Estimated future amortization expense for other intangible assets is as follows:

Years	(dollars in millions)
Remainder of 2010	$	178
2011		542
2012		405
2013		323
2014		228
Thereafter		245
Total	$	1,921

4. Fair Value Measurements

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis as of September 30, 2010:

(dollars in millions)	Level 1 (1)		Level 2 (2)		Level 3 (3)		Total
Assets:
Other intangibles and other assets, net:
Derivative contracts—Cross currency swaps	$	—	$	139	$	—	$	139

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⁽¹⁾– quoted prices in active markets for identical assets or liabilities

⁽²⁾– observable inputs other than quoted prices in active markets for identical assets and liabilities

⁽³⁾– no observable pricing inputs in the market

Derivative contracts consist of cross currency swaps. Derivative contracts are valued using models based on readily observable market parameters for all substantial terms of our derivative contracts and thus are classified within Level 2. We use mid-market pricing for fair value measurements of our derivative instruments.

We recognize transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the fair value hierarchy during the nine months ended September 30, 2010.

Fair Value of Short-term and Long-term Debt

The fair value of our term note due to affiliates was determined based on future cash flows discounted at current rates. The fair value of our short-term and long-term debt is determined based on quoted market prices or future cash flows discounted at current rates. Our financial instruments also include cash and cash equivalents, and trade receivables and payables. These financial instruments are short term in nature and are stated at their carrying value, which approximates fair value. The fair value of our term note due to affiliates and short-term and long-term debt were as follows:

	At September 30, 2010				At December 31, 2009
(dollars in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term note due to affiliates	$	—	$	—	$	5,003	$	5,008
Short-term and long-term debt	$	16,537	$	19,164	$	21,659	$	23,597

Derivative Instruments

We have entered into derivative transactions to manage our exposure to fluctuations in foreign currency exchange rates and interest rates. We employ risk management strategies that may include the use of a variety of derivatives including cross currency swaps and interest rate swap agreements. We do not hold derivatives for trading purposes.

We measure all derivatives, including derivatives embedded in other financial instruments, at fair value and recognize them as either assets or liabilities on our consolidated balance sheets. Changes in the fair values of derivative instruments not qualifying as hedges or any ineffective portion of hedges are recognized in earnings in the current period. Changes in the fair values of derivative instruments used effectively as fair value hedges are recognized in earnings, along with changes in the fair value of the hedged item. Changes in the fair value of the effective portions of cash flow hedges are reported in Other comprehensive income (loss) and recognized in earnings when the hedged item is recognized in earnings.

Cross Currency Swaps

We have entered into cross currency swaps designated as cash flow hedges to exchange approximately $2.4 billion of British Pound Sterling and Euro denominated debt into U.S. dollars and to fix our future interest and principal payments in U.S. dollars, as well as mitigate the impact of foreign currency transaction gains or losses. The fair value of the cross currency swaps included in Other intangibles and other assets, net was $139 million and $315 million at September 30, 2010 and December 31, 2009, respectively. For the three and nine months ended September 30, 2010, a pretax $207 million gain and $176 million loss, respectively, on the cross currency swaps was recognized in Other comprehensive income (loss), a portion of which was reclassified to Interest income and other, net to offset the related pretax foreign-currency transaction gain or loss on the underlying debt obligations.

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5. Debt

Debt

During the nine months ended September 30, 2010, the Partnership repaid $3,996 million of borrowings under a three-year term loan facility. No borrowings remain outstanding under this facility as of September 30, 2010 and this facility has been cancelled.

On June 28, 2010, the Partnership exercised its right to redeem all of its outstanding $1,000 million Put/Call Floating Rate Notes due June 2011 at a redemption price of 100% of the principal amount of the notes, plus accrued and unpaid interest through the date of redemption.

Term Notes Payable to Affiliate

During the first half of 2010, the Partnership repaid $5,003 million of its $9,363 million floating rate promissory note. No borrowings remain outstanding under this note as of September 30, 2010 and this note has been cancelled.

On July 28, 2010, the Partnership entered into an amendment of our affiliate $750 million fixed rate promissory note payable to Verizon Financial Services LLC (VFSL), due August 1, 2010. The fixed rate note, as amended, extends the maturity date to August 1, 2013 and gives VFSL the right to cancel this note and require settlement of the aggregate unpaid principal and interest under this note on August 1, 2011 or August 1, 2012. There were no outstanding borrowings under this note as of September 30, 2010.

Debt Covenants

As of September 30, 2010, we are in compliance with all of our debt covenants.

6. Long-Term Incentive Plan

Verizon Wireless Long Term Incentive Plan

The 2000 Verizon Wireless Long Term Incentive Plan (Wireless Plan) provides compensation opportunities to eligible employees of the Partnership. The Wireless Plan provides rewards that are tied to the long-term performance of the Partnership. Under the Wireless Plan, Value Appreciation Rights (VARs) are granted to eligible employees. As of September 30, 2010, all VARs were fully vested.

VARs reflect the change in the value of the Partnership, as defined in the Wireless Plan, similar to stock options. Once VARs become vested, employees can exercise their VARs and receive a payment that is equal to the difference between the VAR price on the date of grant and the VAR price on the date of exercise, less applicable taxes. VARs are fully exercisable three years from the date of grant with a maximum term of 10 years. All VARs were granted at a price equal to the estimated fair value of the Partnership, as defined in the Wireless Plan, at the date of grant.

For the three and nine months ended September 30, 2010 the intrinsic value of VARs exercised during the period was $13 million and $58 million, respectively. For the three and nine months ended September 30, 2009 the intrinsic value of VARs exercised during the period was $15 million and $167 million, respectively.

Cash paid to settle VARs for the three and nine months ended September 30, 2010 was $16 million and $55 million, respectively. Cash paid to settle VARs for the three and nine months ended September 30, 2009 was $11 million and $157 million, respectively.

