Verizon builds on 2Q momentum with strong 3Q results

NEW YORK, Oct. 19, 2017 /PRNewswire/ --

3Q 2017 highlights

    --  89 cents in earnings per share (EPS), compared with 89 cents in 3Q 2016;
        adjusted EPS (non-GAAP), excluding special items, of 98 cents in 3Q
        2017, compared with $1.01 in 3Q 2016.
    --  Wireless: 603,000 retail postpaid net additions, including 486,000
        postpaid smartphone net adds; retail postpaid churn of 0.97 percent,
        with strong customer loyalty demonstrated by retail postpaid phone churn
        of 0.75 percent -- less than 0.90 percent for the 10th consecutive
        quarter.
    --  Wireline: Fios total revenue growth of 4.8 percent.

Building on momentum from second-quarter 2017, Verizon Communications Inc. (NYSE, Nasdaq: VZ) delivered strong results in third-quarter 2017, both adding and retaining wireless customers, and generating significant cash flow.

Verizon reported EPS of 89 cents in the quarter, compared with 89 cents in third-quarter 2016. On an adjusted basis (non-GAAP), third-quarter 2017 EPS was 98 cents. This includes 7 cents per share in net losses primarily for early debt redemption costs, and 2 cents per share in acquisition and integration related charges in connection with Yahoo and other acquisitions. This compares with adjusted EPS of $1.01 in third-quarter 2016.

Verizon's third-quarter 2017 earnings include a 1-cent-per-share impact as a result of the natural disasters in Florida and Texas.

"Verizon Wireless delivered another quarter of profitable growth combined with strong customer loyalty," said Chairman and CEO Lowell McAdam. "This success is based on the strength of the Verizon network, and I share the pride of all Verizon employees that our network aided and served first-responders and customers when they needed it most following the recent natural disasters. While steadily investing to advance our network leadership and to build the Verizon Intelligent Edge Network, we have also maintained the financial flexibility to increase shareholder dividends for an 11th consecutive year."

Consolidated results

Total consolidated operating revenues in third-quarter 2017 were $31.7 billion, up 2.5 percent from third-quarter 2016. On a comparable basis excluding divestitures and acquisitions (non-GAAP), consolidated revenues declined 2.3 percent.

Net income was $3.7 billion in third-quarter 2017. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled $11.5 billion. Consolidated operating income margin was 22.7 percent. Consolidated EBITDA margin (non-GAAP) was 36.2 percent in third-quarter 2017, compared with 33.9 percent in third-quarter 2016. Adjusted EBITDA margin (non-GAAP) was 36.7 percent and 36.5 percent in the same periods, respectively.

Verizon is focused on driving profitability through efficiencies across its business and in September announced it has targeted $10 billion in cumulative cash savings over the next four years.

Cash flow from operations totaled $17.2 billion during the first nine months of 2017, and year-to-date capital expenditures have totaled $11.3 billion.

In Verizon's media business, Oath revenues were $2 billion in third-quarter 2017, and the integration of AOL and Yahoo is ahead of internal expectations. In telematics, revenues were more than $220 million in third-quarter 2017. Organic IoT (Internet of Things) revenues (non-GAAP) increased approximately 13 percent year over year.

Wireless results

    --  Verizon reported a net increase of 603,000 retail postpaid connections
        in third-quarter 2017. Net phone additions of 274,000 included 486,000
        smartphones in the quarter, compared with 242,000 smartphone additions
        in third-quarter 2016. The 603,000 postpaid net adds included tablet net
        adds of 91,000 and net adds of other connected devices, led by
        wearables, of 238,000. The company had 109.7 million retail postpaid
        connections and 5.6 million retail prepaid connections at the end of the
        quarter.
    --  Verizon added 30,000 postpaid accounts in third-quarter 2017, compared
        with a loss of 107,000 postpaid accounts in third-quarter 2016.
    --  Total retail postpaid churn was 0.97 percent in third-quarter 2017,
        driven mainly by retail postpaid phone churn of 0.75 percent - the 10th
        consecutive quarter of retail postpaid phone churn of less than 0.90
        percent.
    --  Revenue trends are improving. Total revenues were $21.6 billion in
        third-quarter 2017, a decline of 2.4 percent compared with third-quarter
        2016. A year ago, quarterly total revenues had declined 3.9 percent year
        over year. On a year-over-year basis, service revenues declined 5.1
        percent versus a 6.7 percent decrease in the second quarter.
        Sequentially, service revenues increased for the first time in 12
        quarters.
    --  The company expects its service revenue trend to continue to improve in
        fourth-quarter 2017, exiting the year with a year-over-year decline of
        less than 4 percent.
    --  Verizon now has approximately 78 percent of its postpaid phone base on
        unsubsidized service pricing plans, compared with 60 percent in
        third-quarter 2016.
    --  The percentage of phone activations on device payment plans was about 77
        percent in third-quarter 2017, consistent with second-quarter 2017.
        Verizon expects a seasonal increase in this rate in fourth-quarter 2017.
        Approximately 49 percent of postpaid phone customers had a device
        payment plan at the end of third-quarter 2017, consistent with
        second-quarter 2017.
    --  Segment operating income in third-quarter 2017 was $7.6 billion, and
        segment operating income margin on total revenues was 35.2 percent.
        Segment EBITDA (non-GAAP) totaled nearly $10.0 billion in third-quarter
        2017. Segment EBITDA margin on total revenues (non-GAAP) was 46.2
        percent, compared with 44.9 percent in third-quarter 2016.

