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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021

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: 1-8606
Verizon Communications Inc.
(Exact name of registrant as specified in its charter)
Delaware 23-2259884
(State or other jurisdiction
of incorporation or organization)
 (I.R.S. Employer Identification No.)
1095 Avenue of the Americas10036
New York,New York
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (212395-1000


Table of Contents
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, par value $0.10VZNew York Stock Exchange
Common Stock, par value $0.10VZThe NASDAQ Global Select Market
1.625% Notes due 2024VZ24BNew York Stock Exchange
4.073% Notes due 2024VZ24CNew York Stock Exchange
0.875% Notes due 2025VZ25New York Stock Exchange
3.250% Notes due 2026VZ26New York Stock Exchange
1.375% Notes due 2026VZ26BNew York Stock Exchange
0.875% Notes due 2027VZ27ENew York Stock Exchange
1.375% Notes due 2028VZ28New York Stock Exchange
1.125% Notes due 2028VZ28ANew York Stock Exchange
1.875% Notes due 2029VZ29BNew York Stock Exchange
0.375% Notes due 2029VZ29DNew York Stock Exchange
1.250% Notes due 2030VZ30New York Stock Exchange
1.875% Notes due 2030VZ30ANew York Stock Exchange
2.625% Notes due 2031VZ31New York Stock Exchange
2.500% Notes due 2031VZ31ANew York Stock Exchange
0.875% Notes due 2032VZ32New York Stock Exchange
0.750% Notes due 2032VZ32ANew York Stock Exchange
1.300% Notes due 2033VZ33BNew York Stock Exchange
4.750% Notes due 2034VZ34New York Stock Exchange
3.125% Notes due 2035VZ35New York Stock Exchange
1.125% Notes due 2035VZ35ANew York Stock Exchange
3.375% Notes due 2036VZ36ANew York Stock Exchange
2.875% Notes due 2038VZ38BNew York Stock Exchange
1.875% Notes due 2038VZ38CNew York Stock Exchange
1.500% Notes due 2039VZ39CNew York Stock Exchange
3.500% Fixed Rate Notes due 2039VZ39DNew York Stock Exchange
1.850% Notes due 2040VZ40New York Stock Exchange

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.     Yes     No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).     Yes     No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

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

At March 31, 2021, 4,140,067,633 shares of the registrant’s common stock were outstanding, after deducting 151,366,013 shares held in treasury.


Table of Contents
TABLE OF CONTENTS
Item No. Page
Item 1.
Three months ended March 31, 2021 and 2020
Three months ended March 31, 2021 and 2020
At March 31, 2021 and December 31, 2020
Three months ended March 31, 2021 and 2020
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
















Table of Contents
Part I - Financial Information

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Statements of Income
Verizon Communications Inc. and Subsidiaries
Three Months Ended
 March 31,
(dollars in millions, except per share amounts) (unaudited)20212020
Operating Revenues
Service revenues and other
$27,923 $27,481 
Wireless equipment revenues
4,944 4,129 
Total Operating Revenues32,867 31,610 
Operating Expenses
Cost of services (exclusive of items shown below)
8,020 7,754 
Cost of wireless equipment
5,502 4,542 
Selling, general and administrative expense
7,401 8,585 
Depreciation and amortization expense
4,174 4,150 
Total Operating Expenses25,097 25,031 
Operating Income7,770 6,579 
Equity in earnings (losses) of unconsolidated businesses8 (12)
Other income, net401 143 
Interest expense(1,101)(1,034)
Income Before Provision For Income Taxes7,078 5,676 
Provision for income taxes(1,700)(1,389)
Net Income$5,378 $4,287 
Net income attributable to noncontrolling interests$133 $131 
Net income attributable to Verizon5,245 4,156 
Net Income$5,378 $4,287 
Basic Earnings Per Common Share
Net income attributable to Verizon$1.27 $1.00 
Weighted-average shares outstanding (in millions)4,141 4,139 
Diluted Earnings Per Common Share
Net income attributable to Verizon$1.27 $1.00 
Weighted-average shares outstanding (in millions)4,142 4,141 
See Notes to Condensed Consolidated Financial Statements

