What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-07-25 compared with 2024-04-25 · 231 added, 158 removed, 473 unchanged (45% of the section changed)

9 unchanged sentences

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 March 31, 2024 and 2023

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

(dollars in millions)

Highlights of Our Financial Results for the Six Months Ended June 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 March 31, 2024 and 2023

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

Excludes eliminations.

Revenue by Segment for the Six Months Ended June 30, 2024 and 2023

Excludes eliminations.

Verizon Consumer Group

9 unchanged sentences

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 months ended March 31, 2024 totaled $25.1 billion, representing an increase of 0.8% compared to the similar period in 2023.

The Consumer segment's operating revenues for the three and six months ended June 30, 2024 totaled $24.9 billion and $50.0 billion, respectively, representing an increase of 1.5% and 1.2%, 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.

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and a subset of these products and services to customers around the world.

The Business segment's operating revenues for the three months ended March 31, 2024 totaled $7.4 billion, representing a decrease of 1.6% compared to the similar period in 2023.

The Business segment's operating revenues for the three and six months ended June 30, 2024 totaled $7.3 billion and $14.7 billion, respectively, representing a decrease of 2.4% and 2.0%, 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.

1 unchanged sentence

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.

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 segment results and therefore are included in the chief operating decision maker’s assessment of segment performance.

Gains and losses from these transactions that are not individually significant are included in

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.

1 unchanged sentence

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 three months ended March 31, 2024, these investments included $4.4 billion for capital expenditures.

During the six months ended June 30, 2024, these investments included $8.1 billion for capital expenditures.

See "Cash Flows Used in Investing Activities" for additional information.

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In addition, we leverage our 5G and 4G LTE networks for our FWA broadband service.

Recent Developments

In June 2024, we announced and opened a Voluntary Separation Program for select U.S.-based management employees.

Management at its discretion will accept volunteers for separation based on the needs of the business, and these employees will be notified in August 2024.

We expect to record a severance charge related to the program in the third quarter of 2024, which could be significant.

The ultimate financial statement impact will be based on the number of volunteers accepted.

Consolidated Results of Operations

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Consolidated Operating Revenues

Three Months Ended

March 31, Increase/

(dollars in millions) 2024 2023 (Decrease)

Three Months Ended Six Months Ended

June 30, Increase/ June 30, Increase/

(dollars in millions) 2024 2023 (Decrease) 2024 2023 (Decrease)

Consumer $ 24,927 $ 24,558 $ 369 1.5 % $ 49,984 $ 49,415 $ 569 1.2 %

3 unchanged sentences

Consolidated Operating Revenues $ 32,796 $ 32,596 $ 200 0.6 $ 65,777 $ 65,508 $ 269 0.4

Consolidated operating revenues increased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily due to revenue increases in our Consumer segment, partially offset by revenue decreases in our Business segment.

Consolidated operating revenues increased during both the three and six months ended June 30, 2024 compared to the similar periods in 2023 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

March 31, Increase/

(dollars in millions) 2024 2023 (Decrease)

Three Months Ended Six Months Ended

June 30, Increase/ June 30, Increase/

(dollars in millions) 2024 2023 (Decrease) 2024 2023 (Decrease)

Cost of services $ 6,904 $ 6,986 $ (82) (1.2) % $ 13,871 $ 14,064 $ (193) (1.4) %

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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 decreased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily as result of:

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

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

• a decrease of $41 million in access costs primarily as a result of decreases in prepaid subscribers, circuit disconnections and pricing changes;

• a decrease of $36 million in personnel costs primarily related to the impact of workforce changes.

• an increase of $49 million in direct costs driven by vendor and service provider promotions and discounts received in 2023 that did not reoccur in 2024;

• an increase of $48 million in rent and lease expense primarily driven by new leases and lease modifications related to the continued deployment of the C-Band spectrum.

The decrease during the six months ended June 30, 2024 was primarily the result of:

• a decrease of $171 million in access costs primarily as a result of decreases in prepaid subscribers, circuit disconnections and pricing changes;

• a decrease of $138 million in personnel costs primarily related to the impact of workforce changes;

• an increase of $78 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.

Cost of Wireless Equipment

Cost of wireless equipment decreased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily as a result of:

• a decrease of $852 million driven by a lower volume of wireless devices sold primarily related to a decrease of 19% in upgrades;

• an increase of $331 million due to a shift to higher priced equipment in the mix of wireless devices sold.

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

• a decrease of $683 million and $1.5 billion for the three and six months, respectively, driven by a lower volume of wireless devices sold primarily related to a decrease of 13% and 16%, respectively, in upgrades;

• an increase of $472 million and $803 million for the three and six months, respectively, due to a shift to higher priced equipment in the mix of wireless devices sold.

Selling, General and Administrative Expense

1 unchanged sentence

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 the three months ended March 31, 2024 compared to the similar period in 2023 primarily due to:

• an increase of $312 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 increased sales commission expense;

Selling, general and administrative expense decreased during the three months ended June 30, 2024 compared to the similar period in 2023.

The decrease was primarily the result of:

• a decrease of $237 million due to severance charges in 2023 that did not reoccur;

• a decrease of $141 million primarily related to an asset rationalization charge in 2023 that did not reoccur;

• an increase of $95 million primarily r elated to higher costs for device insurance programs due to an increase in claims.

Selling, general and administrative expense increased during the six months ended June 30, 2024 compared to the similar period in 2023.