Wireline results

    --  Total wireline revenues increased 1.1 percent, to $7.7 billion,
        comparing third-quarter 2017 with third-quarter 2016. On an organic
        basis, excluding revenues from acquired operations (non-GAAP), total
        wireline revenues declined 2.7 percent year over year in third-quarter
        2017, consistent with second-quarter 2017.
    --  Total Fios revenues grew 4.8 percent, and consumer Fios revenues grew
        4.6 percent, comparing third-quarter 2017 with third-quarter 2016 and
        including the impact of two marquee pay-per-view events in the current
        quarter. Fios Gigabit Connection, which offers symmetrical high-speed
        broadband, continues to gain traction with customers.
    --  In third-quarter 2017, Verizon added a net of 66,000 Fios Internet
        connections and lost a net of 18,000 Fios Video connections, reflecting
        the ongoing shift from traditional linear video to over-the-top
        offerings. At the end of the quarter, Verizon had 5.8 million Fios
        Internet connections and 4.6 million Fios Video connections.
    --  Wireline operating income was $65 million in third-quarter 2017,
        compared with $73 million in third-quarter 2016. Segment operating
        income margin was 0.8 percent in third-quarter 2017. Segment EBITDA
        (non-GAAP) was $1.6 billion in third-quarter 2017. Segment EBITDA margin
        (non-GAAP) was 21.1 percent in third-quarter 2017, compared with 20.3
        percent in third-quarter 2016.
    --  In the quarter, Verizon was named an Enterprise Infrastructure Solutions
        contract provider by the U.S. General Services Administration. Verizon
        Enterprise Solutions (VES) released its 2017 Payment Security Report,
        which demonstrated a link between payment card security standard
        compliance and an organization's ability to defend itself against
        cyberattacks. On the product front, Check Point Software Technologies
        Ltd. embedded its security offering within Verizon's Virtual Network
        Services (VNS) solution; VNS was made available on the Amazon Web
        Services cloud; and VES introduced mid-market and enterprise
        capabilities for its One Talk solution. In addition, Verizon announced
        plans to develop a dedicated network core for public safety.

Network and Technology highlights

    --  As expected, the introduction of unlimited wireless pricing plans has
        increased LTE network usage. Verizon has network capabilities and
        pricing plan features to handle this increase while maintaining a
        high-quality experience for customers, evidenced by awards in
        third-party studies that test coverage, speed and reliability. Just over
        50 percent of Verizon's available low- and mid-band spectrum portfolio
        is being used for 4G LTE.
    --  Through prior investment, planning, network redundancy and rapid
        response, Verizon's network maintained a high level of performance,
        despite widespread power outages, during natural disasters in Texas,
        Florida and Northern California. Although the company is not a wireless
        operator in Puerto Rico, Verizon has offered assistance to local
        carriers and government officials working to recover from hurricane
        damage there.
    --  The Verizon Intelligent Edge Network, the company's future network
        architecture designed to meet the demands of new types of applications,
        has many components that lead to a multi-use, software-driven network at
        scale. Verizon's pre-commercial 5G fixed wireless broadband trials are
        continuing, and the company is on track to share trial results later in
        the fourth quarter.

Outlook and forward-looking items

Verizon expects the following:

    --  Full-year 2017 consolidated revenues, on an organic basis, to be fairly
        consistent with 2016, with improvement in wireless service revenue and
        equipment revenue trends; also, full-year 2017 consolidated adjusted EPS
        trends to be similar to consolidated revenue trends;
    --  Consolidated capital spending for 2017 to be at the lower end of the
        range of $16.8 billion to $17.5 billion; and
    --  The 2017 effective tax rate to be around 34 percent, excluding impacts
        from potential tax reform.

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, has a diverse workforce of 160,100 and generated nearly $126 billion in 2016 revenues. Verizon operates America's most reliable wireless network and the nation's premier all-fiber network, and delivers integrated solutions to businesses worldwide. Its Oath subsidiary reaches about one billion people around the world with a dynamic house of media and technology brands.

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

Forward-looking statements
In this communication we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words "anticipates," "believes," "estimates," "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. 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.


