Verizon Reports Strong 4Q and Year-End 2010 Results, Highlighted by Cash Flow, Wireless and FiOS Growth

Verizon Reports Strong 4Q and Year-End 2010 Results, Highlighted by Cash Flow, Wireless and FiOS Growth

Gains Reported in 4Q Wireless and Wireline Margins; Solid Results Across Verizon Wireless, Consumer Wireline and Global Business

News Release January 25, 2011 –

4Q HIGHLIGHTS

(Click here for financial tables)

Consolidated

93 cents in diluted earnings per share (EPS), including 39 cents per share in net non-operational gains, compared with 22 cents in EPS (as adjusted) in 4Q 2009, including 28 cents per share in non-operational charges.Continued cash flow growth in quarter, contributing to $33.4 billion in cash flow from operations in 2010 and $16.9 billion in free cash flow (non-GAAP).

Wireless

7.7 percent increase in service revenues from 4Q 2009; data revenues up 25.5 percent; 30.1 percent operating income margin and 47.5 percent Segment EBITDA margin on service revenues (non-GAAP).955,000 total net customer additions, excluding acquisitions and adjustments, in 4Q 2010; includes 872,000 retail postpaid net customer additions in the quarter; continued low retail postpaid churn of 1.01 percent.102.2 million total connections, includes 94.1 million total customers.

Wireline

197,000 net FiOS Internet and 182,000 net FiOS TV customer additions; 4.1 million total FiOS Internet customers and 3.5 million total FiOS TV customers.10.7 percent increase in consumer ARPU from 4Q 2009; FiOS revenues now represent approximately 53 percent of total consumer revenues.7.5 percent increase in strategic enterprise revenues, which now represent approximately 44 percent of total global enterprise revenues.NEW YORK - Continued strong cash flow and growth in Verizon Wireless, FiOS and strategic enterprise services highlighted fourth-quarter and year-end 2010 earnings reported today by Verizon Communications Inc.

The company reported 93 cents in EPS in fourth-quarter 2010, compared with 22 cents per share (as adjusted) in fourth-quarter 2009.  Fourth-quarter 2010 results included 39 cents per share in net non-operational gains: 50 cents per share primarily from the annual actuarial valuation of Verizon's pension assets, partially offset by 6 cents per share for severance and other related charges, and 5 cents per share for Alltel merger integration costs.  Fourth-quarter 2009 results included 28 cents per share in non-operational charges.

On an annual basis, Verizon reported 90 cents in 2010 EPS, compared with $1.72 (as adjusted) in 2009.

Improved Earnings and Solid Momentum

"Verizon ended 2010 with strong results, driven by solid execution across all our businesses," said Verizon Chairman and CEO Ivan Seidenberg.  "The fourth quarter capped a strong second half of the year, resulting in improved earnings, solid momentum and an even stronger balance sheet.  Verizon Wireless produced another quarter of impressive growth, with record-high profitability, as we continue to drive higher smartphone adoption and data use.  Following another solid quarter in our wireline businesses, we are optimistic about opportunities to continue to expand wireline margins."

Strong Cash Flow Growth in 2010

Cash flow from operations totaled $33.4 billion in 2010, compared with $31.4 billion in 2009.  Capital expenditures totaled $16.5 billion in 2010, down $400 million from 2009.  For 2010, free cash flow (non-GAAP; cash flow from operations less capital expenditures) totaled $16.9 billion, a 16.4 percent year-over-year increase.

On a consolidated basis, Verizon's total operating revenues were $26.4 billion in fourth-quarter 2010, a decrease of 2.6 percent compared with fourth-quarter 2009.  Last year's results included revenues from operations that have since been divested.

On a comparable basis (non-GAAP), fourth-quarter 2010 total operating revenues increased $592 million, or 2.3 percent, compared with fourth-quarter 2009.

Wireless Delivers Continued Strong Growth and Profitability

Verizon Wireless delivered strong growth in revenues, strong retail postpaid ARPU (average monthly service revenue per user), and growth in traditional customers and other connections.  Wireless service EBITDA margin was a record high.  In the fourth quarter of 2010:

Verizon Wireless added 872,000 retail postpaid customers, and 803,000 total retail customers, which includes a decrease of 69,000 retail prepaid customers.  These additions exclude acquisitions and adjustments. At the end of the fourth quarter, the company had 87.5 million retail customers, which represented 93 percent of the company's wireless customers. The company also added 152,000 reseller customers in the fourth quarter. The company had a total of 94.1 million customers at the end of the fourth quarter.  In addition, the company had 8.1 million other connections - such as machine-to-machine and telematics.  This was an increase of 186,000 net other connections in the quarter, and brought the number of total wireless connections to 102.2 million at year-end 2010. At year-end 2010, 26 percent of Verizon Wireless' retail postpaid customer base had smartphone devices, up from 15 percent at year-end 2009.  In fourth-quarter 2010, more than 75 percent of Verizon Wireless' postpaid net adds were smartphones. Retail postpaid churn remained low at 1.01 percent.  Total retail and total customer churn levels were 1.37 and 1.34 percent, respectively.  All churn levels improved year over year and sequentially. Retail service revenues in the quarter totaled $13.5 billion, up 5.1 percent year over year.  Retail data revenues were $5.0 billion, up 22.8 percent year over year.  Service revenues in the fourth quarter were $14.2 billion, up 7.7 percent year over year.  Total revenues were $16.1 billion, up 5.7 percent year over year.  For full-year 2010, service revenues were $55.6 billion, up 6.9 percent over full-year 2009; total revenues were $63.4 billion, up 5.1 percent year over year. Retail postpaid ARPU grew 2.5 percent over the fourth-quarter 2009, to $53.50.  Retail postpaid data ARPU increased to $19.97, up 19.3 percent year over year.  In addition, retail service ARPU grew 2.4 percent over fourth-quarter 2009, to $51.84. Wireless operating income margin was 30.1 percent, an increase of 340 basis points year over year.  Segment EBITDA margin on service revenues (non-GAAP) was 47.5 percent, up 290 basis points over fourth-quarter 2009.  For full-year 2010, operating income margin was 29.5 percent, up 190 basis points over full-year 2009; segment EBITDA margin on service revenues was 46.9 percent, up 140 basis points.

Continued Growth for FiOS and Strategic Enterprise Services

In wireline businesses, Verizon continued to add customers served by its FiOS fiber-optic network in the U.S., and revenues continued to increase for strategic enterprise services worldwide.  In the fourth quarter of 2010:

Verizon added 197,000 net new FiOS Internet customers and 182,000 net new FiOS TV customers.  By year-end, Verizon had 4.1 million FiOS Internet and 3.5 million FiOS TV customers. FiOS Internet penetration (customers as a percentage of potential customers) was 31.9 percent by the end of the quarter, with the product available for sale to 12.8 million premises.  This compares with 28.3 percent and 11.6 million, respectively, at year-end 2009. FiOS TV penetration was 28.0 percent by the end of the quarter, with the product available for sale to 12.4 million premises.  This compares with 24.7 percent and 11.1 million, respectively, at year-end 2009. FiOS revenues generated approximately 53 percent of consumer wireline revenues in fourth-quarter 2010, compared with approximately 50 percent in third-quarter 2010. Total wireline broadband and video revenues - including FiOS Internet, FiOS TV and HSI (DSL-based high-speed Internet) - were $1.8 billion in the quarter, up 18.4 percent from fourth-quarter 2009. Consumer revenues grew 1.6 percent compared with fourth-quarter 2009.  Consumer ARPU for wireline services was $88.85 in fourth-quarter 2010, up 10.7 percent compared with fourth-quarter 2009.  ARPU for FiOS customers is more than $146. Global enterprise revenues totaled $4.0 billion in the quarter, up 1.3 percent compared with fourth-quarter 2009.  Sales of strategic enterprise services - such as security and IT solutions, as well as strategic networking - increased 7.5 percent compared with fourth-quarter 2009 and now represent approximately 44 percent of global enterprise revenues. Segment EBITDA margin (non-GAAP) was 23.5 percent, compared with 22.7 percent in third-quarter 2010 and 22.5 percent in fourth-quarter 2009, as adjusted.