The increase was primarily the result of:

• an increase of $231 million related to higher costs for device insurance programs due to an increase in claims;

• an increase of $106 million related to a legacy legal matter;

See "Special Items" for additional information on the legacy legal matter.

• an increase of $60 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 , partially offset by severance charges in 2023 that did not reoccur;

• an increase of $58 million due to provision for credit losses resulting from additional bad debt reserves;

• a decrease of $141 million related to an asset rationalization charge in 2023 that did not re-occur.

See "Special Items" for additional information on the severance charges, asset rationalization charges and the legacy legal matter.

Depreciation and Amortization Expense

Depreciation and amortization expense increased during the three months ended March 31, 2024 compared to the similar period in 2023 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.

Depreciation and amortization expense increased during both the three and six months ended June 30, 2024 compared to the similar periods in 2023 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

March 31, Increase/

(dollars in millions) 2024 2023 (Decrease)

Other Income (Expense), Net

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

Three Months Ended Six Months Ended

June 30, Increase/ June 30, Increase/

(dollars in millions) 2024 2023 (Decrease) 2024 2023 (Decrease)

Interest income $ 83 $ 92 $ (9) (9.8) % $ 161 $ 167 $ (6) (3.6) %

Other components of net periodic benefit income — 13 (13) nm

Other components of net periodic benefit income (cost) (233) 13 (246) nm (233) 26 (259) nm

Net debt extinguishment gains 89 69 20 29.0 199 139 60 43.2

Other, net (11) 36 (47) nm (1) (8) 7 (87.5)

Other Income, Net

$ 198 $ 114 $ 84 73.7

Other Income (Expense), Net

$ (72) $ 210 $ (282) nm $ 126 $ 324 $ (198) (61.1)

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 increased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily due to:

• an increase of $54 million primarily related to the remeasurement of our foreign currency denominated assets and liabilities resulting in a foreign currency adjustment gain in 2024 compared with a loss in 2023;

Other income (expense), 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 (expense), net decreased during both the three and six months ended June 30, 2024 compared to the similar periods in 2023.

The decrease during the three months ended June 30, 2024 was primarily due to a pension remeasurement loss of $136 million in 2024 that did not occur in 2023 and a decr ease of $114 million due to a lower expected return on plan assets in our pension and postretirement plans compared to 2023.

The decrease during the six months ended June 30, 2024 was primarily a result of:

• a decrease of $159 million due to a lower expected return on plan assets in our pension and postretirement plans compared to 2023, a decrease of $145 million in our postretirement plans due to prior service credits in 2023 that did not reoccur in 2024, and a net pension remeasurement loss of $63 million in 2024 that did not occur in 2023.

These decreases were partially offset by a decrease of $108 million in our pension plan interest costs in 2024 due to a decrease in discount rates;

• net debt extinguishment gains of $199 million related to tender offers and open market repurchases of various Company notes in 2024, compared with gains of $139 million related to open market repurchases of various Company notes in 2023.

Interest Expense

Three Months Ended

March 31, Increase/

(dollars in millions) 2024 2023 (Decrease)

Three Months Ended Six Months Ended

June 30, Increase/ June 30, Increase/

(dollars in millions) 2024 2023 (Decrease) 2024 2023 (Decrease)

Total interest costs on debt balances $ 1,942 $ 1,843 $ 99 5.4 % $ 3,850 $ 3,591 $ 259 7.2 %

5 unchanged sentences

Effective interest rate (2)(3)

5.1 % 4.8 % 5.1 % 4.7 %

(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 unchanged sentences

(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 the three months ended March 31, 2024 compared to the similar period in 2023 primarily as a result of a decrease in capitalized interest costs due to additional C-Band spectrum licenses being placed into service, an increase in interest costs due to a higher average interest rate and higher average debt balances.

Total interest expense increased during both the three and six months ended June 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, an increase in interest costs due to a higher average interest rate offset by lower average debt balances.

Provision for Income Taxes

Three Months Ended

(dollars in millions) 2024 2023 Decrease

Three Months Ended Six Months Ended

June 30, June 30,

(dollars in millions) 2024 2023 Decrease 2024 2023 Decrease

Provision for income taxes $ 1,332 $ 1,346 $ (14) (1.0) % $ 2,685 $ 2,828 $ (143) (5.1) %

1 unchanged sentence

The effective income tax rate is calculated by dividing the provision for income taxes by income before the provision for income taxes.

During the three months ended March 31, 2024, both the provision for income taxes and the effective income tax rate decreased compared to the similar period in 2023 due to lower income before taxes in the current period.

The provision for income taxes and the effective income tax rate during the three months ended June 30, 2024 are comparable to the similar period in 2023.

The decrease in the provision for income taxes and the effective income tax rate during the six months ended June 30, 2024, compared to the similar period in 2023, was primarily due to lower income before income taxes in the current period.

Unrecognized Tax Benefits

Unrecognized tax benefits were $2.7 billion at both March 31, 2024 and December 31, 2023.

Interest and penalties related to unrecognized tax benefits were $650 million (after-tax) and $630 million (after-tax) at March 31, 2024 and December 31, 2023, respectively.

Unrecognized tax benefits were $2.6 billion and $2.7 billion at June 30, 2024 and December 31, 2023, respectively.

Interest and penalties related to unrecognized tax benefits were $628 million (after-tax) and $630 million (after-tax) at June 30, 2024 and December 31, 2023, respectively.

