VERIZON COMMUNICATIONS INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview Verizon Communications Inc. (the Company) is a holding company that, acting through its subsidiaries (together with the Company, collectively, Verizon), is one of the world's leading providers of communications, technology, information and streaming products and services to consumers, businesses and government entities. With a presence around the world, we offer data, video and voice services and solutions on our networks and platforms that are designed to meet customers’ demand for mobility, reliable network connectivity and security. To compete effectively in today's dynamic marketplace, we are focused on the capabilities of our high-performing networks to drive growth based on delivering what customers want and need in the digital world. We are consistently deploying new network architecture and technologies to secure our leadership in both fifth-generation (5G) and fourth-generation (4G) wireless networks. Our network quality is the hallmark of our brand and the foundation for the connectivity, platforms and solutions upon which we build our competitive advantage. In 2025 , we are focused on enhancing our networks, offering innovative services and products, growing and maintaining a high-quality customer base and delivering strong financial and operating results. Our strategy requires significant capital investments primarily to acquire wireless spectrum, put the spectrum into service, provide additional capacity for growth in our networks, invest in the fiber that supports our businesses, evolve and maintain our networks and develop and maintain significant advanced information technology systems and data system capabilities. We believe that our C-Band spectrum, together with our industry leading millimeter wave spectrum holdings and our 4G Long-Term Evolution (LTE) network and fiber infrastructure, will drive innovative products and services and fuel our growth. Highlights of Our Financial Results for the Three Months Ended March 31, 2025 and 2024 (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). 30 Table of Contents Revenue by Segment for the Three Months Ended March 31, 2025 and 2024 ——— Note: Excludes eliminations. Verizon Consumer Group Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless services are provided across one of the most extensive wireless networks in the United States (U.S.) under the Verizon family of brands and through wholesale and other arrangements. We also provide fixed wireless access (FWA) broadband through our 5G or 4G LTE networks as an alternative to traditional landline internet access. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios. Customers can obtain our wireless services on a postpaid or prepaid basis. Our postpaid service is generally billed one month in advance for a monthly access charge in return for access to and usage of network services. Our prepaid service is offered only to Consumer customers and enables individuals to obtain wireless services without credit verification by paying for all services in advance. The Consumer segment also offers several categories of wireless equipment to customers, including a variety of smartphones and other handsets, wireless-enabled internet devices, such as tablets, and other wireless-enabled connected devices, such as smart watches. In addition to wireless services and equipment for retail customers, 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, 2025 totaled $25.6 billion, representing an increase of 2.2% compared to the similar period in 2024. See "Segment Results of Operations" for additional information regarding our Consumer segment’s operating performance and selected operating statistics. Verizon Business Group Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and advanced communication services, corporate networking solutions, security and managed network services, local and long distance voice services and network access to deliver various Internet of Things (IoT) services and products. We provide these products and services to businesses, public sector customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world. The Business segment's operating revenues for the three months ended March 31, 2025 totaled $7.3 billion, representing a decrease of 1.2% compared to the similar period in 2024. See "Segment Results of Operations" for additional information regarding our Business segment’s operating performance and selected operating statistics. Corporate and Other Corporate and other primarily includes device insurance programs, investments in unconsolidated businesses and development stage businesses that support our strategic initiatives, as well as unallocated corporate expenses, certain pension and other employee benefit related costs and interest and financing expenses. Corporate and other also includes the historical results of divested businesses and other adjustments and gains and losses that are not allocated or used in assessing segment performance due to their nature. Although such transactions are excluded from the business segment results, they are included in reported consolidated earnings. Gains and losses from these transactions that are not individually significant are included in segment results and therefore are included in the chief operating decision maker’s (CODM) assessment of segment performance. See "Consolidated Results of Operations" for additional information regarding Corporate and other results. 31 Table of Contents Capital Expenditures and Investments We continue to invest in our wireless networks, high-speed fiber and other advanced technologies to position ourselves at the center of growth trends for the future. During the three months ended March 31, 2025, these investments included $4.1 billion for capital expenditures. See "Cash Flows Used in Investing Activities" for additional information. Capital expenditures for 2025 are expected to be in the range of $17.5 billion to $18.5 billion. Global Networks and Technology We consider the reliability, speed, capacity, coverage and security of our wireless network to be key factors in our continued success. We are evolving and transforming our networks to ensure our customers receive access to the best network possible. Over the past several years, we have been leading the development of 5G wireless technology industry standards and the ecosystems for fixed and mobile 5G wireless services. Our evolution to 5G with its new architecture allows us to simplify operations by eliminating legacy network elements. While we continue to improve our 5G wireless service coverage, we are also adding capacity and density to our networks. Network densification enables us to increase coverage, improve quality of service and add capacity to accommodate an increasing number of users. In addition to enhancing our wireless service, our wireless mobility investments provide the foundation for our growing FWA broadband business. We are also continuing to expand our fiber-based networks, as customers increasingly value the ability to obtain wireless and wireline broadband services from the same provider. In September 2024, we entered into an agreement to acquire Frontier Communications Parent, Inc. (Frontier), a U.S. provider of broadband internet and other communication services, as part of our fiber expansion strategy, and we expect to increase the capital expenditures we devote to our fiber networks in 2025. Tariffs and Other Government