VERIZON COMMUNICATIONS INC

Verizon Communications Inc. is a holding company that, acting through its subsidiaries, is one of the world's leading providers of communications, technology, information and streaming products and services to consumers, businesses and government entities. The company operates in the highly competitive telecommunications industry, which has seen the rapid development of new technologies, services and products that have eliminated many of the distinctions among wireless, cable, internet and traditional telephone services and brought new competitors to its markets. Verizon competes against other national wireless service providers, including AT&T Inc. and T-Mobile US, Inc., as well as various regional wireless service providers, and also competes for retail activations with resellers that buy bulk wholesale service from wireless service providers, including cable companies such as Comcast Corporation and Charter Communications, Inc. With respect to fiber, FWA and other broadband services, the company competes against cable companies, wireless service providers, domestic and foreign telecommunications providers, satellite television companies, low Earth orbit satellite companies, internet service providers, OTT providers, other internet portal providers and other companies that offer network services and managed enterprise solutions. The company's ability to compete effectively depends on, among other things, the pricing of its products and services and its value proposition, its competitors' promotional strategies, the quality of its customer service, its network reliability, speed, capacity and coverage, its ability to market its products and services effectively, its development of new and enhanced products and services, its capital resources, and the reach and quality of its sales and distribution channels.

Verizon's primary competitors named in the filing include AT&T Inc. and T-Mobile US, Inc. for wireless connectivity products and services, and cable companies such as Comcast Corporation and Charter Communications, Inc. for fiber, FWA and other broadband services. The company's stated competitive advantages include operating one of the most extensive wireless networks in the United States under the Verizon family of brands, owning and operating one of the largest global fiber-optic networks in the world providing connectivity to Business customers in more than 180 countries, and having a portfolio of spectrum holdings including C-Band and millimeter wave spectrum. Verizon has an industry leading virtualized radio access network (vRAN) infrastructure and has deployed Open RAN (ORAN) based solutions. As of December 31, 2025, Verizon operated a national wireless network covering approximately 147 million wireless retail connections and an extensive broadband network covering approximately 14 million broadband connections. The Consumer segment had approximately 116 million wireless retail connections (including FWA), of which 83% were postpaid connections, and the Business segment had approximately 31 million wireless retail postpaid connections (including FWA).

Verizon generates revenue through the provision of communications, technology, information and streaming products and services to consumers, businesses and government entities. The company's revenue mix includes service revenues and other, which totaled $112.721 billion ¹ for the year ended December 31, 2025, and wireless equipment revenues, which totaled $25.470 billion ² for the same period. Service revenue is primarily recurring in nature, derived from monthly access charges for wireless and wireline services, while wireless equipment revenue is transactional, generated from the sale of devices. The company's primary customer segments are consumers (served by the Verizon Consumer Group segment) and businesses, public sector customers, and wireless and wireline carriers (served by the Verizon Business Group segment). The Consumer segment's revenues were $106.8 billion ³ in 2025, representing approximately 77% of Verizon's consolidated revenues, and the Business segment's revenues were $29.1 billion ⁴, representing approximately 21% of consolidated revenues.

The Verizon Consumer Group segment provides consumer-focused wireless and wireline communications services and products. 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. Wireline services are provided in 31 U.S. states and Washington D.C. over a 100% fiber-optic network through the fiber product portfolio, as well as over a traditional copper-based network. The segment also provides fixed wireless access (FWA) broadband through 5G or 4G LTE networks. In 2025, the Consumer segment's revenues were $106.8 billion ⁵. As of December 31, 2025, Consumer had approximately 116 million wireless retail connections (including FWA) ⁶, of which 83% were postpaid connections ⁷, approximately 11 million total broadband connections ⁸, and approximately 2 million Fios video connections ⁹. Wireless service revenue for the Consumer segment was $69.382 billion ¹⁰ for the year ended December 31, 2025. Fios revenue for the Consumer segment was $11.678 billion ¹¹ for the same period.

The Verizon Business Group segment provides wireless and wireline communications services and products, including mobility communication services, FWA and wireline broadband, Internet of Things (IoT) connectivity solutions, advanced communication services, corporate networking solutions, local and long distance voice services, and security and managed network services. The segment is organized in three customer groups: Enterprise and Public Sector, Business Markets and Other, and Wholesale. In 2025, the Business segment's revenues were $29.1 billion ¹². As of December 31, 2025, Business had approximately 31 million wireless retail postpaid connections (including FWA) ¹³ and approximately 3 million total broadband connections ¹⁴. Enterprise and Public Sector revenues were $13.5 billion ¹⁵ in 2025, representing approximately 46% of Business's total revenues. Business Markets and Other revenues were $13.6 billion ¹⁶, representing approximately 47% of Business's total revenues. Wholesale revenues were $2.0 billion ¹⁷, representing approximately 7% of Business's total revenues.