Verizon and/or its subsidiaries file income tax returns in the U.S.

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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

Three Months Ended Six Months Ended

June 30, June 30,

(dollars in millions) 2024 2023 2024 2023

2 unchanged sentences

Interest expense

1,698 1,285 3,333 2,492

Depreciation and amortization expense (1)

4,483 4,359 8,928 8,677

Consolidated EBITDA $ 12,215 $ 11,756 $ 24,370 $ 23,781

Other income, net $ (198) $ (114)

Equity in (earnings) losses of unconsolidated businesses 9 (9)

Other (income) expense, net (2)

$ 72 $ (210) $ (126) $ (324)

Equity in losses of unconsolidated businesses 14 33 23 24

Severance charges — 237 — 237

Legacy legal matter

Asset rationalization — 155 — 155

Consolidated Adjusted EBITDA $ 12,301 $ 11,971 $ 24,373 $ 23,873

(1) Includes Amortization of acquisition-related intangible assets, which were $221 million and $208 million during the three months ended March 31, 2024 and 2023, respectively.

(1) Includes Amortization of acquisition-related intangible assets, which were $219 million and $440 million during the three and six months ended June 30, 2024, respectively, and $206 million and $414 million during the three and six months ended June 30, 2023, respectively.

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 months ended March 31, 2024 compared to the similar period in 2023 were primarily a result of the factors described in connection with consolidated operating revenues and consolidated operating expenses.

(2) Includes Pension and benefits mark-to-market charges of $136 million during both the three and six months ended June 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 six months ended June 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.

Segment Results of Operations

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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 (DSL), and postpaid, prepaid and IoT FWA as of the end of the period.

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.

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Operating Revenues and Selected Operating Statistics

Three Months Ended

March 31, Increase/

(dollars in millions, except ARPA) 2024 2023 (Decrease)

Three Months Ended Six Months Ended

June 30, Increase/ June 30, Increase/

(dollars in millions, except ARPA) 2024 2023 (Decrease) 2024 2023 (Decrease)

Service $ 19,208 $ 18,641 $ 567 3.0% $ 38,206 $ 37,097 $ 1,109 3.0%

15 unchanged sentences

Wireless retail postpaid 72 304 (232) (76.3) 147 625 (478) (76.5)

Wireless retail prepaid (216) (351) 135 38.5

Total wireless retail (141) (30) (111) nm

Wireless retail prepaid (624) (304) (320) nm (840) (655) (185) (28.2)

Total wireless retail (552) — (552) nm (693) (30) (663) nm

Wireless retail postpaid phone

4 unchanged sentences

Wireless retail postpaid phone 0.79 % 0.76 % 0.81 % 0.80 %

0.83 % 0.84 %

Account Statistics:

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nm - not meaningful

Consumer’s total operating revenues increased during the three months ended March 31, 2024 compared to the similar period in 2023 as a result of increases in Service and Other revenues, partially offset by a decrease in Wireless equipment revenue.

Consumer’s total operating revenues increased during both the three and six months ended June 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 the three months ended March 31, 2024 compared to the similar period in 2023 primarily driven by an increase in Wireless service revenue.

Wireless service revenue increased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily as a result of:

• an increase of $409 million 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.

Service revenue increased during both the three and six months ended June 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 June 30, 2024 compared to the similar period in 2023 primarily as a result of:

• an increase of $502 million 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 $162 million related to growth in non-retail service revenue;

• an increase of $64 million in TravelPass revenue through increased customer international travel;

• a decrease of $106 million in prepaid revenue primarily due to a decrease in the prepaid subscriber base.

• an increase of $44 million in TravelPass revenue due to increased customer international travel;

• a decrease of $163 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 six months ended June 30, 2024 compared to the similar period in 2023 primarily as a result of:

• an increase of $911 million 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 $311 million related to growth in non-retail service revenue;

• an increase of $108 million in TravelPass revenue due to increased customer international travel;

• a decrease of $269 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 the three months ended March 31, 2024 compared to the similar period in 2023 primarily as a result of:

• a decrease of $722 million driven by a lower volume of wireless devices sold primarily related to a decrease of 21% in upgrades;

• an increase of $365 million related to a shift to higher priced equipment in the mix of wireless devices sold.

Wireless equipment revenue decreased during both the three and six months ended June 30, 2024 compared to the similar periods in 2023 primarily as a result of:

• a decrease of $622 million and $1.3 billion for the three and six months, respectively, driven by a lower volume of wireless devices sold primarily related to a decrease of 14% and 18%, respectively, in upgrades;

• an increase of $358 million and $723 million for the three and six months , respectively, 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 remained relatively flat for the three months ended March 31, 2024 compared to the similar period in 2023.

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

• an increase of $46 million and $79 million for the three and six months, respectively, driven by regulatory surcharges, primarily related to higher net Federal Universal Service Fund surcharge rates, along with an increase in other regulatory surcharges;

• an increase of $29 million and $61 million for the three and six months, respectively, related to device protection offerings primarily due to pricing actions and changes in the products offered.