Initiatives The U.S. government recently announced tariffs on goods imported from various countries to the U.S. Countries subject to such tariffs have imposed or may in the future impose reciprocal or retaliatory tariffs and other trade measures. We are actively monitoring the tariff developments and analyzing the potential impacts on our business, cost structure, supply chain and broader economic environment. We are also working closely with our strategic suppliers to manage the potential impacts. In addition, the U.S. presidential administration is seeking to implement significant changes to the size and scope of the federal government, which may include reduction of the federal government workforce, changes in budgetary priorities and other cost efficiency measures. We began seeing some impact from these efforts in our federal government business in the first quarter of 2025. While these developments have not had a material impact on our financial condition or results of operations to date, due to their evolving nature, we cannot predict with certainty the ultimate impacts they may have on our business and results in the future but those impacts could be material. Consolidated Results of Operations In this section, we discuss our overall results of operations and highlight special items, some of which are not included in our segment results. In "Segment Results of Operations" we review the performance of our two reportable segments in more detail. Consolidated Operating Revenues Three Months Ended March 31, Increase/ (dollars in millions) 2025 2024 (Decrease) Consumer $ 25,618 $ 25,057 $ 561 2.2 % Business 7,286 7,376 (90) (1.2) Corporate and other 660 611 49 8.0 Eliminations (79) (63) (16) 25.4 Consolidated Operating Revenues $ 33,485 $ 32,981 $ 504 1.5 Consolidated operating revenues increased during the three months ended March 31, 2025 compared to the similar period in 2024 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." 32 Table of Contents Consolidated Operating Expenses Three Months Ended March 31, Increase/ (dollars in millions) 2025 2024 (Decrease) Cost of services $ 6,950 $ 6,967 $ (17) (0.2) % Cost of wireless equipment 6,106 5,905 201 3.4 Selling, general and administrative expense 7,874 8,143 (269) (3.3) Depreciation and amortization expense 4,577 4,445 132 3.0 Consolidated Operating Expenses $ 25,507 $ 25,460 $ 47 0.2 Operating expenses for our segments are discussed separately below under the heading "Segment Results of Operations." Cost of Services Cost of services includes the following costs directly attributable to a service: salaries and wages, benefits, materials and supplies, content costs, contracted services, network access and transport costs, customer provisioning costs, computer systems support and costs to support our outsourcing contracts and technical facilities. Aggregate customer service costs, which include billing and service provisioning, are allocated between Cost of services and Selling, general and administrative expense. Cost of services remained relatively flat during the three months ended March 31, 2025 compared to the similar period in 2024. Cost of Wireless Equipment Cost of wireless equipment increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to an increase of $201 million driven by a shift to higher priced equipment in the mix of wireless devices sold. Selling, General and Administrative Expense Selling, general and administrative expense includes salaries and wages and benefits not directly attributable to a service or product, the provision for credit losses, taxes other than income taxes, advertising and sales commission costs, call center and information technology costs, regulatory fees, professional service fees and rent and utilities for administrative space. Also included is a portion of the aggregate customer care costs as discussed above in "Cost of Services." Selling, general and administrative expense decreased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to: • a decrease of $162 million in personnel costs related to workforce changes primarily due to the voluntary separation program that was announced in June of 2024 and completed in March of 2025 ; and • a decrease of $106 million related to a legacy legal matter from 2024 that did not reoccur. See "Special Items" for additional information on the legacy legal matter. Depreciation and Amortization Expense Depreciation and amortization expense increased during the three months ended March 31, 2025 compared to the similar period in 2024 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 Three Months Ended March 31, Increase/ (dollars in millions) 2025 2024 (Decrease) Interest income $ 63 $ 78 $ (15) (19.2) % Other components of net periodic benefit cost (94) — (94) nm Net debt extinguishment gains 90 110 (20) (18.2) Other, net 62 10 52 nm Other Income, Net $ 121 $ 198 $ (77) (38.9) nm - not meaningful Other income, net, reflects certain items not directly related to our core operations, including interest income, debt extinguishment gains, components of net periodic pension and postretirement benefit cost and income and certain foreign exchange gains and losses. 33 Table of Contents Other income, net decreased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to a decrease of $94 million in other components of net periodic benefit cost primarily driven by lower plan assets on which to earn expected returns in our pension and postretirement plans compared to the prior year along with a net pension remeasurement gain in 2024 that did not reoccur, partially offset by a decrease in interest costs. See Note 8 to the condensed consolidated financial statements for more information on the other components of net periodic benefit cost. Interest Expense Three Months Ended March 31, (dollars in millions) 2025 2024 (Decrease) Total interest costs on debt balances $ 1,829 $ 1,909 $ (80) (4.2) % Less capitalized interest costs 197 274 (77) (28.1) Interest Expense $ 1,632 $ 1,635 $ (3) (0.2) Average debt outstanding (1)(3) $ 144,024 $ 152,754 Effective interest rate (2)(3) 5.1 % 5.0 % (1) The average debt outstanding is a financial measure and is calculated by applying a simple average of prior months end balances of total short-term and long-term debt, net of discounts, premiums and unamortized debt issuance costs. (2) The effective interest rate is the rate of actual interest incurred on debt. It is calculated by dividing the total interest costs on debt balances by the average debt outstanding. (3) We believe that this measure is useful to management, investors and other users of our financial information in evaluating our debt financing cost and trends in our debt leverage management. Total interest expense remained relatively flat during the three months ended March 31, 2025 compared to the similar period in 2024. Provision for Income Taxes Three Months Ended March 31, (dollars in millions) 2025 2024 Increase Provision for income taxes $ 1,490 $ 1,353 $ 137 10.1 % Effective income tax rate 23.0 % 22.3 % The effective income tax rate is calculated by dividing the provision for income taxes by income before the provision for income taxes. The increase in the provision for income taxes during the three months ended March 31, 2025 compared to the similar period in 2024 was primarily due to the increase in income before income taxes in the current period. The increase in the effective income tax rate during the three months ended March 31, 2025 compared to the similar period in 2024 was primarily due to higher tax benefits from the favorable resolution of various income tax matters in the prior period. Unrecognized Tax Benefits Unrecognized tax benefits were $2.6 billion at both March 31, 2025 and December 31, 2024. Interest and penalties related to unrecognized tax benefits were $649 million (after-tax) and $684 million (after-tax) at March 31, 2025 and December 31, 2024, respectively. Verizon and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state, local and foreign jurisdictions. As a large taxpayer, we are under audit by the Internal Revenue Service and multiple state and foreign jurisdictions for various open tax years. Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA Consolidated earnings before interest, taxes, depreciation and amortization expense (Consolidated EBITDA) and Consolidated Adjusted EBITDA, which are presented below, are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as they exclude the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to Verizon's competitors. Consolidated EBITDA is calculated by adding back interest, taxes, depreciation and amortization expense to net income. Consolidated Adjusted EBITDA is calculated by excluding from Consolidated EBITDA the effect of the following non-operational items: equity in earnings and losses of unconsolidated businesses and other income and expense, net, as well as the effect of 34 Table of Contents certain special items. We believe that this measure is useful to management, investors and other users of our financial information in evaluating the effectiveness of our operations and underlying business trends. We believe that Consolidated Adjusted EBITDA is widely used by investors to compare a company’s operating performance to its competitors by minimizing impacts caused by differences in capital structure, taxes, and depreciation and amortization policies. Further, the exclusion of non-operational items and special items enables comparability to prior period performance and trend analysis. See "Special Items" for additional information. It is management's intent to provide non-GAAP financial information to enhance the understanding of Verizon's GAAP financial information, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. We believe that providing these non-GAAP measures in addition to the GAAP measures allows management, investors and other users of our financial information to more fully and accurately assess both consolidated and segment performance. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be directly comparable to that of other companies. Three Months Ended March 31, (dollars in millions) 2025 2024 Consolidated Net Income $ 4,983 $ 4,722 Add: Provision for income taxes 1,490 1,353 Interest expense 1,632 1,635 Depreciation and amortization expense (1) 4,577 4,445 Consolidated EBITDA $ 12,682 $ 12,155 Add (Less): Other income, net $ (121) $ (198) Equity in (earnings) losses of unconsolidated businesses (6) 9 Legacy legal matter — 106 Consolidated Adjusted EBITDA $ 12,555 $ 12,072 (1) Includes Amortization of acquisition-related intangible assets, which were $190 million and $221 million during the three months ended March 31, 2025 and 2024, 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, 2025 compared to the similar period in 2024 were primarily a result of the factors described above in connection with consolidated operating revenues and consolidated operating expenses. Segment Results of Operations We have two reportable segments that we operate and manage as strategic business units - Consumer and Business. We measure and evaluate our segments based on segment operating income. The use of segment operating income is consistent with the CODM's assessment of segment performance. To aid in the understanding of segment performance as it relates to segment operating income, management uses the following operating statistics to evaluate the overall effectiveness of our segments. We believe these operating statistics are useful to investors and other users of our financial information because they provide additional insight into drivers of our segments' operating results, key trends and performance relative to our peers. These operating statistics may be determined or calculated differently by other companies and may not be directly comparable to those statistics of other companies. Wireless retail connections are retail customer device postpaid and prepaid connections as of the end of the period. Retail connections under an account may include those from smartphones and basic phones (collectively, phones), postpaid and prepaid FWA, as well as tablets and other internet devices, wearables and retail IoT devices. Wireless retail connections are calculated by adding total retail postpaid and prepaid new connections in the period to prior period retail connections, and subtracting total retail postpaid and prepaid disconnects in the period. Wireless retail postpaid connections are retail postpaid customer device connections as of the end of the period. Retail postpaid connections under an account may include those from phones, postpaid FWA, as well as tablets and other internet devices, wearables and retail IoT devices. Wireless retail postpaid connections are calculated by adding retail postpaid new connections in the period to prior period retail postpaid connections, and subtracting retail postpaid disconnects in the period. Wireless retail prepaid connections are retail prepaid customer device connections as of the end of the period. Retail prepaid connections may include those from phones, prepaid FWA, as well as tablets and other internet devices, and wearables. 35 Table of Contents Wireless retail prepaid connections are calculated by adding retail prepaid new connections in the period to prior period retail prepaid connections, and subtracting retail prepaid disconnects in the period. Wireless retail core prepaid connections are wireless retail prepaid customer device connections, excluding our SafeLink brand, as of the end of the period. Retail core prepaid connections may include those from phones, prepaid FWA, as well as tablets and other internet devices, and wearables. Wireless retail core prepaid connections are calculated by adding retail core prepaid new connections in the period to prior period retail core prepaid connections, and subtracting retail core prepaid disconnects in the period. Fios internet connections are the total number of connections to the internet using Fios internet services as of the end of the period. Fios internet connections are calculated by adding Fios internet new connections in the period to prior period Fios internet connections, and subtracting Fios internet disconnects in the period. Fios video connections are the total number of connections to traditional linear video programming using Fios video services as of the end of the period. Fios video connections are calculated by adding Fios video net additions in the period to prior period Fios video connections. Fios video net additions are calculated by subtracting the Fios video disconnects from the Fios video new connections. Total broadband connections are the total number of connections to the internet using Fios internet services, Digital Subscriber Line (DSL), 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. FWA broadband connections are the total number of postpaid and prepaid connections to the internet through our 5G or 4G LTE wireless networks