VERIZON COMMUNICATIONS INC - Quarter Report: 2024 September (Form 10-Q)

(1) The total cash consideration includes the tender offer consideration, plus any accrued and unpaid interest to the date of purchase. In addition, for securities denominated in a currency other than the U.S. dollar, cash consideration is shown on a U.S. dollar equivalent basis and includes the amount payable per the derivatives entered into in connection with the transaction. See Note 7 for additional information on cross currency swap transactions related to the transaction.

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% notes due 2024€ $

Verizon % notes due 2024

$ Verizon floating rate notes due 2024 Open market repurchases of various Verizon notes Three Months Ended March 31, 2024 total Three Months Ended June 30, 2024

Verizon % notes due 2024

£ $ Open market repurchases of various Verizon notes$ Three Months Ended June 30, 2024 total

Three Months Ended September 30, 2024

Open market repurchases of various Verizon notes$ $

Three Months Ended September 30, 2024 total

Nine Months Ended September 30, 2024 total

(1) Represents amount paid to repay or repurchase, including any accrued interest. In addition, for securities denominated in a currency other than the U.S. dollar, amount paid is shown on a U.S. dollar equivalent basis and includes the amount payable per the derivatives entered into in connection with the transaction. See Note 7 for additional information on cross currency swap transactions related to the transaction.

Issuances


(dollars in millions)	Principal Amount Issued	Net Proceeds(1)
Three Months Ended March 31, 2024
Verizon % notes due 2032	€	$
Verizon % notes due 2036	€
Verizon % notes due 2054(2)	$
Three Months Ended March 31, 2024 total
Nine Months Ended September 30, 2024 total		$

(1) Net proceeds were net of underwriting discounts and other issuance costs. In addition, for securities denominated in a currency other than the U.S. dollar, net proceeds are shown on a U.S. dollar equivalent basis. See Note 7 for additional information on cross currency swap transactions related to the issuances.

(2) An amount equal to the net proceeds from these notes is expected to be used to fund certain renewable energy projects, including new and existing investments made by us during the period from May 1, 2023 through the maturity date of the notes.

Commercial Paper Program

During the nine months ended September 30, 2024, we issued $ billion in net proceeds and made $ billion in principal repayments of commercial paper. These transactions are reflected within Cash flows from financing activities in our condensed consolidated statements of cash flows on a net basis. As of September 30, 2024, we had commercial paper outstanding.

Asset-Backed Debt

As of September 30, 2024, the carrying value of our asset-backed debt was $ billion. Our asset-backed debt includes Asset-Backed Notes (ABS Notes) issued to third-party investors (Investors) and loans (ABS Financing Facilities) received from banks and their conduit facilities (collectively, the Banks). Our consolidated asset-backed debt bankruptcy remote legal entities (each, an ABS Entity, or collectively, the ABS Entities) issue the debt or are otherwise party to the transaction documentation in connection with our asset-backed debt transactions. Under the terms of our asset-backed debt, Cellco Partnership (Cellco), a wholly-owned subsidiary of the Company, and certain other Company affiliates (collectively, the Originators) transfer device payment plan agreement receivables and certain other receivables (collectively referred to as certain receivables) or a participation interest in certain other receivables to one of the ABS Entities, which in turn transfers such receivables and participation interest to another ABS Entity that issues the debt. Verizon entities retain the equity interests and residual interests, as applicable, in the ABS Entities, which represent the rights to all funds not needed to make required payments on the asset-backed debt and other related payments and expenses.

Our asset-backed debt is secured by the transferred receivables and participation interest, and future collections on such receivables and underlying receivables related to such participation interest. These receivables and participation interest transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of

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$ A-1b Senior class notes

Compounded SOFR + (1)

B Junior class notes C Junior class notes Series 2024-2A Senior class notes B Junior class notes C Junior class notes January 2024 total April 2024Series 2024-3A-1a Senior class notes A-1b Senior class notes

Compounded SOFR + (1)

B Junior class notes C Junior class notes April 2024 total June 2024Series 2024-4A-1a Senior class notes A-1b Senior class notes

Compounded SOFR + (1)

B Junior class notes C Junior class notes Series 2024-5A Senior class notes B Junior class notes C Junior class notes June 2024 total

September 2024

Series 2024-6

A-1a Senior class notes A-1b Senior class notes

Compounded SOFR + (1)

B Junior class notes C Junior class notes

Series 2024-7

A Senior class notes B Junior class notes C Junior class notes

September 2024 total

Total$

(1) Compounded Secured Overnight Financing Rate (SOFR) is calculated using SOFR as published by the Federal Reserve Bank of New York in accordance with the terms of such notes. Compounded SOFR for the interest payment made in September 2024 was %.

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, , or , as applicable, during which we may transfer additional receivables to the ABS Entity. During the nine months ended September 30, 2024, we made aggregate principal repayments of $ billion in connection with anticipated redemptions of ABS Notes and notes that have entered the amortization period, including payments in connection with any note redemptions.

In October 2024, in connection with an anticipated redemption of ABS Notes, we made a principal repayment, in whole, for $ billion.

ABS Financing Facilities

Under the loan agreements outstanding in connection with the ABS Financing Facility originally entered into in 2021 and most recently renewed in 2023 (2021 ABS Financing Facility), we prepaid an aggregate of $ million in January 2024, borrowed an additional $ million in March 2024, prepaid an aggregate of $ million in April 2024, borrowed an additional $ million in June 2024, prepaid an aggregate of $ billion in August 2024, prepaid an aggregate of $ million and borrowed an additional $ million in September 2024. The aggregate outstanding balance under the 2021 ABS Financing Facility was $ billion as of September 30, 2024.

Under the loan agreement outstanding in connection with the ABS Financing Facility originally entered into in 2022 and most recently renewed in 2023 (2022 ABS Financing Facility), we borrowed an additional $ billion in June 2024. The aggregate outstanding balance under the 2022 ABS Financing Facility was $ billion as of September 30, 2024.

Variable Interest Entities

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

$ Prepaid expenses and other Other assets LiabilitiesAccounts payable and accrued liabilities Debt maturing within one year Long-term debt

The Accounts receivable, net amounts above does not include underlying receivables for which a participation interest has been transferred to the ABS Entities. See Note 6 for additional information on certain receivables and participation interest used to secure asset-backed debt.

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$ $

Various export credit facilities(2)

2024 - 2031 Total$ $ $

The data presented in the table above was last updated on September 30, 2024.

Allowance for Credit Losses

The credit quality indicators are used in determining the estimated amount and the timing of expected credit losses for the device payment plan agreement and wireless service receivables portfolios.

For device payment plan agreement receivables, we record bad debt expense based on a default and loss calculation using our proprietary loss model. The expected loss rate is determined based on customer credit scores and other qualitative factors as noted above. The loss rate is assigned individually on a customer by customer basis and the custom credit scores are then aggregated by vintage and used in our proprietary loss model to calculate the weighted-average loss rate used for determining the allowance balance.

We monitor the collectability of our wireless service receivables as one overall pool. Wireline service receivables are disaggregated and pooled by the following types of customers and related contracts: consumer, small and medium business,

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$ $ $ Cross currency swaps Interest rate caps Other assets:Fixed income securities Cross currency swaps Total$ $ $ $ Liabilities:Other current liabilities:Interest rate swaps$ $ $ $ Cross currency swaps Foreign exchange forwards Interest rate caps Other liabilities:Interest rate swaps Cross currency swaps Total$ $ $ $

(1)Quoted prices in active markets for identical assets or liabilities.

(2)Observable inputs other than quoted prices in active markets for identical assets and liabilities.

(3)Unobservable pricing inputs in the market.

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$ $ $ Cross currency swaps Foreign exchange forwards Interest rate caps Other assets:Fixed income securities Cross currency swaps Interest rate caps Total$ $ $ $ Liabilities:Other current liabilities:

Interest rate swaps

$ $ $ $

Cross currency swaps

Foreign exchange forwards

Interest rate caps

Contingent consideration Other liabilities:

Interest rate swaps

Cross currency swaps

Interest rate caps

Total$ $ $ $

(1)Quoted prices in active markets for identical assets or liabilities.

(2)Observable inputs other than quoted prices in active markets for identical assets and liabilities.

(3)Unobservable pricing inputs in the market.