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The following table summarizes award activity under the Wireless Plan as of September 30, 2010 and changes during the nine-month period:

(shares in thousands)	VARs			Weighted Average Grant Date Fair Value
Outstanding, December 31, 2009		16,591		$	16.54
Exercised		(4,456	)		25.48
Cancelled/Forfeited		(51	)		21.84
Outstanding, September 30, 2010		12,084		$	13.22

The following table summarizes the status of the Partnership’s VARs as of September 30, 2010:

	VARs Vested & Outstanding (a)
(shares in thousands) Range of Exercise Prices	VARs		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$8.74 - $14.79		9,683		2.96	$	12.25
$14.80 - $22.19		2,336		1.03		16.77
$22.20 - $30.00		65		—		30.00
Total		12,084			$	13.22

(a) As of September 30, 2010, the aggregate intrinsic value of VARs outstanding and vested was $321 million.

Verizon Communications Inc. Long Term Incentive Plan

The 2009 Verizon Communications Inc. Long-Term Incentive Plan (the Verizon Plan) permits the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other awards to Partnership employees. The maximum number of shares available for awards from the Verizon Plan is 119.6 million shares.

Restricted Stock Units

The Verizon Plan provides for grants of Restricted Stock Units (RSUs) that generally vest at the end of the third year after the grant. The RSUs outstanding at January 1, 2010 are classified as liability awards because the RSUs will be paid in cash upon vesting. The RSU award liability is measured at its fair value at the end of each reporting period and, therefore, will fluctuate based on the performance of Verizon common stock. The RSUs granted during 2010 are classified as equity awards because these RSUs will be paid in Verizon common stock upon vesting. Compensation expense for RSUs classified as equity awards is measured based on the market price of Verizon common stock at the date of grant and is recognized over the vesting period. Dividend equivalent units are also paid to participants at the time the RSU award is paid, and in the same proportion as the RSU award.

The Partnership had approximately 4.2 million and 3.5 million RSUs outstanding under the Verizon Plan as of September 30, 2010 and December 31, 2009, respectively.

Performance Stock Units

The Verizon Plan also provides for grants of Performance Stock Units (PSUs) that generally vest at the end of the third year after the grant. As defined by the Verizon Plan, the Human Resources Committee of the Board of Directors of Verizon determines the number of PSUs a participant earns based on the extent to which the

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corresponding goal has been achieved over the three-year performance cycle. All payments are subject to approval by the Verizon Human Resources Committee. The PSUs are classified as liability awards because the PSU awards are paid in cash upon vesting. The PSU award liability is measured at its fair value at the end of each reporting period and, therefore, will fluctuate based on the price of Verizon common stock as well as performance relative to the targets. Dividend equivalent units are also paid to participants at the time that the PSU award is determined and paid, and in the same proportion as the PSU award.

The Partnership had approximately 6.2 million and 5.2 million PSUs outstanding under the Verizon Plan as of September 30, 2010 and December 31, 2009, respectively.

7. Partners’ Capital and Comprehensive Income

Partners’ Capital

Changes in Partners’ capital were as follows:

	Nine Months Ended September 30, 2010
(dollars in millions)	Attributable to Cellco Partnership			Noncontrolling Interest			Total Partners’ Capital
Balance at beginning of period	$	84,999		$	1,988		$	86,987
Net income		12,089			217			12,306
Other comprehensive income (loss)		(70	)		—			(70	)
Comprehensive income		12,019			217			12,236
Distributions		(3,219	)		(198	)		(3,417	)
Noncontrolling interests in acquired company		—			2			2
Disposition of noncontrolling interests		—			(36	)		(36	)
Balance at end of period	$	93,799		$	1,973		$	95,772

Noncontrolling interest included in our condensed consolidated financial statements includes Verizon’s ownership interest in our majority owned limited partnership Verizon Wireless of the East LP and noncontrolling interest in cellular partnerships.

Distributions

On February 12, 2010, we paid tax distributions to our Partners of $867 million, including an aggregate tax distribution of $700 million for the quarter ended December 31, 2009 as well as a $167 million supplemental tax distribution.

On May 14, 2010, we paid tax distributions to our Partners of $1,247 million, including an aggregate tax distribution of $1,080 million for the quarter ended March 31, 2010 as well as a $167 million supplemental tax distribution.

On August 12, 2010, we paid tax distributions to our Partners of $1,105 million, including an aggregate tax distribution of $939 million for the quarter ended June 30, 2010 as well as a $166 million supplemental tax distribution.

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Comprehensive Income

Comprehensive income consists of net income and other gains and losses affecting Partners’ capital that, under generally accepted accounting principles, are excluded from net income. Significant changes in the components of Other comprehensive income (loss), net of income tax expense (benefit), are described below.

	Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in millions)	2010		2009			2010			2009
Net Income	$	4,434	$	3,699		$	12,306		$	10,867
Other Comprehensive Income (Loss), net of taxes
Net unrealized gain (loss) on cash flow hedges		—		(16	)		(70	)		162
Other		—		2			—			5
Total Other Comprehensive Income (Loss)		—		(14	)		(70	)		167
Comprehensive Income	$	4,434	$	3,685		$	12,236		$	11,034
Comprehensive income attributable to noncontrolling interest	$	77	$	76		$	217		$	213
Comprehensive income attributable to Cellco Partnership		4,357		3,609			12,019			10,821
Comprehensive Income	$	4,434	$	3,685		$	12,236		$	11,034

The components of Accumulated other comprehensive income were as follows:

(dollars in millions)	At September 30, 2010			At December 31, 2009
Unrealized gain on cash flow hedges	$	52		$	122
Other		(9	)		(9	)
Accumulated other comprehensive income	$	43		$	113

8. Other Information

The Partnership’s service revenue and interest expense, net are comprised of the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)	2010			2009			2010			2009
Service revenue:
Voice revenue	$	9,106		$	9,395		$	27,541		$	28,262
Data revenue		5,062			4,130			14,260			11,687
Total service revenue	$	14,168		$	13,525		$	41,801		$	39,949
Interest expense, net:
Interest expense	$	(256	)	$	(285	)	$	(822	)	$	(1,153	)
Affiliate interest expense		—			(13	)		(8	)		(54	)
Capitalized interest		213			72			531			249
Interest expense, net	$	(43	)	$	(226	)	$	(299	)	$	(958	)

9. Commitments and Contingencies

The U.S. Wireless Alliance Agreement contains provisions, subject to specified limitations, that require Vodafone and Verizon to indemnify the Partnership for certain contingencies, excluding PrimeCo Personal Communications L.P. contingencies, arising prior to the formation of the Partnership.