as of the end of the period. FWA broadband connections are calculated by adding FWA broadband connections, net additions in the period to prior period FWA broadband connections. Wireline broadband connections are the total number of connections to the internet using DSL and Fios internet services as of the end of the period. Wireline broadband connections are calculated by adding wireline broadband connections, net additions in the period to prior period wireline broadband connections. Wireless retail connections, net addition s are the total number of additional retail customer device postpaid and prepaid connections, less the number of device disconnects in the period. Wireless retail connections, net additions in each period presented are calculated by subtracting the total retail postpaid and prepaid disconnects, net of certain adjustments, from the total retail postpaid and prepaid new connections in the period. Wireless retail postpaid connections, net additions are the total number of additional retail customer device postpaid connections, less the number of device disconnects in the period. Wireless retail postpaid connections, net additions in each period presented are calculated by subtracting the retail postpaid disconnects, net of certain adjustments, from the retail postpaid new connections in the period. Wireless retail prepaid connections, net additions are the total number of additional retail customer device prepaid connections, less the number of device disconnects in the period. Wireless retail prepaid connections, net additions in each period presented are calculated by subtracting the retail prepaid disconnects, net of certain adjustments, from the retail prepaid new connections in the period. Wireless retail core prepaid connections, net additions are the total number of additional retail customer device core prepaid connections, less the number of device disconnects in the period. Wireless retail core prepaid connections, net additions in each period presented are calculated by subtracting the retail core prepaid disconnects, net of certain adjustments, from the retail core prepaid new connections in the period. Wireless retail postpaid phone connections, net additions are the total number of additional retail customer postpaid phone connections, less the number of phone disconnects in the period. Wireless retail postpaid phone connections, net additions in each period presented are calculated by subtracting the retail postpaid phone disconnects, net of certain adjustments, from the retail postpaid phone new connections in the period. Total broadband connections, net additions are the total number of additional total broadband connections, less the number of total broadband disconnects in the period. Total broadband connections, net additions in each period presented are calculated by subtracting the total broadband disconnects, net of certain adjustments, from the total broadband new connections in the period. FWA broadband connections , net additions are the total number of additional FWA broadband connections, less the number of FWA broadband disconnects in the period. FWA broadband connections, net additions in each period presented are calculated by subtracting the FWA broadband disconnects, net of certain adjustments, from the FWA broadband new connections in the period. Wireline broadband connections, net additions are the total number of additional wireline broadband connections, less the number of wireline broadband disconnects in the period. Wireline broadband connections, net additions in each period presented 36 Table of Contents are calculated by subtracting the wireline broadband disconnects, net of certain adjustments, from the wireline broadband new connections in the period. Wireless churn is the rate at which service to retail, retail postpaid, or retail postpaid phone connections is terminated on average in the period. The churn rate in each period presented is calculated by dividing retail disconnects, retail postpaid disconnects, or retail postpaid phone disconnects by the average retail connections, average retail postpaid connections, or average retail postpaid phone connections, respectively, in the period. Wireless retail postpaid ARPA is the calculated average retail postpaid service revenue per account (ARPA) from retail postpaid accounts in the period. Wireless retail postpaid service revenue does not include recurring device payment plan billings related to the Verizon device payment program, insurance or regulatory fees. Wireless retail postpaid ARPA in each period presented is calculated by dividing retail postpaid service revenue by the average retail postpaid accounts in the period. Wireless retail postpaid accounts are wireless retail customers that are directly served and managed under the Verizon brand and use its services as of the end of the period. Accounts include unlimited plans, shared data plans and corporate accounts, as well as legacy single connection plans and multi-connection family plans. A single account may include monthly wireless services for a variety of connected devices. Wireless retail postpaid accounts are calculated by adding retail postpaid new accounts to the prior period retail postpaid accounts. Wireless retail postpaid connections per account is the calculated average number of retail postpaid connections per retail postpaid account as of the end of the period. Wireless retail postpaid connections per account is calculated by dividing the total number of retail postpaid connections by the number of retail postpaid accounts as of the end of the period. Segment operating income margin reflects the profitability of the segment as a percentage of revenue. Segment operating income margin is calculated by dividing total segment operating income by total segment operating revenues. Segment earnings before interest, taxes, depreciation and amortization (Segment EBITDA) , which is presented below, is a non-GAAP measure and does not purport to be an alternative to operating income (loss) as a measure of operating performance. We believe this measure is useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as it excludes the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to our competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income (loss). Segment EBITDA margin is calculated by dividing Segment EBITDA by total segment operating revenues. See Note 10 to the condensed consolidated financial statements for additional information. Verizon Consumer Group Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless services are provided across one of the most extensive wireless networks in the U.S. under the Verizon family of brands and through wholesale and other arrangements. We also provide FWA broadband through our 5G or 4G LTE networks as an alternative to traditional landline internet access. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios. 37 Table of Contents Operating Revenues and Selected Operating Statistics Three Months Ended March 31, Increase/ (dollars in millions, except ARPA) 2025 2024 (Decrease) Service (1) $ 20,066 $ 19,624 $ 442 2.3% Wireless equipment 4,532 4,490 42 0.9 Other (1) 1,020 943 77 8.2 Total Operating Revenues $ 25,618 $ 25,057 $ 561 2.2 Revenue Statistics: Wireless service revenue (1) $ 17,199 $ 16,760 $ 439 2.6 Fios revenue $ 2,896 $ 2,896 $ — — Connections (‘000): (2) Wireless retail 115,084 114,809 275 0.2 Wireless retail postpaid 94,854 93,905 949 1.0 Wireless retail core prepaid (3) 18,977 18,717 260 1.4 Fios internet 7,176 7,025 151 2.1 Fios video 2,626 2,883 (257) (8.9) FWA broadband 2,914 2,070 844 40.8 Wireline broadband 7,330 7,227 103 1.4 Total broadband 10,244 9,297 947 10.2 Net Additions in Period (‘000): Total wireless retail (159) (141) (18) (12.8) Wireless retail postpaid (253) 75 (328) nm Wireless retail postpaid phone (356) (194) (162) (83.5) Wireless retail core prepaid (3) 137 (131) 268 nm FWA broadband 199 203 (4) (2.0) Wireline broadband 31 36 (5) (13.9) Total broadband 230 239 (9) (3.8) Churn Rate: Wireless retail 1.57 % 1.62 % Wireless retail postpaid 1.13 % 1.03 % Wireless retail postpaid phone 0.90 % 0.83 % Account Statistics: Wireless retail postpaid ARPA (1) $ 146.46 $ 141.31 $ 5.15 3.6 Wireless retail postpaid accounts (‘000) (2) 32,620 32,876 (256) (0.8) Wireless retail postpaid connections per account (2) 2.91 2.86 0.05 1.7 (1) Reflects the reclassification of recurring device protection and insurance related plan revenues from Other revenue into Wireless service revenue in the first quarter of 2025. (2) As of end of period. (3) Represents total prepaid results excluding our SafeLink brand. Where applicable, the operating results reflect certain adjustments, including those related to the reclassification of connections associated with Verizon’s second number offering, migration activity among different types of devices and plans, customer profile changes, and adjustments in connection with mergers, acquisitions and divestitures. Where applicable, historical results have been recast to conform to the current period presentation. nm - not meaningful Consumer's total operating revenues increased during the three months ended March 31, 2025 compared to the similar period in 2024 as a result of increases in Service, Wireless equipment and Other revenues. 38 Table of Contents Service Revenue Service revenue increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily driven by an increase in Wireless service revenue. Wireless service revenue increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily as a result of: • an increase of $407 million in postpaid revenue primarily related to pricing actions, higher adoption of perks and premium MyPlan offerings, and a 41% increase in our FWA subscriber base. These increases were partially offset by the amortization of wireless equipment sales promotions; • an increase of $143 million related to growth in non-retail service revenue; and • a decrease of $112 million primarily driven by the termination of the Affordable Connectivity Program in the second quarter of 2024, partially offset by an increase in the core prepaid subscriber base. Wireless Equipment Revenue Wireless equipment revenue remained relatively flat during the three months ended March 31, 2025 compared to the similar period in 2024. Other Revenue Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, 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 the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to an increase of $53 million driven by regulatory surcharges primarily related to a higher net Federal Universal Service Fund rate. Operating Expenses Three Months Ended March 31, (dollars in millions) 2025 2024 Increase Cost of services $ 4,574 $ 4,537 $ 37 0.8 % Cost of wireless equipment 4,912 4,750 162 3.4 Selling, general and administrative expense 5,165 5,089 76 1.5 Depreciation and amortization expense 3,543 3,309 234 7.1 Total Operating Expenses $ 18,194 $ 17,685 $ 509 2.9 Cost of Services Cost of services remained relatively flat during the three months ended March 31, 2025 compared to the similar period in 2024. Cost of Wireless Equipment Cost of wireless equipment increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to: • an increase of $148 million due to a shift to higher priced equipment in the mix of wireless devices sold; and • an increase of $14 million driven by a higher volume of wireless devices sold. Selling, General and Administrative Expense Selling, general and administrative expense increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to an increase of $66 million in advertising costs related to various marketing campaigns in the first quarter of 2025. Depreciation and Amortization Expense Depreciation and amortization expense increased during the three months ended March 31, 2025 compared to the similar period in 2024 driven by the change in the mix of total Verizon depreciable and amortizable assets and Consumer's usage of those assets. 39 Table of Contents Segment Operating Income and EBITDA Three Months Ended March 31, (dollars in millions) 2025 2024 Increase Segment Operating Income $ 7,424 $ 7,372 $ 52 0.7 % Add Depreciation and amortization expense 3,543 3,309 234 7.1 Segment EBITDA $ 10,967 $ 10,681 $ 286 2.7 Segment operating income margin 29.0 % 29.4 % Segment EBITDA margin 42.8 % 42.6 % The changes in the table above during the three months ended March 31, 2025 compared to the similar period in 2024 were primarily a result of the factors described in connection with Consumer operating revenues and operating expenses. Verizon Business Group Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and advanced communication services, corporate networking solutions, security and managed network services, local and long distance voice services and network access to deliver various IoT services and products. We provide these products and services to businesses, public sector customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world. The Business segment is organized in three customer groups: Enterprise and Public Sector, Business Markets and Other, and Wholesale. 40 Table of Contents Operating Revenues and Selected Operating Statistics Three Months Ended March 31, Increase/ (dollars in millions) 2025 2024 (Decrease) Enterprise and Public Sector $ 3,457 $ 3,587 $ (130) (3.6) % Business Markets and Other 3,314 3,195 119 3.7 Wholesale 515 594 (79) (13.3) Total Operating Revenues (1) $ 7,286 $ 7,376 $ (90) (1.2) Revenue Statistics: Wireless service revenue (2) $ 3,565 $ 3,467 $ 98 2.8 Fios revenue $ 310 $ 311 $ (1) (0.3) Connections (‘000): (3) Wireless retail postpaid 30,890 29,947 943 3.1 Fios internet 405 389 16 4.1 Fios video 52 59 (7) (11.9) FWA broadband 1,931 1,358 573 42.2 Wireline broadband 459 458 1 0.2 Total broadband 2,390 1,816 574 31.6 Net Additions in Period (‘000): Wireless retail postpaid 94 178 (84) (47.2) Wireless retail postpaid phone 67 80 (13) (16.3) FWA broadband 109 151 (42) (27.8) Wireline broadband — (1) 1 nm Total broadband 109 150 (41) (27.3) Churn Rate: Wireless retail postpaid 1.52 % 1.51 % Wireless retail postpaid phone 1.15 % 1.13 % (1) Service and other revenues included in our Business segment were approximately $6.4 billion and $6.5 billion for the three months ended March 31, 2025 and 2024, respectively. Wireless equipment revenues included in our Business segment were $866 million and $871 million for the three months ended March 31, 2025 and 2024, respectively. (2) Reflects the reclassification of recurring device protection and insurance related plan revenues from Other revenue into Wireless service revenue in the first quarter of 2025. (3) As of end of period. Where applicable, the operating results reflect certain adjustments, including those related to the reclassification of connections associated with Verizon’s second number offering, migration activity among different types of devices and plans, customer profile changes, and