Additional Highlights

Wireless

At Verizon Wireless, monthly cash expense per customer (non-GAAP) decreased in the fourth quarter 2010 to $26.59 from $27.72 in the fourth quarter 2009.  For the full year, cash expense per customer was $26.80, down 2.7 percent from $27.55 in 2009. In the fourth quarter, total data revenues were 37.1 percent of all service revenues, up from 31.8 percent in the fourth quarter 2009. Verizon Wireless continued to invest in its 3G (third-generation) broadband network, the nation's largest and most reliable 3G network.  Verizon's 3G network provides more coverage than any other U.S. carrier and is available where more than 290 million people reside. In December, Verizon Wireless launched its 4G LTE (fourth-generation Long Term Evolution) Mobile Broadband network, the fastest and most advanced 4G network in the U.S., in 38 major metropolitan areas covering one-third of all Americans and in more than 60 commercial airports.  With Verizon Wireless' 4G LTE network, laptop users experience average data throughput speeds of up to 10 times faster than when on the company's 3G network.  Verizon Wireless announced earlier this month that it would expand its 4G LTE network to an additional 140 markets by the end of 2011. Concurrent with the launch of its 4G LTE Mobile Broadband network, Verizon Wireless introduced two 4G LTE USB modems:  the LG VL600 and the Pantech UML290, which are also compatible with the company's 3G network.  Verizon Wireless unveiled 10 new 4G LTE consumer devices at the International Consumer Electronics Show earlier this month, including smartphones, tablets, mobile hot spot devices and notebooks that will be available in the first half of this year. On Jan. 11, Verizon Wireless announced the iPhone 4 will be available to customers beginning in February. During the fourth quarter, Verizon Wireless customers sent or received more than 180 billion text messages.  Customers also sent nearly 4.5 billion picture/video messages and completed more than 20 million music and video downloads from Verizon Wireless.

Wireline

Fourth-quarter 2010 operating revenues were $10.3 billion, a decline of 2.8 percent compared with fourth-quarter 2009.  Fourth-quarter 2010 cash operating expenses (non-GAAP) were $7.9 billion, a decline of 3.9 percent compared with fourth-quarter 2009. Broadband connections totaled 8.4 million at the end of the fourth quarter 2010, a 2.8 percent year-over-year increase.  This is a net increase of 52,000 from the third quarter 2010, as the increase in FiOS Internet connections more than offset a decrease in HSI connections. As of year-end 2010, the FiOS network passed 15.6 million premises, or approximately 60 percent of Verizon's domestic wireline footprint following the close of the Frontier transaction on July 1, 2010. The wireline workforce totaled 92,300 at year-end 2010, a decline of about 16,000 year over year, primarily as a result of incentive offers that have led to voluntary separations. During the quarter, Verizon continued to deploy secure global IT and communications solutions that enable better business outcomes for multinational enterprise, medium-sized and government customers wherever and whenever they operate.  These solutions included additional capabilities that support the company's "everything-as-a-service" cloud strategy, as well as a platform for developing enterprise mobility applications and new unified communications professional services.  Additionally, top industry analysts recognized Verizon leadership in a number of key areas, including for managed security services in the North America, Europe and Asia-Pacific regions. Verizon expanded its global network infrastructure during the quarter as it continued to broaden its global scope and capabilities.  The company installed 16 additional Private IP edge routers for a total of 814 edge routers in 233 sites throughout 61 countries; implemented the first production deployment of a true 100G (gigabit-per-second) transmission system on the Verizon backbone network; launched its packet optical transport platform initiative for Private IP and Ethernet services in the Asia-Pacific, Europe and Latin America regions; and installed 22 new nodes in the Switched Ethernet Service network in support of a fiber-to-the-cell-site initiative in the U.S. Multinational corporations, including Carlsberg and National Grid, completed new agreements, expanding their relationships with Verizon for a wide range of advanced communications and IT solutions.  Verizon also continued to win new government business, including an award from the U.S. General Services Administration to provide secure on-demand cloud computing service.

NOTE: Effective with the fourth quarter 2010, Verizon changed its method of accounting for pension and post-employment benefits.  Accordingly, all prior periods have been adjusted for this change, which primarily affected Verizon Consolidated and the Wireline segment.  Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results for the divestiture of overlapping wireless properties in 105 operating markets in 24 states during the first half of 2010; the wireless deferred revenue adjustment that was disclosed in Verizon's Form 10-Q for the period ended June 30, 2010; and the spinoff to Frontier of  local exchange and related landline assets in 14 states, effective on July 1, 2010.  See the accompanying schedules and www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document. 

Verizon Communications Inc. (NYSE, NASDAQ:VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to mass market, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, serving 94.1 million customers nationwide.  Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers innovative, seamless business solutions to customers around the world.  A Dow 30 company, Verizon employs a diverse workforce of more than 194,000 and last year generated consolidated revenues of $106.6 billion.  For more information, visit www.verizon.com.

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NOTE: This document contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties.  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.  The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments; the effect of material changes in available technology; any disruption of our suppliers' provisioning of critical products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural or man-made disasters or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any loss of or inability to renew wireless licenses, and the final results of federal and state regulatory proceedings and judicial review of those results; the timing, scope and financial impact of our deployment of fiber-to-the-premises broadband technology; changes in our 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; our ability to complete acquisitions and dispositions; our ability to successfully integrate Alltel Corporation into Verizon Wireless' business and achieve anticipated benefits of the acquisition; and the inability to implement our business strategies.

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Verizon Communications Reports Continued Strong Growth in Cash Flow, Wireless and FiOS in 3Q

Verizon Communications Reports Continued Strong Growth in Cash Flow, Wireless and FiOS in 3Q

Improved Earnings and Margin Performance Build on Prior Quarter

News Release October 22, 2010 –

3Q HIGHLIGHTS

(Click here for financial tables)

Consolidated

31 cents in diluted earnings per share (EPS), including 25 cents per share in non-operational items, compared with 3Q 2009 EPS of 41 cents.$25.2 billion in cash flow from operations year-to-date; $13.4 billion in free cash flow (non-GAAP) year-to-date, up 25.3 percent.

Wireless

997,000 total net customer additions, excluding acquisitions and adjustments, in 3Q 2010; 584,000 retail postpaid net customer additions in the quarter; continued low retail postpaid churn of 1.07 percent.93.2 million customers; 101.1 million total connections.6.0 percent increase in total revenues from 3Q 2009; 7.7 percent increase in service revenues; data revenues up 26.3 percent; 29.9 percent operating income margin and 47.2 percent Segment EBITDA margin on service revenues (non-GAAP).