    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

    Unaudited                                                                                                                                                       9/30/17           9/30/16  % Change                           9/30/17          9/30/16     % Change
    ---------                                                                                                                                                       -------           -------  --------                           -------          -------     --------


    Operating Revenues

    Service revenues and other                                                                                                                                      $27,365            $26,813           2.1                         $79,665           $81,858            (2.7)

    Wireless equipment revenues                                                                                                                                                       4,352         4,124              5.5                           12,414           11,782           5.4
                                                                                                                                                                                      -----         -----                                           ------           ------

    Total Operating Revenues                                                                                                                                                         31,717        30,937              2.5                           92,079           93,640         (1.7)
                                                                                                                                                                                     ------        ------                                           ------           ------


    Operating Expenses

    Cost of services                                                                                                                                                                  7,640         6,989              9.3                           21,573           22,180         (2.7)

    Wireless cost of equipment                                                                                                                                                        4,965         5,240            (5.2)                          14,808           14,882         (0.5)

    Selling, general and administrative expense                                                                                                                                       7,632         8,226            (7.2)                          20,579           25,601        (19.6)

    Depreciation and amortization expense                                                                                                                                             4,272         3,942              8.4                           12,498           11,941           4.7
                                                                                                                                                                                      -----         -----                                           ------           ------

    Total Operating Expenses                                                                                                                                                         24,509        24,397              0.5                           69,458           74,604         (6.9)
                                                                                                                                                                                     ------        ------                                           ------           ------


    Operating Income                                                                                                                                                                  7,208         6,540             10.2                           22,621           19,036          18.8

    Equity in losses of unconsolidated businesses                                                                                                                                      (22)         (23)           (4.3)                            (71)            (63)         12.7

    Other income (expense), net                                                                                                                                                       (511)           97                *                         (1,376)         (1,697)       (18.9)

    Interest expense                                                                                                                                                                (1,164)      (1,038)            12.1                          (3,514)         (3,239)          8.5
                                                                                                                                                                                     ------        ------                                           ------           ------

    Income Before Provision for Income Taxes                                                                                                                                          5,511         5,576            (1.2)                          17,660           14,037          25.8

    Provision for income taxes                                                                                                                                                      (1,775)      (1,829)           (3.0)                         (5,893)         (5,029)         17.2
                                                                                                                                                                                     ------        ------                                           ------           ------

    Net Income                                                                                                                                                       $3,736             $3,747         (0.3)                        $11,767            $9,008             30.6


    Net income attributable to noncontrolling interests                                                                                                                $116               $127         (8.7)                           $335              $376           (10.9)

    Net income attributable to Verizon                                                                                                                                                3,620         3,620                -                          11,432            8,632          32.4
                                                                                                                                                                                      -----         -----                                           ------            -----

    Net Income                                                                                                                                                       $3,736             $3,747         (0.3)                        $11,767            $9,008             30.6


    Basic Earnings per Common Share

    Net income attributable to Verizon                                                                                                                                 $.89               $.89             -                          $2.80             $2.12             32.1


    Weighted average number of common shares (in millions)                                                                                                                            4,084         4,079                                            4,083            4,080


    Diluted Earnings per Common Share(1)

    Net income attributable to Verizon                                                                                                                                 $.89               $.89             -                          $2.80             $2.11             32.7


    Weighted average number of common

                                                           shares-assuming dilution (in millions)                                                                                       4,089         4,086                                            4,088            4,086



    Footnotes:

                                                    (1)    Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which
                                                            represents the only potential dilution.


                              *                            Not meaningful


    Verizon Communications Inc.

    Condensed Consolidated Balance Sheets



                                                                                                                                              (dollars in millions)


    Unaudited                                                                                                             9/30/17    12/31/16                    $ Change
    ---------                                                                                                          -------    --------                    --------


    Assets

    Current assets

                       Cash and cash equivalents                                                                          $4,487       $2,880                       $1,607

                       Accounts receivable, net                                                                           21,549       17,513                        4,036

                       Inventories                                                                                         1,276        1,202                           74

                       Assets held for sale                                                                                  275          882                        (607)

                       Prepaid expenses and other                                                                          3,280        3,918                        (638)
                                                                                                                         -----

    Total current assets                                                                                                30,867       26,395                        4,472
                                                                                                                        ------       ------                        -----

    Plant, property and equipment                                                                                      242,608      232,215                       10,393

                       Less accumulated depreciation                                                                     155,986      147,464                        8,522
                                                                                                                       -------

    Plant, property and equipment, net                                                                                  86,622       84,751                        1,871
                                                                                                                        ------       ------                        -----

    Investments in unconsolidated businesses                                                                             1,054        1,110                         (56)

    Wireless licenses                                                                                                   87,883       86,673                        1,210

    Goodwill                                                                                                            28,725       27,205                        1,520

    Other intangible assets, net                                                                                        10,993        8,897                        2,096

    Non-current assets held for sale                                                                                         -         613                        (613)

    Other assets                                                                                                         8,538        8,536                            2
                                                                                                                         -----        -----                          ---

    Total Assets                                                                                                      $254,682     $244,180                      $10,502
                                                                                                                      --------     --------                      -------


    Liabilities and Equity

    Current liabilities

                       Debt maturing within one year                                                                      $2,180       $2,645                       $(465)

                       Accounts payable and accrued liabilities                                                           18,434       19,593                      (1,159)

                       Other                                                                                               8,316        8,102                          214
                                                                                                                         -----

    Total current liabilities                                                                                           28,930       30,340                      (1,410)
                                                                                                                        ------       ------                       ------

