What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-25 compared with 2024-07-25 · 242 added, 193 removed, 511 unchanged (46% 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 June 30, 2024 and 2023

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

(dollars in millions)

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

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

(dollars in millions)

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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 June 30, 2024 and 2023

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

Excludes eliminations.

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

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

Excludes eliminations.

10 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 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.

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.

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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 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.

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.

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

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.

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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.

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 ."

Consolidated Results of Operations

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Consolidated Operating Revenues

Three Months Ended Six Months Ended

June 30, Increase/ June 30, Increase/

Three Months Ended Nine Months Ended

September 30, Increase/ September 30, Increase/

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

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Consolidated Operating Revenues $ 33,330 $ 33,336 $ (6) — $ 99,107 $ 98,844 $ 263 0.3

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.

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 Six Months Ended

June 30, Increase/ June 30, Increase/

Three Months Ended Nine Months Ended

September 30, Increase/ September 30, Increase/

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

9 unchanged sentences

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 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.

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;

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;

• 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 $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.

• 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;

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

Cost of Wireless Equipment

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.

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;

• 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

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Also included is a portion of the aggregate customer care costs as discussed above in "Cost of Services."

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:

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 r elated to an asset and business rationalization charge taken in 2024;

• 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;

• an increase of $106 million related to a 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.

• 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 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.

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 (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/

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)

3 unchanged sentences

Other, net (59) (28) (31) nm (60) (36) (24) 66.7

Other Income (Expense), Net

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

Other Income, Net

$ 72 $ 170 $ (98) (57.6) $ 198 $ 494 $ (296) (59.9)

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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.

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.

The decrease during the three months ended September 30, 2024 was primarily due to a decr ease 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;

• 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.

• 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 Six Months Ended

June 30, Increase/ June 30, Increase/

Three Months Ended Nine Months Ended

September 30, Increase/ September 30, Increase/

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

11 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 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.

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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(dollars in millions) 2024 2023 Decrease 2024 2023 Decrease

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

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.

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 $2.6 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.

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.

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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 a significant amount in the next twelve months.

It is reasonably possible that the amount of the liability for unrecognized tax benefits could change by

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.

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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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(dollars in millions) 2024 2023 2024 2023

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Consolidated EBITDA $ 10,432 $ 12,056 $ 34,802 $ 35,837

Other (income) expense, net (2)

Other income, net (2)

$ (72) $ (170) $ (198) $ (494)

1 unchanged sentence

Severance charges 1,733 — 1,733 237

Asset and business rationalization

374 — 374 155

Legacy legal matter

Asset rationalization — 155 — 155

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 $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.

(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 both the three and six months ended June 30, 2024.

(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 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.

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.

Segment Results of Operations

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Operating Revenues and Selected Operating Statistics

Three Months Ended Six Months Ended

June 30, Increase/ June 30, Increase/

Three Months Ended Nine Months Ended

September 30, Increase/ September 30, Increase/

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

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Wireless retail postpaid 68 251 (183) (72.9) 215 876 (661) (75.5)

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

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

(8) (136) 128 94.1 (166) (399) 233 58.4

81 (51) 132 nm (85) (450) 365 81.1

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

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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.

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 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.

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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• 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 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.

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;

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Wireless Equipment Revenue

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.

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;

• 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 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.

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;

• 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 Six Months Ended

June 30, Increase/ June 30, Increase/

Three Months Ended Nine Months Ended

September 30, Increase/ September 30, Increase/

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

5 unchanged sentences

Cost of Services

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:

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;

• 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;

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

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 $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 $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 $54 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 $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;

• 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 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.

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;

• 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 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;

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;

• 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 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.

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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(dollars in millions) 2024 2023 Increase

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Segment EBITDA margin 43.4 % 42.8 % 43.4 % 42.5 %

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.

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 Six Months Ended

June 30, Increase/ June 30, Increase/

Three Months Ended Nine Months Ended

September 30, Increase/ September 30, Increase/

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

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1.12 % 1.14 % 1.12% 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.

(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

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 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.

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

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federal, state and local governments and educational institutions.

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.

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

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

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.

Business Markets and Other revenues 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 $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;

• 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 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 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.

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 Six Months Ended

June 30, June 30, Increase/

Three Months Ended Nine Months Ended

September 30, Increase/ September 30, Increase/

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

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Cost of Services

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:

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;

• a decrease of $27 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:

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;

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

• 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 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.

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;

• 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 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.

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.

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;

• 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 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.

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 Six Months Ended

June 30, June 30, Increase/

Three Months Ended Nine Months Ended

September 30, Increase/ September 30,

(dollars in millions) 2024 2023 Decrease

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Segment EBITDA margin 21.8 % 22.1 % 21.4 % 22.0 %

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.