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Condensed Consolidated Statements of Comprehensive Income
Verizon Communications Inc. and Subsidiaries
 Three Months Ended
March 31,
(dollars in millions) (unaudited)20212020
Net Income$5,378 $4,287 
Other Comprehensive Income (Loss), Net of Tax (Expense) Benefit
Foreign currency translation adjustments, net of tax of $8 and $(4)
(38)(120)
Unrealized gain (loss) on cash flow hedges, net of tax of $(340) and $792
909 (2,210)
Unrealized loss on marketable securities, net of tax of $1 and $1
(5)(1)
Defined benefit pension and postretirement plans, net of tax of $51 and $56
(155)(169)
Other comprehensive income (loss) attributable to Verizon711 (2,500)
Total Comprehensive Income$6,089 $1,787 
Comprehensive income attributable to noncontrolling interests$133 $131 
Comprehensive income attributable to Verizon5,956 1,656 
Total Comprehensive Income$6,089 $1,787 
See Notes to Condensed Consolidated Financial Statements
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Condensed Consolidated Balance Sheets
Verizon Communications Inc. and Subsidiaries
At March 31,At December 31,
(dollars in millions, except per share amounts) (unaudited)20212020
Assets
Current assets
Cash and cash equivalents
$10,205 $22,171 
Accounts receivable
23,611 25,169 
Less Allowance for credit losses
1,104 1,252 
Accounts receivable, net 22,507 23,917 
Inventories
1,303 1,796 
Prepaid expenses and other
5,632 6,710 
Total current assets39,647 54,594 
Property, plant and equipment282,742 279,737 
Less Accumulated depreciation
187,866 184,904 
Property, plant and equipment, net94,876 94,833 
Investments in unconsolidated businesses555 589 
Wireless licenses98,012 96,097 
Deposits for wireless licenses45,490 2,772 
Goodwill24,837 24,773 
Other intangible assets, net9,304 9,413 
Operating lease right-of-use assets22,315 22,531 
Other assets10,537 10,879 
Total assets$345,573 $316,481 
Liabilities and Equity
Current liabilities
Debt maturing within one year$8,802 $5,889 
Accounts payable and accrued liabilities17,219 20,658 
Current operating lease liabilities3,536 3,485 
Other current liabilities9,173 9,628 
Total current liabilities38,730 39,660 
Long-term debt149,700 123,173 
Employee benefit obligations18,252 18,657 
Deferred income taxes36,747 35,711 
Non-current operating lease liabilities17,766 18,000 
Other liabilities11,695 12,008 
Total long-term liabilities234,160 207,549 
Commitments and Contingencies (Note 12)
Equity
Series preferred stock ($0.10 par value; 250,000,000 shares authorized; none issued)
  
Common stock ($0.10 par value; 6,250,000,000 shares authorized in each period; 4,291,433,646 shares issued in each period)
429 429 
Additional paid in capital13,408 13,404 
Retained earnings63,107 60,464 
Accumulated other comprehensive income (loss)640 (71)
Common stock in treasury, at cost (151,366,013 and 153,304,088 shares outstanding)
(6,634)(6,719)
Deferred compensation – employee stock ownership plans and other282 335 
Noncontrolling interests1,451 1,430 
Total equity72,683 69,272 
Total liabilities and equity$345,573 $316,481 
See Notes to Condensed Consolidated Financial Statements
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Condensed Consolidated Statements of Cash Flows
Verizon Communications Inc. and Subsidiaries
Three Months Ended
 March 31,
(dollars in millions) (unaudited)20212020
Cash Flows from Operating Activities
Net Income$5,378 $4,287 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense4,174 4,150 
Employee retirement benefits(253)(1)
Deferred income taxes762 (87)
Provision for expected credit losses224 553 
Equity in losses of unconsolidated businesses, net of dividends received19 26 
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses(41)(1,208)
Other, net(569)1,104 
Net cash provided by operating activities9,694 8,824 
Cash Flows from Investing Activities
Capital expenditures (including capitalized software)(4,494)(5,274)
Acquisitions of businesses, net of cash acquired(408) 
Acquisitions of wireless licenses(44,783)(434)
Other, net32 (1,272)
Net cash used in investing activities(49,653)(6,980)
Cash Flows from Financing Activities
Proceeds from long-term borrowings31,383 5,848 
Proceeds from asset-backed long-term borrowings1,000 2,844 
Repayments of long-term borrowings and finance lease obligations(302)(1,700)
Repayments of asset-backed long-term borrowings(732)(2,229)
Dividends paid(2,601)(2,547)
Other, net(792)347 
Net cash provided by financing activities27,956 2,563 
Increase (decrease) in cash, cash equivalents and restricted cash(12,003)4,407 
Cash, cash equivalents and restricted cash, beginning of period23,498 3,917 
Cash, cash equivalents and restricted cash, end of period (Note 1)$11,495 $8,324 
See Notes to Condensed Consolidated Financial Statements

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Notes to Condensed Consolidated Financial Statements (Unaudited)
Verizon Communications Inc. and Subsidiaries

Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States (U.S.) and based upon Securities and Exchange Commission 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 financial statements included in Verizon Communications Inc.'s (Verizon or the Company) Annual Report on Form 10-K for the year ended December 31, 2020. 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.

Certain amounts have been reclassified to conform to the current period’s presentation.

Earnings Per Common Share
There were a total of approximately 2 million outstanding dilutive securities, primarily consisting of restricted stock units, included in the computation of diluted earnings per common share for the three months ended March 31, 2021 and March 31, 2020.

Cash, Cash Equivalents and Restricted Cash
We consider all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximates quoted market value and includes amounts held in money market funds.

Cash collections on the device payment plan agreement receivables collateralizing our asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the segregated accounts are considered restricted cash and are included in Prepaid expenses and other and Other assets in our condensed consolidated balance sheets.

Cash, cash equivalents and restricted cash are included in the following line items in the condensed consolidated balance sheets:
At March 31,At December 31,Decrease
(dollars in millions)
20212020
Cash and cash equivalents$10,205 $22,171 $(11,966)
Restricted cash:
Prepaid expenses and other
1,180 1,195 (15)
Other assets
110 132 (22)
Cash, cash equivalents and restricted cash$11,495 $23,498 $(12,003)

Note 2. Revenues and Contract Costs
We earn revenue from contracts with customers, primarily through the provision of telecommunications and other services and through the sale of wireless equipment.

Revenue by Category
We have two reportable segments that we operate and manage as strategic business units - Consumer and Business. Revenue is disaggregated by products and services within Consumer and customer groups (Small and Medium Business, Global Enterprise, Public Sector and Other, and Wholesale) within Business. See Note 11 for additional information on revenue by segment.