Wireline

226,000 net FiOS Internet and 204,000 net FiOS TV customer additions; 3.9 million total FiOS Internet customers and 3.3 million total FiOS TV customers.10.9 percent increase in consumer ARPU from 3Q 2009; FiOS revenues now represent approximately 50 percent of total consumer revenues.6.9 percent increase in strategic business services revenues, which now represent approximately 43 percent of total global enterprise revenues.

NEW YORK - Verizon Communications Inc. (NYSE, NASDAQ: VZ) today reported continued strong cash flow in the third quarter 2010, and earnings and margin improvements compared with the second quarter 2010.  In the third quarter, Verizon Wireless, FiOS and strategic business services produced continued strong revenue and customer growth.

The company reported 31 cents in EPS in third-quarter 2010, compared with 41 cents per share in third-quarter 2009.  Third-quarter 2010 results included 25 cents per share in non-operational charges, the largest of which was a non-cash charge related to pension settlements.

On Track to Achieve Earnings Targets

"Verizon built on a strong second quarter with a stronger third quarter, resulting in improved earnings performance and substantial cash flow," said Chairman and CEO Ivan Seidenberg.  "We are building momentum and are on track to achieve our goal of growing earnings in the second half of the year.  We are excited by the opportunities we see to expand wireline margins and the growth we see related to the upcoming launch of next-generation wireless services."

Verizon anticipates that adjusted EPS (non-GAAP) in second-half 2010 will be at the high end of the range of its guidance.  Based on adjusted EPS of $1.01 in the first half of the year, Verizon estimates second-half 2010 adjusted EPS will be approximately 5 percent to 10 percent greater than $1.01.  (Adjusted EPS is calculated based on excluding the impact of divested properties and adding back the EPS impact of non-operational and/or non-recurring items to reported EPS.)

Seidenberg added, "We are confident in the long-term potential of our business and in our ability to return long-term value to shareowners."

In third-quarter 2010, Verizon's Board of Directors approved a 2.6 percent quarterly dividend increase, and shareowners realized $1.85 per share in additional returns as a result of Verizon's transaction with Frontier Communications.

Accelerated Comparable Revenue Growth

On a consolidated basis, Verizon's total operating revenues were $26.5 billion in third-quarter 2010, a decrease of 2.9 percent compared with third-quarter 2009.  Last year's results included revenues from operations that have since been divested.

On a comparable basis (non-GAAP), third-quarter 2010 total operating revenues increased $550 million, or 2.1 percent, compared with third-quarter 2009.  This is an acceleration from year-over-year comparable revenue growth of 0.5 percent in second-quarter 2010.

Cash flow from operations totaled $25.2 billion through the first three quarters of 2010, compared with $23.1 billion through the first three quarters of 2009.  Cash flow from operations totaled $8.3 billion in third-quarter 2010 alone.

Capital expenditures totaled $11.8 billion through the first three quarters of 2010, down 4.9 percent compared with $12.4 billion through the first three quarters of 2009.  Verizon expects that total capital spending for 2010 will be at the low end of, or slightly below, the company's targeted range of $16.8 billion to $17.2 billion.

Through the first three quarters of 2010, free cash flow (non-GAAP; cash flow from operations less capital expenditures) totaled $13.4 billion, a 25.3 percent year-over-year increase.

Verizon's net debt (non-GAAP; total debt less cash and cash equivalents) was $47.8 billion at the end of third-quarter 2010.  The net debt to Adjusted EBITDA ratio (non-GAAP; net debt divided by earnings before interest, taxes, depreciation and amortization, adjusted for the impact of divested operations and non-recurring or non-operational items) was approximately 1.4 at the end of the quarter, and Verizon continues to expect it to be lower by year-end 2010.

Non-operational items that negatively impacted Verizon's third-quarter 2010 net income by 25 cents per share were: 19 cents per share for the non-cash recognition of pension settlement losses resulting from the company's workforce reduction and voluntary separation plans; 4 cents per share for charges in connection with the closing of the Frontier transaction; and 2 cents per share for Alltel merger integration costs.

Verizon also reported that the full-year 2010 adjusted effective tax rate attributable to Verizon will be in the range of 31 percent to 32 percent, down from previous guidance in the range of 33 percent to 35 percent.

Wireless: Another Strong Quarter

Verizon Wireless delivered accelerating top-line revenue growth, continued data revenue growth, strong margins, and solid additions of traditional customers and other connections.  In the third quarter of 2010:

Verizon Wireless added 584,000 retail postpaid and 447,000 total retail customers in the quarter, excluding acquisitions and adjustments. At the end of the third quarter, the company had 86.7 million retail customers, which represented 93 percent of the company's wireless customers, the largest number of retail customers of any U.S. wireless provider. The company also added 550,000 reseller customers in the third quarter. The total number of customers at the end of the quarter was 93.2 million. In addition, the company had 7.9 million other connections at the end of the quarter - such as machine-to-machine and telematics - adding 251,000 net other connections in the quarter.  This brings the number of total wireless connections to 101.1 million at the end of the third quarter. Retail postpaid churn remained low at 1.07 percent.  Retail and total customer churn levels were 1.43 percent and 1.36 percent, respectively. Retail service revenues in the quarter totaled $13.5 billion, up 5.0 percent year over year.  Retail data revenues were $4.8 billion, up 22.8 percent.  Service revenues in the third quarter were $14.2 billion, up 7.7 percent.  Total revenues were $16.3 billion, up 6.0 percent year over year. Retail service ARPU (average monthly service revenue per user) grew 1.8 percent over third-quarter 2009, to $51.99.  Retail data ARPU increased to $18.61, up 19.0 percent year over year. Wireless operating income margin was 29.9 percent, an increase of 220 basis points year over year.  Segment EBITDA margin on service revenues (non-GAAP) was 47.2 percent, up 150 basis points over third-quarter 2009.

Wireline: Accelerated FiOS Growth

Customer growth accelerated for broadband and video services provided over Verizon's FiOS fiber-optic network in the U.S., and revenues continued to increase for strategic wireline business services worldwide.  In the third quarter of 2010:

Verizon added 226,000 net new FiOS Internet customers and 204,000 net new FiOS TV customers, sequential improvements of approximately 17 percent and 19 percent, respectively, compared with second-quarter 2010.  This is the largest net quarterly increase in FiOS customers in more than a year.  By the end of the third quarter, Verizon had 3.9 million FiOS Internet and 3.3 million FiOS TV customers. FiOS Internet penetration (customers as a percentage of potential customers) was 31.0 percent by the end of the quarter, with the product available for sale to 12.5 million premises.  This compares with 28.7 percent and 10.9 million, respectively, at the end of third-quarter 2009. FiOS TV penetration was 27.2 percent by the end of the quarter, with the product available for sale to 12.1 million premises.  This compares with 25.1 percent and 10.4 million, respectively, at the end of third-quarter 2009. In more mature FiOS markets, penetration rates have been consistently growing and are more than 35 percent, with a few markets in excess of 40 percent.  FiOS revenues, including FiOS Digital Voice, grew 29.2 percent year over year.  FiOS revenues generated approximately 50 percent of consumer wireline revenues in third-quarter 2010, compared with approximately 40 percent in third-quarter 2009. Total wireline broadband and video revenues - including FiOS Internet, FiOS TV and HSI (DSL-based high-speed Internet) - were $1.8 billion in the quarter, up 20.8 percent from third-quarter 2009.  Consumer revenues grew 1.1 percent compared with third-quarter 2009.  Consumer ARPU for wireline services was $86.55 in third-quarter 2010, up 10.9 percent compared with third-quarter 2009.  ARPU for FiOS customers was more than $146. Global enterprise revenues totaled $3.9 billion in the quarter.  This is a decrease of 0.8 percent compared with third-quarter 2009, primarily due to foreign currency effects.  Sales of strategic enterprise services - such as security and IT solutions, as well as strategic networking - increased 6.9 percent compared with third-quarter 2009 and now represent approximately 43 percent of global enterprise revenues. Segment EBITDA margin (non-GAAP) was 21.0 percent, compared with 20.8 percent in the second quarter of 2010 and 21.2 percent in the third quarter of 2009.