adjustments in connection with mergers, acquisitions and divestitures. Where applicable, historical results have been recast to conform to the current period presentation. nm - not meaningful Business's total operating revenues decreased during the three months ended March 31, 2025 compared to the similar period in 2024 as a result of decreases in Enterprise and Public Sector and Wholesale revenues, partially offset by an increase in Business Markets and Other revenue. Enterprise and Public Sector Enterprise and Public Sector offers wireless products and services as well as wireline connectivity such as broadband and managed solutions to our large business and private sector customers. Large businesses are identified based on their size and volume of business with Verizon. Public sector customers include U.S. federal, state and local governments and educational institutions. Our offerings to this customer group include plans with features and pricing designed to address their specific needs. Enterprise and Public Sector revenues decreased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to a decrease of $119 million in wireline revenue primarily driven by declines in networking, traditional data 41 Table of Contents and voice communication services along with related professional services, due to secular market pressure and technology shifts, coupled with lower customer premise equipment sales volumes. Business Markets and Other Business Markets and Other offers wireless services (including FWA broadband), wireless equipment, advanced communication services, tailored voice and networking products, Fios services, advanced voice solutions and security services to businesses that ordinarily do not meet the requirements to be categorized as Enterprise and Public Sector, as described above. Business Markets and Other also includes solutions that support mobile resource management. Business Markets and Other revenues increased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to an increase of $129 million in Wireless service revenue driven by pricing actions and an increase in our FWA subscriber base partially offset by the amortization of wireless equipment sales promotions. Wholesale Wholesale offers wireline communications services including data, voice, local dial tone and broadband services primarily to local, long distance, and wireless carriers that use our facilities to provide services to their customers. Wholesale revenues decreased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to a decrease of $79 million related to declines in traditional data and voice communication services and network connectivity as a result of technology substitution. Operating Expenses Three Months Ended March 31, Increase/ (dollars in millions) 2025 2024 Decrease Cost of services $ 2,376 $ 2,432 $ (56) (2.3) % Cost of wireless equipment 1,194 1,155 39 3.4 Selling, general and administrative expense 2,032 2,262 (230) (10.2) Depreciation and amortization expense 1,020 1,128 (108) (9.6) Total Operating Expenses $ 6,622 $ 6,977 $ (355) (5.1) Cost of Services Cost of services decreased during the three months ended March 31, 2025 compared to the similar period in 2024 primarily as a result of: • a decrease of $25 million in customer premise equipment costs due to lower volumes sold; and • a decrease of $15 million in rent and lease expense primarily driven by a change in Business's proportionate usage of shared leased assets and new lease activity. Cost of Wireless Equipment Cost of wireless equipment remained relatively flat during the three months ended March 31, 2025 compared to the similar period in 2024. Selling, General and Administrative Expense Selling, general and administrative expense decreased during the three months compared to the similar period in 2024 primarily due to a decrease of $144 million in personnel costs related to the impact of workforce changes primarily due to the voluntary separation program that was announced in June of 2024 and completed in March of 2025. Depreciation and Amortization Expense Depreciation and amortization expense decreased during the three months ended March 31, 2025 compared to the similar period in 2024 driven by the change in the mix of total Verizon depreciable and amortizable assets and Business's usage of those assets. 42 Table of Contents Segment Operating Income and EBITDA Three Months Ended March 31, Increase/ (dollars in millions) 2025 2024 Decrease Segment Operating Income $ 664 $ 399 $ 265 66.4 % Add Depreciation and amortization expense 1,020 1,128 (108) (9.6) Segment EBITDA $ 1,684 $ 1,527 $ 157 10.3 Segment operating income margin 9.1 % 5.4 % Segment EBITDA margin 23.1 % 20.7 % The changes in the table above during the three months ended March 31, 2025 compared to the similar period in 2024 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 March 31, (dollars in millions) 2025 2024 Amortization of acquisition-related intangible assets (1) Depreciation and amortization expense $ 190 $ 221 Legacy legal matter Selling, general and administrative expense — 106 Total $ 190 $ 327 (1) Amounts are included in segment results of operations. Consolidated Adjusted EBITDA, a non-GAAP measure discussed in the section titled "Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA" as part of Consolidated Results of Operations, excludes all of the amounts included above. The income and expenses related to special items included in our condensed consolidated results of operations were as follows: Three Months Ended March 31, (dollars in millions) 2025 2024 Within Total Operating Expenses $ 190 $ 327 Total $ 190 $ 327 Amortization of Acquisition-Related Intangible Assets During the three months ended March 31, 2025 and 2024, we recorded pre-tax amortization expense of $190 million and $221 million, respectively, related to acquired intangible assets. 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. Consolidated Financial Condition Three Months Ended March 31, (dollars in millions) 2025 2024 Change Cash Flows Provided By (Used In) Operating activities $ 7,782 $ 7,084 $ 698 Investing activities (3,752) (5,245) 1,493 Financing activities (5,893) (1,428) (4,465) Increase (decrease) in cash, cash equivalents and restricted cash $ (1,863) $ 411 $ (2,274) 43 Table of Contents 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. Our cash and cash equivalents are held both domestically and internationally, and are invested to maintain principal and provide liquidity. See "Market Risk" for additional information regarding our foreign currency risk management strategies. 