Corporate and other includes the results of our media business, Verizon Media Group (Verizon Media), and other businesses. Verizon Media generated revenues from contracts with customers under Accounting Standards Updated (ASU) 2014-09, "Revenue from Contracts with Customers" (Topic 606) of approximately $1.9 billion and $1.7 billion during the three months ended March 31, 2021 and March 31, 2020, respectively.     

We also earn revenues that are not accounted for under Topic 606 from leasing arrangements (such as those for towers and equipment), captive reinsurance arrangements primarily related to wireless device insurance and the interest on equipment financed under a device payment plan agreement when sold to the customer by an authorized agent. As allowed by the practical expedient within ASU 2016-02, "Leases" (Topic 842), we have elected to combine the lease and non-lease components for those arrangements of customer premise equipment where we are the lessor as components accounted for under Topic 606. During the three months ended March 31, 2021 and March 31, 2020, revenues from arrangements that were not accounted for under Topic 606 were approximately $735 million and $812 million, respectively.

Remaining Performance Obligations
When allocating the total contract transaction price to identified performance obligations, a portion of the total transaction price may relate to service performance obligations which were not satisfied or are partially satisfied as of the end of the reporting period. Below we disclose
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information relating to these unsatisfied performance obligations. We apply the practical expedient available under Topic 606 that provides the option to exclude the expected revenues arising from unsatisfied performance obligations related to contracts that have an original expected duration of one year or less. This situation primarily arises with respect to certain month-to-month service contracts. At March 31, 2021, month-to-month service contracts represented approximately 91% of our wireless postpaid contracts and approximately 78% of our wireline Consumer and Small and Medium Business contracts, compared to March 31, 2020, for which month-to-month service contracts represented approximately 88% of our wireless postpaid contracts and 64% of our wireline Consumer and Small and Medium Business contracts.

Additionally, certain contracts provide customers the option to purchase additional services. The fees related to these additional services are recognized when the customer exercises the option (typically on a month-to-month basis).

Contracts for wireless services are generally either month-to-month and cancellable at any time (typically under a device payment plan) or contain terms ranging from greater than one month to up to two years (typically under a fixed-term plan). Additionally, customers may incur charges based on usage or additional optional services purchased in conjunction with entering into a contract that can be cancelled at any time and therefore are not included in the transaction price. The transaction price allocated to service performance obligations, which are not satisfied or are partially satisfied as of the end of the reporting period, are generally related to contracts that are not accounted for as month-to-month contracts.

Our Consumer group customers also include traditional wholesale resellers that purchase and resell wireless service under their own brands to their respective customers. Reseller arrangements generally include a stated contract term, which typically extends longer than two years and, in some cases, include a periodic minimum revenue commitment over the contract term for which revenues will be recognized in future periods.

Consumer customer contracts for wireline services are generally month-to-month; however, they may have a service term of two years or shorter than twelve months. Certain contracts with Business customers for wireline services extend into future periods, contain fixed monthly fees and usage-based fees, and can include annual commitments in each year of the contract or commitments over the entire specified contract term; however, a significant number of contracts for wireline services with our Business customers have a contract term that is twelve months or less.

Additionally, there are certain contracts with Business customers for wireline and telematics services and certain Verizon Media contracts with customers that have a contractual minimum fee over the total contract term. We cannot predict the time period when revenue will be recognized related to those contracts; thus, they are excluded from the time bands below. These contracts have varying terms spanning over approximately seven years ending in January 2029 and have aggregate contract minimum payments totaling $2.7 billion.

At March 31, 2021, the transaction price related to unsatisfied performance obligations for total Verizon that is expected to be recognized for the remainder of 2021, 2022 and thereafter was $13.3 billion, $9.1 billion and $2.0 billion, respectively. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations and changes in the timing and scope of contracts, arising from contract modifications.

Accounts Receivable and Contract Balances
The timing of revenue recognition may differ from the time of billing to our customers. Receivables presented in our condensed consolidated balance sheets represent an unconditional right to consideration. Contract balances represent amounts from an arrangement when either Verizon has performed, by transferring goods or services to the customer in advance of receiving all or partial consideration for such goods and services from the customer, or the customer has made payment to Verizon in advance of obtaining control of the goods and/or services promised to the customer in the contract.

Contract assets primarily relate to our rights to consideration for goods or services provided to customers but for which we do not have an unconditional right at the reporting date. Under a fixed-term plan, total contract revenue is allocated between wireless service and equipment revenues. In conjunction with these arrangements, a contract asset is created, which represents the difference between the amount of equipment revenue recognized upon sale and the amount of consideration received from the customer when the performance obligation related to the transfer of control of the equipment is satisfied. The contract asset is reclassified to accounts receivable as wireless services are provided and billed. We have the right to bill the customer as service is provided over time, which results in our right to the payment being unconditional. The contract asset balances are presented in our condensed consolidated balance sheets as Prepaid expenses and other and Other assets. We recognize the allowance for credit losses at inception and reassess quarterly based on management’s expectation of the asset’s collectability.

Contract liabilities arise when we bill our customers and receive consideration in advance of providing the goods or services promised in the contract. We typically bill service one month in advance, which is the primary component of the contract liability balance. Contract liabilities are recognized as revenue when services are provided to the customer. The contract liability balances are presented in our condensed consolidated balance sheets as Other current liabilities and Other liabilities.