    Long-term debt                                                                                                     115,317      105,433                        9,884

    Employee benefit obligations                                                                                        21,131       26,166                      (5,035)

    Deferred income taxes                                                                                               48,345       45,964                        2,381

    Other liabilities                                                                                                   12,508       12,245                          263


    Equity

                       Common stock                                                                                          424          424                            -

                       Contributed capital                                                                                11,098       11,182                         (84)

                       Reinvested earnings                                                                                19,373       15,059                        4,314

                       Accumulated other comprehensive income                                                              2,683        2,673                           10

                       Common stock in treasury, at cost                                                                 (7,141)     (7,263)                         122

                       Deferred compensation - employee

                       stock ownership plans and other                                                                       411          449                         (38)

                       Noncontrolling interests                                                                            1,603        1,508                           95
                                                                                                                         -----

    Total equity                                                                                                        28,451       24,032                        4,419
                                                                                                                        ------       ------                        -----

    Total Liabilities and Equity                                                                                      $254,682     $244,180                      $10,502
                                                                                                                      --------     --------                      -------



    Verizon - Selected Financial and Operating Statistics


    Unaudited                                                                                                          9/30/17    12/31/16
    ---------                                                                                                          -------    --------


    Total debt (in millions)                                                                                          $117,497     $108,078

    Net debt (in millions)                                                                                            $113,010     $105,198

    Net debt / Adjusted EBITDA(1)                                                                                         2.6x        2.4x

    Common shares outstanding end of period (in millions)                                                                4,079        4,077

    Total employees ('000)                                                                                               160.1        160.9

    Quarterly cash dividends declared per common share                                                                 $0.5900      $0.5775


    Footnotes:

                (1)    Adjusted EBITDA excludes the effects of special items and operating results of Divested
                        Businesses, as the Company's chief operating decision maker excludes these items in assessing
                        business unit performance.


    Verizon Communications Inc.

    Condensed Consolidated Statements of Cash Flows



                                                                                                                                                                                           (dollars in millions)


                                                                                                                                            9 Mos. Ended            9 Mos. Ended

    Unaudited                                                                                                                                    9/30/17                 9/30/16                            $ Change
    ---------                                                                                                                                    -------                 -------                            --------


    Cash Flows from Operating Activities

    Net Income                                                                                                                                   $11,767                   $9,008                               $2,759

    Adjustments to reconcile net income to net cash provided by

    operating activities:

                                                                   Depreciation and amortization expense                                                     12,498                    11,941                                   557

                                                                   Employee retirement benefits                                                               (334)                    4,531                               (4,865)

                                                                   Deferred income taxes                                                                      2,577                   (2,331)                                4,908

                                                                   Provision for uncollectible accounts                                                         842                       963                                 (121)

                                                                   Equity in losses of unconsolidated businesses, net of dividends received                     100                        94                                     6

                                                                   Changes in current assets and liabilities, net of effects from

                                                                     acquisition/disposition of businesses                                                  (5,513)                  (4,010)                              (1,503)

                                                                   Discretionary contributions to qualified pension plans                                   (3,411)                    (186)                              (3,225)

                                                                   Net gain on sale of divested businesses                                                  (1,774)                  (1,007)                                (767)

                                                                   Other, net                                                                                   469                   (1,279)                                1,748

    Net cash provided by operating activities                                                                                                              17,221                    17,724                                 (503)
                                                                                                                                                           ------                    ------                                  ----


    Cash Flows from Investing Activities

    Capital expenditures (including capitalized software)                                                                                                (11,282)                 (11,398)                                  116

    Acquisitions of businesses, net of cash acquired                                                                                                      (6,295)                    (963)                              (5,332)

    Acquisitions of wireless licenses                                                                                                                       (469)                    (410)                                 (59)

    Proceeds from dispositions of businesses                                                                                                                3,614                     9,882                               (6,268)

    Other, net                                                                                                                                                731                       350                                   381
                                                                                                                                                              ---                       ---

    Net cash used in investing activities                                                                                                                (13,701)                  (2,539)                             (11,162)
                                                                                                                                                          -------                    ------                               -------


    Cash Flows from Financing Activities

    Proceeds from long-term borrowings                                                                                                                     21,915                     8,152                                13,763

    Proceeds from asset-backed long-term borrowings                                                                                                         2,878                     2,594                                   284

    Repayments of long-term borrowings and capital lease obligations                                                                                     (16,457)                 (14,510)                              (1,947)

    Decrease in short-term obligations, excluding current maturities                                                                                        (160)                    (120)                                 (40)

    Dividends paid                                                                                                                                        (7,067)                  (6,908)                                (159)

    Other, net                                                                                                                                            (3,022)                  (2,422)                                (600)

    Net cash used in financing activities                                                                                                                 (1,913)                 (13,214)                               11,301
                                                                                                                                                           ------                   -------                                ------


    Increase in cash and cash equivalents                                                                                                                   1,607                     1,971                                 (364)

    Cash and cash equivalents, beginning of period                                                                                                          2,880                     4,470                               (1,590)

    Cash and cash equivalents, end of period                                                                                                      $4,487                   $6,441                             $(1,954)
                                                                                                                                                  ------                   ------                              -------


    Footnotes:

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


    Verizon Communications Inc.