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The Partnership is subject to lawsuits and other claims, including class actions and claims relating to product liability, patent infringement, intellectual property, antitrust, partnership disputes, and relations with resellers and agents. The Partnership is also defending lawsuits filed against the Partnership and other participants in the wireless industry alleging adverse health effects as a result of wireless phone usage. Various consumer class action lawsuits allege that the Partnership violated certain state consumer protection laws and other statutes and defrauded customers through misleading billing practices or statements. These matters may involve indemnification obligations by third parties and/or affiliated parties covering all or part of any potential damage awards against the Partnership and/or insurance coverage.

All of the above matters are subject to many uncertainties. Consequently, the ultimate liability with respect to these matters as of September 30, 2010 cannot be predicted with certainty. To the extent that actual results differ from any estimated liabilities previously recorded, the effect, if any, on the consolidated financial statements of the Partnership in the period in which these matters are resolved may be material.

In addition to the aforementioned matters, the Partnership is subject to various other legal actions and claims in the normal course of business. While the Partnership’s legal counsel cannot give assurance as to the outcome of each of these other matters, in management’s opinion, based on an investigation of these matters and the advice of such legal counsel, the ultimate liability with respect to any of these actions, or all of them combined, will not materially affect the consolidated financial statements of the Partnership.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In this Management’s Discussion and Analysis of Financial Condition and Results of Operations, “we”, “our”, “us” and “the Partnership” refer to Cellco Partnership d/b/a Verizon Wireless. References to “our Partners” refer to subsidiaries of Verizon Communications Inc. (Verizon Communications), and U.S. subsidiaries of Vodafone Group Plc (Vodafone), which are the partners in Cellco Partnership.

The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and notes thereto contained elsewhere in this Form 10-Q.

This discussion reflects the results of operations of the markets acquired from Alltel Corporation (Alltel) that were not subject to divestiture requirements from the date of our acquisition of Alltel on January 9, 2009.

In connection with obtaining regulatory approvals to complete the acquisition of Alltel, we agreed to divest 105 markets in 24 states (Alltel Divestiture Markets). This discussion reflects the results of operations of these markets through the dates of divestiture to Atlantic Tele-Network Inc. (ATN) and AT&T Mobility LLC (AT&T Mobility), respectively.

Overview

We believe we are the industry-leading wireless service provider in the United States in terms of profitability, as measured by operating income. We are the largest national wireless service provider in the United States, as measured by total number of customers. We offer wireless voice and data services across one of the most extensive networks in the United States.

Our goal is to be the market leader in providing wireless voice and data communication services in the United States. We focus on providing a high-quality, differentiated service across a cost-efficient network designed to meet the growing needs of our customers. Our results of operations, financial condition and sources and uses of cash in recent periods reflect management’s continued focus on implementing the following key elements of our business strategy:

• Provide highest network reliability and continue to build out and expand our network. We continue to build out, expand and upgrade our network. We invested $6,205 million in capital expenditures for the nine months ended September 30, 2010, primarily to fund continued investment in the capacity of our Evolution-Data Optimized (EV-DO) networks as well as the build-out of our fourth generation (4G) network based on Long Term Evolution (LTE) technology. We announced on October 6, 2010 that we will launch our 4G LTE network in 38 major metropolitan areas and in more than 60 commercial airports by the end of 2010. We expanded our national coverage in the nine months ended September 30, 2009 when we completed the acquisition of Alltel, paying $4,881 million, net of cash acquired from Alltel, for the equity of Alltel.

• Profitably acquire, satisfy and retain our customers and increase the value of our service offerings to customers. We expect to achieve revenue and operating income growth by retaining our existing base of customers, obtaining new customers, increasing individual customer usage of our existing services, and bringing our customers new ways of using wireless services in their daily lives. We had approximately 93.2 million total customers at September 30, 2010, an increase of 4.7% from approximately 89.0 million at September 30, 2009.

• Continue to expand our wireless data offerings and develop and bring to market innovative wireless devices for both consumers and business customers. As the demand for wireless data services grows, we continue to expand our offerings of data services and devices with advanced data capabilities for consumer and business customers, and we continue to increase our data revenues. We had total data revenues of $5,062 million and $14,260 million for the three and nine months ended September 30,

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2010, respectively, representing increases of 22.6% and 22.0%, respectively, compared to the corresponding prior year periods. Our total data revenue accounted for 35.7% and 34.1% of our service revenue in the three and nine months ended September 30, 2010, respectively.

• Focus on profitability and cash flow. Our goal is to maintain industry-leading profitability levels, as measured by operating income, and to generate substantial cash flow from operations. Operating income increased by 11.9% and 8.3% for the three and nine months ended September 30, 2010, respectively, compared to the corresponding prior year periods. Cash flow from operations increased by 16.0% for the nine months ended September 30, 2010, compared to the similar period in 2009.

Trends

Information related to trends affecting our business was disclosed under Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2009. While we experienced significant growth in our wireless reseller customer base during the first half of 2010, the number of net reseller customer additions in the third quarter was comparatively lower than the first half of the year on a quarterly basis. We cannot predict at this time whether this third quarter trend will continue through the end of the year. There have been no other significant changes to our previously discussed trends.

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Consolidated Results of Operations

Selected Operating Statistics and Trends

	Three Months Ended September 30,									Nine Months Ended September 30,
(in thousands, except churn)	2010			2009			% Change			2010			2009			% Change
Total customers											93,170			89,013			4.7
Retail customers											86,734			86,291			0.5
Total customer net additions in period (excluding acquisitions, divestitures and adjustments)		997			1,240			(19.6	)		3,895			3,658			6.5
Retail customer net additions in period (excluding acquisitions, divestitures, and adjustments)		447			970			(53.9	)		1,185			3,375			(64.9	)
Total churn rate		1.36	%		1.49	%		(8.7	)		1.34	%		1.44	%		(6.9	)
Retail postpaid churn rate		1.07	%		1.13	%		(5.3	)		1.03	%		1.10	%		(6.4	)

Excluding acquisitions, divestitures and adjustments, we added approximately 447,000 net retail customers during the three months ended September 30, 2010, compared to approximately 970,000 during the similar period in 2009, and approximately 1.2 million net retail customers during the nine months ended September 30, 2010, compared to approximately 3.4 million during the similar period in 2009. The decline in net retail customer additions during the three and nine months ended September 30, 2010 compared to the similar periods in 2009 was due to a decrease in gross retail customer additions, as well as an increase in churn for our retail prepaid base in part attributable to a marketplace shift in customer activations within the period toward unlimited prepaid offerings of the type being sold by a number of our resellers. However, we expect to continue to experience retail customer growth based on the strength of our product offerings and network service quality. Our churn rate during the three and nine months ended September 30, 2010, compared to the similar periods in 2009, improved as a result of successful customer retention efforts. Churn is the rate at which customers disconnect individual lines of service.