Additional Highlights

Wireless

Verizon Wireless continued to lead the industry in cost efficiency.  Monthly cash expense per customer (non-GAAP) decreased in the third quarter 2010 to $26.88, from $27.59 in the comparable period in 2009. In the third quarter, data revenues increased to 35.7 percent of all service revenues, up from 30.5 percent in the third quarter 2009. Verizon Wireless continued to invest in its broadband network, the nation's largest and most reliable 3G (third-generation) network.  Verizon's 3G network provides more coverage than any other U.S. carrier's and is available where more than 289 million people reside. In early October, Verizon Wireless announced 38 major metropolitan areas, covering 110 million people, where it will launch its 4G LTE (fourth-generation Long Term Evolution) network by the end of the year.  In addition, 4G LTE will be available in more than 60 commercial airports coast to coast - including major airports within the launch areas plus airports in other key cities.  Verizon Wireless' 4G LTE network-deployment plans include covering virtually all of the company's current nationwide 3G footprint by the end of 2013. Verizon Wireless announced the first tablets to be available to its customers:  the Apple iPad Wi-Fi will go on sale on Oct. 28 and the Samsung Galaxy Tab will launch on Nov. 11.  In addition, the company continued to expand its smartphone lineup during the third quarter with the launch of the DROID X, DROID 2 and limited edition DROID R2-D2 by Motorola; the Samsung Fascinate, a Galaxy S smartphone; and a new model of the BlackBerry Curve 3G smartphone. The company hosted its second annual Verizon Developers Conference in September, reaffirming its commitment to an open network and helping developers deliver applications to market quickly.  Since the VDC was established in 2009, more than 5,000 developers have joined to create applications to be distributed to Verizon Wireless customers. During the third quarter, Verizon Wireless customers sent or received more than 183 billion text messages.  Customers also sent nearly 3.8 billion picture messages and completed nearly 22 million music and video downloads.

Wireline

Third-quarter 2010 operating revenues were $10.3 billion, a decline of 3.6 percent compared with third-quarter 2009.  Third-quarter 2010 cash operating expenses (non-GAAP) were $8.1 billion, a decline of 3.3 percent compared with third-quarter 2009. Broadband connections totaled 8.3 million at the end of the third quarter 2010, a 2.7 percent year-over-year increase.  This is a net increase of 61,000 from the second quarter 2010, as the increase in FiOS Internet connections more than offset a decrease in HSI connections. As of the end of third-quarter 2010, the FiOS network passed 15.4 million premises, or approximately 60 percent of Verizon's domestic wireline footprint following the close of the Frontier transaction. The wireline workforce totaled 97,500 at the end of the third quarter 2010.  This is a decline of 5,900 compared with the end of the second quarter 2010.  Primarily as a result of a second-quarter 2010 incentive offer that has led to voluntary separations, the wireline workforce has declined by about 10,500 in the second and third quarters of 2010, and from 2,000 to 3,000 additional employees are expected to leave the payroll by year-end.  These numbers do not include more than 9,200 employees who were transferred to Frontier in July. During the quarter, Verizon continued to deploy global IT and networking solutions that enable multinational enterprise, medium business and government customers to do business more efficiently and effectively.  These included new cloud computing capabilities, additional security capabilities in the Asia-Pacific region and global data center expansion to support the company's "everything-as-a-service" cloud strategy.  In addition to rolling out new capabilities, Verizon received recognition from top industry analyst firms during the quarter in the areas of communications outsourcing, Asia-Pacific network services, carrier Ethernet and IP services, and managed security services. Verizon expanded its global network infrastructure during the quarter as it continued to broaden its global scope and capabilities.  The company installed 17 additional Private IP edge routers for a total of 798 edge routers in 228 sites throughout 60 countries; added three new converged packet architecture switches, bringing the total number of CPA switches to 149 in 131 sites across 36 countries; and installed 19 new nodes in the Switched Ethernet Service network in support of a fiber-to-the-cell-site initiative. AEG, the American Red Cross and the U.S. General Services Administration were among Verizon Business customers that completed new agreements during the quarter for a wide range of advanced communications and technology solutions.

NOTE: Comparisons are year over year unless otherwise noted.  See the accompanying schedules and www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this news release.  Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results for the divestiture of overlapping wireless properties in 105 operating markets in 24 states during the first half of 2010; the wireless deferred revenue adjustment that was disclosed in Verizon's Form 10-Q for the period ended June 30, 2010; and the spinoff to Frontier of  local exchange and related landline assets in 14 states, effective on July 1, 2010.

Verizon Communications Inc. (NYSE, NASDAQ:VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to mass market, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, serving more than 93 million customers nationwide.  Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers innovative, seamless business solutions to customers around the world.  A Dow 30 company, Verizon employs a diverse workforce of more than 195,000 and last year generated consolidated revenues of more than $107 billion.  For more information, visit www.verizon.com.

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NOTE: This document contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties.  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.  The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments; the effect of material changes in available technology; any disruption of our suppliers' provisioning of critical products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural or man-made disasters or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any loss of or inability to renew wireless licenses, and the final results of federal and state regulatory proceedings and judicial review of those results; the timing, scope and financial impact of our deployment of fiber-to-the-premises broadband technology; changes in our 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; our ability to complete acquisitions and dispositions; our ability to successfully integrate Alltel Corporation into Verizon Wireless' business and achieve anticipated benefits of the acquisition; and the inability to implement our business strategies.

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Verizon Sees Revenue and EPS Growth

NEW YORK – January 25, 2011 –

Verizon Communications Inc. has positioned itself to "kick into a higher gear as we go forward," Lowell McAdam, Verizon president and chief operating officer, told investors and analysts at a conference today.  The conference included a discussion of the company's 2010 results and a strategic and financial overview of 2011 and beyond.

McAdam said: "Verizon's superior asset base gives us a solid foothold in growth markets for broadband, wireless data, video and cloud services - businesses that are gaining scale and momentum, as we saw in the second half of 2010.  Verizon has an unmatched strategic position in the growth markets of the future.  Our focus is on leveraging these superior assets to deliver superior value to customers and investors."

