EX-99 2 a2019q3exhibit99.htm EXHIBIT 99 Exhibit
Exhibit 99
vzlogoa34.jpg


News Release




FOR IMMEDIATE RELEASE
Media contacts:
October 25, 2019
Kim Ancin
 
908.559.3227
 
kimberly.ancin@verizon.com
 
 
 
Eric Wilkens
 
908.559.3063
 
eric.wilkens@verizon.com



Verizon reports strong 3Q results propelled by
wireless customer growth

Highest third-quarter phone gross adds in five years, increased wireless net additions
and EPS growth



3Q 2019 highlights
Consolidated:
$1.25 in earnings per share (EPS), compared with $1.19 in 3Q 2018; adjusted EPS (non-GAAP), excluding special items, of $1.25, compared with $1.22 in 3Q 2018.

Consumer:
Total revenue of $22.7 billion, an increase of 1.4 percent year over year.
193,000 retail postpaid net additions, including 239,000 phone net additions, more than double the 112,000 phone net additions in third-quarter 2018, and 372,000 postpaid smartphone net additions.
Total retail postpaid churn of 1.05 percent, and retail postpaid phone churn of 0.79 percent.
30,000 Fios Internet net additions.

Business:
Total revenue of $7.9 billion, approximately flat year over year.
408,000 retail postpaid net additions, including 205,000 phone net additions.

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Total retail postpaid churn of 1.22 percent, and retail postpaid phone churn of 0.98 percent.

Wireless (non-GAAP):
Total revenue growth of 2.6 percent year over year to $23.6 billion, driven by a 2.7 percent increase in service revenue.
601,000 retail postpaid net additions, including 444,000 phone net additions, an increase from 295,000 phone net additions in third-quarter 2018, and 615,000 postpaid smartphone net additions, an increase from 510,000 postpaid smartphone net additions in third-quarter 2018. This growth was driven by a 10 percent year over year increase in phone gross additions.
Total retail postpaid churn of 1.09 percent, and retail postpaid phone churn of 0.82 percent.

Wireline (non-GAAP):
Total revenue of $7.1 billion, a decrease of 3.8 percent year over year.
36,000 Fios Internet net additions; Fios total revenue growth of 2.3 percent year over year.


NEW YORK - 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.



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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.

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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.

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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 statements
In 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

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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.


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Verizon Communications Inc.



Condensed Consolidated Statements of Income
(dollars in millions, except per share amounts)
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 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



Verizon Communications Inc.



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)
 
Unaudited
 
9 Mos. Ended 9/30/19

 
9 Mos. Ended 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)
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
 
$
16,433

 
$
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
)
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
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



Verizon Communications Inc.



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
 
 
 
 
 
 
 
 
 
 
 
 
 
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)
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
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
 
 
9/30/2019

 
9/30/2018

 
%
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)
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
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