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, including, for example, to complete our acquisition of Frontier, 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. In addition, we monetize certain receivables through asset-backed debt transactions. Cash Flows Provided By Operating Activities Our primary source of funds continues to be cash generated from operations. Net cash provided by operating activities increased $698 million during the three months ended March 31, 2025 compared to the similar period in 2024 primarily due to an increase in earnings and discretionary pension plan contributions of $365 million made during the three months ended March 31, 2024 that did not reoccur. As a result of the prior year discretionary contributions to our qualified pension plans and the additional non-cash contribution made in April 2025 in the principal amount of $563 million, we expect that there will be no required pension funding through the end of 2025, subject to changes in market conditions. Cash Flows Used In Investing Activities Capital Expenditures 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, 2025 and 2024 were $4.1 billion and $4.4 billion, respectively. Capital expenditures decreased approximately $231 million during the three months ended March 31, 2025 compared to the similar period in 2024. Acquisitions of Wireless Licenses During the three months ended March 31, 2025 and 2024, we recorded capitalized interest related to wireless licenses of $122 million and $180 million, respectively. During the three months ended March 31, 2024, we made payments of $269 million for obligations related to clearing costs and accelerated clearing incentives associated with Auction 107. Cash Flows Used In Financing Activities 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, 2025, net cash used in financing activities was $5.9 billion. 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, 2025, our net cash used in financing activities was primarily driven by cash dividends paid of $2.9 billion, repayments of asset-backed long-term borrowings of $2.6 billion and repayments and repurchases of long-term borrowings and finance lease obligations of $2.4 billion. These payments were partially offset by proceeds from asset-backed long-term borrowings of $2.8 billion. At March 31, 2025, our total debt of $143.6 billion included unsecured debt of $117.3 billion and secured debt of $26.3 billion. At December 31, 2024, our total debt of $144.0 billion included unsecured debt of $117.9 billion and secured debt of $26.1 billion. During the three months ended March 31, 2025 and 2024, our effective interest rate was 5.1% and 5.0%, 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. Verizon may acquire debt securities issued by Verizon and its affiliates through open market purchases, redemptions, privately negotiated transactions, tender offers, exchange offers, or otherwise, upon such terms and at such prices as Verizon may from time to time determine, for cash or other consideration. 44 Table of Contents Asset-Backed Debt Cash collections on the receivables and on the underlying receivables related to the participation interest collateralizing our asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the segregated accounts are considered restricted cash and are included in Prepaid expenses and other and Other assets in our condensed consolidated balance sheets. Proceeds from our asset-backed debt transactions are reflected in Cash flows from financing activities in our condensed consolidated statements of cash flows. The asset-backed debt issued is included in Debt maturing within one year and Long-term debt in our condensed consolidated balance sheets. See Note 5 to the condensed consolidated financial statements for additional information. Long-Term Credit Facilities At March 31, 2025 (dollars in millions) Maturities Facility Capacity Unused Capacity Principal Amount Outstanding Verizon revolving credit facility (1) 2028 $ 12,000 $ 11,964 $ — Various export credit facilities (2) 2025 - 2031 10,000 — 5,118 Total $ 22,000 $ 11,964 $ 5,118 (1) The revolving credit facility does not require us to comply with financial covenants or maintain specified credit ratings, and it permits us to borrow even if our business has incurred a material adverse change. The revolving credit facility provides for the issuance of letters of credit. As of March 31, 2025 , there have been no drawings against the revolving credit facility since its inception. (2) During the three months ended March 31, 2025 and 2024, there were no drawings from these facilities. Borrowings under certain of these facilities are repaid semi-annually in equal installments up to the applicable maturity dates. Maturities reflect maturity dates of principal amounts outstanding. Any amounts borrowed under these facilities and subsequently repaid cannot be reborrowed. Other, Net Other, net cash flow from financing activities during the three months ended March 31, 2025 includes $288 million in payments related to vendor financing arrangements, $159 million in payments related to withheld employee shares tax and $128 million in equity distribution payments made for controlled entities. Dividends As in prior periods, dividend payments were a significant use of capital resources. We paid $2.9 billion and $2.8 billion in cash dividends during the three months ended March 31, 2025 and 2024, respectively. Covenants Our credit agreements contain covenants that are typical for large, investment grade companies. These covenants include requirements to pay interest and principal in a timely fashion, pay taxes, maintain insurance with responsible and reputable insurance companies, preserve our corporate existence, keep appropriate books and records of financial transactions, maintain our properties, provide financial and other reports to our lenders, limit pledging and disposition of assets and mergers and consolidations, and other similar covenants. We and our consolidated subsidiaries are in compliance with all of our restrictive covenants in our debt agreements. Change In Cash, Cash Equivalents and Restricted Cash Our Cash and cash equivalents at March 31, 2025 totaled $2.3 billion, a $1.9 billion decrease compared to December 31, 2024, primarily as a result of the factors discussed above. Restricted cash totaled $465 million and $441 million as of March 31, 2025 and December 31, 2024, 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 Free cash flow is a non-GAAP financial measure that reflects an additional way of viewing our liquidity that, we believe, when viewed with our GAAP results, provides management, investors and other users of our financial information with a more complete understanding of factors and trends affecting our cash flows. Free cash flow is calculated by subtracting capital expenditures (including capitalized software) from net cash provided by operating activities. We believe it is a more conservative 45 Table of Contents measure of cash flow since capital expenditures are necessary for ongoing operations. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments made on finance lease obligations or cash payments for business acquisitions or wireless licenses. Therefore, we believe it is important to view free cash flow as a complement to our entire condensed consolidated statements of cash flows. The following table reconciles net cash provided by operating activities to free cash flow: Three Months Ended March 31, (dollars in millions) 2025 2024 Change Net cash provided by operating activities $ 7,782 $ 7,084 $ 698 Less Capital expenditures (including capitalized software) 4,145 4,376 (231) Free cash flow $ 3,637 $ 2,708 $ 929 The increase in free cash flow during the three months ended March 31, 2025 compared to the similar period in 2024 is a reflection of the increase in operating cash flows, as well as the decrease in capital expenditures, both of which are discussed above. Other Future Obligations As of March 31, 2025, Verizon had 28 renewable energy purchase agreements with third parties for a total of approximately 3.7 gigawatts of anticipated renewable energy capacity across multiple states. See Note 12 to the condensed consolidated financial statements for additional information. Market Risk 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. We employ risk management strategies, which may include the use of a variety of derivatives including cross currency swaps, forward starting interest rate swaps, interest rate swaps, interest rate caps, treasury rate locks and foreign exchange forwards. We do not hold derivatives for trading purposes. 