Verizon reports strong 3Q results propelled by wireless customer growth

October 25, 2019 7:00 AM

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

3Q 2019 highlights

Consolidated:

Consumer:

Business:

Wireless (non-GAAP):

Wireline (non-GAAP):

NEW YORK, Oct. 25, 2019 (GLOBE NEWSWIRE) -- Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported strong third-quarter 2019 results highlighted by increased cash flow and the most third-quarter phone gross additions in five years.

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

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

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

Consolidated results

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

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

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

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

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

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

Consumer results

Business results

Media results

Outlook and guidance

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

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

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

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

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

Media contacts:
Kim Ancin
908.559.3227
kimberly.ancin@verizon.com
Eric Wilkens
908.559.3063
eric.wilkens@verizon.com

Verizon Communications Inc.
Condensed Consolidated Statements of Income
(dollars in millions, except per share amounts)
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited9/30/19 9/30/18 % Change 9/30/19 9/30/18 % Change
Operating Revenues
Service revenues and other$27,753 $27,254 1.8 $82,301 $81,145 1.4
Wireless equipment revenues 5,141 5,353 (4.0) 14,792 15,437 (4.2)
Total Operating Revenues 32,894 32,607 0.9 97,093 96,582 0.5
Operating Expenses
Cost of services 7,902 7,842 0.8 23,396 24,022 (2.6)
Cost of wireless equipment 5,482 5,489 (0.1) 15,699 16,195 (3.1)
Selling, general and administrative expense 7,216 7,224 (0.1) 21,682 21,673
Depreciation and amortization expense 4,114 4,377 (6.0) 12,577 13,051 (3.6)
Total Operating Expenses 24,714 24,932 (0.9) 73,354 74,941 (2.1)
Operating Income 8,180 7,675 6.6 23,739 21,641 9.7
Equity in losses of unconsolidated businesses (1) (3) (66.7) (20) (250) (92.0)
Other income (expense), net (110) 214 * (1,127) 499 *
Interest expense (1,146) (1,211) (5.4) (3,571) (3,634) (1.7)
Income Before Provision For Income Taxes 6,923 6,675 3.7 19,021 18,256 4.2
Provision for income taxes (1,586) (1,613) (1.7) (4,450) (4,282) 3.9
Net Income$5,337 $5,062 5.4 $14,571 $13,974 4.3
Net income attributable to noncontrolling interests$143 $138 3.6 $401 $385 4.2
Net income attributable to Verizon 5,194 4,924 5.5 14,170 13,589 4.3
Net Income$5,337 $5,062 5.4 $14,571 $13,974 4.3
Basic Earnings Per Common Share
Net income attributable to Verizon$1.26 $1.19 5.9 $3.42 $3.29 4.0
Weighted-average shares outstanding (in millions) 4,138 4,136 4,138 4,125
Diluted Earnings Per Common Share (1)
Net income attributable to Verizon$1.25 $1.19 5.0 $3.42 $3.29 4.0
Weighted-average shares outstanding (in millions) 4,140 4,140 4,140 4,129
Footnotes:
(1) Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represents the only potential dilution.
* Not meaningful