Certain of our equity investments do not have readily determinable fair values and are excluded from the tables above. Such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer and are included in Investments in unconsolidated businesses in our condensed consolidated balance sheets. As of September 30, 2024 and December 31, 2023, the carrying amount of our investments without readily determinable fair values was $ million and $ million, respectively. During both the three and nine months ended September 30, 2024, there were insignificant adjustments due to observable price changes and there were insignificant amounts of impairment charges. As of September 30, 2024, cumulative adjustments due to observable price changes and impairment charges were $ million and $ million, respectively.

Verizon had a liability for contingent consideration related to its acquisition of TracFone, completed in November 2021. The fair value was calculated using a probability-weighted discounted cash flow model and represented a Level 3 measurement. Level 3 instruments include valuation based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. Subsequent to the Acquisition Date, at each reporting date, the contingent consideration liability was remeasured to fair value. Contingent consideration payments were completed in January of 2024. During the nine months ended September 30, 2024 and September 30, 2023, we made payments of $ million and $ million, respectively, related to the contingent consideration. See Note 3 for additional information.

Fixed income securities consist primarily of investments in municipal bonds. The valuation of the fixed income securities is based on the quoted prices for similar assets in active markets or identical assets in inactive markets or models that apply inputs from observable market data. The valuation determines that these securities are classified as Level 2.

Derivative contracts are valued using models based on readily observable market parameters for all substantial terms of our derivative contracts and thus are classified within Level 2. We use mid-market pricing for fair value measurements of our derivative instruments. Our derivative instruments are recorded on a gross basis.

We recognize transfers between levels of the fair value hierarchy as of the end of the reporting period.

Fair Value of Short-term and Long-term Debt

The fair value of our debt is determined using various methods, including quoted prices for identical debt instruments, which is a Level 1 measurement, as well as quoted prices for similar debt instruments with comparable terms and maturities, which is a Level 2 measurement.

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$ $ $ $ At December 31, 2023

Derivative Instruments

We enter into derivative transactions primarily to manage our exposure to fluctuations in foreign currency exchange rates and interest rates. We employ risk management strategies, which may include the use of a variety of derivatives including interest rate swaps, cross currency swaps, forward starting interest rate swaps, treasury rate locks, interest rate caps, swaptions and foreign exchange forwards. We do not hold derivatives for trading purposes.

$ Cross currency swaps Foreign exchange forwards

$ $ $ Notional value settled

Pre-tax gain (loss) recognized in Interest expense

() Cross Currency Swaps:Notional value entered into Notional value settled

Pre-tax gain (loss) on cross currency swaps recognized in Interest expense

() ()

Pre-tax gain (loss) on hedged debt recognized in Interest expense

() ()

Excluded components recognized in Other comprehensive income (loss)

() () Initial value of the excluded component amortized into Interest expense Treasury Rate Locks:Notional value entered into Notional value settled

Pre-tax gain (loss) recognized in Other comprehensive income (loss)

() ()


	Nine Months Ended
	September 30,
(dollars in millions)	2024		2023
Other, net Cash Flows from Operating Activities:
Cash paid for settlement of interest rate swaps, net	$	()	$
Cash received (paid) for settlement of treasury rate locks	()
Other, net Cash Flows from Financing Activities:
Cash paid for settlement of cross currency swaps, net	()		()

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$ Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities()()Cumulative amount of fair value hedging adjustment remaining for which hedge accounting has been discontinued

Interest Rate Swaps

We enter into interest rate swaps to achieve a targeted mix of fixed and variable rate debt. We principally receive fixed rates and pay variable rates, resulting in a net increase or decrease to Interest expense. These swaps are designated as fair value hedges and hedge against interest rate risk exposure of designated debt issuances. We record the interest rate swaps at fair value in our condensed consolidated balance sheets as assets and liabilities. Changes in the fair value of the interest rate swaps are recorded to Interest expense, which are primarily offset by changes in the fair value of the hedged debt due to changes in interest rates.

Cross Currency Swaps

We have entered into cross currency swaps to exchange our British Pound Sterling, Euro, Swiss Franc, Canadian Dollar and Australian Dollar-denominated cash flows into U.S. dollars and to fix our cash payments in U.S. dollars, as well as to mitigate the impact of foreign currency transaction gains or losses. These swaps are designated as fair value hedges. We record the cross currency swaps at fair value in our condensed consolidated balance sheets as assets and liabilities. Changes in the fair value of the cross currency swaps attributable to changes in the spot rate of the hedged item and changes in the recorded value of the hedged debt due to changes in spot rates are recorded in the same income statement line item. We present exchange gains and losses from the conversion of foreign currency denominated debt as a part of Interest expense. During both the three and nine months ended September 30, 2024 and September 30, 2023, these amounts completely offset each other and no net gain or loss was recorded.

Changes in the fair value of cross currency swaps attributable to time value and cross currency basis spread are initially recorded to Other comprehensive income (loss). Unrealized gains or losses on excluded components are recorded in Other comprehensive income (loss) and are recognized into Interest expense on a systematic and rational basis through the swap accrual over the life of the hedging instrument. The amount remaining in Accumulated other comprehensive loss related to cash flow hedges on the date of transition will be reclassified to earnings when the hedged item is recognized in earnings or when it becomes probable that the forecasted transactions will not occur.

On March 31, 2022, we elected to de-designate our cross currency swaps previously designated as cash flow hedges and re-designated these swaps as fair value hedges. For these hedges, we elected to exclude the change in fair value of the cross currency swaps related to both time value and cross currency basis spread from the assessment of hedge effectiveness (the excluded components). The initial value of the excluded components of $ billion as of March 31, 2022 will continue to be amortized into Interest expense over the remaining life of the hedging instruments. During both the three and nine months ended September 30, 2024 and September 30, 2023, the amortization of the initial value of the excluded component completely offset the amortization related to the amount remaining in Other comprehensive income (loss) related to cash flow hedges. See Note 9 for additional information. We estimate that $ million will be amortized into Interest expense within the next 12 months.

Treasury Rate Locks

We enter into treasury rate locks designated as cash flow hedges to mitigate our interest rate risk on future transactions. We recognize gains and losses resulting from interest rate movements in Other comprehensive income (loss).

Net Investment Hedges

We have designated certain foreign currency debt instruments as net investment hedges to mitigate foreign exchange exposure related to non-U.S. dollar net investments in certain foreign subsidiaries against changes in foreign exchange rates. The notional amount of Euro-denominated debt designated as a net investment hedge was € million as of both September 30, 2024 and December 31, 2023.

Undesignated Derivatives

We also have the following derivative contracts which we use as economic hedges but for which we have elected not to apply hedge accounting.

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$ $ $ Notional value settled

Pre-tax gain (loss) recognized in Other income, net

()()()

Foreign Exchange Forwards

We enter into British Pound Sterling and Euro foreign exchange forwards to mitigate our foreign exchange rate risk related to non-functional currency denominated monetary assets and liabilities of international subsidiaries.

Concentrations of Credit Risk

Financial instruments that subject us to concentrations of credit risk consist primarily of temporary cash investments, short-term and long-term investments, trade receivables, including device payment plan agreement receivables, certain notes receivable, including lease receivables, and derivative contracts.

t hold any collateral. At September 30, 2024, we posted $ billion of collateral related to derivative contracts under collateral exchange agreements, which was recorded as Prepaid expenses and other in our condensed consolidated balance sheet. At December 31, 2023, we did t hold any collateral. At December 31, 2023, we posted $ billion of collateral related to derivative contracts under collateral exchange arrangements, which was recorded as Prepaid expenses and other in our condensed consolidated balance sheet. While we may be exposed to credit losses due to the nonperformance of our counterparties, we consider the risk remote and do not expect that any such nonperformance would result in a significant effect on our results of operations or financial condition due to our diversified pool of counterparties.

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$ $ $ Service cost - Selling, general and administrative expense Service cost$ $ $ $ Amortization of prior service cost (credit)$ $ $()$()Expected return on plan assets()()()()Interest cost Remeasurement gain, net() Other components$()$()$ $ Total$ $ $ $


	(dollars in millions)
	Pension		Health Care and Life
Nine Months Ended September 30,	2024	2023	2024		2023
Service cost - Cost of services	$	$	$		$
Service cost - Selling, general and administrative expense
Service cost	$	$	$		$

Amortization of prior service cost (credit)	$	$	$	()	$	()
Expected return on plan assets	()	()	()		()
Interest cost
Remeasurement loss, net

$()$ $())))()$ $ $()

The amounts presented above in Net other comprehensive income (loss) are net of taxes. The amounts reclassified to net income related to unrealized gain (loss) on cash flow hedges and unrealized gain (loss) on fair value hedges in the table above are included in Other income, net and Interest expense in our condensed consolidated statements of income. See Note 7 for additional information. The amounts reclassified to net income related to unrealized gain (loss) on marketable securities and defined benefit pension and postretirement plans in the table above are included in Other income, net in our condensed consolidated statements of income. See Note 8 for additional information.

reportable segments that we operate and manage as strategic business units - Consumer and Business. We measure and evaluate our reportable segments based on segment operating income, consistent with the chief operating decision maker's assessment of segment performance.

states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios.Verizon
Business GroupOur Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and conferencing services, corporate networking solutions, security and managed network services, local and long distance voice services and network access to deliver various Internet of Things services and products. We provide these products and services to businesses, government customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world.