Excluding acquisitions, divestitures and adjustments, we added approximately 997,000 net total customers during the three months ended September 30, 2010, compared to approximately 1.2 million during the similar period in 2009, and approximately 3.9 million net total customers during the nine months ended September 30, 2010, compared to approximately 3.7 million during the similar period in 2009. The decrease in net total customer additions during the three months ended September 30, 2010 was due to the decline in net retail customer additions described above. The increase in net total customer additions during the nine months ended September 30, 2010, compared to the similar period in 2009, was due to the cumulative increase in net customer additions from our reseller channel, as a result of the marketplace shift in customer activations mentioned above.

During the second quarter of 2010, our customer base was reduced by approximately 2.1 million net customers, primarily as a result of the completion of the required divestitures to AT&T Mobility and ATN, which resulted from the Alltel acquisition, partially offset by certain adjustments.

Customers from acquisitions during the three and nine months ended September 30, 2010 included approximately 106,000 net customers, after conforming adjustments, that we acquired in a transaction with AT&T Inc. (AT&T). Customers from acquisitions for the nine months ended September 30, 2009 included approximately 13.2 million net total customer additions, after conforming adjustments but before the impact of required divestitures, which resulted from our acquisition of Alltel on January 9, 2009.

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Operating Revenue

	Three Months Ended September 30,							Nine Months Ended September 30,
(dollars in millions, except ARPU)	2010		2009		% Change			2010		2009		% Change
Service revenue	$	14,168	$	13,525		4.8		$	41,801	$	39,949		4.6
Equipment and other		2,082		2,272		(8.4	)		5,970		6,450		(7.4	)
Total Operating Revenue	$	16,250	$	15,797		2.9		$	47,771	$	46,399		3.0
Service ARPU	$	50.94	$	51.04		(0.2	)	$	50.20	$	50.96		(1.5	)
Retail service ARPU		51.99		51.20		1.5			51.17		51.09		0.2
Total data ARPU		18.20		15.59		16.7			17.12		14.91		14.8

Our total operating revenue during the three months ended September 30, 2010 increased by $453 million, or 2.9%, and $1,372 million, or 3.0%, during the nine months ended September 30, 2010, compared to the similar periods in 2009, primarily due to growth in service revenue, partially offset by the sale of the Alltel Divestiture Markets.

Service Revenue

Service revenue during the three months ended September 30, 2010 increased by $643 million, or 4.8%, and $1,852 million, or 4.6%, during the nine months ended September 30, 2010, compared to the similar periods in 2009, primarily due to a 4.2 million, or 4.7%, increase in total customers since October 1, 2009, as well as continued growth in our data average revenue per customer per month (ARPU). These increases were partially offset by a decline in voice ARPU, as well as the sale of the Alltel Divestiture Markets which resulted in reductions of service revenue of $357 million and $447 million during the three and nine months ended September 30, 2010, respectively, compared to the similar periods in 2009.

During the second quarter of 2010, we recorded a one-time non-cash adjustment of $268 million primarily to reduce wireless data revenues. This adjustment was recorded to properly defer previously recognized wireless data revenues that will be earned and recognized in future periods. As the amounts involved were not material to our consolidated financial statements in the current or any previous reporting period, the adjustment was recorded during the second quarter of 2010.

Total data revenue was $5,062 million and accounted for 35.7% of service revenue during the three months ended September 30, 2010, compared to $4,130 million and 30.5% during the similar period in 2009. Total data revenue was $14,260 million and accounted for 34.1% of service revenue during the nine months ended September 30, 2010, compared to $11,687 million and 29.3% during the similar period in 2009. Total data revenue continues to increase as a result of the increased penetration of data offerings, in particular for e-mail and web services resulting in part from increased sales of smartphone and other data-capable devices. As described above, the current year increase was partially offset by the one-time non-cash reduction to wireless data revenue for the nine months ended September 30, 2010. Voice revenue decreased as a result of continued declines in our voice ARPU, as discussed below, partially offset by an increase in the number of customers. We expect that total service revenue and data revenue will continue to grow as we grow our customer base, increase the penetration of our data offerings and increase the proportion of our customer base using smartphone and other data-capable devices.

Our retail service ARPU increased for both the three and nine months ended September 30, 2010, primarily due to increases in our data revenue per customer as a result of increases in our penetration of data offerings, partially offset by a continued reduction in voice revenue per customer. The decline in our service ARPU was impacted by changes in our customer mix as a result of increased reseller net customer additions. Total voice ARPU declined $2.71, or 7.6%, during the three months ended September 30, 2010, and declined $2.97, or 8.2%, during the nine

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months ended September 30, 2010 compared to the similar periods in 2009 due to the impact of the aforementioned changes in our customer mix as well as the ongoing impact of customers seeking to optimize the value of our voice minute bundles. Total data ARPU increased $2.61 and $2.21 during the three and nine months ended September 30, 2010, compared to the similar periods in 2009, as a result of continued growth and penetration of our data offerings, resulting in part from the above mentioned increase in sales of our smartphone and other data-capable devices.

Equipment and Other Revenue

Equipment and other revenue during the three months ended September 30, 2010 decreased by $190 million, or 8.4%, and $480 million, or 7.4%, during the nine months ended September 30, 2010, compared to the similar periods in 2009. The decreases were partially due to the sale of the Alltel Divestiture Markets, which resulted in decreases of $87 million and $103 million, respectively, during the three and nine months ended September 30, 2010 compared to the similar periods in 2009. Equipment and other revenue also decreased due to declines in gross retail customer additions, and during the three months ended September 30, 2010 was impacted by lower revenue from cost recovery surcharges as a result of a decrease in our cost recovery rate.