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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(dollars in millions) 2024 2023 2024 2023

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Other (income) expense, net — — 136 —

Asset and business rationalization

Cost of Services

Selling, general and administrative expense

185 — 185 141

Legacy legal matter

Selling, general and administrative expense

Asset rationalization

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

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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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(dollars in millions) 2024 2023 2024 2023

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Amortization of Acquisition-Related 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.

During the three and nine months ended September 30, 2024, we recorded pre-tax amortization expense of $186 million and $626 million, respectively, related to acquired intangible assets.

During the three and nine months ended September 30, 2023, we recorded pre-tax amortization expense of $224 million and $638 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.

During both the three and nine months ended September 30, 2024, we recorded pre-tax severance charges of $1.7 billion related to separations under our voluntary separation program for select U.S.-based management employees as well as other headcount reduction initiatives.

During the nine months ended September 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.

During the nine months ended September 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.

Asset and Business Rationalization

During both the three and nine months ended September 30, 2024, we recorded a pre-tax asset and business rationalization charge of $374 million predominately related to the decision to cease use of certain real estate assets and exit non-strategic portions of certain businesses as part of our continued transformation initiatives.

During the nine months ended September 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.

Legacy Legal Matter

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.

During the nine months ended September 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.

Business Transformation Costs

During both the three and nine months ended September 30, 2023, we recorded pre-tax charges of $176 million primarily related to costs incurred in connection with strategic partnership initiatives in our managed network support services for certain Business customers.

Non-Strategic Business Shutdown

During both the three and nine months ended September 30, 2023, we recorded pre-tax charges of $179 million related to the shutdown of our BlueJeans business offering.

Consolidated Financial Condition

Six Months Ended

Nine Months Ended

September 30,

(dollars in millions) 2024 2023 Change

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Increase in cash, cash equivalents and restricted cash $ 1,890 $ 1,549 $ 341

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.

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

Our sources of funds, primarily from operations and, to the extent necessary, from external financing arrangements, are sufficient to meet ongoing operating and investing requirements over the next 12 months and beyond.

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We expect that our capital spending requirements will continue to be financed primarily through internally generated funds.

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,

Debt or equity financing may be needed to fund additional investments or development activities, including, for example, to complete our acquisition of Frontier, or to maintain an appropriate capital structure to ensure our financial flexibility.

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 $1.5 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.

Net cash provided by operating activities decreased $2.3 billion during the nine months ended September 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 primarily 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 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.

Capital expenditures, including capitalized software, for the nine months ended September 30, 2024 and 2023 were $12.0 billion and $14.2 billion, respectively.

Capital expenditures decreased approximately $2.1 billion during the nine months ended September 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 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.

During the nine months ended September 30, 2024 and 2023, we made payments of $269 million and $578 million, respectively, for obligations related to clearing costs and accelerated clearing incentives associated with Auction 107.

During the nine months ended September 30, 2024 and 2023, we recorded capitalized interest related to wireless licenses of $485 million and $1.2 billion, respectively.

Collateral Receipts (Payments) Related to Derivative Contracts, Net

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.

During the nine months ended September 30, 2024, we made collateral payments of $332 million related to derivative contracts, net of receipts.

During the nine months ended September 30, 2023, we received a return of collateral posted of $162 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 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.

During the nine months ended September 30, 2024, net cash used in financing activities was $11.5 billion.

During the nine months ended September 30, 2023, net cash used in financing activities was $11.6 billion.

During the nine months ended September 30, 2024, our net cash used in financing activities was primarily driven by cash dividends paid of $8.4 billion, repayments and repurchases of long-term borrowings and finance lease obligations of $6.6 billion and repayments of asset-backed long-term borrowings of $6.2 billion.

These payments were partially offset by proceeds from asset-backed long-term borrowings of $8.2 billion and proceeds from long-term borrowings of $3.1 billion.

At September 30, 2024, our total debt of $150.6 billion included unsecured debt of $126.4 billion and secured debt of $24.3 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 six months ended June 30, 2024 and 2023, our effective interest rate was 5.1% and 4.7%, respectively.

During the nine months ended September 30, 2024 and 2023, our effective interest rate was 5.1% and 4.8%, 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 June 30, 2024

At September 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 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.

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

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

During the nine months ended September 30, 2023, we drew down $1.0 billion 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 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.

Other, net financing activities during the nine months ended September 30, 2024 includes $413 million in payments related to vendor financing arrangements, $309 million in equity distribution payments made for controlled entities, $266 million in cash consideration payments to acquire additional interest in certain controlled entities, $243 million in payments for settlement of cross currency swaps and $234 million in payments made under the sublease arrangement for our cell towers.

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

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

We paid $8.4 billion and $8.2 billion in cash dividends during the nine months ended September 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 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.

Our Cash and cash equivalents at September 30, 2024 totaled $5.0 billion, a $2.9 billion increase compared to December 31, 2023, primarily as a result of the factors discussed above.