Operating Expenses

Three Months Ended

March 31, Increase/

(dollars in millions) 2024 2023 (Decrease)

Three Months Ended Six Months Ended

June 30, Increase/ June 30, Increase/

(dollars in millions) 2024 2023 (Decrease) 2024 2023 (Decrease)

Cost of services $ 4,450 $ 4,367 $ 83 1.9 % $ 8,987 $ 8,799 $ 188 2.1 %

4 unchanged sentences

Cost of Services

Cost of services increased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily as a result of:

• an increase of $59 million in rent and lease expense primarily driven by new leases and lease modifications related to the continued deployment of the C-Band spectrum;

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

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

• an increase of $57 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 $50 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 $33 million in personnel costs mainly driven by certain other post-employment benefit credits in 2023 that did not reoccur in 2024;

• an increase of $40 million in direct costs driven by vendor and service provider promotions and discounts received in 2023 that did not reoccur in 2024;

• a decrease of $59 million in access costs primarily as a result of decreases in prepaid subscribers, circuit disconnections and pricing changes.

The increase during the six months ended June 30, 2024 was primarily the result of:

• an increase of $116 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 $79 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 $75 million in personnel costs mainly driven by certain other post-employment benefit credits in 2023 that did not reoccur in 2024;

• an increase of $54 million in direct costs driven by vendor and service provider promotions and discounts received in 2023 that did not reoccur in 2024;

• a decrease of $143 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 the three months ended March 31, 2024 compared to the similar period in 2023 primarily as a result of:

• a decrease of $719 million driven by a lower volume of wireless devices sold primarily related to a decrease of 21% in upgrades;

• an increase of $278 million related to a shift to higher priced equipment in the mix of wireless devices sold.

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

• a decrease of $690 million and $1.4 billion for the three and six months, respectively, driven by a lower volume of wireless devices sold primarily related to a decrease of 14% and 18%, respectively, in upgrades;

• an increase of $496 million and $776 million for the three and six 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 increased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily due to:

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

The increase during the three months ended June 30, 2024 was primarily due to an increase of $46 million in the provision for credit losses resulting from additional bad debt reserves.

The increase during the six months ended June 30, 2024 was primarily due to:

• an increase of $93 million in personnel costs mainly driven by the impacts of a prior year compensation plan assumption change that did not reoccur and increased sales commission expense;

• an increase of $77 million in the provision for credit losses resulting from additional bad debt reserves;

• an increase of $55 million in regulatory fees mainly driven by an increase in rates.

Depreciation and Amortization Expense

Depreciation and amortization expense increased during the three months ended March 31, 2024 compared to the similar period in 2023 driven by the change in the mix of total Verizon depreciable and amortizable assets and Consumer's usage of those assets.

Depreciation and amortization expense increased during both the three and six months ended June 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

Three Months Ended Six Months Ended

June 30, June 30,

(dollars in millions) 2024 2023 Increase

2024 2023 Increase

Segment Operating Income $ 7,604 $ 7,330 $ 274 3.7 % $ 14,976 $ 14,429 $ 547 3.8 %

Add Depreciation and amortization expense 3,394 3,247 147 4.5 6,703 6,461 242 3.7

3,309 3,214 95 3.0

Segment EBITDA $ 10,998 $ 10,577 $ 421 4.0 $ 21,679 $ 20,890 $ 789 3.8

1 unchanged sentence

Segment EBITDA margin 44.1 % 43.1 % 43.4 % 42.3 %

The changes in the table above during the three months ended March 31, 2024 compared to the similar period in 2023 were primarily a result of the factors described in connection with Consumer operating revenues and operating expenses.

The changes in the table above during the three and six months ended June 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

5 unchanged sentences

Operating Revenues and Selected Operating Statistics

Three Months Ended

March 31, Increase/

(dollars in millions) 2024 2023 (Decrease)

Three Months Ended Six Months Ended

June 30, Increase/ June 30, Increase/

(dollars in millions) 2024 2023 (Decrease) 2024 2023 (Decrease)

Enterprise and Public Sector $ 3,545 $ 3,784 $ (239) (6.3) % $ 7,132 $ 7,571 $ (439) (5.8) %

19 unchanged sentences

Wireless retail postpaid phone

(1) Service and other revenues included in our Business segment were approximately $6.5 billion and $6.6 billion for the three months ended March 31, 2024 and 2023, respectively.

Wireless equipment revenues included in our Business segment were $871 million and $882 million for the three months ended March 31, 2024 and 2023, respectively.

1.10 % 1.10 % 1.11% 1.13 %

(1) Service and other revenues included in our Business segment were approximately $6.4 billion and $6.6 billion for the three months ended June 30, 2024 and 2023, respectively, and $13.0 billion and $13.2 billion for the six months ended June 30, 2024 and 2023, respectively.

Wireless equipment revenues included in our Business segment were $855 million and $847 million for the three months ended June 30, 2024 and 2023, respectively, and $1.7 billion for both the six months ended June 30, 2024 and 2023.

(2) 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.

Business’s total operating revenues decreased during the three months ended March 31, 2024 compared to the similar period 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.

Business’s total operating revenues decreased during both the three and six months ended June 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

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federal, state and local governments and educational institutions.

Enterprise and Public Sector revenues decreased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily due to:

• a decrease of $150 million in wireline revenue primarily driven by decreases in networking, traditional data and voice communication services due to secular market pressure, coupled with lower customer premise equipment sales volumes;

• a decrease of $20 million in Wireless equipment revenue driven by a decrease in the number of wireless devices sold primarily due to fewer upgrades, partially offset by a shift to higher priced equipment in the mix of devices sold.