Operating Costs and Expenses

	Three Months Ended September 30,							Nine Months Ended September 30,
(dollars in millions)	2010		2009		% Change			2010		2009		% Change
Cost of service	$	2,112	$	1,920		10.0		$	6,137	$	5,751		6.7
Cost of equipment		2,997		3,184		(5.9	)		8,660		8,923		(2.9	)
Selling, general and administrative		4,585		4,642		(1.2	)		13,890		13,759		1.0
Depreciation and amortization		1,861		1,854		0.4			5,553		5,466		1.6
Total Operating Costs and Expenses	$	11,555	$	11,600		(0.4	)	$	34,240	$	33,899		1.0

Cost of Service

Cost of service during the three months ended September 30, 2010 increased by $192 million, or 10.0%, and $386 million, or 6.7%, during the nine months ended September 30, 2010, compared to the similar periods in 2009. The increase in cost of service was primarily attributable to higher wireless network costs due to increases in local interconnection cost as a result of both increased capacity needs from increases in data usage and costs incurred to transition to Ethernet facilities that will be used to enable LTE technology, as well as increases in roaming costs as a result of increased international roaming volumes, data roaming and roaming costs incurred in the Alltel Divestiture Markets. Also contributing to higher wireless network costs during the nine months ended September 30, 2010 compared to the similar period in 2009 was an increase in operating lease expense related to our network cell sites. Cost of service in the three and nine months ended September 30, 2010 also included $67 million and $142 million, respectively, and $6 million and $33 million, respectively, during similar periods in 2009, for merger integration costs related to the acquisition of Alltel.

Cost of Equipment

Cost of equipment during the three months ended September 30, 2010 decreased by $187 million, or 5.9%, and $263 million, or 2.9%, during the nine months ended September 30, 2010, compared to the similar periods in 2009, in part due to a decrease in gross retail customer additions partially offset by an increase in the average cost per unit. The sale of the Alltel Divestiture Markets resulted in decreases of $71 million and $81 million, respectively, for the three and nine months ended September 30, 2010 compared to the similar periods in 2009. Cost of equipment in the three and nine months ended September 30, 2010 also included $25 million and $83 million, respectively, and $73 million and $131 million, respectively, during similar periods in 2009, for merger integration costs related to the Alltel acquisition.

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Selling, General and Administrative Expenses

Selling, general and administrative expense during the three months ended September 30, 2010 decreased by $57 million, or 1.2%, compared to the similar period in 2009, primarily due to a $141 million reduction in expense as the result of the sale of the Alltel Divestiture Markets, and a $60 million reduction in merger integration costs related to the Alltel acquisition. These decreases were partially offset by a $175 million increase in our sales commission expense in our indirect channel as a result of increases in both contract renewals in connection with equipment upgrades and the average commission per unit as the mix of units and service plans sold continues to shift toward data devices.

Selling, general and administrative expense during the nine months ended September 30, 2010 increased $131 million, or 1.0%, compared to the similar period in 2009, primarily due to a $494 million increase in sales commission expense in our indirect channel for the reasons mentioned above as well as a $110 million increase in our non-income taxes due to both the growth in our revenues subject to fees as well as increases in the federal universal service fund rate. These increases were partially offset by a $139 million reduction in expense as a result of the sale of the Alltel Divestiture Markets, a $160 million reduction in merger integration costs related to the Alltel acquisition and a $141 million decrease in compensation related costs, excluding commissions.

Depreciation and Amortization Expense

Depreciation and amortization expense during the three months ended September 30, 2010 increased by $7 million, or 0.4%, and $87 million, or 1.6%, during the nine months ended September 30, 2010, compared to the similar periods in 2009. These increases were primarily driven by growth in depreciable assets through the third quarter of 2010.

Other Consolidated Results

	Three Months Ended September 30,									Nine Months Ended September 30,
(dollars in millions)	2010			2009			% Change			2010			2009			% Change
Interest expense, net	$	(43	)	$	(226	)		(81.0	)	$	(299	)	$	(958	)		(68.8	)
Interest income and other, net		22			19			15.8			62			58			6.9
Provision for income taxes		(240	)		(291	)		(17.5	)		(988	)		(733	)		34.8
Effective income tax rate		5.1	%		7.3	%		(29.6	)		7.4	%		6.3	%		17.6
Net income attributable to noncontrolling interest		77			76			1.3			217			213			1.9

Interest expense, net

Interest expense, net during the three months ended September 30, 2010 decreased by $183 million, or 81.0%, and $659 million, or 68.8%, during the nine months ended September 30, 2010, compared to the similar periods in 2009, primarily due to a decrease in the weighted-average amount of debt outstanding. The decrease in the weighted-average amount of debt outstanding compared to the similar periods in 2009 was primarily driven by repayments of both affiliate and external borrowings. Interest costs during the nine months ended September 30, 2009 also included fees related to the bridge facility that was entered into and utilized to complete the acquisition of Alltel.

Capitalized interest for the three and nine months ended September 30, 2010 was $213 million and $531 million, respectively, relating to capitalization of interest on wireless licenses under development for commercial services, primarily as a result of the spectrum acquired in the 700 MHZ auction.

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Provision for income taxes

The effective tax rate for the three months ended September 30, 2010 compared to the similar period in 2009 decreased due to one-time tax benefits related to audit settlements and deferred tax requirements. The effective tax rate for the nine months ended September 30, 2010 compared to the similar period in 2009 increased mainly due to a tax charge of approximately $201 million for the taxable gain on the excess of book over tax basis of the goodwill associated with the Alltel Divestiture Markets, which we recorded upon the completion of the divestitures.

Net Income

	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)	2010		2009		% Change		2010		2009		% Change
Net income	$	4,434	$	3,699		19.9	$	12,306	$	10,867		13.2

Net income during the three months ended September 30, 2010 increased by $735 million, or 19.9%, and $1,439 million, or 13.2%, during the nine months ended September 30, 2010, compared to the similar periods in 2009, primarily as a result of the impact of factors described in connection with operating revenue and operating expenses above.