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The following table presents information about receivables from contracts with customers:
At March 31,At January 1,At March 31,At January 1,
(dollars in millions)2021202120202020
Receivables(1)
$10,821 $12,029 $11,273 $12,078 
Device payment plan agreement receivables(2)
10,409 10,358 10,955 11,741 
(1)Balances do not include receivables related to the following contracts: leasing arrangements (such as those for towers and equipment), captive reinsurance arrangements primarily related to wireless device insurance and the interest on equipment financed under a device payment plan agreement when sold to the customer by an authorized agent.
(2)Included in device payment plan agreement receivables presented in Note 7. Balances do not include receivables derived from the sale of equipment on a device payment plan through an authorized agent.

The following table presents information about contract balances:
At March 31,At January 1,At March 31,At January 1,
(dollars in millions)2021202120202020
Contract asset$923 $937 $1,135 $1,150 
Contract liability (1)
5,783 5,598 5,347 5,307 
(1) Revenue recognized related to contract liabilities existing at January 1, 2021 and January 1, 2020 were $3.9 billion and $3.8 billion for the three months ended March 31, 2021 and March 31, 2020, respectively.

The balance of contract assets and contract liabilities recorded in our condensed consolidated balance sheets were as follows:
At March 31,At December 31,
(dollars in millions)20212020
Assets
Prepaid expenses and other$729 $733 
Other assets194 204 
Total$923 $937 
Liabilities
Other current liabilities$4,979 $4,843 
Other liabilities804 755 
Total$5,783 $5,598 

Contract Costs
Topic 606 requires the recognition of an asset for incremental costs to obtain a customer contract, which are then amortized to expense over the respective periods of expected benefit. We recognize an asset for incremental commission expenses paid to internal and external sales personnel and agents in conjunction with obtaining customer contracts. We only defer these costs when we have determined the commissions are incremental costs that would not have been incurred absent the customer contract and are expected to be recoverable. Costs to obtain a contract are amortized and recorded ratably as commission expense over the period representing the transfer of goods or services to which the assets relate. Costs to obtain wireless contracts are amortized over both of our Consumer and Business customers' estimated device upgrade cycles, as such costs are typically incurred each time a customer upgrades. Costs to obtain wireline contracts are amortized as expense over the estimated customer relationship period for our Consumer customers. Incremental costs to obtain wireline contracts for our Business customers are insignificant. Costs to obtain contracts are recorded in Selling, general and administrative expense.

We also defer costs incurred to fulfill contracts that: (1) relate directly to the contract; (2) are expected to generate resources that will be used to satisfy our performance obligation under the contract; and (3) are expected to be recovered through revenue generated under the contract. Contract fulfillment costs are expensed as we satisfy our performance obligations and recorded in Cost of services. These costs principally relate to direct costs that enhance our wireline business resources, such as costs incurred to install circuits.

We determine the amortization periods for our costs incurred to obtain or fulfill a customer contract at a portfolio level due to the similarities within these customer contract portfolios.

Other costs, such as general costs or costs related to past performance obligations, are expensed as incurred.

Collectively, costs to obtain a contract and costs to fulfill a contract are referred to as deferred contract costs, and amortized over a two-to five-year period. Deferred contract costs are classified as current or non-current within Prepaid expenses and other and Other assets, respectively.

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The balances of deferred contract costs included in our condensed consolidated balance sheets were as follows:
At March 31,At December 31,
(dollars in millions)20212020
Assets
Prepaid expenses and other$2,426 $2,472 
Other assets2,068 2,070 
Total$4,494 $4,542 

For the three months ended March 31, 2021 and 2020, we recognized expense of $765 million and $778 million, respectively, associated with the amortization of deferred contract costs, primarily within Selling, general and administrative expense in our condensed consolidated statements of income.

We assess our deferred contract costs for impairment on a quarterly basis. We recognize an impairment charge to the extent the carrying amount of a deferred cost exceeds the remaining amount of consideration we expect to receive in exchange for the goods and services related to the cost, less the expected costs related directly to providing those goods and services that have not yet been recognized as expenses. There have been no impairment charges recognized for the three months ended March 31, 2021 or March 31, 2020.

Note 3. Acquisitions and Divestitures
Spectrum License Transactions
In March 2020, the Federal Communications Commission's (FCC) incentive auction, Auction 103, for spectrum licenses in the upper 37 GHz, 39 GHz, and 47 GHz bands concluded. Verizon participated in this incentive auction and was the high bidder on 4,940 licenses, which primarily consisted of 37 GHz and, to a lesser extent, 39 GHz spectrum. As an incumbent licensee, our 39 GHz licenses provided us with incentive payments that were applied towards the purchase price of spectrum in the auction. The value of the licenses won by Verizon amounted to $3.4 billion, of which $1.8 billion was settled with the relinquished 39 GHz licenses. The remaining balance was settled in cash of $1.6 billion, of which $101 million was paid in December 2019. In connection with the incentive auction, a pre-tax net loss of $1.2 billion ($914 million after-tax) was recorded in Selling, general and administrative expense in the condensed consolidated statement of income during the three months ended March 31, 2020 because the exchange of the previously held licenses for new licenses had commercial substance. See Note 4 for additional information. The new reconfigured licenses were received in the second quarter 2020 and are included in Wireless licenses in our condensed consolidated balance sheet.