Our Consumer segment's wireless and wireline products and services are available to our retail customers, as well as resellers that purchase wireless network access from us on a wholesale basis. Our Business segment's wireless and wireline products

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reportable segments:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(dollars in millions)	2024	2023	2024	2023
External Operating Revenues
Consumer
Service	$	$	$	$
Wireless equipment
Other(1)
Total Consumer

Business
Enterprise and Public Sector
Business Markets and Other
Wholesale
Total Business
Total reportable segments	$	$	$	$

Intersegment Revenues
Consumer	$	$	$	$
Business
Total reportable segments	$	$	$	$

Total Operating Revenues
Consumer	$	$	$	$
Business(2)
Total reportable segments	$	$	$	$

Operating Income
Consumer	$	$	$	$
Business
Total reportable segments	$	$	$	$

(1) Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, revenues associated with certain products included in our device protection offerings, leasing and interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.

(2) Service and other revenues included in our Business segment were approximately $ billion and $ billion for the three months ended September 30, 2024 and 2023, respectively, and $ billion and $ billion for the nine months ended September 30, 2024 and 2023, respectively. Wireless equipment revenues included in our Business segment were $ million and $ million for the three months ended September 30, 2024 and 2023, respectively, and $ billion for both the nine months ended September 30, 2024 and 2023.

The following table provides Fios revenue for our reportable segments:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(dollars in millions)	2024	2023	2024	2023
Consumer	$	$	$	$
Business
Total Fios revenue	$	$	$	$

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$ $ $ Business Total Wireless service revenue$ $ $ $

Reconciliation to Consolidated Financial Information

The reconciliation of segment operating revenues and operating income to consolidated operating revenues and operating income below includes the effects of special items that the chief operating decision maker does not consider in assessing segment performance, primarily because of their nature.

$ $ $

Corporate and other

Eliminations

()()()()Total consolidated operating revenues$ $ $ $

$ $ $ Corporate and other()()()()Severance charges() ()()Other components of net periodic benefit charges (Note 8)()()()()

Asset and business rationalization

() ()()

Legacy legal matter

()

Non-strategic business shutdown

() ()

Business transformation costs

() ()Total consolidated operating income Equity in losses of unconsolidated businesses()()()()Other income, net Interest expense()()()()Income Before Provision For Income Taxes$ $ $ $

No single customer accounted for more than 10% of our total operating revenues during the three and nine months ended September 30, 2024 or 2023.

The chief operating decision maker does not review disaggregated assets on a segment basis; therefore, such information is not presented. Depreciation and amortization included in the measure of segment profitability is primarily allocated based on proportional usage, and is included within Total reportable segments operating income.

million and $ million, respectively, remained as confirmed obligations outstanding related to suppliers participating in the supplier finance program.

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federal district court actions alleging that Verizon is infringing various patents. Most of these cases are brought by non-practicing entities and effectively seek only monetary damages; a small number are brought by companies that have sold products and could seek injunctive relief as well. These cases have progressed to various stages and a small number have gone to trial or may go to trial in the coming 12 months if they are not otherwise resolved.

In connection with the execution of agreements for the sales of businesses and investments, Verizon ordinarily provides representations and warranties to the purchasers pertaining to a variety of nonfinancial matters, such as ownership of the securities being sold, as well as indemnity from certain financial losses. From time to time, counterparties may make claims under these provisions, and Verizon will seek to defend against those claims and resolve them in the ordinary course of business.

As of September 30, 2024, Verizon had renewable energy purchase agreements (REPAs) with third parties. Each of the REPAs is based on the expected operation of a renewable energy-generating facility and has a fixed price term of to years from the commencement of the facility's entry into commercial operation. of the facilities have entered into commercial operation, and the remainder are under development. The REPAs generally are expected to be financially settled based on the prevailing market price as energy is generated by the facilities.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


Overview

Verizon Communications Inc. (the Company) is a holding company that, acting through its subsidiaries (together with the Company, collectively, Verizon), is one of the world's leading providers of communications, technology, information and entertainment products and services to consumers, businesses and government entities. With a presence around the world, we offer data, video and voice services and solutions on our networks and platforms that are designed to meet customers’ demand for mobility, reliable network connectivity and security.

To compete effectively in today's dynamic marketplace, we are focused on the capabilities of our high-performing networks to drive growth based on delivering what customers want and need in the digital world. We are consistently deploying new network architecture and technologies to secure our leadership in both fourth-generation (4G) and fifth-generation (5G) wireless networks. Our network quality is the hallmark of our brand and the foundation for the connectivity, platforms and solutions upon which we build our competitive advantage. In 2024, we are focused on enhancing and driving the monetization of our networks, platforms and solutions, retaining and growing our high-quality customer base and further improving our financial and operating performance.

Our strategy requires significant capital investments primarily to acquire wireless spectrum, put the spectrum into service, provide additional capacity for growth in our networks, invest in the fiber that supports our businesses, evolve and maintain our networks and develop and maintain significant advanced information technology systems and data system capabilities. We believe that our C-Band spectrum, together with our industry leading millimeter wave spectrum holdings and our 4G Long-Term Evolution (LTE) network and fiber infrastructure, will drive innovative products and services and fuel our growth.

Highlights of Our Financial Results for the Three Months Ended September 30, 2024 and 2023

(dollars in millions)

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Highlights of Our Financial Results for the Nine Months Ended September 30, 2024 and 2023

(dollars in millions)

Business Overview

We have two reportable segments that we operate and manage as strategic business units - Verizon Consumer Group (Consumer) and Verizon Business Group (Business).

Revenue by Segment for the Three Months Ended September 30, 2024 and 2023

———

Note: Excludes eliminations.

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Revenue by Segment for the Nine Months Ended September 30, 2024 and 2023

———

Note: Excludes eliminations.

Verizon Consumer Group

Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless services are provided across one of the most extensive wireless networks in the United States (U.S.) under the Verizon family of brands and through wholesale and other arrangements. We also provide fixed wireless access (FWA) broadband through our 5G or 4G LTE networks as an alternative to traditional landline internet access. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios. Our Consumer segment's wireless and wireline products and services are available to our retail customers, as well as resellers that purchase wireless network access from us on a wholesale basis.

Customers can obtain our wireless services on a postpaid or prepaid basis. Our postpaid service is generally billed one month in advance for a monthly access charge in return for access to and usage of network services. Our prepaid service is offered only to Consumer customers and enables individuals to obtain wireless services without credit verification by paying for all services in advance. The Consumer segment also offers several categories of wireless equipment to customers, including a variety of smartphones and other handsets, wireless-enabled internet devices, such as tablets, and other wireless-enabled connected devices, such as smart watches.

In addition to the wireless services and equipment discussed above, the Consumer segment sells residential fixed connectivity solutions, including internet, video and voice services, and wireless network access to resellers on a wholesale basis. The Consumer segment's operating revenues for the three and nine months ended September 30, 2024 totaled $25.4 billion and $75.3 billion, respectively, representing an increase of 0.4% and 0.9%, respectively, compared to the similar periods in 2023. See "Segment Results of Operations" for additional information regarding our Consumer segment’s operating performance and selected operating statistics.

Verizon Business Group

Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and conferencing services, corporate networking solutions, security and managed network services, local and long distance voice services and network access to deliver various Internet of Things (IoT) services and products, including solutions that support mobile resource management. We provide these products and services to businesses, government customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world. The Business segment's operating revenues for the three and nine months ended September 30, 2024 totaled $7.4 billion and $22.0 billion, respectively, representing a decrease of 2.3% and 2.1%, respectively, compared to the similar periods in 2023. See "Segment Results of Operations" for additional information regarding our Business segment’s operating performance and selected operating statistics.