    Wireless - Selected Financial Results




                                                                                                                                                                                                                                         (dollars in millions)


                                                                                                                                    3 Mos. Ended                           3 Mos. Ended                                  9 Mos. Ended             9 Mos. Ended

    Unaudited                                                                                                                            9/30/17                                9/30/16             % Change                  9/30/17                  9/30/16     % Change
    ---------                                                                                                                            -------                                -------             --------                  -------                  -------     --------


    Operating Revenues

    Service                                                                                                                              $15,841                                 $16,684                           (5.1)        $47,241                   $50,234           (6.0)

    Equipment                                                                                                                              4,352                                   4,124                             5.5          12,414                    11,782             5.4

    Other                                                                                                                                  1,387                                   1,293                             7.3           4,085                     3,793             7.7
                                                                                                                                           -----                                   -----                                          -----                     -----

    Total Operating Revenues                                                                                                              21,580                                  22,101                           (2.4)         63,740                    65,809           (3.1)
                                                                                                                                          ------                                  ------                                         ------                    ------


    Operating Expenses

    Cost of services                                                                                                                       2,052                                   2,006                             2.3           6,007                     5,932             1.3

    Cost of equipment                                                                                                                      4,965                                   5,240                           (5.2)         14,808                    14,882           (0.5)

    Selling, general and administrative expense                                                                                            4,594                                   4,921                           (6.6)         13,785                    14,589           (5.5)

    Depreciation and amortization expense                                                                                                  2,366                                   2,287                             3.5           7,051                     6,862             2.8
                                                                                                                                           -----                                   -----                                          -----                     -----

    Total Operating Expenses                                                                                                              13,977                                  14,454                           (3.3)         41,651                    42,265           (1.5)
                                                                                                                                          ------                                  ------                                         ------                    ------


    Operating Income                                                                                                                      $7,603                                  $7,647                           (0.6)        $22,089                   $23,544           (6.2)

    Operating Income Margin                                                                                                               35.2 %                                 34.6 %                                        34.7 %                   35.8 %


    Segment EBITDA                                                                                                                        $9,969                                  $9,934                             0.4         $29,140                   $30,406           (4.2)

    Segment EBITDA Margin                                                                                                                 46.2 %                                 44.9 %                                        45.7 %                   46.2 %



    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 business unit performance.


    Intersegment transactions have not been eliminated.


    Verizon Communications Inc.

    Wireless - Selected Operating Statistics





    Unaudited                                                                                                                                                                                                               9/30/17        9/30/16    % Change
    ---------                                                                                                                                                                                                               -------        -------    --------


    Connections ('000)

                                                Retail postpaid                                                                                                                                                                            109,686      108,220        1.4

                                                Retail prepaid                                                                                                                                                                               5,588        5,456        2.4
                                                                                                                                                                                                                                                       -----

    Total retail                                                                                                                                                                                                                         115,274      113,676        1.4



                                                                                                                                                                3 Mos. Ended 3 Mos. Ended                              9 Mos. Ended   9 Mos. Ended

    Unaudited                                                                                                                                                        9/30/17      9/30/16  % Change                         9/30/17      9/30/2016    % Change
    ---------                                                                                                                                                        -------      -------  --------                         -------      ---------    --------


    Net Add Detail ('000) (1)

                                                Retail postpaid                                                                                                                       603                 442     36.4                            910        1,697     (46.4)

                                                Retail prepaid                                                                                                                        139                  83     67.5                            141        (124)         *
                                                                                                                                                                                    ---                 ---                                                ---

    Total retail                                                                                                                                                                    742                 525     41.3                          1,051        1,573     (33.2)



    Account Statistics

    Retail Postpaid Accounts ('000) (2)                                                                                                                                                                                                   35,364       35,530      (0.5)

    Retail postpaid connections per account (2)                                                                                                                                                                                             3.10         3.05        1.6

    Retail postpaid ARPA(3)                                                                                                                                                      136.31              144.94    (6.0)                        136.06       145.12      (6.2)

    Retail postpaid I-ARPA (4)                                                                                                                                                   166.98              169.49    (1.5)                        165.98       167.23      (0.7)


    Churn Detail

    Retail postpaid                                                                                                                                                              0.97 %             1.04 %                                1.02 %      0.98 %

    Retail                                                                                                                                                                       1.19 %             1.28 %                                1.25 %      1.23 %


    Retail Postpaid Connection Statistics

    Total Smartphone postpaid % of phones activated                                                                                                                              94.8 %             93.1 %                                94.8 %      92.6 %

    Total Smartphone postpaid phone base (2)                                                                                                                                                                                              89.4 %      86.3 %

    Total Internet postpaid base (2)                                                                                                                                                                                                      18.6 %      18.1 %

    4G LTE devices as % of retail postpaid connections                                                                                                                                                                                    87.5 %      83.7 %


    Other Operating Statistics

    Capital expenditures (in millions)                                                                                                                                $2,652        $2,771               (4.3)                 $6,927          $7,776       (10.9)



    Footnotes:

    (1)                                         Connection net additions exclude acquisitions and adjustments.