In September 2020, the FCC completed Auction 105 for Priority Access Licenses. Verizon participated in the auction and was the high bidder on 557 licenses in the 3.5 GHz band valued at approximately $1.9 billion. Verizon made payments for these licenses in 2020 and received them from the FCC in March 2021. The average remaining renewal period for these acquired licenses was 10 years. The purchase cost for these licenses and related capitalized interest, to the extent qualifying activities have occurred, are included in Wireless licenses in our condensed consolidated balance sheet.

In February 2021, the FCC concluded Auction 107 for C-Band wireless spectrum. Verizon was the winning bidder on 3,511 licenses, consisting of contiguous C-Band spectrum bands ranging between 140 and 200 megahertz of C-Band spectrum in all 406 markets available in the auction. Verizon paid $45.5 billion for the licenses it won, of which $44.6 billion was paid in the first quarter of 2021. In accordance with the rules applicable to the auction, Verizon is required to make additional payments to acquire the licenses. The payments are for our allocable share of clearing costs incurred by, and incentive payments due to, the incumbent license holders associated with the auction, which are estimated to be $7.4 billion. We expect to begin making these payments in 2021 for the top 46 markets and continue to do so for the remaining markets through 2024. These payments are dependent on the incumbent license holders accelerated clearing of the spectrum for Verizon’s use and, therefore, the final timing and amounts could differ based on the incumbent holders’ execution of their clearing process. Per FCC order, the clearing must be completed by December 2025.

The carrying value of our wireless spectrum won in Auction 107 will consist of all payments required to participate and purchase licenses in the auction, including Verizon’s allocable share of clearing costs incurred by, and incentive payments due to, the incumbent license holders associated with the auction that we are obligated to pay in order to acquire the licenses. Carrying value will also include capitalized interest to the extent qualifying activities have occurred. These figures are recorded within Deposits for wireless licenses in our condensed consolidated balance sheet. Reclassification of these amounts to Wireless licenses is made upon receipt of the corresponding licenses. The timing of when the licenses will be issued will be determined by the FCC after all the payments have been made.

Refer to Note 6 for further details on significant debt transactions.

During the three months ended March 31, 2021, we entered into and completed various other wireless license acquisitions for cash consideration of approximately $90 million. In addition, we reached two agreements to sell certain wireless licenses for insignificant cash consideration. We reclassified these wireless licenses as assets held for sale within Other assets and recognized a pre-tax loss of $223 million ($167 million after-tax). The agreement is subject to regulatory approval and buyer financing conditions.

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BlueJeans Network, Inc.
In April 2020, we entered into a definitive purchase agreement to acquire BlueJeans Network, Inc. (BlueJeans), an enterprise-grade video conferencing and event platform, whose services are sold to Business customers globally. The transaction closed in May 2020. The aggregate cash consideration paid by Verizon at the closing of the transaction was approximately $397 million, net of cash acquired.

The acquisition of BlueJeans was accounted for as a business combination. The consideration was allocated to the assets acquired and liabilities assumed based on their fair values as of the close of the acquisition. We recorded approximately $246 million of goodwill and $190 million of other intangible assets, which primarily consisted of customer lists and internally developed technology. Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the fair value of the net assets acquired. The goodwill represents future economic benefits that we expect to achieve as a result of the acquisition. The goodwill related to this acquisition is included within Business.

TracFone Wireless, Inc.
In September 2020, we entered into a purchase agreement (Tracfone Purchase Agreement) with América Móvil to acquire TracFone Wireless, Inc. (Tracfone), a provider of prepaid and value mobile services in the U.S. Under the terms of the Tracfone Purchase Agreement, we will acquire all of the stock of Tracfone for approximately $3.1 billion in cash and $3.1 billion in Verizon common stock, subject to customary adjustments, at closing. The number of shares issued will be based on an average trading price determined as of the closing date and is subject to a minimum number of shares issuable of 47,124,445 and a maximum number of shares issuable of 57,596,544. The Tracfone Purchase Agreement also includes up to an additional $650 million in future cash consideration related to the achievement of certain performance measures and other commercial arrangements. The transaction is subject to regulatory approvals and closing conditions and is expected to close in the second half of 2021.

Bluegrass Cellular
In October 2020, we entered into a definitive agreement to acquire certain assets of Bluegrass Cellular (Bluegrass), a rural wireless operator serving central Kentucky. Bluegrass provides wireless service to 210,000 customers in 34 counties in rural service areas 3, 4, and 5 in Central Kentucky. The transaction closed in March 2021. The aggregate cash consideration paid by Verizon at the closing of the transaction was approximately $405 million, net of cash acquired, which is subject to customary closing adjustments.

The financial results of Bluegrass are included in the consolidated results of Verizon from the date of acquisition. These amounts are insignificant for the three months ended March 31, 2021.

The acquisition of Bluegrass was accounted for as a business combination. We are currently assessing the identification and measurement of the assets acquired and liabilities assumed based on their fair values as of the close of the acquisition. Preliminarily, we recorded approximately $146 million of plant, property and equipment, $135 million of intangible assets and $80 million of goodwill. Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the fair value of the net assets acquired. The goodwill represents future economic benefits that we expect to achieve as a result of the acquisition. The goodwill related to this acquisition is included within Consumer.

Other
In November 2020, Verizon entered into an agreement to sell our Huffington Post business. In connection with this transaction, we recorded a pre-tax loss of $126 million in Selling, general and administrative expense in our condensed consolidated statement of income for the year ended December 31, 2020. The transaction closed in February 2021.