During the period, Verizon announced plans in the fourth quarter of 2025 to reduce its workforce by more than 13,000 positions ¹⁸ as part of an initiative to reduce costs, pursue greater efficiency and align investments with business and strategic priorities. Over 80% of the affected employees exited in December 2025 ¹⁹. On January 20, 2026, Verizon completed the acquisition of Frontier Communications Parent, Inc., a U.S. provider of broadband internet and other communication services, which expanded the company's fiber broadband footprint to 31 U.S. states and Washington D.C. ²⁰. On January 30, 2026, Verizon completed the acquisition of Starry Group Holdings, Inc., a fixed wireless broadband provider serving multi-dwelling units in five markets across the U.S. ²¹. In October 2025, Verizon entered into a commercial fiber arrangement with an affiliate of Tillman Global Holdings to further increase its fiber access reach ²². The company also recorded pre-tax severance charges of $1.7 billion ²³ principally as a result of separations in connection with workforce reduction initiatives, and pre-tax asset and business rationalization charges of $583 million ²⁴ predominately related to the decision to cease use of certain real estate assets and exit non-strategic portions of certain businesses.

For the fiscal year ended December 31, 2025, Verizon reported total operating revenues of $138.191 billion ²⁵, compared to $134.788 billion ²⁶ in the prior year, representing an increase of 2.5%. Net income attributable to Verizon was $17.174 billion ²⁷ for 2025, compared to $17.506 billion ²⁸ in 2024. Diluted earnings per common share were $4.06 ²⁹ in 2025, compared to $4.14 ³⁰ in 2024. Consolidated operating income was $29.259 billion ³¹ in 2025, compared to $28.686 billion ³² in 2024. Net cash provided by operating activities was $37.137 billion ³³ in 2025, compared to $36.912 billion ³⁴ in 2024. Free cash flow, a non-GAAP measure, was $20.126 billion ³⁵ in 2025, compared to $19.822 billion ³⁶ in 2024. The Consumer segment's operating revenues increased by $3.9 billion ³⁷, or 3.8%, to $106.8 billion ³⁸, while the Business segment's operating revenues decreased by $462 million ³⁹, or 1.6%, to $29.1 billion ⁴⁰.

The filing states that management expects 2026 will be a transitional year for revenue as the company works towards achieving sustainable volume based growth. The company anticipates cash requirements for its 2026 capital program to be between $16.0 billion and $16.5 billion ⁴¹. Management expects that there will be no required pension funding through the end of 2030 ⁴², subject to changes in market conditions. Contributions to other postretirement benefit plans are estimated to be approximately $700 million ⁴³ in 2026. The company expects no required qualified pension plan contributions and insignificant nonqualified pension plan contributions for 2026 ⁴⁴.

A major growth vector is the expansion of the company's fiber broadband footprint following the acquisition of Frontier Communications Parent, Inc., which closed on January 20, 2026. This transaction expanded Verizon's fiber broadband footprint to 31 U.S. states and Washington D.C. ⁴⁵ and is expected to provide opportunities for future fiber growth. The company expects to continue to grow its fiber internet connections as it seeks to expand availability of fiber, increase its penetration rates, and experience continued strong demand for higher speed internet connections. Additionally, the acquisition of Starry Group Holdings, Inc., completed on January 30, 2026, is expected to provide additional FWA capabilities and enhance the company's ability to deliver high-speed internet to multi-dwelling units and urban communities ⁴⁶. The company also entered into a commercial fiber arrangement with an affiliate of Tillman Global Holdings in October 2025 to further increase its fiber access reach ⁴⁷.

Another growth vector is the continued expansion of fixed wireless access (FWA) broadband connections. As of December 31, 2025, Verizon had 5.7 million FWA broadband connections ⁴⁸. The company expects continued growth of FWA connections to complement strong fiber results as demand for broadband services continues to grow. In the Consumer segment, the company expects mobility and broadband revenue to be driven by plans to maintain and grow its customer base, migrations to higher priced plans, increased offering of perks, and increases in FWA connections and revenue, offset in part by higher promotion amortization impacts. In the Business segment, the company expects mobility and broadband revenue to expand, driven by growth from an increase in wireless volumes, strong FWA revenue and increased penetration of fiber. The company also expects its wireless service revenue to benefit from its growing prepaid business.

Management expects that the growth of wireless service revenue will continue to be unfavorably impacted by the amortization of wireless equipment sales and promotions in 2026 ⁴⁹. The company is focused on achieving profitable growth and undertaking transformation initiatives to reduce costs and improve efficiencies, including through AI-driven technologies. The company expects that its ability to generate cash flows will benefit from its expected mobility and broadband service revenue growth and optimization of its cost structure. The company is focused on a more efficient use of capital with the goal to achieve its capital investment priorities at lower cost. In the Business segment, the company expects that legacy traditional wireline services will continue to face secular pressures.