Restricted cash totaled $400 million and $1.4 billion as of September 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.

The decrease of $1.0 billion in restricted cash was primarily due to a change in the timing on when cash collections on certain receivables collateralizing our asset-backed debt securities are required 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:

Six Months Ended

Nine Months Ended

September 30,

(dollars in millions) 2024 2023 Change

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Free cash flow $ 14,461 $ 14,634 $ (173)

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.

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

Other Future Obligations

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

As of September 30, 2024, Verizon had 28 renewable energy purchase agreements with third parties for a total of approximately 3.6 gigawatts of anticipated renewable energy capacity across multiple states.

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

Under the REPAs, we plan to purchase up to an aggregate of approximately 3.5 gigawatts of capacity across multiple states.

We are exposed to various types of market risk in the normal course of business, including the impact of interest rate changes, foreign currency exchange rate fluctuations, changes in investment, equity and commodity prices and changes in corporate tax rates.

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It is our general policy to enter into interest rate, foreign currency and other derivative transactions only to the extent necessary to achieve our desired objectives in optimizing exposure to various market risks.

Our objectives include maintaining 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.

Our objectives include maintaining 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.

We do not hedge our market risk exposure in a manner that would completely eliminate the effect of changes in interest rates and foreign exchange rates on our earnings.

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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 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 September 30, 2024, we did not hold any collateral.

At September 30, 2024, we posted $1.7 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 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.

As of September 30, 2024, approximately 77% 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 $354 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 June 30, 2024, the fair value of the liability of these contracts was $5.3 billion.

At September 30, 2024, the fair value of the liability of these contracts was $4.1 billion.

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

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

At September 30, 2024 and December 31, 2023, the total notional amount of the interest rate swaps was $24.8 billion and $26.1 billion, respectively.

Foreign Currency Risk

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

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

At September 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 $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.

The fair value of the asset of these contracts was $776 million and $762 million at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024 and December 31, 2023, the fair value of the liability of these contracts was $1.8 billion and $2.1 billion, respectively.

At September 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 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.

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

At September 30, 2024 and December 31, 2023, the total notional amount of the foreign exchange forwards was $620 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 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.

During the nine months ended September 30, 2024 and September 30, 2023, we made payments of $269 million and $578 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 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.

During the nine months ended September 30, 2024 and September 30, 2023, Verizon made payments of $52 million and $182 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.

Frontier Communications Parent, Inc.

On September 4, 2024, Verizon entered into an Agreement and Plan of Merger (the Merger Agreement) to acquire Frontier, a U.S.

provider of broadband internet and other communication services.

The transaction is structured as a merger of the Company's subsidiary with and into Frontier, as a result of which Frontier will become a wholly owned subsidiary of the Company and shares of Frontier common stock outstanding immediately prior to the effective time of merger (subject to certain limited exceptions) will be cancelled and converted into the right to receive a per share merger consideration of $38.50, in cash.

Consummation of the transaction is subject to approval by Frontier shareholders, receipt of certain regulatory approvals and other customary closing conditions.

Under certain circumstances, if the Merger Agreement is terminated, Frontier may be required to pay Verizon a termination fee of $320 million.

Under certain other specified circumstances, Verizon may be required to pay Frontier a termination fee of $590 million.

Other Factors That May Affect Future Results

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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.

Industry groups have appealed this decision in federal court and the court has stayed the rules from going into effect pending its final decision.

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

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Forward-looking statements also include those preceded or followed by the words "anticipates," "assumes," "believes," "estimates," "expects," "forecasts," "hopes," "intends," "plans," "targets" or similar expressions.

For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

For those statements,

we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law.

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The following important factors, along with those discussed elsewhere in this report and in other filings with the Securities and Exchange Commission (SEC), could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements:

• the effects of competition in the markets in which we operate, including the inability to successfully respond to

competitive factors such as prices, promotional incentives and evolving consumer preferences;

• failure to take advantage of, or respond to competitors' use of, developments in technology and address changes in

consumer demand;

• performance issues or delays in the deployment of our 5G network resulting in significant costs or a reduction in the

anticipated benefits of the enhancement to our networks;

• the effects of competition in the markets in which we operate, including the inability to successfully respond to competitive factors such as prices, promotional incentives and evolving consumer preferences;

• failure to take advantage of, or respond to competitors' use of, developments in technology and address changes in consumer demand;

• performance issues or delays in the deployment of our 5G network resulting in significant costs or a reduction in the anticipated benefits of the enhancement to our networks;

• the inability to implement our business strategy;

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• changes in accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings;

• risks associated with mergers, acquisitions and other strategic transactions, including our ability to consummate the proposed acquisition of Frontier and obtain cost savings, synergies and other anticipated benefits within the expected time period or at all.

Quantitative and Qualitative Disclosures About Market Risk

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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