Note 4. Wireless Licenses, Goodwill, and Other Intangible Assets
Wireless Licenses
The carrying amounts of our Wireless licenses, as well as wireless spectrum for which licenses have not yet been received, are as follows:
At March 31,At December 31,
(dollars in millions)20212020
Wireless licenses$98,012 $96,097 
Deposits for wireless licenses45,490 2,772 

At March 31, 2021 and 2020, approximately $53.5 billion and $3.5 billion, respectively, of wireless licenses were under development for commercial service for which we were capitalizing interest costs. At March 31, 2021, the $53.5 billion was comprised of $8.0 billion recorded in Wireless licenses and $45.5 billion recorded in Deposits for wireless licenses. At March 31, 2020, $3.5 billion, was recorded in Wireless licenses. We recorded approximately $79 million and $64 million of capitalized interest on wireless licenses for the three months ended March 31, 2021 and 2020, respectively. We recorded approximately $35 million of capitalized interest on Deposits for wireless licenses during the three months ended March 31, 2021.

In the first quarter of 2020, we reclassified substantially all of our 39 GHz wireless licenses, including capitalized interest, with a carrying value of $2.8 billion to assets held for sale in connection with the FCC's incentive auction, Auction 103. As a result, these wireless licenses
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were adjusted down to their fair value of $1.6 billion resulting in a pre-tax loss of $1.2 billion ($914 million after-tax) in 2020. The new reconfigured licenses were received in the second quarter 2020 and had a value of $3.4 billion.

During the three months ended March 31, 2021, we renewed various wireless licenses in accordance with FCC regulations. The average renewal period for these licenses was 10 years.

Goodwill
Changes in the carrying amount of Goodwill are as follows:
(dollars in millions)ConsumerBusinessOtherTotal
Balance at January 1, 2021 (1)
$17,222 $7,535 $16 $24,773 
Acquisitions (2)
80   80 
Reclassifications, adjustments and other3 (19) (16)
Balance at March 31, 2021 (1)
$17,305 $7,516 $16 $24,837 
(1) Goodwill is net of accumulated impairment charges of $4.8 billion, related to our Media reporting unit.
(2) The change in goodwill due to acquisitions is due to Bluegrass. See Note 3 for additional information.

Other Intangible Assets
The following table displays the composition of Other intangible assets, net as well as the respective amortization period:
 At March 31, 2021At December 31, 2020
(dollars in millions)Gross
Amount
Accumulated
Amortization
Net
Amount
Gross
Amount
Accumulated
Amortization
Net
Amount
Customer lists (8 to 13 years)
$4,055 $(2,058)$1,997 $4,021 $(1,961)$2,060 
Non-network internal-use software (5 to 7 years)
22,107 (15,548)6,559 21,685 (15,104)6,581 
Other (4 to 25 years)
1,770 (1,022)748 1,771 (999)772 
Total$27,932 $(18,628)$9,304 $27,477 $(18,064)$9,413 

The amortization expense for Other intangible assets was as follows: 
Three Months Ended
(dollars in millions)March 31,
2021$629 
2020592 

The estimated future amortization expense for Other intangible assets for the remainder of the current year and next 5 years is as follows:
Years(dollars in millions)
Remainder of 2021$1,804 
20222,085 
20231,712 
20241,276 
2025906 
2026690 

Note 5. Leasing Arrangements
In April 2021, Verizon executed agreements that modified the tenure and payment terms for certain existing cell tower operating leases to support the build-out of our fifth-generation wireless network. Verizon expects these lease modifications will result in an increase to our operating lease right-of-use assets and liabilities of approximately $7.0 billion to $7.5 billion in the second quarter of 2021.

Note 6. Debt
Significant Debt Transactions
Debt or equity financing may be needed to fund additional investments or development activities or to maintain an appropriate capital structure to ensure our financial flexibility.

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The following table shows the significant transactions involving the senior unsecured debt securities of Verizon and its subsidiaries that occurred during the three months ended March 31, 2021.

Issuances
(amounts in millions)Principal Amount Issued
Net Proceeds (1)
Verizon 0.750% notes due 2024
$1,750 $1,746 
Verizon floating rate (Compounded SOFR(2) + 0.500%) notes due 2024
750 748 
Verizon 1.450% notes due 2026
2,750 2,737 
Verizon floating rate (Compounded SOFR(2) + 0.790%) notes due 2026
750 748 
Verizon 2.100% notes due 2028
3,000 2,988 
Verizon 2.550% notes due 2031
4,250 4,216 
Verizon 3.400% notes due 2041
3,750 3,726 
Verizon 3.550% notes due 2051
4,500 4,426 
Verizon 3.700% notes due 2061
3,500 3,439 
Verizon 0.375% notes due 2029 (3)
1,000 1,186 
Verizon 0.750% notes due 2032 (3)
1,000 1,181 
Verizon 1.125% notes due 2035 (3)
750 878 
Verizon 2.375% notes due 2028 (3)
C$1,000 800 
Verizon 4.050% notes due 2051 (3)
C$500 399 
Verizon 2.350% notes due 2028 (3)
A$600 463 
Verizon 3.000% notes due 2031 (3)
A$500 385 
Verizon 3.850% notes due 2041 (3)
A$150 116 
Verizon 0.193% bonds due 2028 (3)
CHF375 403 
Verizon 0.555% bonds due 2031 (3)
CHF325 349 
Total$30,934 
(1) Net proceeds were net of underwriting discounts and other issuance costs. In addition, for securities denominated in a currency other than the U.S. dollar, net proceeds are shown on a U.S. dollar equivalent.
(2) Compounded Secured Overnight Financing Rate (SOFR) is calculated using the SOFR Index published by the Federal Reserve Bank of New York in accordance with the terms of the notes.
(3) See Note 8 for information on derivative transactions related to the issuances.

