Debt

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Debt

Note 5. 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.

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, 2023.

Repayments and Repurchases

(dollars in millions)	Principal Repaid/ Repurchased		Amount Paid (1)
Verizon 3.500% notes and floating rate notes due 2023 (2)	A$	1,050	$	850
Open market repurchases of various Verizon notes	$	260	190
Total			$	1,040

(1) Represents amount paid to repay or repurchase, including any accrued interest. In addition, for securities denominated in a currency other than the U.S. dollar, amount paid is shown on a U.S. dollar equivalent basis.

(2) U.S. dollar amount paid represents the amount payable at maturity per the derivatives entered into in connection with the transaction. See Note 7 for additional information on cross currency swap transactions related to the repayment.

Short-Term Borrowing and Commercial Paper Program

In March 2023, we entered into and fully drew from a $500 million short-term revolving credit facility. As of March 31, 2023, the $500 million borrowed under the facility remains outstanding.

During the three months ended March 31, 2023, we issued $4.9 billion in commercial paper and we repaid $4.6 billion of commercial paper. As of March 31, 2023, we had $500 million of commercial paper outstanding. These transactions are reflected within Cash flows from financing activities in our condensed consolidated statements of cash flows.

Asset-Backed Debt

As of March 31, 2023, the carrying value of our asset-backed debt was $20.8 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 the Company, and certain other Company affiliates (collectively, the Originators) transfer device payment plan agreement receivables and certain other receivables (collectively referred to as certain 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 and residual interests, as applicable, 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 receivables and future collections on such receivables. These 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 certain 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, the Company has agreed to guarantee certain of the payment obligations of Cellco and the Originators to the ABS Entities.

Cash collections on the 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.

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 is included in Debt maturing within one year and Long-term debt in our condensed consolidated balance sheets.

ABS Notes

During the three months ended March 31, 2023, we completed the following ABS Notes transactions:

(dollars in millions)	Interest Rates %	Expected Weighted-average Life to Maturity (in years)	Principal Amount Issued
January 2023
A Senior class notes	4.490	2.98	$	891
B Junior class notes	4.740	2.98	—
C Junior class notes	4.980	2.98	41
Total			$	932

Under the terms of each series of ABS Notes outstanding as of March 31, 2023, there is a revolving period of 18 months, two years or up to three years, as applicable, during which we may transfer additional receivables to the ABS Entity. During the three months ended March 31, 2023, we made aggregate principal repayments of $931 million on ABS Notes that have entered the amortization period, including principal payments made in connection with any clean-up redemptions.

In April 2023, we issued $1.2 billion aggregate principal amount of two series of senior and junior ABS Notes, with a blended interest rate of approximately 4.751% and 4.911%, through an ABS Entity. In April 2023, in connection with an optional acquisition of receivables and redemption of ABS Notes, we made a principal payment, in whole, for $104 million.

ABS Financing Facilities

In March 2023, we borrowed an additional $325 million under the loan agreements outstanding in connection with the ABS Financing Facility that we originally entered into in 2021 and previously renewed in 2022 (2021 ABS Financing Facility). The aggregate outstanding balance under the 2021 ABS Financing Facility was $8.3 billion as of March 31, 2023. In April 2023, we prepaid an aggregate of $700 million of the loan agreements outstanding in connection with the 2021 ABS Financing Facility.

In March 2023, we borrowed an additional $500 million under the loan agreement outstanding in connection with the ABS Financing Facility that we originally entered into in 2022 (2022 ABS Financing Facility). The aggregate outstanding balance under the 2022 ABS Financing Facility was $2.5 billion as of March 31, 2023.

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)	2023		2022
Assets
Accounts receivable, net	$	14,255	$	13,906
Prepaid expenses and other	1,573		1,409
Other assets	11,011		9,894
Liabilities
Accounts payable and accrued liabilities	23		22
Debt maturing within one year	6,409		6,809
Long-term debt	14,426		13,199

See Note 6 for additional information on certain receivables used to secure asset-backed debt.

Long-Term Credit Facilities

				At March 31, 2023
(dollars in millions)	Maturities	Facility Capacity		Unused Capacity		Principal Amount Outstanding
Verizon revolving credit facility (1)	2026	$	9,500	$	9,438	$	—
Various export credit facilities (2)	2024 - 2031	11,000		486		6,985
Total		$	20,500	$	9,924	$	6,985

(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. As of March 31, 2023, there have been no drawings against the $9.5 billion revolving credit facility since its inception.

(2) During the three months ended March 31, 2023 and 2022, we drew down $515 million and $2.0 billion, respectively, from these facilities. Borrowings under certain of these facilities are amortized 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.

Non-Cash Transactions

During the three months ended March 31, 2023 and 2022, we financed, primarily through alternative financing arrangements, the purchase of approximately $284 million and $150 million, respectively, of long-lived assets consisting primarily of network equipment. As of March 31, 2023 and December 31, 2022, $1.9 billion and $1.7 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.

Net Debt Extinguishment Gains (Losses)

During the three months ended March 31, 2023, we recorded debt extinguishment gains of $70 million. During the three months ended March 31, 2022, we recorded debt extinguishment losses of $1.2 billion. The gains and losses are recorded in Other income (expense), net in our condensed consolidated statements of income. The total gains and losses are reflected within Other, net cash flow from operating activities, and the portion of the gains and losses representing cash payments are reflected within Other, net cash flow from financing activities in our condensed consolidated statements of cash flows.

Guarantees

We guarantee the debentures of our operating telephone company subsidiaries. As of March 31, 2023, $614 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 the Company.

Debt Covenants

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