    (2)                                         Statistics presented as of end of period.


    (3)                                         Retail postpaid ARPA - average service revenue per account from retail postpaid accounts.


    (4)                                          Retail postpaid I-ARPA - average service revenue per account from retail postpaid account plus recurring device installment
                                                 billings.


                                                 The segment financial results and metrics above are adjusted to exclude the effects of of special items, as the Company's
                                                 chief operating decision maker excludes these items in assessing business unit performance.


                                                Intersegment transactions have not been eliminated.


    Verizon Communications Inc.

    Wireline - Selected Financial Results




                                                                                                                                          (dollars in millions)


                                                                              3 Mos. Ended   3 Mos. Ended                  9 Mos. Ended            9 Mos. Ended

    Unaudited                                                                      9/30/17        9/30/16   % Change            9/30/17                 9/30/16   % Change
    ---------                                                                      -------        -------   --------            -------                 -------   --------


    Operating Revenues

    Consumer Markets                                                                $3,204          $3,174         0.9              $9,589                   $9,519         0.7

    Enterprise Solutions                                                             2,262           2,273       (0.5)              6,882                    6,888       (0.1)

    Partner Solutions                                                                1,244           1,219         2.1               3,708                    3,722       (0.4)

    Business Markets                                                                   903             834         8.3               2,700                    2,534         6.6

    Other                                                                               49              76      (35.5)                184                      240      (23.3)
                                                                                       ---             ---                            ---                      ---

    Total Operating Revenues                                                         7,662           7,576         1.1              23,063                   22,903         0.7
                                                                                     -----           -----                         ------                   ------


    Operating Expenses

    Cost of services                                                                 4,496           4,369         2.9              13,457                   13,996       (3.9)

    Selling, general and administrative expense                                      1,552           1,667       (6.9)              4,716                    4,998       (5.6)

    Depreciation and amortization expense                                            1,549           1,467         5.6               4,572                    4,540         0.7
                                                                                     -----           -----                          -----                    -----

    Total Operating Expenses                                                         7,597           7,503         1.3              22,745                   23,534       (3.4)
                                                                                     -----           -----                         ------                   ------


    Operating Income (Loss)                                                            $65             $73      (11.0)               $318                   $(631)          *

    Operating Income (Loss) Margin                                                   0.8 %          1.0 %                         1.4 %                  (2.8)%


    Segment EBITDA                                                                  $1,614          $1,540         4.8              $4,890                   $3,909        25.1

    Segment EBITDA Margin                                                           21.1 %         20.3 %                        21.2 %                  17.1 %



    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 business unit performance.


                                                   Intersegment transactions have not been
                                                   eliminated.


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


                                                * Not meaningful


    Verizon Communications Inc.

    Wireline - Selected Operating Statistics





    Unaudited                                                                                                                                                                                                    9/30/17         9/30/16     % Change
    ---------                                                                                                                                                                                                    -------         -------     --------


    Connections ('000)

                                                Fios Video Subscribers                                                                                                                                                             4,648            4,673         (0.5)

                                                Fios Internet Subscribers                                                                                                                                                          5,803            5,585           3.9

                                                Fios Digital voice residence connections                                                                                                                                           3,920            3,882           1.0
                                                                                                                                                                                                                                                 -----

    Fios Digital connections                                                                                                                                                                                                    14,371           14,140           1.6


    HSI                                                                                                                                                                                                                          1,175            1,453        (19.1)

    Total Broadband connections                                                                                                                                                                                                  6,978            7,038         (0.9)


    Primary residence switched access connections                                                                                                                                                                                2,830            3,359        (15.7)

    Primary residence connections                                                                                                                                                                                                6,750            7,241         (6.8)


    Total retail residence voice connections                                                                                                                                                                                     6,950            7,482         (7.1)

    Total voice connections                                                                                                                                                                                                     13,100           14,194         (7.7)




                                                                                                                                                           3 Mos. Ended 3 Mos. Ended                        9 Mos. Ended    9 Mos. Ended

    Unaudited                                                                                                                                                 9/30/2017    9/30/2016  % Change                 9/30/2017       9/30/2016        % Change
    ---------                                                                                                                                                 ---------    ---------  --------                 ---------       ---------        --------


    Net Add Detail ('000)

                                                Fios Video Subscribers                                                                                                          (18)        36           *                           (46)              38             *

                                                Fios Internet Subscribers                                                                                                         66         90      (26.7)                            150              167        (10.2)

                                                Fios Digital voice residence connections                                                                                          11          3           *                             25               10             *
                                                                                                                                                                               ---        ---                                                        ---

    Fios Digital connections                                                                                                                                                    59        129      (54.3)                            129              215        (40.0)


    HSI                                                                                                                                                                       (76)      (66)     (15.2)                          (210)           (214)          1.9