Corporate and Other

Corporate and other primarily includes device insurance programs, investments in unconsolidated businesses and development stage businesses that support our strategic initiatives, as well as unallocated corporate expenses, certain pension and other employee benefit related costs and interest and financing expenses. Corporate and other also includes the historical results of divested businesses and other adjustments and gains and losses that are not allocated or used in assessing segment performance due to their nature. Although such transactions are excluded from the business segment results, they are included in reported consolidated earnings. Gains and losses from these transactions that are not individually significant are included in

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segment results and therefore are included in the chief operating decision maker’s assessment of segment performance. See "Consolidated Results of Operations" for additional information regarding Corporate and other results.

Capital Expenditures and Investments

We continue to invest in our wireless networks, high-speed fiber and other advanced technologies to position ourselves at the center of growth trends for the future. During the nine months ended September 30, 2024, these investments included $12.0 billion for capital expenditures. See "Cash Flows Used in Investing Activities" for additional information. Capital expenditures for 2024 are expected to be in the range of $17.0 billion to $17.5 billion.

Global Network and Technology

Over the past several years, we have been leading the development of 5G wireless technology industry standards and the ecosystems for fixed and mobile 5G wireless services. 5G technology enables higher throughput and lower latency than 4G LTE technology and allows our networks to handle more traffic as the number of internet-connected devices grows.

We are focusing our capital investment on building our next generation 5G network, while also adding capacity and density to our 4G LTE network. We are densifying our networks by utilizing macro and small cell technology, in-building solutions and distributed antenna systems. Network densification enables us to add capacity to address increasing mobile video consumption and the growing demand for IoT products and services on our 5G and 4G LTE networks. We obtained full access to our C-Band spectrum in August 2023, and will continue deploying this spectrum across the continental U.S.

We continue to build fiber-based networks supporting data, video and advanced business services - areas where demand for reliable high-speed connections is growing. In addition, we leverage our 5G and 4G LTE networks for our FWA broadband service.

Recent Developments

In June 2024, we announced a voluntary separation program for select U.S.-based management employees. Approximately 4,800 eligible employees will separate from Verizon under this program by the end of March 2025, with more than half of these employees having exited in September of 2024. Principally as a result of this program, but also as a result of other headcount reduction initiatives, we recorded a severance charge of $1.7 billion ($1.3 billion after-tax) during the three and nine months ended September 30, 2024, which was recorded in Selling, general and administrative expense in our condensed consolidated statement of income.

On September 27, 2024, Verizon entered into an agreement with Vertical Bridge REIT, LLC (Vertical Bridge) pursuant to which Vertical Bridge will obtain the exclusive rights to lease, operate and manage over 6,000 wireless towers from subsidiaries of Verizon. The transaction is structured as a prepaid lease with an upfront payment of approximately $2.8 billion. Under the terms of the leases, Vertical Bridge will have exclusive rights to lease, operate and manage the towers over an average term of approximately 30 years, and will have an option to acquire the towers at the end of the lease terms. Verizon will lease back capacity on the towers from Vertical Bridge for an initial term of 10 years, with eight optional renewal terms of five years each, subject to certain early termination rights. This transaction is expected to close by the end of 2024, subject to customary closing conditions. Verizon plans to account for the upfront payment as a financing obligation and prepaid rent.

On October 17, 2024, Verizon entered into a license purchase agreement to acquire select spectrum licenses of United States Cellular Corporation and certain of its subsidiaries (UScellular) for total consideration of $1.0 billion, subject to certain potential adjustments. The closing of this transaction is subject to the receipt of regulatory approvals and other closing conditions, including the consummation of UScellular's proposed sale of its wireless operations and select spectrum assets to T-Mobile US, Inc., and the termination of certain post-closing arrangements with respect to that sale.

Our agreement to acquire Frontier Communications Parent, Inc. (Frontier) is discussed below under the heading "Acquisitions and Divestitures."

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Consolidated Results of Operations

In this section, we discuss our overall results of operations and highlight special items, some of which are not included in our segment results. In "Segment Results of Operations" we review the performance of our two reportable segments in more detail.

Consolidated Operating Revenues


	Three Months Ended								Nine Months Ended
	September 30,				Increase/				September 30,				Increase/
(dollars in millions)	2024		2023		(Decrease)				2024		2023		(Decrease)
Consumer	$	25,360	$	25,257	$	103	0.4	%	$	75,344	$	74,672	$	672	0.9	%
Business	7,351		7,527		(176)		(2.3)		22,027		22,504		(477)		(2.1)
Corporate and other	685		618		67		10.8		1,929		1,856		73		3.9
Eliminations	(66)		(66)		—		—		(193)		(188)		(5)		2.7
Consolidated Operating Revenues	$	33,330	$	33,336	$	(6)	—		$	99,107	$	98,844	$	263	0.3

Consolidated operating revenues remained relatively flat during the three months ended September 30, 2024 and increased during the nine months ended September 30, 2024 compared to the similar periods in 2023. The increase during the nine months ended September 30, 2024 was primarily due to revenue increases in our Consumer segment, partially offset by revenue decreases in our Business segment.

Revenues for our segments are discussed separately below under the heading "Segment Results of Operations."

Consolidated Operating Expenses


	Three Months Ended								Nine Months Ended
	September 30,				Increase/				September 30,				Increase/
(dollars in millions)	2024		2023		(Decrease)				2024		2023		(Decrease)
Cost of services	$	7,193	$	7,084	$	109	1.5	%	$	21,064	$	21,148	$	(84)	(0.4)	%
Cost of wireless equipment	6,047		6,353		(306)		(4.8)		17,519		18,557		(1,038)		(5.6)
Selling, general and administrative expense	9,706		7,995		1,711		21.4		25,873		23,754		2,119		8.9
Depreciation and amortization expense	4,458		4,431		27		0.6		13,386		13,108		278		2.1
Consolidated Operating Expenses	$	27,404	$	25,863	$	1,541	6.0		$	77,842	$	76,567	$	1,275	1.7

Operating expenses for our segments are discussed separately below under the heading "Segment Results of Operations."

Cost of Services

Cost of services includes the following costs directly attributable to a service: salaries and wages, benefits, materials and supplies, content costs, contracted services, network access and transport costs, customer provisioning costs, computer systems support and costs to support our outsourcing contracts and technical facilities. Aggregate customer service costs, which include billing and service provisioning, are allocated between Cost of services and Selling, general and administrative expense.

Cost of services increased during the three months ended September 30, 2024 compared to the similar period in 2023. The increase was primarily the result of:

•an increase of $189 million related to an asset and business rationalization charge taken in 2024;

•an increase of $73 million in regulatory costs primarily related to a higher net Federal Universal Service Fund (FUSF) rate;

•a decrease of $76 million in access costs primarily as a result of decreases in prepaid subscribers, changes in usage and changes in net circuit access prices; and

•a decrease of $45 million in connection with the non-strategic business shutdown of our BlueJeans business offering in 2023.

Cost of services decreased during the nine months ended September 30, 2024 compared to the similar period in 2023. The decrease was primarily the result of:

•a decrease of $247 million in access costs primarily as a result of decreases in prepaid subscribers, changes in usage and changes in net circuit access prices;

•a decrease of $176 million in personnel costs primarily related to the impact of workforce changes;

•an increase of $175 million related to an asset and business rationalization charge taken in 2024 compared to an asset rationalization charge taken in 2023; and

•an increase of $113 million in regulatory costs related to a higher net FUSF rate.

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Cost of Wireless Equipment

Cost of wireless equipment decreased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 primarily as a result of:

•a decrease of $594 million and $2.1 billion for the three and nine months, respectively, driven by a lower volume of wireless devices sold; and

•an increase of $288 million and $1.1 billion for the three and nine months, respectively, due to a shift to higher priced equipment in the mix of wireless devices sold.

Selling, General and Administrative Expense

Selling, general and administrative expense includes salaries and wages and benefits not directly attributable to a service or product, the provision for credit losses, taxes other than income taxes, advertising and sales commission costs, call center and information technology costs, regulatory fees, professional service fees and rent and utilities for administrative space. Also included is a portion of the aggregate customer care costs as discussed above in "Cost of Services."

Selling, general and administrative expense increased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023.

The increase during the three months ended September 30, 2024 was primarily the result of:

•an increase of $1.7 billion due to severance charges in 2024 related to separations under our voluntary separation program;

•an increase of $185 million related to an asset and business rationalization charge taken in 2024; and

•a decrease of $161 million related to business transformation costs in 2023 that did not reoccur.