Enterprise and Public Sector revenues decreased during both the three and six months ended June 30, 2024 compared to the similar periods in 2023 primarily due to a decrease of $199 million and $349 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, coupled with lower customer premise equipment sales volumes.

Business Markets and Other

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Business Markets and Other also includes solutions that support mobile resource management.

Business Markets and Other revenue increased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily due to an increase of $114 million in Wireless service revenue driven mainly by an increase in our FWA subscriber base and our pricing actions.

Fios revenues remained flat for the three months ended March 31, 2024 compared to the similar period in 2023.

Business Markets and Other revenues increased during both the three and six months ended June 30, 2024 compared to the similar periods in 2023 primarily due to an increase of $109 million and $223 million, respectively, in Wireless service revenue driven by an increase in our FWA subscriber base and our pricing actions.

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 revenue remained relatively flat for the three months ended March 31, 2024 compared to the similar period in 2023.

Wholesale revenues decreased during both the three and six months ended June 30, 2024 compared to the similar periods in 2023 primarily due to a decline of $38 million and $47 million, respectively, 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

March 31, Increase/

(dollars in millions) 2024 2023 (Decrease)

Three Months Ended Six Months Ended

June 30, June 30, Increase/

(dollars in millions) 2024 2023 Decrease 2024 2023 (Decrease)

Cost of services $ 2,455 $ 2,543 $ (88) (3.5) % $ 4,887 $ 5,125 $ (238) (4.6) %

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Cost of Services

Cost of services decreased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily due to:

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

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

• a decrease of $28 million in rent and lease expense primarily driven by a change in Business's proportionate usage of shared leased assets;

• a decrease of $26 million in customer premise equipment costs due to lower volumes sold.

The decrease during the six months ended June 30, 2024 was primarily due to:

• a decrease of $80 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 $46 million in access costs related to changes in usage, partially offset by changes in circuit access prices;

• a decrease of $55 million in customer premise equipment costs due to lower volumes sold;

• a decrease of $39 million in rent and lease expense primarily driven by a change in Business's proportionate usage of shared leased assets.

Cost of Wireless Equipment

Cost of wireless equipment decreased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily as a result of:

• a decrease of $132 million driven by a lower volume of wireless devices sold;

• an increase of $53 million related to a shift to higher priced equipment in the mix of wireless devices sold.

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

• a decrease of $74 million and $207 million for the three and six months, respectively, driven by a lower volume of wireless devices sold;

• an increase of $57 million and $111 million for the three and six 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 increased during the three months ended March 31, 2024 compared to the similar period in 2023 primarily due to an increase of $209 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 increased sales commission expense.

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

The increase during the six months ended June 30, 2024 was primarily due to an increase of $233 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.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased during the three months ended June 30, 2024 and remained relatively flat during the six months ended June 30, 2024 compared to the similar periods in 2023.

The decrease during the three months ended June 30, 2024 is 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

March 31, Increase/

Three Months Ended Six Months Ended

June 30, June 30, Increase/

(dollars in millions) 2024 2023 Decrease

2024 2023 (Decrease)

Segment Operating Income $ 500 $ 533 $ (33) (6.2) % $ 899 $ 1,084 $ (185) (17.1) %

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Segment EBITDA margin 21.6 % 21.9 % 21.2 % 21.9 %

The changes in the table above during the three months ended March 31, 2024 compared to the similar period in 2023 were primarily a result of the factors described in connection with Business operating revenues and operating expenses.

The changes in the table above during the three and six months ended June 30, 2024 compared to the similar period 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

Three Months Ended Six Months Ended

June 30, June 30,

(dollars in millions) 2024 2023 2024 2023

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Depreciation and amortization expense $ 219 $ 206 $ 440 $ 414

Severance, pension and benefits charges

Selling, general and administrative expense — 237 — 237

Other (income) expense, net 136 — 136 —

Legacy legal matter

Selling, general and administrative expense

Asset rationalization

Cost of services — 14 — 14

Selling, general and administrative expense — 141 — 141

Total $ 355 $ 598 $ 682 $ 806

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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

Three Months Ended Six Months Ended

June 30, June 30,

(dollars in millions) 2024 2023 2024 2023

Within Total Operating Expenses $ 219 $ 598 $ 546 $ 806

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

Total $ 355 $ 598 $ 682 $ 806

Amortization of Acquisition-Related Intangible Assets

During the three months ended March 31, 2024 and 2023, we recorded pre-tax amortization expense of $221 million and $208 million, respectively, related to acquired intangible assets.

During the three and six months ended June 30, 2024, we recorded pre-tax amortization expense of $219 million and $440 million, respectively, related to acquired intangible assets.

During the three and six months ended June 30, 2023, we recorded pre-tax amortization expense of $206 million and $414 million, respectively, related to the acquired intangible assets.

Severance, Pension and Benefits Charges

During both the three and six months ended June 30, 2024, we recorded a net pre-tax remeasurement loss of $136 million in our pension plans triggered by settlements.

The remeasurement loss was primarily driven by a $245 million charge resulting from the difference between our estimated and actual return on assets, partially offset by a credit of $109 million due to changes in our discount rate assumption used to determine the current year liabilities of our pension plans.

During both the three and six months ended June 30, 2023, we recorded pre-tax severance charges of $237 million related to involuntary separations under our existing plans.

See Note 8 to the condensed consolidated financial statements for additional information.

Legacy Legal Matter

During the three months ended March 31, 2024, we recorded a pre-tax charge of $106 million associated with a litigation matter related to a legacy contract for the production of telephone directories in Costa Rica by a subsidiary of the Company.