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Consolidated Financial Condition

	Nine Months Ended September 30,
(dollars in millions)	2010			2009			Change
Net cash provided by operating activities	$	19,502		$	16,810			2,692
Net cash used in investing activities		(4,407	)		(10,328	)		5,921
Net cash used in financing activities		(13,438	)		(14,897	)		1,459
Increase (Decrease) in cash		1,657			(8,415	)		10,072

We use the net cash generated from our operations to fund network expansion and technology upgrades, repay affiliate and external debt, pay distributions to our Partners, and from time to time, make strategic investments in licenses or operating markets. We believe that internally generated funds are sufficient to meet ongoing operating and investing requirements. We expect that our capital spending, distributions to our Partners at current levels, interest payments on our debt and other general corporate expenditures will continue to be financed primarily through internally generated funds. We also have borrowing capacity under a fixed rate promissory note with an affiliate that provides daily liquidity and permits us to borrow, repay and re-borrow from time to time up to $0.8 billion.

The amount of cash that we need to service our debt substantially increased with the acquisition of Alltel. Our ability to make payments on our debt when due will depend largely upon our future cash balances and operating performance. Internally generated funds may not be sufficient to repay the principal on our debt when due, or to pay additional distributions to our Partners, if declared, and as a result, we may need to obtain cash from other sources. Sources of future affiliate and external financing requirements may include a combination of debt financing provided through affiliate debt facilities with Verizon Communications and its subsidiaries, borrowings from banks, or debt issued in private placements or in the public markets.

Cash Flows Provided By Operating Activities

Our primary source of funds continues to be cash generated from operations. Net cash provided by operating activities during the nine months ended September 30, 2010 increased by $2.7 billion, or 16.0%, compared to the similar period in 2009, primarily due to an increase in changes in working capital along with increases in operating income.

Cash Flows Used In Investing Activities

Capital Expenditures

Capital expenditures continue to be our primary ongoing use of capital resources as they facilitate the introduction of new products and services, enhance responsiveness to competitive challenges and increase the operating efficiency and productivity of our wireless networks. We invested $6.2 billion and $5.1 billion in capital expenditures, including capitalized software, in the nine months ended September 30, 2010 and 2009, respectively. The increase in capital expenditures during the nine months ended September 30, 2010, compared to the similar period in 2009, was primarily due to increased investment in the capacity of our wireless EV-DO networks and funding the build-out of our 4G network based on LTE technology.

Dispositions

During the nine months ended September 30, 2010, we received cash proceeds of $2.6 billion in connection with the required divestitures of overlapping properties as a result of the acquisition of Alltel (see Recent Developments).

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Acquisitions

On August 23, 2010, we completed our acquisition of the net assets and related customers of six operating markets in Louisiana and Mississippi in a transaction with AT&T for cash consideration of $235 million (see Recent Developments).

On January 9, 2009, we completed our acquisition of the equity of Alltel for cash consideration of $4.9 billion, net of cash acquired from Alltel.

Cash Flows Used In Financing Activities

During the nine months ended September 30, 2010 and 2009, net cash used in financing activities was $13.4 billion and $14.9 billion, respectively, which primarily included net debt repayments and distributions to our Partners as described below.

Our total debt decreased by $10.1 billion to $16.5 billion during the nine months ended September 30, 2010, compared to December 31, 2009, primarily due to the following debt repayments:

• During the nine months ended September 30, 2010, we repaid $5.0 billion of our $9.4 billion floating rate promissory note, which was payable to Verizon Financial Services LLC (VFSL), a wholly-owned subsidiary of Verizon Communications. No borrowings remain outstanding under this note as of September 30, 2010 and this note has been cancelled.

• During the nine months ended September 30, 2010, we repaid $4.0 billion of borrowings under a three-year term loan facility. No borrowings remain outstanding under this facility as of September 30, 2010 and this facility has been cancelled.

• On June 28, 2010, we exercised our right to redeem all of our outstanding $1.0 billion Put/Call Floating Rate Notes due June 2011 at a redemption price of 100% of the principal amount of the notes, plus accrued and unpaid interest through the date of redemption.

Additionally, on July 28, 2010, we entered into an amendment of our affiliate $750 million fixed rate promissory note payable to VFSL, due August 1, 2010. The fixed rate note, as amended, extends the maturity date to August 1, 2013 and gives VFSL the right to cancel this note and require settlement of the aggregate unpaid principal and interest under this note on August 1, 2011 or August 1, 2012. There were no outstanding borrowings under this note as of September 30, 2010.

Distributions

As required under the Partnership Agreement, we paid aggregate tax distributions of $3,219 million and $2,396 million to our Partners during the nine months ended September 30, 2010 and 2009, respectively. In addition to our quarterly tax distribution to our Partners, our Partners have directed us to make supplemental tax distributions to them, subject to our board of representatives’ right to reconsider these distributions based on significant changes in overall business and financial conditions. During the nine months ended September 30, 2010, we made supplemental tax distributions in the aggregate amount of $500 million, which is included in the total distribution paid above. Supplemental tax distributions in the amount of $167 million, comprised of $75 million to Vodafone and $92 million to Verizon Communications, remain payable in the remaining quarter of 2010. Subsequent annual supplemental tax distributions in the amount of $667 million comprised of $300 million to Vodafone and $367 million to Verizon Communications, in each of 2011 and 2012, are scheduled to be paid in equal quarterly installments during each of those years on the same dates that the established regular quarterly tax distributions are made.

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Credit Ratings

In August 2010, Standard & Poor’s placed the ratings of Verizon Communications and subsidiaries, including Cellco Partnership, on CreditWatch with negative implications. The CreditWatch includes Cellco Partnership’s ‘A’ long-term rating and ‘A-1’ short-term rating. There were no other changes to the outlooks or credit ratings of Cellco Partnership discussed in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Cash Flows (Used in)/Provided by Financing Activities,” in our Annual Report on Form 10-K for the year ended December 31, 2009. The three primary rating agencies have identified factors which they believe could result in a ratings downgrade for Cellco Partnership in the future, including sustained leverage levels resulting from: (i) diminished wireless operating performance as a result of a weakening economy and competitive pressures; and (ii) failure to achieve significant synergies from the Alltel integration. A downgrade in our credit rating, or that of Verizon Communications, would increase our cost of obtaining financing, and could affect the amounts of indebtedness and types of financing structures and debt that may be available to us. Securities ratings assigned by rating organizations are expressions of opinion and are not recommendations to buy, sell, or hold securities. A securities rating is subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating.