McAdam described a transformational change in Verizon's revenue and growth profile.  Over the past several years, he noted, Verizon has invested in next-generation broadband technologies such as FiOS and wireless LTE; it has acquired assets such as Alltel and MCI to extend its reach in global markets and add scale; and it has divested lower-growth, non-strategic assets.  As a result, 72 percent of Verizon's total revenues in 2010 were generated by wireless, FiOS and strategic business services, compared with 48 percent in 2006.

Earlier today, the company reported 2010 total operating revenues of $106.6 billion.  Excluding results from assets that have since been divested, 2010 revenues were $104.4 billion, or a 1.9 percent increase from 2009 revenues of $102.5 billion on a comparable basis (non-GAAP).

Revenue, Capital Investment and Earnings Expectations
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Fran Shammo, Verizon executive vice president and chief financial officer, said that the company sees accelerated top-line revenue growth rates in the range of 4 percent to 8 percent in 2011.  He said that this outlook is based on the continued growth in strategic businesses - aided by Verizon's prior investments in technology; sales and recurring revenues from the newly announced Verizon iPhone and LTE wireless devices; continued growth in revenues from FiOS and strategic business services; and a stable to improving economic environment.

With the introduction of the iPhone and LTE devices, Verizon said it sees smartphone penetration rates increasing from a current 26 percent to more than 50 percent by the end of 2011.

Shammo said Verizon Wireless margins have demonstrated years of sustained excellent performance, and improvements in wireline margins are gaining momentum.  He added that the company plans to maintain a disciplined program for capital investments and driving cost efficiencies.

Verizon reported capital expenditures of $16.5 billion in 2010, and Shammo said the company expects capex to be flat or slightly down from this level in 2011, with improved return on invested capital.

Shammo said the company expects to maintain strong cash flow with continued gains in earnings per share (EPS) in 2011, including the impact on wireless margins from expected gains in market share from iPhone sales.

Earlier today, Verizon reported 2010 earnings of 90 cents per share and $33.4 billion in cash flow from operations.  On a comparable and adjusted basis (non-GAAP, adjusting for non-operational items and removing impacts from businesses since divested), 2010 EPS was $2.08.  Shammo said that from this baseline Verizon sees EPS growth of 5 percent to 8 percent in 2011.

In addition, he said, continued strong cash flow will enable management to continue to recommend to Verizon's Board of Directors annual dividend increases.

NOTE: Effective with the fourth quarter 2010, Verizon changed its method of accounting for pension and post-employment benefits.  Accordingly, all prior periods have been adjusted for this change, which primarily affected Verizon Consolidated and the Wireline segment.  Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results for the divestiture of overlapping wireless properties in 105 operating markets in 24 states during the first half of 2010; the wireless deferred revenue adjustment that was disclosed in Verizon's Form 10-Q for the period ended June 30, 2010; and the spinoff to Frontier of  local exchange and related landline assets in 14 states, effective on July 1, 2010.  See the accompanying schedules and www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE, NASDAQ:VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to mass market, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, serving 94.1 million customers nationwide.  Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers innovative, seamless business solutions to customers around the world.  A Dow 30 company, Verizon employs a diverse workforce of more than 194,000 and last year generated consolidated revenues of $106.6 billion.  For more information, visit www.verizon.com.

NOTE: This document contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties.  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.  The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments; the effect of material changes in available technology; any disruption of our suppliers' provisioning of critical products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural or man-made disasters or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any loss of or inability to renew wireless licenses, and the final results of federal and state regulatory proceedings and judicial review of those results; the timing, scope and financial impact of our deployment of fiber-to-the-premises broadband technology; changes in our 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; our ability to complete acquisitions and dispositions; our ability to successfully integrate Alltel Corporation into Verizon Wireless' business and achieve anticipated benefits of the acquisition; and the inability to implement our business strategies.

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Verizon Generates Strong Wireless Results, Increased Cash Flow, and FiOS and Strategic Services Growth in 3Q

Verizon Generates Strong Wireless Results, Increased Cash Flow, and FiOS and Strategic Services Growth in 3Q

News Release October 21, 2011 –

3Q 2011 HIGHLIGHTS

(Click here for financial tables)

Consolidated

49 cents in diluted earnings per share (EPS), compared with 23 cents per share in 3Q 2010.56 cents per share in adjusted EPS (non-GAAP), which excludes 7 cents per share in non-operational items, compared with 55 cents in adjusted EPS in 3Q 2010.

Wireless

$15.0 billion in service revenues in 3Q 2011, up 6.1 percent year over year; data revenues of $6.1 billion, up 20.5 percent, representing 40.6 percent of service revenues; total revenues of $17.7 billion, up 9.1 percent.2.4 percent growth in retail postpaid ARPU over 3Q 2010; retail postpaid data ARPU up 15.7 percent; retail service ARPU also up 2.4 percent.29.0 percent operating income margin; record-high 47.8 percent Segment EBITDA margin on service revenues (non-GAAP), up 60 basis points year over year.

Wireline

138,000 FiOS Internet and 131,000 FiOS TV net additions, with increased sales penetration for both products; 4.0 million customers now subscribe to FiOS TV.8.8 percent year-over-year increase in consumer ARPU; FiOS consumer retail revenues represent nearly 60 percent of total consumer revenues.15.6 percent increase in strategic services revenues, representing nearly 50 percent of global enterprise revenues.

NEW YORK - With another strong showing by Verizon Wireless, and continued growth in FiOS and strategic business services, Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported third-quarter 2011 financial and operational results that keep the company on track to achieve its full-year earnings and revenue guidance.

Verizon reported 49 cents in EPS in the quarter, compared with 23 cents per share in third-quarter 2010.

Adjusted third-quarter 2011 earnings (non-GAAP) of 56 cents per share exclude 7 cents per share for a non-operational charge relating to a remeasurement, based on an actuarial valuation of pension plans.  No adjustments were made for the previously announced $250 million (5 cents per share) negative impact in the quarter due to storm-related repair costs and a two-week strike affecting the Wireline segment.  Comparable adjusted third-quarter 2010 earnings were 55 cents per share, excluding the impact of non-operational charges, the largest of which was related to pension and benefits remeasurements.

Well-Positioned for 4Q and 2012

"Verizon emerges from the third quarter in a strong position to accelerate growth," said Lowell McAdam, Verizon president and chief executive officer.  "We faced significant challenges in recent months, yet delivered results that keep us on track to meet our 2011 earnings and revenue guidance, with great momentum expected entering 2012.  We continue to grow revenues from strategic products and to increase free cash flow through improved operating performance and disciplined capital spending."

McAdam added, "Verizon Wireless delivered impressive results across the board in the third quarter, and we are geared up for an even better fourth quarter, with new smartphones, tablets and data devices coming to market.  In FiOS, we expect to capitalize on pent-up demand and deliver stronger growth in the fourth quarter.  In enterprise, the integration of Terremark and recent acquisition of CloudSwitch have significantly improved our competitive positioning."

Verizon has targeted 2011 adjusted EPS growth of 5 percent to 8 percent from an adjusted base of $2.08 in EPS in 2010, and 2011 revenue growth of 4 percent to 8 percent on a comparable basis with 2010.

Consolidated Revenue and Cash Flow Growth

In third-quarter 2011, Verizon's total operating revenues were $27.9 billion on a consolidated basis, an increase of 5.4 percent compared with third-quarter 2010.  Total operating expenses were $23.3 billion, an increase of 0.7 percent.

Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter totaled $8.8 billion, up 19.2 percent year over year.

Cash flow from operating activities totaled $21.5 billion in the first nine months of 2011, and capital expenditures totaled $12.5 billion -- on track to meet the company's full-year guidance of $16.5 billion.  From the $9.0 billion in free cash flow (non-GAAP, cash flow from operations less capex) over the first nine months, Verizon has paid $4.1 billion in dividends to shareholders, and in September the Verizon Board of Directors approved a dividend increase for the fifth consecutive year.

Verizon Wireless Delivers Strong Results

In third-quarter 2011, Verizon Wireless again delivered strong growth in revenues, retail customers and other connections, driven by increased smartphone penetration and increased retail postpaid ARPU (average monthly service revenue per user).

Wireless Financial Highlights

Service revenues in third-quarter 2011 totaled $15.0 billion, up 6.1 percent year over year.  Data revenues were $6.1 billion, up more than $1.0 billion or 20.5 percent year over year, and represent 40.6 percent of all service revenues.  Total revenues were $17.7 billion, up 9.1 percent year over year. Retail postpaid ARPU grew 2.4 percent over third-quarter 2010, to $54.89.  Retail postpaid data ARPU increased to $22.22, up 15.7 percent year over year.  Retail service ARPU also grew 2.4 percent, to $53.21. Wireless operating income margin was 29.0 percent.  Verizon Wireless generated $7.2 billion of EBITDA in third-quarter 2011, an increase of 7.5 percent year over year.  Segment EBITDA margin on service revenues (non-GAAP) was 47.8 percent, up 60 basis points over third-quarter 2010 and up 240 basis points over second-quarter 2011.  This was the highest Segment EBITDA margin on service revenues Verizon Wireless has ever reported.

Wireless Operational Highlights

Verizon Wireless added 1.3 million total connections in third-quarter 2011, including 882,000 retail postpaid customers, and 367,000 wholesale and other connections.  These additions exclude acquisitions and adjustments. At the end of the third quarter, the company had 107.7 million total connections, an increase of 6.5 percent year over year, consisting of 90.7 million retail customers and 17.0 million wholesale and other connections. At the end of the third quarter, smartphones accounted for 39 percent of the Verizon Wireless retail postpaid customer phone base, up from 36 percent at the end of second-quarter 2011. Retail postpaid churn was 0.94 percent in third-quarter 2011, an improvement of 13 basis points year over year.  Total retail churn was 1.26 percent, an improvement of 17 basis points year over year. Verizon Wireless continued to roll out its 4G LTE mobile broadband network, the largest 4G LTE network in the United States, during the quarter.  As of yesterday (Oct. 20), Verizon Wireless 4G LTE service was available in 165 markets covering a population of more than 186 million, across the country.  With additional markets planned before year-end, the company's 4G LTE network build-out is ahead of schedule and has already exceeded the company's 2011 target of covering a population of 185 million. The company introduced five new 4G LTE devices:  the DROID BIONIC by Motorola, Pantech Breakout, Samsung Galaxy Tab 10.1 tablet, Compaq Mini CQ10-688nr netbook and HP Pavilion dm 1-3010nr notebook.  On Oct. 14, the Apple iPhone 4S became available on the Verizon Wireless 3G network.  On Oct. 18, the company announced that the DROID RAZR by Motorola, a 4G LTE device, will be available in November. Verizon Wireless opened its LTE Innovation Center in Waltham, Mass., in July and its Application Innovation Center in San Francisco in August. The company continued to invest in and enhance its 3G network, the nation's largest and most reliable 3G network. Verizon Wireless ranked highest in customer care among the major national wireless phone service providers in the J.D. Power and Associates "2011 Wireless Customer Care Performance Study."  Verizon Wireless was also named a Small Business Influencer Champion for 2011 by Small Business Trends and SmallBizTechnology.com.

FiOS, Strategic Services Transform Wireline Revenue Mix

Revenues and customers continued to increase for FiOS fiber-optic services, and sales of strategic services to business customers remained strong -- countering the adverse impacts to Verizon's Wireline segment in third-quarter 2011.  FiOS and strategic services continued to become a larger percentage of the wireline revenue mix.

Wireline Financial Highlights

Third-quarter 2011 operating revenues were $10.1 billion, a decline of 1.3 percent compared with third-quarter 2010.  Consumer revenues grew 1.1 percent compared with third-quarter 2010. Consumer ARPU for wireline services was $94.20 in third-quarter 2011, up 8.8 percent compared with third-quarter 2010.  ARPU for FiOS customers continues to be more than $146.  Revenues for Verizon's FiOS services to consumer retail customers generated nearly 60 percent of consumer wireline revenues in third-quarter 2011, compared with approximately 50 percent in third-quarter 2010. Global enterprise revenues totaled $3.9 billion in the quarter, up 2.1 percent compared with third-quarter 2010.  Sales of strategic services - including Terremark cloud services, security and IT solutions, and strategic networking - increased 15.6 percent compared with third-quarter 2010 and now represent nearly 50 percent of global enterprise revenues.  Terremark achieved record new sales bookings in third-quarter 2011.  International revenue, which makes up approximately 15 percent of global enterprise, grew 9.8 percent year over year. Segment EBITDA (non-GAAP) was $2.2 billion in the quarter, including the $250 million impact from the storms and strike.  This compares with $2.3 billion in third-quarter 2010.  As a result, segment EBITDA margin (non-GAAP) was 21.4 percent in third-quarter 2011, compared with 22.7 percent in third-quarter 2010.

Wireline Operational Highlights

Verizon added 138,000 net new FiOS Internet connections and 131,000 net new FiOS TV connections in third-quarter 2011.  Verizon had a total of 4.6 million FiOS Internet and 4.0 million FiOS TV connections at the end of the quarter.  With the clearing of FiOS installation backlogs caused by the storms and strike, Verizon expects to add at least 200,000 FiOS Internet and 200,000 FiOS TV customers in fourth-quarter 2011. FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase.  FiOS Internet penetration was 35 percent at the end of third-quarter 2011, compared with 31 percent at the end of third-quarter 2010.  In the same periods, FiOS TV penetration was 31 percent, compared with 27 percent, respectively. Broadband connections totaled 8.6 million at the end of third-quarter 2011, a 2.8 percent year-over-year increase.  FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 20,000 broadband connections from second-quarter 2011.  Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.6 percent to 24.5 million - the smallest year-over-year decline since fourth-quarter 2006. During the quarter Verizon continued to aggressively execute its global cloud strategy, expanding its portfolio of secure IT solutions and acquiring CloudSwitch, which will enable Verizon to boost industry adoption by simplifying the move to the enterprise cloud.  Multinational companies including ARINC adopted Verizon enterprise cloud services during the quarter.  In addition, enterprise customers including RWE of Germany, the University of North Carolina at Chapel Hill, Plunkett & Cooney Inc. and Smile Brands Inc. completed new agreements for a wide range of strategic advanced communications and information technology solutions. Verizon also continued to broaden the scope and capabilities of its global network infrastructure.  The company completed the integration of Terremark data centers in Florida and Virginia with Verizon's Global IP network; activated its first 100 gigabit-per-second network route in the United States; expanded its 100G capabilities in Europe; and completed deployment of advanced network equipment on its global network in Singapore and Sydney.