    Total Broadband connections                                                                                                                                               (10)        24           *                           (60)            (47)       (27.7)


    Primary residence switched access connections                                                                                                                            (132)     (142)        7.0                           (400)           (440)          9.1

    Primary residence connections                                                                                                                                            (121)     (139)       12.9                           (375)           (430)         12.8


    Total retail residence voice connections                                                                                                                                 (129)     (152)       15.1                           (405)           (467)         13.3

    Total voice connections                                                                                                                                                  (252)     (282)       10.6                           (839)           (841)          0.2


    Revenue Statistics

    Fios revenues (in millions)                                                                                                                                  $2,942        $2,807        4.8                     $8,732           $8,344              4.7


    Other Operating Statistics

    Capital expenditures (in millions)                                                                                                                           $1,208        $1,036       16.6                     $3,358           $2,856             17.6


    Wireline employees ('000)                                                                                                                                                                                                     58.2             57.9

    Fios Video Open for Sale ('000)                                                                                                                                                                                             14,130           13,529

    Fios Video penetration                                                                                                                                                                                                      32.9 %          34.5 %

    Fios Internet Open for Sale ('000)                                                                                                                                                                                          14,423           13,825

    Fios Internet penetration                                                                                                                                                                                                   40.2 %          40.4 %



    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 business unit performance.


                                                Intersegment transactions have not been eliminated.


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


                        *                       Not meaningful


    Verizon Communications Inc.

    Non-GAAP Reconciliations - Consolidated Verizon



    Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions

                                                                                                                                                          (dollars in millions)

                                                                                                                                                                   3 Mos. Ended     3 Mos. Ended

    Unaudited                                                                                                                                                           9/30/17          9/30/16
    ---------                                                                                                                                                           -------          -------


    Consolidated Operating Revenues                                                                                                                                     $31,717           $30,937

    Less operating revenues from Divested Businesses                                                                                                                         54               211

    Less operating revenues from Acquisitions                                                                                                                             1,648                 -

    Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions                                                                                  $30,015           $30,726
                                                                                                                                                                    -------           -------

    Year over Year Change                                                                                                                                                (2.3)%




    IoT Revenues Excluding Acquisitions                                                                                                                   (dollars in millions)

                                                                                                                                                                   3 Mos. Ended     3 Mos. Ended

    Unaudited                                                                                                                                                           9/30/17          9/30/16
    ---------                                                                                                                                                           -------          -------


    IoT Revenues                                                                                                                                                           $375              $242

    Less IoT revenues from Acquisitions                                                                                                                                     124                20

    IoT Revenues Excluding Acquisitions                                                                                                                                    $251              $222
                                                                                                                                                                           ----              ----

    Year over Year Change                                                                                                                                                 13.1%




    Consolidated EBITDA, Consolidated EBITDA Margin, Consolidated Adjusted EBITDA,
    Consolidated Adjusted EBITDA Margin and Consolidated Adjusted EBITDA Excluding Operating Results from Divested
    Businesses



                                                                                                                                                          (dollars in millions)

                                                                                                                    3 Mos.  3 Mos.   3 Mos.     3 Mos.                   3 Mos.           3 Mos.

                                                                                                                     Ended   Ended    Ended      Ended                    Ended            Ended

    Unaudited                                                                                                      9/30/17 6/30/17  3/31/17   12/31/16                  9/30/16          6/30/16
    ---------                                                                                                      ------- -------  -------   --------                  -------          -------


    Consolidated Net Income                                                                                         $3,736   $4,478    $3,553      $4,600                    $3,747              $831

    Add/(subtract):

    Provision for income taxes                                                                                       1,775    2,489     1,629       2,349                     1,829               864

    Interest expense                                                                                                 1,164    1,218     1,132       1,137                     1,038             1,013

    Other (income) expense, net                                                                                        511       19       846        (98)                     (97)            1,826

    Equity in losses of unconsolidated businesses                                                                       22       28        21          35                        23                20
                                                                                                                       ---      ---       ---         ---                       ---               ---

    Operating Income                                                                                                 7,208    8,232     7,181       8,023                     6,540             4,554

    Add Depreciation and amortization expense                                                                        4,272    4,167     4,059       3,987                     3,942             3,982
                                                                                                                     -----    -----     -----       -----                     -----             -----

    Consolidated EBITDA                                                                                            $11,480  $12,399   $11,240     $12,010                   $10,482            $8,536
                                                                                                                   -------  -------   -------     -------                   -------            ------


    Add/subtract special items (before tax):

    Severance, pension, and benefit charges/(credits)(2)                                                                 -     195         -    (1,589)                      797             3,550

    Gain on spectrum license transactions                                                                                -       -    (126)          -                        -                -

    Net gain on sale of Divested Businesses                                                                              - (1,774)        -          -                        -          (1,007)

    Acquisition and integration related costs (1)(2)                                                                   166      559         -          -                        -                -

                                                                                                                       166  (1,020)    (126)    (1,589)                      797             2,543
                                                                                                                       ---   ------      ----      ------                       ---             -----