Covenants

The instruments governing our external debt contain covenants that are typical for large, investment grade companies. These covenants include requirements to pay interest and principal in a timely fashion, to limit pledging and disposition of assets and mergers and consolidations, and other similar covenants.

As of September 30, 2010, we were in compliance with all of our debt covenants.

Increase (Decrease) In Cash and Cash Equivalents

Our Cash and cash equivalents at September 30, 2010 totaled $2.3 billion, a $1.7 billion increase compared to Cash and cash equivalents at December 31, 2009 for the reasons discussed above.

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Market Risk

We are exposed to various types of market risk in the normal course of business, including the impact of interest rate changes and foreign currency exchange rate fluctuations. We employ risk management strategies which may include the use of a variety of derivatives, including cross-currency swaps and interest rate swap agreements. We do not hold derivatives for trading purposes.

It is our general policy to enter into interest rate and foreign currency derivative transactions only to the extent necessary to achieve our desired objectives in limiting our exposure to the various market risks. Our objectives include maintaining a mix of fixed and variable rate debt to lower borrowing costs within reasonable risk parameters and to protect against earnings and cash flow volatility resulting from changes in market conditions. We do not hedge our market risk exposure in a manner that would completely eliminate the effect of changes in interest rates and foreign exchange rates on our earnings. We do not expect that our net income, liquidity nor cash flows will be materially affected by these risk management strategies.

Interest Rate Risk

Our primary market risk relates to changes in interest rates, primarily on the portion of our debt that carries a floating interest rate. As of September 30, 2010 we had approximately $1.3 billion of aggregate floating rate debt outstanding. A change in the interest rate of 1.0% would change annual interest expense by $13 million.

Foreign Currency Risk

Cross Currency Swaps

We have entered into cross currency swaps designated as cash flow hedges to exchange approximately $2.4 billion of British Pound Sterling and Euro denominated debt into U.S. dollars and to fix our future interest and principal payments in U.S. dollars, as well as mitigate the impact of foreign currency transaction gains or losses. The fair value of the cross currency swaps included in Other intangibles and other assets, net was $139 million and $315 million at September 30, 2010 and December 31, 2009, respectively. For the three and nine months ended September 30, 2010, a pretax $207 million gain and $176 million loss, respectively, on the cross currency swaps was recognized in Other comprehensive income (loss), a portion of which was reclassified to Interest income and other, net to offset the related pretax foreign-currency transaction gain or loss on the underlying debt obligations.

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Other Factors That May Affect Future Results

Recent Developments

Alltel Divestiture Markets

As a condition of the regulatory approvals by the Department of Justice and the Federal Communications Commission to complete the acquisition of Alltel in January 2009, we were required to divest overlapping properties in 105 operating markets in 24 states. Total assets and total liabilities divested were $2.6 billion and $0.1 billion, respectively, principally comprised of network assets, wireless licenses and customer relationships; that were included in Prepaid expenses and other current assets and Other current liabilities, respectively, on the accompanying condensed consolidated balance sheet at December 31, 2009.

On May 8, 2009, we entered into a definitive agreement with AT&T Mobility, a subsidiary of AT&T, pursuant to which AT&T Mobility agreed to acquire 79 of the 105 Alltel Divestiture Markets, including licenses and network assets for approximately $2.4 billion in cash. On June 9, 2009, we entered into a definitive agreement with ATN, pursuant to which ATN agreed to acquire the remaining 26 Alltel Divestiture Markets, including licenses and network assets, for $200 million in cash. During the second quarter of 2010, we received the necessary regulatory approvals and completed both transactions.

Other

On August 23, 2010, the Partnership acquired the net assets and related customers of six operating markets in Louisiana and Mississippi in a transaction with AT&T for cash consideration of $235 million. These assets were acquired to enhance the Partnership’s network coverage in these operating markets. The preliminary purchase price allocation primarily resulted in $106 million of wireless licenses and $76 million in goodwill.

Regulatory and Competitive Trends

Information related to Regulatory and Competitive Trends is disclosed in Part I, Item 1. “Business” in our Annual Report on Form 10-K for the year ended December 31, 2009.

Recent Accounting Standards

In July 2010, the accounting standard update regarding disclosures for finance receivables and allowances for credit losses was issued. This standard update requires that entities disclose information at more disaggregated levels than currently required. We will adopt this standard update during the fourth quarter of 2010. The adoption of this standard update is not expected to have a significant impact on our consolidated financial statements.

In September 2009, the accounting standard update regarding revenue recognition for multiple deliverable arrangements was issued. This update requires the use of the relative selling price method when allocating revenue in these types of arrangements. This method allows a vendor to use its best estimate of selling price if neither vendor-specific objective evidence nor third party evidence of selling price exists when evaluating multiple deliverable arrangements. This standard update is effective January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. We are currently evaluating the impact that this standard update will have on our consolidated financial statements.

In September 2009, the accounting standard update regarding revenue recognition for arrangements that include software elements was issued. This update requires tangible products that contain software and non-software elements that work together to deliver the product’s essential functionality to be evaluated under the accounting standard regarding multiple deliverable arrangements. This standard update is effective January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. We are currently evaluating the impact that this standard update will have on our consolidated financial statements.

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Cautionary Statement Concerning Forward-Looking Statements

In this Quarterly Report on Form 10-Q 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,” “hopes” or similar expressions.

The following important factors, along with those discussed elsewhere in this Quarterly Report and those disclosed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009 could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements:

• materially adverse changes in economic conditions in the markets served by us;

• the effects of adverse conditions in the U.S. economy;

• the effects of competition in our markets;

• the effects of material changes in available technology;

• any disruption of our suppliers’ provisioning of critical products or services;

• the impact of natural or man-made disasters or existing or future litigation and any resulting financial impact not covered by insurance;

• technology substitution;

• an adverse change in the ratings afforded our debt securities, or those of Verizon Communications, by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing;

• our ability to obtain sufficient financing to satisfy our substantial capital requirements, including to fund capital expenditures, debt service and distributions to our owners, and to refinance our existing debt;

• any changes in the regulatory environments in which we operate, including any loss of or inability to renew wireless licenses, and the final results of federal and state regulatory proceedings and judicial review of those results;

• changes in our 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;

• our ability to complete acquisitions and dispositions;

• our ability to successfully integrate Alltel Corporation into our business and achieve the anticipated benefits of the acquisition;

• the impact of continued unionization efforts with respect to our employees; and

• the inability to implement our business strategies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information relating to market risk is included in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations under the caption “Market Risk.”