Verizon Communications Inc.
Condensed Consolidated Balance Sheets
(dollars in millions)
Unaudited9/30/19 12/31/18 $ Change
Assets
Current assets
Cash and cash equivalents$3,020 $2,745 $275
Accounts receivable, net 24,713 25,102 (389)
Inventories 1,538 1,336 202
Prepaid expenses and other 5,624 5,453 171
Total current assets 34,895 34,636 259
Property, plant and equipment 260,053 252,835 7,218
Less accumulated depreciation 171,204 163,549 7,655
Property, plant and equipment, net 88,849 89,286 (437)
Investments in unconsolidated businesses 628 671 (43)
Wireless licenses 94,433 94,130 303
Goodwill 24,570 24,614 (44)
Other intangible assets, net 9,264 9,775 (511)
Operating lease right-of-use assets 22,218 22,218
Other assets 10,018 11,717 (1,699)
Total assets$284,875 $264,829 $20,046
Liabilities and Equity
Current liabilities
Debt maturing within one year$7,830 $7,190 $640
Accounts payable and accrued liabilities 19,566 22,501 (2,935)
Current operating lease liabilities 2,959 2,959
Other current liabilities 8,854 8,239 615
Total current liabilities 39,209 37,930 1,279
Long-term debt 101,769 105,873 (4,104)
Employee benefit obligations 18,236 18,599 (363)
Deferred income taxes 34,592 33,795 797
Non-current operating lease liabilities 18,214 18,214
Other liabilities 12,543 13,922 (1,379)
Total long-term liabilities 185,354 172,189 13,165
Equity
Common stock 429 429
Additional paid in capital 13,418 13,437 (19)
Retained earnings 50,595 43,542 7,053
Accumulated other comprehensive income 1,104 2,370 (1,266)
Common stock in treasury, at cost (6,822) (6,986) 164
Deferred compensation – employee stock ownership plans and other 197 353 (156)
Noncontrolling interests 1,391 1,565 (174)
Total equity 60,312 54,710 5,602
Total liabilities and equity$284,875 $264,829 $20,046
Consolidated - Selected Financial and Operating Statistics
(dollars in millions, except per share amounts)
Unaudited9/30/19 12/31/18
Total debt$109,599 $113,063
Net debt$106,579 $110,318
Net unsecured debt$97,779 $100,242
Net debt / Consolidated Adjusted EBITDA(1)2.2x 2.3x
Net unsecured debt / Consolidated Adjusted EBITDA(1)2.1x 2.1x
Common shares outstanding end of period (in millions) 4,136 4,132
Total employees (‘000) 135.4 144.5
Quarterly cash dividends declared per common share$0.6150 $0.6025
Footnotes:
(1) Consolidated adjusted EBITDA excludes the effects of non-operational items and special items.

Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in millions)
9 Mos. Ended 9 Mos. Ended
Unaudited9/30/19 9/30/18 $ Change
Cash Flows from Operating Activities
Net Income$14,571 $13,974 $597
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 12,577 13,051 (474)
Employee retirement benefits (105) (886) 781
Deferred income taxes 1,070 2,023 (953)
Provision for uncollectible accounts 1,131 699 432
Equity in losses of unconsolidated businesses, net of dividends received 64 291 (227)
Net loss on sale of divested businesses 94 94
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses (3,902) (1,944) (1,958)
Discretionary employee benefits contributions (300) (1,679) 1,379
Other, net 1,548 715 833
Net cash provided by operating activities 26,748 26,244 504
Cash Flows from Investing Activities
Capital expenditures (including capitalized software) (12,332) (12,026) (306)
Acquisitions of businesses, net of cash acquired (29) (39) 10
Acquisitions of wireless licenses (299) (1,307) 1,008
Proceeds from dispositions of businesses 27 27
Other, net 476 236 240
Net cash used in investing activities (12,157) (13,136) 979
Cash Flows from Financing Activities
Proceeds from long-term borrowings 8,360 5,932 2,428
Proceeds from asset-backed long-term borrowings 3,982 3,216 766
Repayments of long-term borrowings and finance lease obligations (12,486) (9,776) (2,710)
Repayments of asset-backed long-term borrowings (5,273) (2,915) (2,358)
Dividends paid (7,474) (7,283) (191)
Other, net (1,410) (1,595) 185
Net cash used in financing activities (14,301) (12,421) (1,880)
Increase in cash, cash equivalents and restricted cash 290 687 (397)
Cash, cash equivalents and restricted cash, beginning of period 3,916 2,888 1,028
Cash, cash equivalents and restricted cash, end of period$4,206 $3,575 $631

Verizon Communications Inc.
Consumer - Selected Financial Results
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited9/30/19 9/30/18 % Change 9/30/19 9/30/18 % Change
Operating Revenues
Service$16,433 $16,193 1.5 $49,042 $48,066 2.0
Wireless equipment 4,257 4,508 (5.6) 12,326 13,029 (5.4)
Other 2,016 1,698 18.7 5,481 4,934 11.1
Total Operating Revenues 22,706 22,399 1.4 66,849 66,029 1.2
Operating Expenses
Cost of services 4,035 3,850 4.8 11,761 11,465 2.6
Cost of wireless equipment 4,291 4,379 (2.0) 12,342 12,948 (4.7)
Selling, general and administrative expense 4,085 3,947 3.5 12,090 11,426 5.8
Depreciation and amortization expense 2,806 3,010 (6.8) 8,581 8,982 (4.5)
Total Operating Expenses 15,217 15,186 0.2 44,774 44,821 (0.1)
Operating Income$7,489 $7,213 3.8 $22,075 $21,208 4.1
Operating Income Margin 33.0% 32.2% 33.0% 32.1%
Segment EBITDA$10,295 $10,223 0.7 $30,656 $30,190 1.5
Segment EBITDA Margin 45.3% 45.6% 45.9% 45.7%
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing segment performance.
Certain intersegment transactions with corporate entities have not been eliminated.