The increase during the nine months ended September 30, 2024 was primarily the result of:

•an increase of $1.5 billion due to severance charges in 2024 compared to 2023;

•an increase of $405 million in personnel costs related to an increase in costs associated with the transition to third-party contracted resources along with the impacts of a prior year compensation plan assumption change that did not reoccur and increased sales commission expense;

•an increase of $184 million related to higher costs for device insurance programs due to an increase in claims; and

•a decrease of $161 million related to business transformation costs in 2023 that did not reoccur.

See "Special Items" for additional information on the severance charges, the asset and business rationalization charges, the business transformation costs and the non-strategic business shutdown.

Depreciation and Amortization Expense

Depreciation and amortization expense remained relatively flat during the three months ended September 30, 2024 and increased during the nine months ended September 30, 2024 compared to the similar periods in 2023. The increase during the nine months ended September 30, 2024 was primarily due to the change in the mix of net depreciable and amortizable assets, including the amortization period of certain acquisition-related intangible assets, and the continued deployment of C-Band network assets.

Other Consolidated Results

Other Income, Net

Additional information relating to Other income, net is as follows:


	Three Months Ended								Nine Months Ended
	September 30,				Increase/				September 30,				Increase/
(dollars in millions)	2024		2023		(Decrease)				2024		2023		(Decrease)
Interest income	$	97	$	98	$	(1)	(1.0)	%	$	258	$	265	$	(7)	(2.6)	%
Other components of net periodic benefit income (cost)	(56)		15		(71)		nm		(289)		41		(330)		nm
Net debt extinguishment gains	90		85		5		5.9		289		224		65		29.0
Other, net	(59)		(28)		(31)		nm		(60)		(36)		(24)		66.7
Other Income, Net	$	72	$	170	$	(98)	(57.6)		$	198	$	494	$	(296)	(59.9)

nm - not meaningful

Other income, net, reflects certain items not directly related to our core operations, including interest income, debt extinguishment costs, components of net periodic pension and postretirement benefit cost and income and certain foreign exchange gains and losses.

Other income, net decreased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023.

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The decrease during the three months ended September 30, 2024 was primarily due to a decrease of $122 million due to lower plan assets on which to earn expected returns in our pension and postretirement plans compared to 2023, partially offset by a pension remeasurement gain of $46 million in 2024 that did not occur in 2023.

The decrease during the nine months ended September 30, 2024 was primarily a result of:

•a decrease of $281 million due to lower plan assets on which to earn expected returns in our pension and postretirement plans compared to 2023 and a decrease of $218 million in our postretirement plans due to prior service credits in 2023 that did not reoccur in 2024. These decreases were partially offset by a decrease of $186 million in our pension plan interest costs in 2024 due to a decrease in discount rates; and

•net debt extinguishment gains of $289 million related to open market repurchases of various Company notes and tender offers in 2024, compared with gains of $224 million related to open market repurchases of various Company notes and tender offers in 2023.

See Note 8 to the condensed consolidated financial statements for more information on the other components of net periodic benefit income (cost).

Interest Expense


	Three Months Ended										Nine Months Ended
	September 30,						Increase/				September 30,						Increase/
(dollars in millions)	2024			2023			(Decrease)				2024			2023			(Decrease)
Total interest costs on debt balances	$	1,904		$	1,844		$	60	3.3	%	$	5,754		$	5,435		$	319	5.9	%
Less capitalized interest costs	232			411			(179)		(43.6)		749			1,510			(761)		(50.4)
Interest Expense	$	1,672		$	1,433		$	239	16.7		$	5,005		$	3,925		$	1,080	27.5

Average debt outstanding(1)(3)	$	148,952		$	149,712						$	151,149		$	151,266
Effective interest rate(2)(3)	5.1		%	4.9		%					5.1		%	4.8		%

(1)The average debt outstanding is a financial measure and is calculated by applying a simple average of prior months end balances of total short-term and long-term debt, net of discounts, premiums and unamortized debt issuance costs.

(2)The effective interest rate is the rate of actual interest incurred on debt. It is calculated by dividing the total interest costs on debt balances by the average debt outstanding.

(3)We believe that this measure is useful to management, investors and other users of our financial information in evaluating our debt financing cost and trends in our debt leverage management.

Total interest expense increased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 primarily as a result of a decrease in capitalized interest costs due to additional C-Band spectrum licenses being placed into service and an increase in interest costs due to a higher average interest rate partially offset by lower average debt balances.

Provision for Income Taxes


	Three Months Ended										Nine Months Ended
	September 30,										September 30,
(dollars in millions)	2024			2023			Decrease				2024			2023			Decrease
Provision for income taxes	$	891		$	1,308		$	(417)	(31.9)	%	$	3,576		$	4,136		$	(560)	(13.5)	%
Effective income tax rate	20.7		%	21.1		%					21.8		%	22.0		%

The effective income tax rate is calculated by dividing the provision for income taxes by income before the provision for income taxes. The decrease in the provision for income taxes during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 was primarily due to the decrease in income before income taxes in each of the current periods. The decrease in the effective income tax rate during the three months ended September 30, 2024 compared to the similar period in 2023 was primarily due to a reduction in deferred income taxes due to changes in state apportionment during the current period. The effective income tax rate for the nine months ended September 30, 2024 is comparable to the similar period in 2023.

Unrecognized Tax Benefits

Unrecognized tax benefits were $2.8 billion and $2.7 billion at September 30, 2024 and December 31, 2023, respectively. Interest and penalties related to unrecognized tax benefits were $682 million (after-tax) and $630 million (after-tax) at September 30, 2024 and December 31, 2023, respectively.

Verizon and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state, local and foreign jurisdictions. As a large taxpayer, we are under audit by the Internal Revenue Service and multiple state and foreign jurisdictions for various open tax years. It is reasonably possible that the amount of the liability for unrecognized tax benefits could change by

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a significant amount in the next twelve months. An estimate of the range of the possible change cannot be made until these tax matters are further developed or resolved.

Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA

Consolidated earnings before interest, taxes, depreciation and amortization expense (Consolidated EBITDA) and Consolidated Adjusted EBITDA, which are presented below, are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as they exclude the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to Verizon's competitors. Consolidated EBITDA is calculated by adding back interest, taxes, depreciation and amortization expense to net income.

Consolidated Adjusted EBITDA is calculated by excluding from Consolidated EBITDA the effect of the following non-operational items: equity in earnings and losses of unconsolidated businesses and other income and expense, net, as well as the effect of certain special items. We believe that this measure is useful to management, investors and other users of our financial information in evaluating the effectiveness of our operations and underlying business trends. We believe that Consolidated Adjusted EBITDA is widely used by investors to compare a company’s operating performance to its competitors by minimizing impacts caused by differences in capital structure, taxes, and depreciation and amortization policies. Further, the exclusion of non-operational items and special items enables comparability to prior period performance and trend analysis. See "Special Items" for additional information.

It is management's intent to provide non-GAAP financial information to enhance the understanding of Verizon's GAAP financial information, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. We believe that providing these non-GAAP measures in addition to the GAAP measures allows management, investors and other users of our financial information to more fully and accurately assess both consolidated and segment performance. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be directly comparable to that of other companies.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in millions)	2024		2023		2024		2023
Consolidated Net Income	$	3,411	$	4,884	$	12,835	$	14,668
Add:
Provision for income taxes	891		1,308		3,576		4,136
Interest expense	1,672		1,433		5,005		3,925
Depreciation and amortization expense(1)	4,458		4,431		13,386		13,108
Consolidated EBITDA	$	10,432	$	12,056	$	34,802	$	35,837

Add (Less):
Other income, net(2)	$	(72)	$	(170)	$	(198)	$	(494)
Equity in losses of unconsolidated businesses	24		18		47		42


Severance charges	1,733		—		1,733		237
Asset and business rationalization	374		—		374		155
Legacy legal matter	—		—		106		—






Business transformation costs	—		176		—		176
Non-strategic business shutdown	—		158		—		158
Consolidated Adjusted EBITDA	$	12,491	$	12,238	$	36,864	$	36,111

(1) Includes Amortization of acquisition-related intangible assets, which were $186 million and $626 million during the three and nine months ended September 30, 2024, respectively, and $224 million and $638 million during the three and nine months ended September 30, 2023, respectively. The three and nine months ended September 30, 2023 also includes a portion of the charges associated with the Non-strategic business shutdown. See "Special Items" for additional information.