Repayments, Redemptions and Repurchases
During April 2021, we notified investors of our intention to redeem in May 2021 all of the approximately $713 million outstanding aggregate principal amount of 2.946% notes due 2022.

Asset-Backed Debt
As of March 31, 2021, the carrying value of our asset-backed debt was $10.9 billion. Our asset-backed debt includes Asset-Backed Notes (ABS Notes) issued to third-party investors (Investors) and loans (ABS Financing Facilities) received from banks and their conduit facilities (collectively, the Banks). Our consolidated asset-backed debt bankruptcy remote legal entities (each, an ABS Entity or collectively, the ABS Entities) issue the debt or are otherwise party to the transaction documentation in connection with our asset-backed debt transactions. Under the terms of our asset-backed debt, Cellco Partnership (Cellco), a wholly-owned subsidiary of Verizon, and certain other affiliates of Verizon (collectively, the Originators) transfer device payment plan agreement receivables to one of the ABS Entities, which in turn transfers such receivables to another ABS Entity that issues the debt. Verizon entities retain the equity interests in the ABS Entities, which represent the rights to all funds not needed to make required payments on the asset-backed debt and other related payments and expenses.

Our asset-backed debt is secured by the transferred device payment plan agreement receivables and future collections on such receivables. The device payment plan agreement receivables transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of asset-backed debt and expenses related thereto, payments to the Originators in respect of additional transfers of device payment plan agreement receivables, and other obligations arising from our asset-backed debt transactions, and will not be available to pay other obligations or claims of Verizon’s creditors until the associated asset-backed debt and other obligations are satisfied. The Investors or Banks, as applicable, which hold our asset-backed debt have legal recourse to the assets securing the debt, but do not have any recourse to Verizon with respect to the payment of principal and interest on the debt. Under a parent support agreement, Verizon has agreed to guarantee certain of the payment obligations of Cellco and the Originators to the ABS Entities.

Cash collections on the device payment plan agreement receivables collateralizing our asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the segregated accounts are considered restricted cash and are included in Prepaid expenses and other and Other assets in our condensed consolidated balance sheets.

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Proceeds from our asset-backed debt transactions are reflected in Cash flows from financing activities in our condensed consolidated statements of cash flows. The asset-backed debt issued and the assets securing this debt are included in our condensed consolidated balance sheets.

ABS Notes
Under the terms of each series of ABS Notes, there is a two year revolving period during which we may transfer additional receivables to the ABS Entity. During the three months ended March 31, 2021, we made aggregate principal repayments of $732 million on ABS notes that have entered the amortization period, including principal payments made in connection with clean-up redemptions.

ABS Financing Facility
In March 2021, we borrowed an additional $1.0 billion under the loan agreement outstanding in connection with the ABS Financing Facility. The aggregate outstanding balance under the ABS Financing Facility was $1.5 billion as of March 31, 2021.

Variable Interest Entities (VIEs)
The ABS Entities meet the definition of a VIE for which we have determined that we are the primary beneficiary as we have both the power to direct the activities of the entity that most significantly impact the entity’s performance and the obligation to absorb losses or the right to receive benefits of the entity. Therefore, the assets, liabilities and activities of the ABS Entities are consolidated in our financial results and are included in amounts presented on the face of our condensed consolidated balance sheets.

The assets and liabilities related to our asset-backed debt arrangements included in our condensed consolidated balance sheets were as follows:
At March 31,At December 31,
(dollars in millions)20212020
Assets
Account receivable, net$9,445 $9,257 
Prepaid expenses and other1,133 1,128 
Other assets3,717 2,950 
Liabilities
Accounts payable and accrued liabilities9 8 
Debt maturing within one year5,407 4,191 
Long-term debt5,469 6,413 

See Note 7 for additional information on device payment plan agreement receivables used to secure asset-backed debt.

Long-Term Credit Facilities
At March 31, 2021
(dollars in millions)MaturitiesFacility CapacityUnused Capacity Principal Amount Outstanding
Verizon revolving credit facility (1)
2024$9,500 $9,392 N/A
Various export credit facilities (2)
2022 - 20287,500 530 $5,205 
Total$17,000 $9,922 $5,205 
N/A - not applicable
(1) The revolving credit facility does not require us to comply with financial covenants or maintain specified credit ratings, and it permits us to borrow even if our business has incurred a material adverse change. The revolving credit facility provides for the issuance of letters of credit.
(2) During the three months ended March 31, 2021, we drew down $470 million from these facilities. These credit facilities are used to finance equipment-related purchases. Borrowings under certain of these facilities amortize semi-annually in equal installments up to the applicable maturity dates. Maturities reflect maturity dates of principal amounts outstanding. Any amounts borrowed under these facilities and subsequently repaid cannot be reborrowed.

2021 Term Loan Credit Agreement
In February 2021, Verizon entered into a credit agreement that provided Verizon with the ability to borrow up to $25.0 billion for general corporate purposes, including any potential acquisition of wireless spectrum. Verizon terminated this agreement in March 2021 without borrowing any of the available funds.