    Consolidated Adjusted EBITDA                                                                                   $11,646  $11,379   $11,114     $10,421                   $11,279           $11,079

    Operating results from Divested Businesses (1)(2)                                                                 (17)    (50)    (104)      (107)                    (115)            (120)

    Consolidated Adjusted EBITDA Excluding Operating Results from Divested Businesses                              $11,629  $11,329   $11,010     $10,314                   $11,164           $10,959
                                                                                                                   -------  -------   -------     -------                   -------           -------

    Consolidated Operating Revenues                                                                                $31,717                                               $30,937

    Consolidated Operating Income Margin                                                                            22.7 %

    Consolidated EBITDA Margin                                                                                      36.2 %                                               33.9 %

    Consolidated Adjusted EBITDA Margin                                                                             36.7 %                                               36.5 %



    (1)Excludes depreciation and amortization expense.

    (2) Certain amounts have been reclassified conform to the current period presentation.


    Verizon Communications Inc.

    Non-GAAP Reconciliations - Consolidated Verizon



    Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio

                                                                                                                                      (dollars in millions)

    Unaudited                                                                                                                                    9/30/17           12/31/16
    ---------                                                                                                                                    -------           --------


    Net Debt

    Debt maturing within one year                                                                                                                $2,180              $2,645

    Long-term debt                                                                                                                               115,317             105,433
                                                                                                                                                 -------             -------


    Total Debt                                                                                                                                   117,497             108,078

    Less Cash and cash equivalents                                                                                                               4,487               2,880
                                                                                                                                                 -----               -----

    Net Debt                                                                                                                                    $113,010            $105,198
                                                                                                                                                --------            --------

    Net Debt to Consolidated Adjusted EBITDA Ratio                                                                                                2.6x               2.4x
                                                                                                                                                  ----               ----




    Adjusted Earnings per Common Share (Adjusted EPS) (1)

                                                                                                3 Mos. Ended                                                   3 Mos. Ended

    Unaudited                                                                                        9/30/17                                                        9/30/16
    ---------                                                                                        -------                                                        -------

                                                                  Pre-tax     Tax    After-Tax                   Pre-tax      Tax                After-Tax

    EPS                                                                                                $0.89                                                           $0.89


    Severance, pension, and benefit charges                     $       - $     -  $         -               -      $797    $(295)                     $502                0.12

    Early debt redemption costs                                       454    (180)          274             0.07          -        -                        -               0.07

    Acquisition and integration related costs                         166     (66)          100             0.02          -        -                        -               0.02
                                                                                           ---

                                                                     $620   $(246)         $374             0.09       $797    $(295)                     $502                0.12
                                                                                                                                                                       ----

    Adjusted EPS                                                                                       $0.98                                                           $1.01
                                                                                                       -----                                                           -----


    (1)Adjusted EPS may not add due to rounding.


    Verizon Communications Inc.

    Non-GAAP Reconciliations - Segments



    Segment EBITDA and Segment EBITDA Margin


    Wireless                                                       (dollars in millions)

                                                      3 Mos. Ended                                3 Mos. Ended

    Unaudited                                              9/30/17                                     9/30/16
    ---------                                              -------                                     -------


    Operating Income                                        $7,603                                       $7,647

    Add Depreciation and amortization expense                2,366                                        2,287
                                                             -----                                        -----

    Segment EBITDA                                          $9,969                                       $9,934
                                                            ------                                       ------


    Total operating revenues                               $21,580                                      $22,101
                                                           -------                                      -------


    Operating Income Margin                                  35.2%                                       34.6%
                                                              ----                                         ----

    Segment EBITDA Margin                                    46.2%                                       44.9%
                                                              ----                                         ----



    Wireline                                                                             (dollars in millions)

                                                      3 Mos. Ended                                3 Mos. Ended

    Unaudited                                              9/30/17                                     9/30/16
    ---------                                              -------                                     -------


    Operating Income                                           $65                                          $73

    Add Depreciation and amortization expense                1,549                                        1,467
                                                             -----                                        -----

    Segment EBITDA                                          $1,614                                       $1,540
                                                            ------                                       ------



    Total operating revenues                                $7,662                                       $7,576
                                                            ------                                       ------


    Operating Income Margin                                   0.8%                                        1.0%
                                                               ---                                          ---

    Segment EBITDA Margin                                    21.1%                                       20.3%
                                                              ----                                         ----



    Wireline Operating Revenues Excluding Acquisition

                                                                                         (dollars in millions)

                                                      3 Mos. Ended                                3 Mos. Ended

    Unaudited                                              9/30/17                                     9/30/16
    ---------                                              -------                                     -------


    Wireline Operating Revenues                             $7,662                                       $7,576

    Less operating revenues from Acquisition                   290                                            -

    Wireline Operating Revenues Excluding Acquisition       $7,372                                       $7,576
                                                            ------                                       ------

    Year over Year Change                                   (2.7)%

Media contact:
Bob Varettoni
908.559.6388
robert.a.varettoni@verizon.com

Related Links

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http://www.verizonenterprise.com/
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SOURCE Verizon