(2) Includes Pension and benefits mark-to-market charges of $136 million during the nine months ended September 30, 2024. See "Special Items" for additional information.

The changes in Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA in the table above during the three and nine months ended September 30, 2024 compared to the similar periods in 2023 were primarily a result of the factors described in connection with consolidated operating revenues and consolidated operating expenses.

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Segment Results of Operations

We have two reportable segments that we operate and manage as strategic business units - Consumer and Business. We measure and evaluate our segments based on segment operating income. The use of segment operating income is consistent with the chief operating decision maker's assessment of segment performance.

To aid in the understanding of segment performance as it relates to segment operating income, management uses the following operating statistics to evaluate the overall effectiveness of our segments. We believe these operating statistics are useful to investors and other users of our financial information because they provide additional insight into drivers of our segments' operating results, key trends and performance relative to our peers. These operating statistics may be determined or calculated differently by other companies and may not be directly comparable to those statistics of other companies.

Wireless retail connections are retail customer device postpaid and prepaid connections as of the end of the period. Retail connections under an account may include those from smartphones and basic phones (collectively, phones), postpaid and prepaid FWA, as well as tablets and other internet devices, wearables and retail IoT devices. Wireless retail connections are calculated by adding total retail postpaid and prepaid new connections in the period to prior period retail connections, and subtracting total retail postpaid and prepaid disconnects in the period.

Wireless retail postpaid connections are retail postpaid customer device connections as of the end of the period. Retail postpaid connections under an account may include those from phones, postpaid FWA, as well as tablets and other internet devices, wearables and retail IoT devices. Wireless retail postpaid connections are calculated by adding retail postpaid new connections in the period to prior period retail postpaid connections, and subtracting retail postpaid disconnects in the period.

Wireless retail prepaid connections are retail prepaid customer device connections as of the end of the period. Retail prepaid connections may include those from phones, prepaid FWA, as well as tablets and other internet devices, and wearables. Wireless retail prepaid connections are calculated by adding retail prepaid new connections in the period to prior period retail prepaid connections, and subtracting retail prepaid disconnects in the period.

Fios internet connections are the total number of connections to the internet using Fios internet services as of the end of the period. Fios internet connections are calculated by adding Fios internet new connections in the period to prior period Fios internet connections, and subtracting Fios internet disconnects in the period.

Fios video connections are the total number of connections to traditional linear video programming using Fios video services as of the end of the period. Fios video connections are calculated by adding Fios video net additions in the period to prior period Fios video connections. Fios video net additions are calculated by subtracting the Fios video disconnects from the Fios video new connections.

Total broadband connections are the total number of connections to the internet using Fios internet services, Digital Subscriber Line, and postpaid, prepaid and IoT FWA as of the end of the period. Total broadband connections are calculated by adding total broadband connections, net additions in the period to prior period total broadband connections.

Wireless retail connections, net additions are the total number of additional retail customer device postpaid and prepaid connections, less the number of device disconnects in the period. Wireless retail connections, net additions in each period presented are calculated by subtracting the total retail postpaid and prepaid disconnects, net of certain adjustments, from the total retail postpaid and prepaid new connections in the period.

Wireless retail postpaid connections, net additions are the total number of additional retail customer device postpaid connections, less the number of device disconnects in the period. Wireless retail postpaid connections, net additions in each period presented are calculated by subtracting the retail postpaid disconnects, net of certain adjustments, from the retail postpaid new connections in the period.

Wireless retail prepaid connections, net additions are the total number of additional retail customer device prepaid connections, less the number of device disconnects in the period. Wireless retail prepaid connections, net additions in each period presented are calculated by subtracting the retail prepaid disconnects, net of certain adjustments, from the retail prepaid new connections in the period.

Wireless retail postpaid phone connections, net additions are the total number of additional retail customer postpaid phone connections, less the number of phone disconnects in the period. Wireless retail postpaid phone connections, net additions in each period presented are calculated by subtracting the retail postpaid phone disconnects, net of certain adjustments, from the retail postpaid phone new connections in the period.

Total broadband connections, net additions are the total number of additional total broadband connections, less the number of total broadband disconnects in the period. Total broadband connections, net additions in each period presented are calculated by subtracting the total broadband disconnects, net of certain adjustments, from the total broadband new connections in the period.

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Wireless churn is the rate at which service to retail, retail postpaid, or retail postpaid phone connections is terminated on average in the period. The churn rate in each period presented is calculated by dividing retail disconnects, retail postpaid disconnects, or retail postpaid phone disconnects by the average retail connections, average retail postpaid connections, or average retail postpaid phone connections, respectively, in the period.

Wireless retail postpaid ARPA is the calculated average retail postpaid service revenue per account (ARPA) from retail postpaid accounts in the period. Wireless retail postpaid service revenue does not include recurring device payment plan billings related to the Verizon device payment program, plan billings related to device warranty and insurance or regulatory fees. Wireless retail postpaid ARPA in each period presented is calculated by dividing retail postpaid service revenue by the average retail postpaid accounts in the period.

Wireless retail postpaid accounts are wireless retail customers that are directly served and managed under the Verizon brand and use its services as of the end of the period. Accounts include unlimited plans, shared data plans and corporate accounts, as well as legacy single connection plans and multi-connection family plans. A single account may include monthly wireless services for a variety of connected devices. Wireless retail postpaid accounts are calculated by adding retail postpaid new accounts to the prior period retail postpaid accounts.

Wireless retail postpaid connections per account is the calculated average number of retail postpaid connections per retail postpaid account as of the end of the period. Wireless retail postpaid connections per account is calculated by dividing the total number of retail postpaid connections by the number of retail postpaid accounts as of the end of the period.

Segment operating income margin reflects the profitability of the segment as a percentage of revenue. Segment operating income margin is calculated by dividing total segment operating income by total segment operating revenues.

Segment earnings before interest, taxes, depreciation and amortization (Segment EBITDA), which is presented below, is a non-GAAP measure and does not purport to be an alternative to operating income (loss) as a measure of operating performance. We believe this measure is useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as it excludes the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to our competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income (loss). Segment EBITDA margin is calculated by dividing Segment EBITDA by total segment operating revenues.

See Note 10 to the condensed consolidated financial statements for additional information.

Verizon Consumer Group

Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless services are provided across one of the most extensive wireless networks in the U.S. under the Verizon family of brands and through wholesale and other arrangements. We also provide FWA broadband through our 5G or 4G LTE networks as an alternative to traditional landline internet access. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios.

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Operating Revenues and Selected Operating Statistics


	Three Months Ended									Nine Months Ended
	September 30,						Increase/			September 30,						Increase/
(dollars in millions, except ARPA)	2024			2023			(Decrease)			2024			2023			(Decrease)
Service	$	19,260		$	18,850		$	410	2.2%	$	57,466		$	55,947		$	1,519	2.7%
Wireless equipment	4,478			4,902			(424)		(8.6)	13,111			14,210			(1,099)		(7.7)
Other	1,622			1,505			117		7.8	4,767			4,515			252		5.6
Total Operating Revenues	$	25,360		$	25,257		$	103	0.4	$	75,344		$	74,672		$	672	0.9

Revenue Statistics:
Wireless service revenue	$	16,377		$	15,963		$	414	2.6	$	48,853		$	47,324		$	1,529	3.2
Fios revenue	$	2,916		$	2,897		$	19	0.7	$	8,708		$	8,672		$	36	0.4

Connections (‘000):(1)
Wireless retail postpaid										94,005			92,704			1,301		1.4
Wireless retail prepaid										20,206			21,420			(1,214)		(5.7)
Total wireless retail										114,211			114,124			87		0.1
Fios internet										7,088			6,923			165		2.4
Fios video										2,744			3,013			(269)		(8.9)


Total broadband										9,762			8,792			970		11.0





Net Additions in Period (‘000):
Wireless retail postpaid	68			251			(183)		(72.9)	215			876			(661)		(75.5)
Wireless retail prepaid	(69)			(207)			138		66.7	(909)			(862)			(47)		(5.5)
Total wireless retail	(1)			44			(45)		nm	(694)			14			(708)		nm

Wireless retail postpaid phone	81			(51)			132		nm	(85)			(450)			365		81.1



Total broadband	235			304			(69)		(22.7)	705			893			(188)		(21.1)

Churn Rate:
Wireless retail	1.61		%	1.68		%				1.62		%	1.65		%
Wireless retail postpaid	1.07		%	1.04		%				1.04		%	1.01		%
Wireless retail postpaid phone	0.84		%	0.85		%				0.82		%	0.82		%

Account Statistics:
Wireless retail postpaid ARPA	$	139.06		$	133.47		$	5.59	4.2	$	137.75		$	131.79		$	5.96	4.5

Wireless retail postpaid accounts (‘000)(1)										32,719			32,938			(219)		(0.7)
Wireless retail postpaid connections per account(1)										2.87			2.81			0.06		2.1

(1)As of end of period

Where applicable, the operating results reflect certain adjustments, including those related to the 3G network shutdowns, migration activity among different types of devices and plans, customer profile changes, and adjustments in connection with mergers, acquisitions and divestitures.

nm - not meaningful

Consumer's total operating revenues increased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 as a result of increases in Service and Other revenues, partially offset by a decrease in Wireless equipment revenue.