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Non-Cash Transactions
During the three months ended March 31, 2021 and 2020, we financed, primarily through alternative financing arrangements, the purchase of approximately $117 million and $502 million, respectively, of long-lived assets consisting primarily of network equipment. As of March 31, 2021 and December 31, 2020, $1.3 billion and $1.6 billion, respectively, relating to these financing arrangements, including those entered into in prior years and liabilities assumed through acquisitions, remained outstanding. These purchases are non-cash financing activities and therefore are not reflected within Capital expenditures in our condensed consolidated statements of cash flows.

Guarantees
We guarantee the debentures of our operating telephone company subsidiaries. As of March 31, 2021, $765 million aggregate principal amount of these obligations remained outstanding. Each guarantee will remain in place for the life of the obligation unless terminated pursuant to its terms, including the operating telephone company no longer being a wholly-owned subsidiary of Verizon.

We also guarantee the debt obligations of GTE LLC as successor in interest to GTE Corporation that were issued and outstanding prior to July 1, 2003. As of March 31, 2021, $391 million aggregate principal amount of these obligations remained outstanding.

Covenants
We and our consolidated subsidiaries are in compliance with all of our restrictive covenants in our debt agreements.

Note 7. Device Payment Plan Agreement and Wireless Service Receivables
The following table presents information about accounts receivable, net of allowances, recorded in our condensed consolidated balance sheet:
At March 31, 2021
(dollars in millions)Device payment plan agreementWireless
service
Other receivables(1)
Total
Accounts receivable$12,019 $4,857 $6,735 $23,611 
Less Allowance for credit losses627 183 294 1,104 
Accounts receivable, net of allowance$11,392 $4,674 $6,441 $22,507 
(1) Other receivables primarily include wireline receivables, Verizon Media receivables and other receivables, the allowances for which are individually insignificant.

Under the Verizon device payment program, our eligible wireless customers purchase wireless devices under a device payment plan agreement. Customers that activate service on devices purchased under the device payment program pay lower service fees as compared to those under our fixed-term service plans, and their device payment plan charge is included on their wireless monthly bill. We no longer offer Consumer customers new fixed-term, subsidized service plans for devices; however, we continue to offer subsidized plans to our Business customers. We also continue to service existing plans for customers who have not yet purchased and activated devices under the Verizon device payment program.

The following table displays device payment plan agreement receivables, net, recognized in our condensed consolidated balance sheets:
At March 31,At December 31,
(dollars in millions)20212020
Device payment plan agreement receivables, gross$17,943 $17,959 
Unamortized imputed interest(427)(453)
Device payment plan agreement receivables, at amortized cost17,516 17,506 
Allowance (1)
(880)(940)
Device payment plan agreement receivables, net$16,636 $16,566 
Classified in our condensed consolidated balance sheets:
Accounts receivable, net$11,392 $11,601 
Other assets5,244 4,965 
Device payment plan agreement receivables, net$16,636 $16,566 
(1) Includes allowance for both short-term and long-term device payment plan agreement receivables.

Included in our device payment plan agreement receivables at March 31, 2021 and December 31, 2020, are net device payment plan agreement receivables of $13.1 billion and $12.1 billion, respectively, which have been transferred to ABS Entities and continue to be reported in our condensed consolidated balance sheets. See Note 6 for additional information. We believe the carrying value of these receivables approximate their fair value using a Level 3 expected cash flow model.

For indirect channel wireless contracts with customers, we impute risk adjusted interest on the device payment plan agreement receivables. We record the imputed interest as a reduction to the related accounts receivable. Interest income, which is included within Service revenues and other in our condensed consolidated statements of income, is recognized over the financed device payment term.
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Promotions
We may offer certain promotions that allow a customer to trade in their owned device in connection with the purchase of a new device. Under these types of promotions, the customer receives a credit for the value of the trade-in device. In addition, we may provide the customer with additional future credits that will be applied against the customer’s monthly bill as long as service is maintained. We recognize a liability measured at fair value, for the customer’s right to trade in the device which is determined by considering several factors, including the weighted-average selling prices obtained in recent resales of similar devices eligible for trade-in. Future credits are recognized when earned by the customer. Device payment plan agreement receivables, net, does not reflect the trade-in device liability. At March 31, 2021 and December 31, 2020, the amount of trade-in liability was $104 million and $70 million, respectively.

From time to time, we offer certain marketing promotions that allow our customers to upgrade to a new device after paying down a certain specified portion of the required device payment plan agreement amount as well as trading in their device in good working order. When a customer enters into a device payment plan agreement with the right to upgrade to a new device, we account for this trade-in right as a guarantee obligation.

Origination of Device Payment Plan Agreements
When originating device payment plan agreements, we use internal and external data sources to create a credit risk score to measure the credit quality of a customer and to determine eligibility for the device payment program. Verizon’s experience has been that the payment attributes of longer tenured customers are highly predictive for estimating their reliability to make future payments. Customers with longer tenures tend to exhibit similar risk characteristics to other customers with longer tenures, and receivables due from customers with longer tenures tend to perform better than receivables from customers that have not previously been Verizon customers. As a result of this experience, we make initial lending decisions based upon whether the customers are "established customers" or "short-tenured customers." If a Consumer customer has been a customer for 45 days or more, or if a Business customer has been a customer for 12 months or more, the customer is considered an "established customer." For established customers, the credit decision and ongoing credit monitoring processes rely on a combination of internal and external data sources. If a Consumer customer has been a customer less than 45 days, or a Business customer has been a customer for less than