During the six months ended June 30, 2024, we recorded a pre-tax charge of $106 million associated with a litigation matter related to a legacy contract for the production of telephone directories in Costa Rica by a subsidiary of the Company.

Asset Rationalization

During both the three and six months ended June 30, 2023, we recorded a pre-tax asset rationalization charge of $155 million driven by certain real estate and non-strategic assets that we made a decision to cease use of as part of our transformation initiatives.

Consolidated Financial Condition

Three Months Ended

Six Months Ended

(dollars in millions) 2024 2023 Change

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(7,062) (5,586) (1,476)

Increase (decrease) in cash, cash equivalents and restricted cash $ 411 $ (204) $ 615

Increase in cash, cash equivalents and restricted cash $ 397 $ 2,234 $ (1,837)

We use the net cash generated from our operations to fund expansion and modernization of our networks, service and repay external financing, pay dividends, invest in new businesses and spectrum and, when appropriate, buy back shares of our outstanding common stock.

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

Our external financing arrangements include credit facilities and other bank lines of credit, an active commercial paper program, vendor financing arrangements, issuances of registered debt or equity securities, U.S.

retail medium-term notes and other securities that are privately-placed or offered overseas.

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Our primary source of funds continues to be cash generated from operations.

Net cash provided by operating activities decreased $1.2 billion during the three months ended March 31, 2024 compared to the similar period in 2023 primarily due to higher interest expense due to higher average interest rates, a discretionary pension plan contribution of $365 million and changes in working capital related to timing.

Net cash provided by operating activities decreased $1.5 billion during the six months ended June 30, 2024 compared to the similar period in 2023 primarily due to higher cash income taxes paid, higher interest expense due to decreases in capitalized interest costs and higher average interest rates, and changes in working capital related to timing.

As a result of the prior year discretionary contribution to one of our qualified pension plans and the additional $365 million contribution made in 2024, we expect that there will be no required pension funding through the end of 2024, subject to changes in market conditions.

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Capital expenditures continue to relate primarily to the use of capital resources to enhance the operating efficiency and productivity of our networks, maintain our existing infrastructure, facilitate the introduction of new products and services and enhance responsiveness to competitive challenges.

Capital expenditures, including capitalized software, for the three months ended March 31, 2024 and 2023 were $4.4 billion and $6.0 billion, respectively.

Capital expenditures decreased approximately $1.6 billion during the three months ended March 31, 2024 compared to the similar period in 2023 primarily due to the completion of our accelerated $10 billion capital program related to our C-Band deployment in the first half of 2023.

Capital expenditures, including capitalized software, for the six months ended June 30, 2024 and 2023 were $8.1 billion and $10.1 billion, respectively.

Capital expenditures decreased approximately $2.0 billion during the six months ended June 30, 2024 compared to the similar period in 2023 primarily due to the completion of our accelerated $10 billion capital program related to our C-Band deployment in the first half of 2023.

Acquisitions of Wireless Licenses

During the three months ended March 31, 2024 and 2023, we made payments of $269 million and $114 million, respectively, for obligations related to clearing costs and accelerated clearing incentives associated with Auction 107.

During the three months ended March 31, 2024 and 2023, we recorded capitalized interest related to wireless licenses of $180 million and $449 million, respectively.

During the six months ended June 30, 2024 and 2023, we made payments of $269 million and $114 million, respectively, for obligations related to clearing costs and accelerated clearing incentives associated with Auction 107.

During the six months ended June 30, 2024 and 2023, we recorded capitalized interest related to wireless licenses of $338 million and $905 million, respectively.

Collateral Receipts (Payments) Related to Derivative Contracts, Net

During the three months ended March 31, 2024, we made collateral payments of $432 million related to derivative contracts, net of receipts.

During the three months ended March 31, 2023, we received return of collateral posted of $367 million related to derivative contracts, net of payments.

During the six months ended June 30, 2024, we made collateral payments of $424 million related to derivative contracts, net of receipts.

During the six months ended June 30, 2023, we received return of collateral posted of $824 million related to derivative contracts, net of payments.

See Note 7 to the condensed consolidated financial statements for additional information.

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We seek to maintain a mix of fixed and variable rate debt to lower borrowing costs within reasonable risk parameters and to protect against earnings and cash flow volatility resulting from changes in market conditions.

During the three months ended

March 31, 2024, net cash used in financing activities was $1.4 billion.

During the three months ended March 31, 2023, net cash used in financing activities was $2.4 billion.

During the three months ended March 31, 2024, our net cash used in financing activities was primarily driven by repayments and repurchases of long-term borrowings and finance lease obligations of $4.5 billion, cash dividends paid of $2.8 billion, and repayments of asset-backed long-term borrowings of $1.4 billion.

These payments were partially offset by proceeds from long-term borrowings of $3.1 billion, proceeds from asset-backed long-term borrowings of $2.5 billion and net proceeds of short-term commercial paper of $2.3 billion.

At March 31, 2024, our total debt of $151.7 billion included unsecured debt of $128.4 billion and secured debt of $23.3 billion.

During the six months ended June 30, 2024, net cash used in financing activities was $7.1 billion.

During the six months ended June 30, 2023, net cash used in financing activities was $5.6 billion.