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Item 4. Controls and Procedures

Our chief executive officer and chief financial officer have evaluated the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934), as of the end of the period covered by this quarterly report. Based on this evaluation, our chief executive officer and chief financial officer have concluded that the registrant’s disclosure controls and procedures were effective as of September 30, 2010.

There were no changes in the registrant’s internal control over financial reporting during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

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Part II - Other Information

Item 1. Legal Proceedings

We are a defendant in a putative nationwide class action, Demmick, et al. v. Cellco Partnership, filed May 11, 2006, in the U.S. District Court for the District of New Jersey (District Court), alleging that (i) while we charge one rate for after-allowance minutes on the primary line in our Family SharePlan and a different, higher rate on the secondary lines, we have an undisclosed policy of billing all after-allowance minutes at the higher per minute rate applicable to the secondary lines, and (ii) we improperly billed for in-network calls that should have been provided without charge to certain subscribers. On September 8, 2010, the District Court certified a nationwide “after-allowance” class with respect to plaintiffs’ Federal Communications Act (FCA) and Declaratory Judgment Act (DJA) claims, and New Jersey and Maryland classes on the breach-of-contract claims. The court also certified an “in-network” class, approving nationwide class treatment of plaintiffs’ FCA and DJA claims, and a Maryland-only class asserting claims for breach of contract and violation of the Maryland Consumer Protection Act. We have petitioned the U.S. Court of Appeals for the Third Circuit for interlocutory review of the District Court’s certification order.

Item 1A. Risk Factors

There have been no material changes to our risk factors as previously disclosed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2009.

Item 6. Exhibits

Exhibit Number	Description
10.1	Amendment No. 9, dated as of July 28, 2010, to the Fixed Rate Promissory Note Between Cellco Partnership and Verizon Financial Services LLC dated as of September 1, 2005 (Incorporated herein by reference to Exhibit No. 10.2 to the Cellco Partnership Form 10-Q for the period ended June 30, 2010 (No. 333-160446))
10.2	Secondment Agreement between Vodafone Americas Inc. and Cellco Partnership, dated as of September 24, 2010 (Incorporated herein by reference to Exhibit No. 10.1 to the Cellco Partnership Form 8-K/A dated September 9, 2010 (No. 333-160446))
10.3	Long Term International Assignment Agreement between Vodafone Group Services Limited and Andrew Davies, effective September 29, 2010 (Incorporated herein by reference to Exhibit No. 10.2 to the Cellco Partnership Form 8-K/A dated September 9, 2010 (No. 333-160446))
12	Computation of Ratio of Earnings to Fixed Charges.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CELLCO PARTNERSHIP (d/b/a VERIZON WIRELESS)
Date: October 28, 2010	By	/s/ John Townsend
		John Townsend
		Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

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Exhibit Index

Exhibit Number	Description
10.1	Amendment No. 9, dated as of July 28, 2010, to the Fixed Rate Promissory Note Between Cellco Partnership and Verizon Financial Services LLC dated as of September 1, 2005 (Incorporated herein by reference to the Cellco Partnership Form 10-Q for the period ended June 30, 2010 (No. 333-160446))
10.2	Secondment Agreement between Vodafone Americas Inc. and Cellco Partnership, dated as of September 24, 2010 (Incorporated herein by reference to Exhibit No. 10.1 to the Cellco Partnership Form 8-K/A dated September 9, 2010 (No. 333-160446))
10.3	Long Term International Assignment Agreement between Vodafone Group Services Limited and Andrew Davies, effective September 29, 2010 (Incorporated herein by reference to Exhibit No. 10.2 to the Cellco Partnership Form 8-K/A dated September 9, 2010 (No. 333-160446))
12	Computation of Ratio of Earnings to Fixed Charges.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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EX-12

EXHIBIT 12

Computation of Ratio of Earnings to Fixed Charges

Cellco Partnership (d/b/a Verizon Wireless)

(dollars in millions, except ratio data)	Nine Months Ended September 30, 2010
Earnings:
Pretax income from continuing operations	$	13,294
Equity in income from unconsolidated entities		(54	)
Noncontrolling interests		(217	)
Interest expense		299
Portion of rent expense representing interest		463
Amortization of capitalized interest		52
Distributions from unconsolidated entities		38
Earnings, as adjusted	$	13,875
Fixed Charges:
Interest expense	$	299
Capitalized interest		531
Preferred return requirement of a consolidated subsidiary		—
Portion of rent expense representing interest		463
Fixed charges	$	1,293
Ratio of earnings to fixed charges		10.73

EX-31.1

EXHIBIT 31.1

I, Daniel S. Mead, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cellco Partnership (“the Partnership”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 28, 2010	/s/ Daniel S. Mead
	Daniel S. Mead
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

I, John Townsend, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cellco Partnership (“the Partnership”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 28, 2010	/s/ John Townsend
	John Townsend
	Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

I, Daniel S. Mead, President and Chief Executive Officer of Cellco Partnership (“the Partnership”), certify that:

(1) the report of the Partnership on Form 10-Q for the quarterly period ending September 30, 2010 (the “Report”) fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership as of the dates and for the periods referred to in the Report.

Date: October 28, 2010	/s/ Daniel S. Mead
	Daniel S. Mead
	President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Cellco Partnership and will be retained by Cellco Partnership and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

I, John Townsend, Vice President and Chief Financial Officer of Cellco Partnership (the “Partnership”), certify that:

(1) the report of the Partnership on Form 10-Q for the quarterly period ending September 30, 2010 (the “Report”) fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership as of the dates and for the periods referred to in the Report.

Date: October 28, 2010	/s/ John Townsend
	John Townsend
	Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Cellco Partnership and will be retained by Cellco Partnership and furnished to the Securities and Exchange Commission or its staff upon request.