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. 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. 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. 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, 2025, we did not hold any collateral. At March 31, 2025, we posted $1.6 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, 2024, we did not hold any collateral. At December 31, 2024, we posted $2.1 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. While we may be exposed to credit losses due to the nonperformance of our counterparties, we consider the risk remote and do not expect that any such nonperformance would result in a significant effect on our results of operations or financial condition due to our diversified pool of counterparties. See Note 7 to the condensed consolidated financial statements for additional information regarding the derivative portfolio. Interest Rate Risk 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, 2025, 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 $342 million. The interest rates on our existing long-term debt obligations are unaffected by changes to our credit ratings. Interest Rate Swaps We enter into interest rate swaps to achieve a targeted mix of fixed and variable rate debt. We principally receive fixed rates and pay variable rates, resulting in a net increase or decrease to Interest expense. These swaps are designated as fair value hedges 46 Table of Contents and hedge against interest rate risk exposure of designated debt issuances. At March 31, 2025 and December 31, 2024, the fair value of the liability of these contracts was $4.8 billion and $5.3 billion, respectively. At both March 31, 2025 and December 31, 2024, the total notional amount of the interest rate swaps was $24.0 billion. Foreign Currency Risk The functional currency for our foreign operations is primarily the local currency. The translation of income statement and balance sheet amounts of our foreign operations into U.S. dollars is recorded as cumulative translation adjustments, which are included in Accumulated other comprehensive loss in our condensed consolidated balance sheets. Gains and losses on foreign currency transactions are recorded in the condensed consolidated statements of income. At March 31, 2025, our primary translation exposure was to the British Pound Sterling, Euro, Australian Dollar and Swedish Krona. Cross Currency Swaps We have entered into cross currency swaps to exchange our British Pound Sterling, Euro, Swiss Franc, Canadian Dollar and Australian Dollar-denominated cash flows into U.S. dollars and to fix our cash payments in U.S. dollars, as well as to mitigate the impact of foreign currency transaction gains or losses. At March 31, 2025 and December 31, 2024, the fair value of the asset of these contracts was $528 million and $500 million, respectively. At March 31, 2025 and December 31, 2024, the fair value of the liability of these contracts was $2.4 billion and $2.7 billion, respectively. At March 31, 2025 and December 31, 2024, the total notional amount of the cross currency swaps was $31.7 billion and $32.1 billion, respectively. Foreign Exchange Forwards We also have foreign exchange forwards which we use as an economic hedge but for which we have elected not to apply hedge accounting. We entered into 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, 2025 and December 31, 2024, the fair value of the asset and liability of these contracts was insignificant. At March 31, 2025 and December 31, 2024, the total notional amount of the foreign exchange forwards was $730 million and $620 million, respectively. Acquisitions and Divestitures Spectrum License Transactions From time to time, we enter into agreements to buy, sell or exchange spectrum licenses. We believe these spectrum license transactions have allowed us to continue to enhance the reliability of our wireless network while also resulting in a more efficient use of spectrum. In February 2021, the Federal Communications Commission (FCC) concluded Auction 107 for C-Band wireless spectrum. 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, we made payments of $269 million 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. 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. 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. In November 2024, Frontier shareholders approved the transaction. Consummation of the transaction is subject to 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. Cautionary Statement Concerning Forward-Looking Statements In this report we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future 47 Table of Contents results of operations. 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. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The following important factors, along with those discussed 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, including artificial intelligence, 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; • adverse conditions in the U.S. and international economies, including inflation and changing interest rates in the markets in which we operate; • changes to international trade and tariff policies and related economic and other impacts; • cyberattacks impacting our networks or systems and any resulting financial or reputational impact; • damage to our infrastructure or disruption of our operations from natural disasters, extreme weather conditions, acts of war, terrorist attacks or other hostile acts and any resulting financial or reputational impact; • disruption of our key suppliers' or vendors' provisioning of products or services, including as a result of geopolitical factors or the potential impacts of global climate change; • material adverse changes in labor matters and any resulting financial or operational impact; • damage to our reputation or brands; • the impact of public health crises on our business, operations, employees and customers; • changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks or businesses; • allegations regarding the release of hazardous materials or pollutants into the environment from our, or our predecessors', network assets and any related government investigations, regulatory developments, litigation, penalties and other liability, remediation and compliance costs, operational impacts or reputational damage; • our high level of indebtedness; • significant litigation and any resulting material expenses incurred in defending against lawsuits or paying awards or settlements; • an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets affecting the cost, including interest rates, and/or availability of further financing; • significant increases in benefit plan costs or lower investment returns on plan assets; • changes in tax laws or regulations, or in their interpretation, or challenges to our tax positions, resulting in additional tax expense or liabilities; • 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; and 48 Table of Contents • risks associated with mergers, acquisitions, divestitures 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk Information relating to market risk is included in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations under the caption "Market Risk."