NOTE: Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results for the divestiture of overlapping wireless properties in 105 operating markets in 24 states during the first half of 2010; the wireless deferred revenue adjustment that was disclosed in Verizon's Form 10-Q for the period ended June 30, 2010; the spinoff to Frontier of local exchange and related landline assets in 14 states, effective on July 1, 2010; and other non-operational items.  See the accompanying schedules and www.verizon.com/investor  for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to consumer, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, with more than 107 million total connections nationwide.  Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers integrated business solutions to customers in more than 150 countries, including all of the Fortune 500.  A Dow 30 company with $106.6 billion in 2010 revenues, Verizon employs a diverse workforce of more than 195,000.  For more information, visit www.verizon.com.

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NOTE: This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. 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. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; the effect of material changes in available technology; any disruption of our key suppliers' provisioning of products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural disasters, terrorist attacks, breaches of network or information technology security or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any increase in restrictions on our ability to operate our networks; the timing, scope and financial impact of our deployment of broadband technology; changes in our 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; our ability to complete acquisitions and dispositions; and the inability to implement our business strategies.

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Verizon Reports Accelerated Revenue Growth, Expanded Margins and Strong 2Q Earnings Performance

Verizon Reports Accelerated Revenue Growth, Expanded Margins and Strong 2Q Earnings Performance

News Release July 22, 2011 –

2Q HIGHLIGHTS

(Click here for financial tables)

Consolidated

57 cents in diluted earnings per share (EPS), compared with a loss of 42 cents per share and adjusted EPS (non-GAAP) of 51 cents in 2Q 2010.

Wireless

6.6 percent year-over-year increase in service revenues in 2Q 2011; data revenues up 22.2 percent; 27.1 percent operating income margin and 45.4 percent Segment EBITDA margin on service revenues (non-GAAP).2.2 million net additions, excluding acquisitions and adjustments, includes 1.3 million retail postpaid net customer additions; 106.3 million total connections, includes 89.7 million retail customers.Retail postpaid churn of 0.89 percent, the lowest in three years.

Wireline

189,000 FiOS Internet and 184,000 FiOS TV net additions.9.4 percent year-over-year increase in consumer ARPU; FiOS consumer retail revenues represent approximately 57 percent of total consumer revenues.17.8 percent increase in strategic services revenues, representing approximately 48 percent of total global enterprise revenues.

NEW YORK - Verizon Communications Inc. (NYSE, NASDAQ: VZ) today reported accelerated revenue growth and improved margins across its business groups, leading to a strong earnings performance in second-quarter 2011.

Verizon reported 57 cents in EPS in the quarter, compared with a second-quarter 2010 loss of 42 cents per share.

There are no adjustments to second-quarter 2011 earnings results.  Adjusted second-quarter 2010 earnings were 51 cents per share, excluding the impact of divestitures and non-operational charges (non-GAAP).  The most significant 2010 charges related to a workforce-reduction incentive offer that led to approximately 11,900 voluntary separations last year.

Strong, Positive Momentum

"In terms of earnings growth and the acceleration of revenue growth, this has been one of Verizon's best quarters since the 2008 economic downturn," said Chairman and CEO Ivan Seidenberg.  "We expanded sequential margins in both our wireline and wireless businesses, and in the second half of the year we expect Verizon to build on this strong, positive momentum to continue to drive profitable, sustainable growth."

Seidenberg added: "We expect Verizon Wireless to gain share in the retail postpaid market and widen its network-quality lead throughout 2011.  We also continue to see strong customer demand for FiOS Internet and TV, and for cloud and other strategic services.  At the same time, we remain focused on our cost structure, as we deliver improvements in wireline margins quarter after quarter."

Consolidated Revenue Growth Continues to Accelerate

On a consolidated basis, Verizon's total operating revenues were $27.5 billion in second-quarter 2011, an increase of 2.8 percent compared with second-quarter 2010.  Last year's results included revenues from operations that have since been divested.

On a comparable basis (non-GAAP), second-quarter 2011 total operating revenues increased 6.3 percent compared with second-quarter 2010.  This was Verizon's strongest quarter for consolidated revenue growth in 10 quarters.

Also on a comparable basis, consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) for second-quarter 2011 totaled $9.0 billion, up 5.2 percent year over year.

Cash flow from operating activities totaled $12.8 billion in the first half of 2011, down from $16.8 billion in the first half of 2010.  Last year's total included cash flow from businesses that have since been divested and the timing of favorable tax-related impacts, and 2011 totals include inventory purchases for wireless devices and the impact of previously announced pension-fund payments in first-quarter 2011.  Verizon said its cash flow outlook for the remainder of 2011 remains very strong.

The company aggressively invested in growth opportunities in the first half of 2011.  One example is the deployment of Verizon's nationwide 4G LTE (fourth-generation, Long-Term Evolution) wireless broadband network.  In first-half 2011, Verizon's capital expenditures totaled $8.9 billion, compared with $7.6 billion in first-half 2010.

Verizon continues to expect full-year 2011 capital spending to be similar to its 2010 investment of $16.5 billion.

Verizon Wireless Delivers Another Strong Quarter

Verizon Wireless delivered strong growth in revenues, retail customers and other connections, driven by increased smartphone penetration and increased retail postpaid ARPU (average monthly service revenue per user).  In the second quarter of 2011:

Wireless Financial Highlights

Service revenues in the quarter totaled $14.7 billion, up 6.6 percent year over year.  Data revenues were $5.8 billion, up $1.1 billion or 22.2 percent year over year, and represent 39.5 percent of all service revenues.  Total revenues were $17.3 billion, up 10.2 percent year over year. Retail postpaid ARPU grew 1.9 percent or $1.00 over second-quarter 2010, to $54.12. Retail postpaid data ARPU increased to $21.26, up 15.2 percent year over year.  Retail service ARPU also grew 1.9 percent, to $52.49. Wireless operating income margin was 27.1 percent.  Segment EBITDA margin on service revenues (non-GAAP) was 45.4 percent.

Wireless Operational Highlights

Verizon Wireless added 2.2 million total connections, including 1.3 million retail postpaid customers, and 890,000 wholesale and other connections.  These additions exclude acquisitions and adjustments. At the end of the second quarter, the company had 106.3 million total connections, an increase of 6.6 percent year over year, including 89.7 million retail customers and 16.6 million wholesale and other connections. At the end of the second quarter, smartphones were 36 percent of Verizon Wireless' retail postpaid customer phone base, up from 32 percent at the end of first-quarter 2011. Retail postpaid churn was 0.89 percent, the lowest in the industry and the company's lowest since second-quarter 2008.  Total retail churn was 1.22 percent, an improvement of 9 basis points year over year and 11 basis points sequentially. Verizon Wireless continued to roll out its 4G LTE mobile broadband network during the quarter.  As of yesterday (July 21), Verizon Wireless 4G LTE service is available in 102 markets across the country, covering a population of more than 160 million.  By year-end, Verizon Wireless' 4G LTE network, the fastest and most advanced LTE network in the U.S., is expected to be available in more than 175 markets across the country, covering a population of more than 185 million. The company introduced three new 4G LTE devices: the Droid Charge by Samsung, Revolution by LG and the MiFi 4510L 4G LTE Mobile Hotspot by Novatel Wireless.  The company also announced that the 4G LTE-enabled Samsung Galaxy Tab 10.1 is available for pre-order; the device is expected to launch by the end of this month.  During the second-quarter 2011, Verizon Wireless sold 1.2 million 4G LTE smartphones and Internet data devices. Verizon Wireless continued to invest in and enhance its 3G network, the nation's largest and most reliable 3G network. During the quarter, Verizon Wireless deployed crisis response teams to help customers stay connected in areas devastated by disasters including the North Dakota floods,  Arizona wildfires and Joplin, Mo., tornado.