Verizon Communications Inc.
Consumer - Selected Operating Statistics
Unaudited 9/30/19 9/30/18 % Change
Connections (‘000):
Wireless retail postpaid connections 89,739 89,062 0.8
Wireless retail prepaid connections 4,183 4,736 (11.7)
Total wireless retail connections 93,922 93,798 0.1
Fios video connections 4,203 4,423 (5.0)
Fios Internet connections 5,867 5,711 2.7
Fios digital voice residence connections 3,672 3,833 (4.2)
Fios digital connections 13,742 13,967 (1.6)
Broadband connections 6,469 6,452 0.3
Voice connections 5,904 6,480 (8.9)
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited9/30/19 9/30/18 % Change 9/30/19 9/30/18 % Change
Gross Additions (‘000):
Wireless retail postpaid 3,020 2,850 6.0 8,459 8,101 4.4
Net Additions Detail (‘000):
Wireless retail postpaid (1) 193 151 27.8 118 243 (51.4)
Wireless retail prepaid (1) (81) (96) 15.6 (470) (667) 29.5
Total wireless retail (1) 112 55 * (352) (424) 17.0
Wireless retail postpaid phones (1) 239 112 * 149 (24) *
Fios video (67) (64) (4.7) (174) (125) (39.2)
Fios Internet 30 48 (37.5) 106 146 (27.4)
Fios digital voice residence (53) (30) (76.7) (130) (72) (80.6)
Fios digital (90) (46) (95.7) (198) (51) *
Broadband (5) 5 * 9 11 (18.2)
Voice (154) (151) (2.0) (428) (448) 4.5
Churn Rate:
Wireless retail postpaid 1.05% 1.01% 1.03% 0.98%
Wireless retail postpaid phones 0.79% 0.77% 0.77% 0.75%
Wireless retail 1.27% 1.24% 1.27% 1.25%
Revenue Statistics (in millions):
Wireless service revenue$13,533 $13,257 2.1 $40,346 $39,260 2.8
Fios revenues$2,811 $2,764 1.7 $8,347 $8,236 1.3
Other Wireless Statistics:
Wireless retail postpaid ARPA (2)$118.89 $117.06 1.6 $118.16 $115.34 2.4
Wireless retail postpaid upgrade rate 4.9% 5.1%
Wireless retail postpaid accounts (‘000) (3) 33,898 34,005 (0.3)
Wireless retail postpaid connections per account (3) 2.65 2.62 1.1
Total wireless Internet postpaid base (3) 16.1% 15.9%
Footnotes:
(1) Connection net additions include certain adjustments.
(2) Wireless retail postpaid ARPA - average service revenue per account from retail postpaid accounts.
(3) Statistics presented as of end of period.
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing segment performance.
Certain intersegment transactions with corporate entities have not been eliminated.
* Not meaningful

Verizon Communications Inc.
Business - Selected Financial Results
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited9/30/19 9/30/18 % Change 9/30/19 9/30/18 % Change
Operating Revenues
Global Enterprise$2,714 $2,782 (2.4) $8,078 $8,416 (4.0)
Small and Medium Business 2,899 2,729 6.2 8,392 7,905 6.2
Public Sector and Other 1,472 1,455 1.2 4,435 4,322 2.6
Wholesale 800 927 (13.7) 2,467 2,884 (14.5)
Total Operating Revenues 7,885 7,893 (0.1) 23,372 23,527 (0.7)
Operating Expenses
Cost of services 2,666 2,657 0.3 7,838 8,027 (2.4)
Cost of wireless equipment 1,190 1,110 7.2 3,356 3,247 3.4
Selling, general and administrative expense 2,042 1,900 7.5 5,984 5,694 5.1
Depreciation and amortization expense 1,010 1,072 (5.8) 3,098 3,190 (2.9)
Total Operating Expenses 6,908 6,739 2.5 20,276 20,158 0.6
Operating Income$977 $1,154 (15.3) $3,096 $3,369 (8.1)
Operating Income Margin 12.4% 14.6% 13.2% 14.3%
Segment EBITDA$1,987 $2,226 (10.7) $6,194 $6,559 (5.6)
Segment EBITDA Margin 25.2% 28.2% 26.5% 27.9%
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing segment performance.
Certain intersegment transactions with corporate entities have not been eliminated.

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

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

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

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

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

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

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

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

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

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Source: Verizon Communications

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