The company's 2026 capital program includes capital to fund advanced networks and services, including expanding and adding capacity and density to its core networks, completing the deployment of C-Band spectrum, and advancing its network architecture, while reducing the cost to deliver services to customers, and pursuing other opportunities to drive operating efficiencies. It will also support the company's broadband investment plans and the expansion of its fiber broadband footprint. The company anticipates cash requirements for its 2026 capital program to be between $16.0 billion and $16.5 billion ⁵⁰. As part of an initiative to reduce costs, pursue greater efficiency and align investments with business and strategic priorities, in the fourth quarter of 2025, the company announced plans to reduce its workforce by more than 13,000 positions ⁵¹, with over 80% of the affected employees exiting in December 2025 ⁵².

In January 2026, the Board of Directors authorized a share repurchase program of up to $25 billion ⁵³ of the company's common stock. The company stated that it expected to repurchase at least $3 billion ⁵⁴ of its common stock during 2026. The company also announced that it believed its strategic plans would provide it with the capacity to return approximately $55 billion ⁵⁵ to its shareholders, in the form of dividend payments and share repurchases, through the end of 2028. During the third quarter of 2025, the Board of Directors increased the quarterly dividend payment by 1.8% to $0.6900 ⁵⁶ from $0.6775 ⁵⁷ per share in the preceding quarter. Capital expenditures, including capitalized software, were $17.0 billion ⁵⁸ for 2025. The company anticipates cash requirements for its 2026 capital program to be between $16.0 billion and $16.5 billion ⁵⁹.

The company faces significant competition that may negatively affect its operating results. Competitors commonly offer aggressive pricing, promotions, premium content options and other incentives, in some cases specifically targeting Verizon's customers and putting pressure on its pricing and margins. The company expects the wireless industry's customer growth rate to continue to moderate over time in comparison to historical growth rates, leading to increased competition for customers. The company also faces risks from adverse conditions in the U.S. and international economies, including inflation and changing interest rates, which could negatively affect the affordability of and demand for some of its products and services and its cost of doing business. Changes to international trade and tariff policies, including new or increased tariffs and other trade restrictions, could adversely affect the company's cost structure and profitability.

The company is subject to risks from cyberattacks impacting its networks or systems, which have increased in frequency, scope and potential harm in recent years. The company experienced a cyberattack in September 2024 by a highly sophisticated nation-state actor known as Salt Typhoon, which was able to access portions of its network. The company's long-term success depends on its ability to implement business transformation initiatives and achieve their anticipated benefits, which involve various execution challenges, may take longer than expected and may result in higher than expected expenses. The company has a significant amount of debt, with approximately $131.1 billion ⁶⁰ of outstanding unsecured indebtedness and $27.1 billion ⁶¹ of outstanding secured indebtedness as of December 31, 2025, which could have negative consequences including requiring significant cash flow for debt service and reducing flexibility.

Verizon faces significant competition that may negatively affect its operating results, as competitors commonly offer aggressive pricing, promotions, and premium content options, in some cases specifically targeting Verizon's customers and putting pressure on its pricing and margins. The company expects the wireless industry's customer growth rate to continue to moderate over time, leading to increased competition for customers. The company has a significant amount of debt, with approximately $131.1 billion ⁶² of outstanding unsecured indebtedness and $27.1 billion ⁶³ of outstanding secured indebtedness as of December 31, 2025, which could require dedicating significant cash flow to debt service and reduce financial flexibility. Cyberattacks impacting the company's networks or systems have increased in frequency, scope and potential harm, and in September 2024, the company was the subject of a cyberattack by a highly sophisticated nation-state actor known as Salt Typhoon. The company's long-term success depends on its ability to implement business transformation initiatives and achieve their anticipated benefits, which involve various execution challenges and may take longer than expected. The company's Business reporting unit had a fair value that exceeded its carrying amount by approximately 9% ⁶⁴ at the goodwill impairment measurement date of October 31, 2025, and remains susceptible to future impairment risk, as a projected sustained decline in the reporting unit's revenues and earnings could have a significant negative impact on its fair value and could result in future impairment charges.

Management's message emphasizes the company's focus on executing on the fundamentals of the business: enhancing its networks, offering innovative services and products, growing and maintaining a high-quality customer base, and delivering strong financial and operating results. The company is undertaking various business transformation initiatives and continues to focus on cost efficiencies in order to have flexibility to adjust to changes in the competitive and economic environments, streamline its operations, enhance customer experience and increase shareholder value. Management states that the company expects 2026 will be a transitional year for revenue as it works towards achieving sustainable volume based growth. The company anticipates cash requirements for its 2026 capital program to be between $16.0 billion and $16.5 billion ⁶⁵. Management expects that there will be no required pension funding through the end of 2030 ⁶⁶, subject to changes in market conditions. The company expects to focus on its strategic growth areas - mobility and broadband - and plans to continue to rationalize its product portfolio, implement operational efficiencies and leverage the latest technological and digital capabilities. Management also announced in January 2026 that it believed its strategic plans would provide it with the capacity to return approximately $55 billion ⁶⁷ to its shareholders, in the form of dividend payments and share repurchases, through the end of 2028, and the Board of Directors authorized a share repurchase program of up to $25 billion ⁶⁸ and stated that the company expected to repurchase at least $3 billion ⁶⁹ of its common stock during 2026.