Improved Revenue Trends in Wireline

Verizon's Wireline segment continued to expand margins, supported by improved revenue trends.  In the second quarter of 2011:

Wireline Financial Highlights

Segment EBITDA margin (non-GAAP) was 23.8 percent, compared with 22.4 percent in second-quarter 2010.  This was Wireline's fifth consecutive quarter of sequential EBITDA margin expansion. Second-quarter 2011 operating revenues were $10.2 billion, a decline of 0.3 percent compared with second-quarter 2010.  This is an improvement from a decline of 2.2 percent comparing first-quarter 2011 to first-quarter 2010.  Verizon acquired cloud and managed IT infrastructure leader Terremark Worldwide in April, and the inclusion of Terremark results added $98 million in revenue, representing 100 basis points of wireline revenue growth, in second-quarter 2011. Revenues for Verizon's FiOS fiber-optic services to consumer retail customers generated approximately 57 percent of consumer wireline revenues in second-quarter 2011, compared with approximately 48 percent in second-quarter 2010. Consumer revenues grew 1.3 percent compared with second-quarter 2010.  Consumer ARPU for wireline services was $92.44 in second-quarter 2011, up 9.4 percent compared with second-quarter 2010.  ARPU for FiOS customers continues to be more than $146. Global enterprise revenues totaled $4.0 billion in the quarter, up 3.6 percent compared with second-quarter 2010.  Sales of strategic services - including Terremark cloud services, security and IT solutions, and strategic networking - increased 17.8 percent compared with second-quarter 2010 and now represent approximately 48 percent of global enterprise revenues.

Wireline Operational Highlights

Verizon added 189,000 net new FiOS Internet connections and 184,000 net new FiOS TV connections in second-quarter 2011.  Verizon had a total of 4.5 million FiOS Internet and 3.8 million FiOS TV connections at the end of the quarter. FiOS penetration (subscribers as a percentage of potential subscribers) is now 30 percent or more for both services.  FiOS Internet penetration was 34 percent at the end of second- quarter 2011, compared with 30 percent at the end of second-quarter 2010.  In the same periods, FiOS TV penetration was 30 percent, compared with 26 percent, respectively.  The FiOS network passed 16.1 million premises at mid-year 2011. Broadband connections totaled 8.6 million at the end of second-quarter 2011, a 3.3 percent year-over-year increase.  FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 62,000 broadband connections from first-quarter 2011.  Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.9 percent to 25.0 million - the smallest year-over-year decline since second-quarter 2007. During the quarter Verizon continued to execute its global cloud strategy, rolling out an expanded portfolio of secure IT solutions and an operational model for its Terremark subsidiary.  Verizon also continued to deploy integrated IT and communications solutions for multinational enterprise, medium-sized and government customers.  These solutions included expansion of the company's managed mobility services for tablets, mobile access to cloud-based SAP applications and enhanced security management programs for health care providers.  Verizon also completed new agreements with a range of multinational corporations, including Constellation Energy, Epsilon, Masco Corp. and PHH Corp. Verizon expanded its global network infrastructure during the quarter as it continued to broaden its scope and capabilities.  The company installed 63 additional Private IP edge routers for a total of 915 edge routers in 245 sites throughout 63 countries, activated more than 1,500 kilometers (932 miles) of ultra-long-haul network across the southern part of the United Kingdom, and completed a joint fiber build in Singapore, which almost doubles the coverage of the Singapore fiber-optic network.  Verizon continued to demonstrate leadership in scaling the global IP network and kicked off the expansion of 100G IP backbone capabilities in the U.S. to nine routes.

NOTE: Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results for the divestiture of overlapping wireless properties in 105 operating markets in 24 states during the first half of 2010; the wireless deferred revenue adjustment that was disclosed in Verizon's Form 10-Q for the period ended June 30, 2010; the spinoff to Frontier of local exchange and related landline assets in 14 states, effective on July 1, 2010; and other non-operational items.  See the accompanying schedules and www.verizon.com/investor  for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE, NASDAQ:VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to consumer, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, with more than 106 million total connections nationwide.  Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers integrated business solutions to customers in more than 150 countries, including all of the Fortune 500.  A Dow 30 company, Verizon employs a diverse workforce of nearly 196,000 and last year generated consolidated revenues of $106.6 billion.  For more information, visit www.verizon.com.

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NOTE: This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. 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. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; the effect of material changes in available technology; any disruption of our key suppliers' provisioning of products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural disasters, terrorist attacks, breaches of network or information technology security or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any increase in restrictions on our ability to operate our networks; the timing, scope and financial impact of our deployment of broadband technology; changes in our 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; our ability to complete acquisitions and dispositions; and the inability to implement our business strategies.

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Anemic job growth numbers threaten President Obama's 2012 run - New York Daily News

President Barack Obama makes a statement on the monthly jobs report, Friday, July 8, 2011, in the Rose Garden of the White House. The low numbers threaten his 2012 re-election campaign.

WASHINGTON - President Obama scrambled yesterday in the wake of another disastrous jobs report to reverse America's economic slump - and salvage his 2012 prospects.

Numbers as anemic as yesterday's - only 18,000 private sector jobs created in June - caused the unemployment rate to rise to a politically unpalatable 9.2%. Despite a recovering stock market and 2 million jobs created on Obama's watch, the new jobs number was the lowest in nine months - dealing Obama's "momentum theory" an embarrassing blow.

"Today's job report confirms what most Americans already know: We still have a long way to go and a lot of work to do to give people the security and opportunity that they deserve," Obama said in brief remarks in the White House Rose Garden. "Our economy as a whole just isn't producing nearly enough jobs for everybody who's looking.

"We've always known that we'd have ups and downs on our way back from this recession."

He noted the jobs market has faced "some tough headwinds," including soaring gas prices, natural disasters like fires and floods, the Greek financial crisis and state and local budget cuts costing tens of thousands of public service workers their livelihoods.

Nervous White House political strategists privately agree with their Republican critics - Obama is running out of time to get the economy humming to avoid becoming a one-term President.

Even Democratic optimists recognize Obama will defy history if he's reelected with this struggling economy.

No incumbent President since Franklin D. Roosevelt has ever won another term with unemployment higher than 7.2% - and Obama's economic gurus believe the jobless figure will remain north of 8% by Election Day next year.

Republicans pounced on Obama yesterday, claiming ordinary Americans have been turned off by his assertion last month that poor monthly job numbers are "bumps on the road to recovery."

"It's like nails on a chalkboard to them," GOP strategist Ed Gillespie said of Obama's rhetoric.

White House press secretary Jay Carney acknowledged the June numbers were "disappointing," but added they underscore "the urgency of the moment" as Obama and congressional leaders try to hammer out a budget deal.

Obama and the eight bipartisan leaders meet at the White House again tomorrow for high-stakes negotiations.

tdefrank@nydailynews.com

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