Service Revenue

Service revenue increased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 primarily driven by an increase in Wireless service revenue.

Wireless service revenue increased during the three months ended September 30, 2024 compared to the similar period in 2023 primarily as a result of:

•an increase of $347 million in access revenues related to our postpaid plans primarily due to pricing actions, an increase in subscriptions through MyPlan offerings, and an increase in our FWA subscriber base. These increases were partially offset by the amortization of wireless equipment sales promotions;

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•an increase of $145 million related to growth in non-retail service revenue;

•an increase of $86 million in TravelPass revenue due to increased customer international travel; and

•a decrease of $191 million in prepaid revenue primarily due to a decrease in the prepaid subscriber base partially driven by the termination of the Affordable Connectivity Program in the second quarter of 2024.

Wireless service revenue increased during the nine months ended September 30, 2024 compared to the similar period in 2023 primarily as a result of:

•an increase of $1.3 billion in access revenues related to our postpaid plans primarily due to pricing actions, an increase in our FWA subscriber base, and an increase in subscriptions through MyPlan offerings. These increases were partially offset by the amortization of wireless equipment sales promotions;

•an increase of $456 million related to growth in non-retail service revenue;

•an increase of $194 million in TravelPass revenue due to increased customer international travel; and

•a decrease of $460 million in prepaid revenue primarily due to a decrease in the prepaid subscriber base partially driven by the termination of the Affordable Connectivity Program in the second quarter of 2024.

Wireless Equipment Revenue

Wireless equipment revenue decreased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023.

The decrease during the three months ended September 30, 2024 was primarily due to a decrease of $362 million driven by a lower volume of wireless devices sold.

The decrease during the nine months ended September 30, 2024 was primarily the result of:

•a decrease of $1.7 billion driven by a lower volume of wireless devices sold; and

•an increase of $738 million related to a shift to higher priced equipment in the mix of wireless devices sold.

Other Revenue

Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, revenues associated with certain products included in our device protection offerings, leasing and interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.

Other revenue increased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 primarily due to:

•an increase of $73 million and $152 million for the three and nine months, respectively, driven by regulatory surcharges, primarily related to a higher net FUSF rate, along with an increase in other regulatory surcharges; and

•an increase of $32 million and $93 million for the three and nine months, respectively, related to device protection offerings primarily due to changes in the products offered and pricing actions.

Operating Expenses


	Three Months Ended								Nine Months Ended
	September 30,				Increase/				September 30,				Increase/
(dollars in millions)	2024		2023		(Decrease)				2024		2023		(Decrease)
Cost of services	$	4,567	$	4,419	$	148	3.3	%	$	13,554	$	13,218	$	336	2.5	%
Cost of wireless equipment	4,850		5,133		(283)		(5.5)		14,032		14,950		(918)		(6.1)
Selling, general and administrative expense	4,928		4,886		42		0.9		15,064		14,795		269		1.8
Depreciation and amortization expense	3,411		3,272		139		4.2		10,114		9,733		381		3.9
Total Operating Expenses	$	17,756	$	17,710	$	46	0.3		$	52,764	$	52,696	$	68	0.1

Cost of Services

Cost of services increased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023.

The increase during the three months ended September 30, 2024 was primarily due to:

•an increase of $83 million in rent and lease expense primarily driven by new leases and lease modifications related to the continued deployment of the C-Band spectrum and Consumer's proportionate usage of shared leased assets; and

•an increase of $51 million in regulatory costs primarily related to a higher net FUSF rate.

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The increase during the nine months ended September 30, 2024 was primarily the result of:

•an increase of $199 million in rent and lease expense primarily driven by new leases and lease modifications related to the continued deployment of the C-Band spectrum and Consumer's proportionate usage of shared leased assets;

•an increase of $120 million in personnel costs mainly driven by certain other post-employment benefit credits in 2023 that did not reoccur in 2024;

•an increase of $101 million in digital content costs primarily associated with an increase in subscriptions through MyPlan offerings, partially offset by a decrease in traditional linear content costs due to a decline in Fios video subscribers;

•an increase of $84 million in regulatory costs primarily related to a higher net FUSF rate; and

•a decrease of $178 million in access costs primarily as a result of decreases in prepaid subscribers, circuit disconnections and pricing changes.

Cost of Wireless Equipment

Cost of wireless equipment decreased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 primarily as a result of:

•a decrease of $434 million and $1.8 billion for the three and nine months, respectively, driven by a lower volume of wireless devices sold; and

•an increase of $151 million and $927 million for the three and nine months, respectively, due to a shift to higher priced equipment in the mix of wireless devices sold.

Selling, General and Administrative Expense

Selling, general and administrative expense remained relatively flat for the three months ended September 30, 2024 and increased during the nine months ended September 30, 2024 compared to the similar periods in 2023.

The increase during the nine months ended September 30, 2024 was primarily due to:

•an increase of $84 million in personnel costs mainly driven by a prior year compensation plan assumption change that did not reoccur and increased sales commission expense, partially offset by the impacts of workforce changes;

•an increase of $71 million in the provision for credit losses resulting from additional bad debt reserves;

•an increase of $66 million in building and facility costs primarily due to higher utility rates; and

•an increase of $65 million in regulatory fees mainly driven by an increase in rates.

Depreciation and Amortization Expense

Depreciation and amortization expense increased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 driven by the change in the mix of total Verizon depreciable and amortizable assets and Consumer's usage of those assets.

Segment Operating Income and EBITDA


	Three Months Ended										Nine Months Ended
	September 30,										September 30,
(dollars in millions)	2024			2023			Increase				2024			2023			Increase
Segment Operating Income	$	7,604		$	7,547		$	57	0.8	%	$	22,580		$	21,976		$	604	2.7	%
Add Depreciation and amortization expense	3,411			3,272			139		4.2		10,114			9,733			381		3.9
Segment EBITDA	$	11,015		$	10,819		$	196	1.8		$	32,694		$	31,709		$	985	3.1

Segment operating income margin	30.0		%	29.9		%					30.0		%	29.4		%
Segment EBITDA margin	43.4		%	42.8		%					43.4		%	42.5		%

The changes in the table above during the three and nine months ended September 30, 2024 compared to the similar periods in 2023 were primarily a result of the factors described in connection with Consumer operating revenues and operating expenses.

Verizon Business Group

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Operating Revenues and Selected Operating Statistics


	Three Months Ended										Nine Months Ended
	September 30,						Increase/				September 30,					Increase/
(dollars in millions)	2024			2023			(Decrease)				2024		2023			(Decrease)
Enterprise and Public Sector	$	3,538		$	3,787		$	(249)	(6.6)	%	$	10,670	$	11,358		$	(688)	(6.1)	%

Business Markets and Other	3,263			3,184			79		2.5		9,661		9,397			264		2.8
Wholesale	550			556			(6)		(1.1)		1,696		1,749			(53)		(3.0)
Total Operating Revenues(1)	$	7,351		$	7,527		$	(176)	(2.3)		$	22,027	$	22,504		$	(477)	(2.1)

Revenue Statistics:
Wireless service revenue	$	3,466		$	3,367		$	99	2.9		$	10,276	$	10,008		$	268	2.7
Fios revenue	$	314		$	308		$	6	1.9		$	938	$	923		$	15	1.6

Connections (‘000):(2)
Wireless retail postpaid											30,532		29,455			1,077		3.7
Fios internet											397		383			14		3.7
Fios video											56		63			(7)		(11.1)


Total broadband											2,157		1,499			658		43.9





Net Additions in Period (‘000):
Wireless retail postpaid	281			330			(49)		(14.8)		727		950			(223)		(23.5)
Wireless retail postpaid phone	158			151			7		4.6		404		431			(27)		(6.3)


Total broadband	154			130			24		18.5		464		396			68		17.2

Churn Rate:
Wireless retail postpaid	1.45		%	1.47		%					1.47%		1.48		%
Wireless retail postpaid phone	1.12		%	1.14		%					1.12%		1.13		%

(1) Service and other revenues included in our Business segment were approximately $6.5 billion and $6.6 billion for the three months ended September 30, 2024 and 2023, respectively, and $19.4 billion and $19.9 billion for the nine months ended September 30, 2024 and 2023, respectively. Wireless equipment revenues included in our Business segment were $865 million and $911 million for the three months ended September 30, 2024 and 2023, respectively, and $2.6 billion for both the nine months ended September 30, 2024 and 2023.