During the six months ended June 30, 2024, our net cash used in financing activities was primarily driven by repayments and repurchases of long-term borrowings and finance lease obligations of $5.7 billion, cash dividends paid of $5.6 billion, and repayments of asset-backed long-term borrowings of $4.0 billion.

These payments were partially offset by proceeds from asset-backed long-term borrowings of $5.8 billion, proceeds from long-term borrowings of $3.1 billion and net proceeds of short-term commercial paper of $603 million.

At June 30, 2024, our total debt of $149.3 billion included unsecured debt of $125.3 billion and secured debt of $24.0 billion.

At December 31, 2023, our total debt of $150.7 billion included unsecured debt of $128.5 billion and secured debt of $22.2 billion.

During the three months ended March 31, 2024 and 2023, our effective interest rate was 5.0% and 4.6%, respectively.

During the six months ended June 30, 2024 and 2023, our effective interest rate was 5.1% and 4.7%, respectively.

See Note 5 to the condensed consolidated financial statements for additional information regarding our debt activity, which excludes the impact from mark-to-market adjustments on foreign currency denominated debt.

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Long-Term Credit Facilities

At March 31, 2024

At June 30, 2024

(dollars in millions) Maturities Facility Capacity Unused Capacity Principal Amount Outstanding

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The revolving credit facility provides for the issuance of letters of credit.

As of March 31, 2024 , there have been no drawings against the revolving credit facility since its inception.

(2) During the three months ended March 31, 2024, there were no drawings from these facilities.

During the three months ended March 31, 2023, we drew down $515 million from these facilities.

As of June 30, 2024 , there have been no drawings against the revolving credit facility since its inception.

(2) During the six months ended June 30, 2024, there were no drawings from these facilities.

During the six months ended June 30, 2023, we drew down $515 million from these facilities.

Borrowings under certain of these facilities are repaid semi-annually in equal installments up to the applicable maturity dates.

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In March 2024, we amended our $9.5 billion revolving credit facility to increase the capacity to $12.0 billion and extended its maturity to 2028.

Other, net financing activities during the three months ended March 31, 2024 includes $216 million in payments for settlement of cross currency swaps, $117 million in payments made under tax withholding of employee share based arrangements and $98 million in cash consideration payment to acquire additional interest in a certain controlled wireless partnership.

Other, net financing activities during the six months ended June 30, 2024 includes $349 million in payments related to vendor financing arrangements, $243 million in payments for settlement of cross currency swaps, $216 million in equity distribution payments made for controlled entities, $154 million in payments made under the sublease arrangement for our cell towers and $142 million in cash consideration payments to acquire additional interest in certain controlled entities.

As in prior periods, dividend payments were a significant use of capital resources.

We paid $2.8 billion and $2.7 billion in cash dividends during the three months ended March 31, 2024 and 2023, respectively.

We paid $5.6 billion and $5.5 billion in cash dividends during the six months ended June 30, 2024 and 2023, respectively.

Our credit agreements contain covenants that are typical for large, investment grade companies.

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Change In Cash, Cash Equivalents and Restricted Cash

Our Cash and cash equivalents at March 31, 2024 totaled $2.4 billion, a $300 million increase compared to December 31, 2023, primarily as a result of the factors discussed above.

Restricted cash totaled $1.5 billion and $1.4 billion as of March 31, 2024 and December 31, 2023, respectively, primarily related to cash collections on certain receivables and on the underlying receivables related to the participation interest that are required at certain specified times to be placed into segregated accounts.

Our Cash and cash equivalents at June 30, 2024 totaled $2.4 billion, a $367 million increase compared to December 31, 2023, primarily as a result of the factors discussed above.

Restricted cash totaled $1.5 billion and $1.4 billion as of June 30, 2024 and December 31, 2023, respectively, primarily related to cash collections on certain receivables and on the underlying receivables related to the participation interest that are required at certain specified times to be placed into segregated accounts.

Free Cash Flow

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The following table reconciles net cash provided by operating activities to free cash flow:

Three Months Ended

Six Months Ended

(dollars in millions) 2024 2023 Change

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Free cash flow $ 8,498 $ 7,950 $ 548

The increase in free cash flow during the three months ended March 31, 2024 compared to the similar period in 2023 is a reflection of the decrease in capital expenditures, partially offset by the decrease in operating cash flows, both of which are discussed above.

The increase in free cash flow during the six months ended June 30, 2024 compared to the similar period in 2023 is a reflection of the decrease in capital expenditures, partially offset by the decrease in operating cash flows, both of which are discussed above.

Other Future Obligations

As of March 31, 2024, Verizon had 27 renewable energy purchase agreements (REPAs) with third parties.

As of June 30, 2024, Verizon had 27 renewable energy purchase agreements (REPAs) with third parties.

See Note 12 to the condensed consolidated financial statements for additional information.

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Counterparties to our derivative contracts are major financial institutions with whom we have negotiated derivatives agreements (ISDA master agreements) and credit support annex (CSA) agreements which provide rules for collateral exchange.

The CSA agreements contain fixed cap amounts or rating based thresholds such that we or our counterparties may be required to hold or

post collateral based upon changes in outstanding positions as compared to established thresholds or caps and changes in credit ratings.

The CSA agreements contain fixed cap amounts or rating based thresholds such that we or our counterparties may be required to hold or post collateral based upon changes in outstanding positions as compared to established thresholds or caps and changes in credit ratings.

We do not offset fair value amounts recognized for derivative instruments and fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments recognized at fair value.