(2) As of end of period

Business's total operating revenues decreased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 as a result of decreases in Enterprise and Public Sector and Wholesale revenues, partially offset by an increase in Business Markets and Other revenue.

Enterprise and Public Sector

Enterprise and Public Sector offers wireless products and services as well as wireline connectivity and managed solutions to our large business and government customers. Large businesses are identified based on their size and volume of business with Verizon. Public sector offers these services with features and pricing designed to address the needs of U.S. federal, state and local governments and educational institutions.

Enterprise and Public Sector revenues decreased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 primarily due to a decrease of $207 million and $556 million, respectively, in wireline revenue primarily driven by declines in networking, traditional data and voice communication services along with related professional services, due to secular market pressure and technology shifts, coupled with lower customer premise equipment sales volumes.

Business Markets and Other

Business Markets and Other offers wireless services and equipment, conferencing services, tailored voice and networking products, Fios services, advanced voice solutions and security services to our business customers that ordinarily do not meet the requirements to be categorized as Enterprise and Public Sector, as described above. Business Markets and Other also includes solutions that support mobile resource management.

Business Markets and Other revenues increased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023.

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The increase during the three months ended September 30, 2024 was primarily due to an increase of $130 million in Wireless service revenue driven by pricing actions and an increase in our FWA subscriber base.

The increase during the nine months ended September 30, 2024 was primarily the result of:

•an increase of $353 million in Wireless service revenue driven by pricing actions and an increase in our FWA subscriber base; and

•a decrease of $69 million in connection with the shutdown of our BlueJeans business offering in 2023 and a decline in core voice communication revenues.

Wholesale

Wholesale offers wireline communications services including data, voice, local dial tone and broadband services primarily to local, long distance, and wireless carriers that use our facilities to provide services to their customers.

Wholesale revenues remained relatively flat during the three months ended September 30, 2024 and decreased during the nine months ended September 30, 2024 compared to the similar periods in 2023.

The decrease during the nine months ended September 30, 2024 was primarily due to a decline of $53 million in traditional voice communication and network connectivity as a result of technology substitution, as well as a decrease in core data.

Operating Expenses


	Three Months Ended								Nine Months Ended
	September 30,				Increase/				September 30,				Increase/
(dollars in millions)	2024		2023		Decrease				2024		2023		(Decrease)
Cost of services	$	2,440	$	2,536	$	(96)	(3.8)	%	$	7,327	$	7,661	$	(334)	(4.4)	%
Cost of wireless equipment	1,197		1,220		(23)		(1.9)		3,487		3,606		(119)		(3.3)
Selling, general and administrative expense	2,109		2,105		4		0.2		6,503		6,290		213		3.4
Depreciation and amortization expense	1,040		1,127		(87)		(7.7)		3,246		3,324		(78)		(2.3)
Total Operating Expenses	$	6,786	$	6,988	$	(202)	(2.9)		$	20,563	$	20,881	$	(318)	(1.5)

Cost of Services

Cost of services decreased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023.

The decrease during the three months ended September 30, 2024 was primarily due to:

•a decrease of $37 million in access costs primarily related to changes in usage and net circuit access prices; and

•a decrease of $27 million in rent and lease expense primarily driven by a change in Business's proportionate usage of shared leased assets.

The decrease during the nine months ended September 30, 2024 was primarily due to:

•a decrease of $83 million in personnel costs related to the impact of workforce changes, partially offset by certain other post-employment benefit credits in 2023 that did not reoccur in 2024;

•a decrease of $74 million in customer premise equipment costs due to lower volumes sold;

•a decrease of $66 million in rent and lease expense primarily driven by a change in Business's proportionate usage of shared leased assets; and

•a decrease of $66 million in access costs primarily related to changes in usage and net circuit access prices.

Cost of Wireless Equipment

Cost of wireless equipment decreased during both the three and nine months ended September 30, 2024 compared to the similar periods in 2023 primarily as a result of:

•a decrease of $114 million and $321 million for the three and nine months, respectively, driven by a lower volume of wireless devices sold; and

•an increase of $91 million and $202 million for the three and nine months, respectively, due to a shift to higher priced equipment in the mix of wireless devices sold.

Selling, General and Administrative Expense

Selling, general and administrative expense remained relatively flat during the three months ended September 30, 2024 and increased during the nine months ended September 30, 2024 compared to the similar periods in 2023.

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The increase during the nine months ended September 30, 2024 was primarily the result of:

•an increase of $260 million in personnel costs primarily related to an increase in costs associated with the transition to third-party contracted resources along with the impacts of a prior year compensation plan assumption change that did not reoccur; and

•a decrease of $53 million in the provision for credit losses resulting from a reduction in bad debt reserves.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased during the three and nine months ended September 30, 2024 compared to the similar periods in 2023 driven by the change in the mix of total Verizon depreciable and amortizable assets and Business's usage of those assets.

Segment Operating Income and EBITDA


	Three Months Ended										Nine Months Ended
	September 30,						Increase/				September 30,
(dollars in millions)	2024			2023			Decrease				2024			2023			Decrease
Segment Operating Income	$	565		$	539		$	26	4.8	%	$	1,464		$	1,623		$	(159)	(9.8)	%
Add Depreciation and amortization expense	1,040			1,127			(87)		(7.7)		3,246			3,324			(78)		(2.3)
Segment EBITDA	$	1,605		$	1,666		$	(61)	(3.7)		$	4,710		$	4,947		$	(237)	(4.8)

Segment operating income margin	7.7		%	7.2		%					6.6		%	7.2		%
Segment EBITDA margin	21.8		%	22.1		%					21.4		%	22.0		%

The changes in the table above during the three and nine months ended September 30, 2024 compared to the similar periods in 2023 were primarily a result of the factors described in connection with Business operating revenues and operating expenses.


Special Items

Special items included in Income Before Provision For Income Taxes were as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in millions)	2024		2023		2024		2023















Amortization of acquisition-related intangible assets(1)
Depreciation and amortization expense	$	186	$	224	$	626	$	638
Severance, pension and benefits charges
Selling, general and administrative expense	1,733		—		1,733		237
Other (income) expense, net	—		—		136		—
Asset and business rationalization
Cost of Services	189		—		189		14
Selling, general and administrative expense	185		—		185		141




Legacy legal matter
Selling, general and administrative expense	—		—		106		—
Business transformation costs
Cost of services	—		15		—		15
Selling, general and administrative expense	—		161		—		161











Non-strategic business shutdown
Depreciation and amortization expense	—		21		—		21
Cost of services	—		45		—		45
Selling, general and administrative expense	—		113		—		113
Total	$	2,293	$	579	$	2,975	$	1,385

(1) Amounts are included in segment results of operations.

Consolidated Adjusted EBITDA, a non-GAAP measure discussed in the section titled "Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA" as part of Consolidated Results of Operations, excludes all of the amounts included above.

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The income and expenses related to special items included in our condensed consolidated results of operations were as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in millions)	2024		2023		2024		2023
Within Total Operating Expenses	$	2,293	$	579	$	2,839	$	1,385

Within Other (income) expense, net	—		—		136		—

Pursuant to Regulation S-K, Item 601(b)(4)(iii)(A), certain instruments which define the rights of holders of long-term debt of Verizon Communications Inc. and its consolidated subsidiaries are not filed herewith, and the Company hereby agrees to furnish a copy of any such instrument to the SEC upon request.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VERIZON COMMUNICATIONS INC.

Date: October 25, 2024

/s/

Mary-Lee Stillwell

Senior Vice President and Controller

(Principal Accounting Officer)

VERIZON COMMUNICATIONS INC - Quarter Report: 2024 September (Form 10-Q)

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