At March 31, 2024, we did not hold any collateral.

At March 31, 2024, we posted $1.8 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 June 30, 2024, we did not hold any collateral.

At June 30, 2024, we posted $1.8 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 not hold any collateral.

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We are exposed to changes in interest rates, primarily on our short-term debt and the portion of long-term debt that carries floating interest rates.

As of March 31, 2024, approximately 75% of the aggregate principal amount of our total debt portfolio consisted of fixed-rate indebtedness, including the effect of interest rate swap agreements designated as hedges.

As of June 30, 2024, approximately 75% of the aggregate principal amount of our total debt portfolio consisted of fixed-rate indebtedness, including the effect of interest rate swap agreements designated as hedges.

The impact of a 100-basis-point change in interest rates affecting our floating rate debt would result in a change in annual interest expense, including our interest rate swap agreements that are designated as hedges, of approximately $389 million.

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These swaps are designated as fair value hedges and hedge against interest rate risk exposure of designated debt issuances.

At March 31, 2024, the fair value of the liability of these contracts was $5.1 billion.

At June 30, 2024, the fair value of the liability of these contracts was $5.3 billion.

At December 31, 2023, the fair value of the liability of these contracts was $4.5 billion.

At both March 31, 2024 and December 31, 2023, the total notional amount of the interest rate swaps was $26.1 billion.

At both June 30, 2024 and December 31, 2023, the total notional amount of the interest rate swaps was $26.1 billion.

Foreign Currency Risk

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Gains and losses on foreign currency transactions are recorded in the condensed consolidated statements of income.

At March 31, 2024, our primary translation exposure was to the British Pound Sterling, Euro, Australian Dollar and Swedish Krona.

At June 30, 2024, our primary translation exposure was to the British Pound Sterling, Euro, Australian Dollar and Swedish Krona.

Cross Currency Swaps

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dollars, as well as to mitigate the impact of foreign currency transaction gains or losses.

The fair value of the asset of these contracts was $600 million and $762 million at March 31, 2024 and December 31, 2023, respectively.

At March 31, 2024 and December 31, 2023, the fair value of the liability of these contracts was $2.2 billion and $2.1 billion, respectively.

At March 31, 2024 and December 31, 2023, the total notional amount of the cross currency swaps was $32.6 billion and $33.5 billion, respectively.

The fair value of the asset of these contracts was $520 million and $762 million at June 30, 2024 and December 31, 2023, respectively.

At June 30, 2024 and December 31, 2023, the fair value of the liability of these contracts was $2.3 billion and $2.1 billion, respectively.

At June 30, 2024 and December 31, 2023, the total notional amount of the cross currency swaps was $32.1 billion and $33.5 billion, respectively.

Foreign Exchange Forwards

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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.

At both March 31, 2024 and December 31, 2023, the fair value of the asset and liability of these contracts was insignificant.

At both March 31, 2024 and December 31, 2023, the total notional amount of the foreign exchange forwards was $1.1 billion.

At both June 30, 2024 and December 31, 2023, the fair value of the asset and liability of these contracts was insignificant.

At June 30, 2024 and December 31, 2023, the total notional amount of the foreign exchange forwards was $600 million and $1.1 billion, respectively.

Acquisitions and Divestitures

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In accordance with the rules applicable to the auction, Verizon is required to make payments for our allocable share of clearing costs incurred by, and incentive payments due to, the incumbent license holders associated with the auction, which are estimated to be $7.5 billion.

During the three months ended March 31, 2024 and March 31, 2023, we made payments of $269 million and $114 million, respectively, for obligations related to clearing costs and accelerated clearing incentives.

We expect to continue to make payments of approximately $100 million for the remaining obligations in 2024.

The final timing and

amounts of these payments could differ based on the actual amount of incumbent holders’ reimbursement claims and the speed with which those claims are approved and processed.

During the six months ended June 30, 2024 and June 30, 2023, we made payments of $269 million and $114 million, respectively, for obligations related to clearing costs and accelerated clearing incentives.

The carrying value of the wireless spectrum won in Auction 107 consists of all payments required to participate and purchase licenses in the auction, including Verizon's allocable share of clearing costs incurred by, and incentive payments due to, the incumbent license holders associated with the auction that we are obligated to pay in order to acquire the licenses, as well as capitalized interest to the extent qualifying activities have occurred.

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Contingent consideration payments were completed in January of 2024.

During the three months ended March 31, 2024 and March 31, 2023, Verizon made payments of $52 million and $102 million, respectively, related to the contingent consideration, which is reflected in Cash flows from financing activities in our condensed consolidated statements of cash flows.

During the six months ended June 30, 2024 and June 30, 2023, Verizon made payments of $52 million and $102 million, respectively, related to the contingent consideration, which are reflected in Cash flows from financing activities in our condensed consolidated statements of cash flows.

See Note 3 and Note 7 to the condensed consolidated financial statements for additional information.

Other Factors That May Affect Future Results

Regulatory Trends

In April 2024, the FCC issued a final decision to regulate broadband services as common carrier services under Title II of the Communications Act of 1934, as amended, consistent with the proposal described in our Annual Report on Form 10-K for the year ended December 31, 2023.

Industry groups have appealed this decision in court.

Except as disclosed herein, there have been no material changes to regulatory trends as previously disclosed in Part I, Item 1.

"Business" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Cautionary Statement Concerning Forward-Looking Statements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis