Published
# Verizon Communications Inc. (VZ) — Business, Risks and Management's Discussion Verizon Communications Inc., CIK 0000732712. Domestic filer on a calendar fiscal year. This narrative draws on the Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (accession 0000732712-26-000007, filed February 17, 2026), the Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (accession 0000732712-26-000046, filed July 31, 2026), and the second-quarter results release furnished on Form 8-K dated July 24, 2026 (accession 0000732712-26-000040, Exhibit 99). --- ## Business *From the FY2025 Form 10-K, accession 0000732712-26-000007, Item 1.* Verizon is a holding company that, through its subsidiaries, is one of the world's largest providers of communications, technology, information and streaming products and services to consumers, businesses and government entities. It sells data, video and voice services over its own wireless and wireline networks. **Two reportable segments.** - **Verizon Consumer Group** — consumer wireless and wireline services and products. Wireless service is delivered over one of the most extensive networks in the U.S. under the Verizon family of brands and through wholesale arrangements. Wireline service is provided in 31 U.S. states and Washington D.C. over a 100% fiber-optic network and a legacy copper network. Fixed wireless access (FWA) broadband is offered over the 5G and 4G LTE networks as an alternative to landline internet. FY2025 revenues were **$106.8 billion, roughly 77% of consolidated revenue**. At December 31, 2025 Consumer had approximately 116 million wireless retail connections (including FWA), 83% of them postpaid; approximately 11 million total broadband connections (Fios internet, FWA and DSL); and approximately 2 million Fios video connections. - **Verizon Business Group** — wireless and wireline services to businesses, public sector customers and carriers: mobility, FWA and wireline broadband, IoT connectivity, advanced communications, corporate networking, voice, and security and managed network services. FY2025 revenues were **$29.1 billion, roughly 21% of consolidated revenue**, with approximately 31 million wireless retail postpaid connections (including FWA) and approximately 3 million total broadband connections at year end. Business is organized around three customer groups: Enterprise and Public Sector ($13.5 billion, ~46% of segment revenue), Business Markets and Other ($13.6 billion, ~47%), and Wholesale ($2.0 billion, ~7%). A portion of Wholesale revenue comes from a small number of large telecommunications companies, most of which compete directly with Verizon. **Corporate and other** carries device insurance programs, investments in unconsolidated and development-stage businesses, unallocated corporate expenses, certain pension and benefit costs, and interest and financing expense, together with results of divested businesses and businesses held for sale. **How the money is made.** Postpaid wireless service is billed a month in advance for network access; prepaid is paid in advance with no credit check and is offered only to Consumer customers. At December 31, 2025 Verizon had 96 million postpaid and 20 million prepaid Consumer connections (approximately 83% and 17%) and 5.7 million FWA broadband connections. Handsets and connected devices are sold outright or on device payment plans that let customers pay in installments, frequently with promotional trade-in offers. Residential fixed services span fiber, copper and FWA internet tiers, video (including over-the-top), voice and home solutions. Network access is also sold wholesale to mobile virtual network operators. Distribution runs through company-operated stores and direct sales teams, an indirect agent channel largely under exclusive selling arrangements, national retailers and convenience chains, and a digital and omni-channel operation increasingly built around AI. **Networks and spectrum.** Verizon's national wireless network covered approximately 147 million wireless retail connections and its broadband network approximately 14 million broadband connections at December 31, 2025. It also operates one of the largest global fiber-optic networks, serving business customers in more than 180 countries. The network leverages 5G, fiber-based transport, cloud infrastructure, AI and automation, private networks and IP routing, with an industry-leading virtualized radio access network (vRAN) and deployed Open RAN solutions; densification proceeds through macro and small cells, in-building systems and distributed antenna systems, alongside satellite partnerships for off-grid emergency and text messaging. FCC licences cover nearly all of the U.S. population across the 700 MHz Upper C block, Cellular (850 MHz), PCS (1900 MHz), AWS-1 and AWS-3, and the 3.7 GHz C-Band, plus millimeter wave holdings at 28, Upper 37 and 39 GHz and CBRS Priority Access Licenses and General Authorized Access at 3.5 GHz. Management expects spectrum demand to keep rising with connection growth, higher-bandwidth usage, AI-driven data demand and an eventual move to 6G. **Recent portfolio moves described in the annual report.** Verizon completed the acquisition of Frontier Communications Parent, Inc. on January 20, 2026, expanding the fiber broadband footprint to 31 U.S. states and Washington D.C., and completed the acquisition of Starry Group Holdings, Inc. on January 30, 2026, a fixed wireless broadband provider serving multi-dwelling units in five U.S. markets. In October 2025 Verizon entered a commercial fiber arrangement with an affiliate of Tillman Global Holdings to extend fiber reach. **Regulation.** Verizon operates in a heavily regulated market in which some competitors face fewer constraints. The FCC is the primary regulator for most services, with jurisdiction over construction, operation, acquisition and transfer of wireless systems and over spectrum assignment; licences typically run 10 years and are subject to renewal. The Communications Act generally preempts state regulation of wireless entry and rates but not other terms and conditions, and states regulate matters such as safety, universal service funding and taxation. Broadband is subject to light-touch federal regulation, with several states adopting or considering net neutrality, low-income pricing and service quality rules; the FCC's "digital discrimination" rules have been appealed by industry groups. Legacy wireline voice is treated as common carriage with heightened oversight; Verizon is an incumbent local exchange carrier in 31 states and the District of Columbia. Multichannel video is regulated like cable and requires local or state franchises. Privacy and data protection obligations span the FCC, FTC, the California Consumer Privacy Act, Europe's GDPR and a widening set of state and national laws, and AI regulation is an emerging area (Colorado has passed comprehensive AI legislation). Public safety rules cover emergency alerting, disaster roaming and backup power, and the FCC restricts use of equipment from certain vendors deemed national security risks — Verizon states it does not use equipment from vendors currently under such restrictions. --- ## Risk factors *From the FY2025 Form 10-K, accession 0000732712-26-000007, Item 1A. Condensed to the substantive risks.* **Economic and strategic** - **Competition.** The convergence of wireless, cable, internet and traditional telephony has brought telecommunications companies, cable operators, wireless providers and satellite providers into the same markets. Competitors offer aggressive pricing, promotions and premium content, often targeting Verizon's customers directly and pressuring pricing and margins. Industry customer growth is expected to keep moderating relative to historical rates, intensifying competition for customers. A sustained decline in a reporting unit's revenue and earnings has produced impairment charges in the past and could again. - **Technology and changing demand.** Verizon must adapt to new technologies, phase out outdated and unprofitable services cost-effectively (subject to legal and regulatory constraints), and compete on AI. It is expanding AI use across network deployment and maintenance, customer and employee support, sales, marketing and administration; generative AI in particular carries technological, regulatory and ethical risk, competitors may adopt it faster, and Verizon's AI investments may not deliver the anticipated benefits. - **Macroeconomic conditions, trade and tariffs.** Recession, slowdown or inflation can push consumers to forgo purchases, drop price plans or seek cheaper alternatives, and can lead business customers to delay decisions. Public sector business has been and may again be hurt by federal and state workforce reductions and cost-efficiency measures. During 2025 the U.S. announced tariffs on imports from various countries; reciprocal or retaliatory measures, further tariffs or prolonged trade uncertainty could raise cost structure, disrupt supply chains and hurt profitability. - **Cyberattacks.** Attacks on Verizon's networks and systems, or those of suppliers and vendors, have increased in frequency, scope and potential harm. In September 2024 Verizon became aware it was one of several telecommunications companies targeted by the nation-state actor known as **Salt Typhoon**, which accessed portions of the network in what Verizon determined was a narrowly focused effort to obtain information about a limited number of individuals primarily involved in government or political activity; Verizon contained that attack but may not contain a future one. Consequences could include equipment failure, loss of sensitive customer or employee information, service disruption, retention incentives, higher security spending, lost revenue, investigation and litigation costs, and reputational damage to the security and cloud businesses. AI adoption may make attacks more frequent, more severe and harder to detect. No cyberattack to date has been material to Verizon's operations or financial condition. - **Business transformation.** Cost-reduction, efficiency, customer-experience and organizational initiatives require substantial investment and may take longer, cost more, or deliver less than expected, and may be derailed by competitor actions, regulation or macroeconomic conditions. - **System failures and outages.** Power outages, natural disasters, extreme weather, acts of war, terrorism, equipment failure and human error can disrupt service. **In early 2026 Verizon experienced an outage that caused a widespread disruption of service to customers.** Redundancy and disaster recovery planning may prove inadequate. - **Supplier and vendor dependence.** Verizon relies on a limited set of suppliers for fiber, switch and network equipment, handsets and customer support; device suppliers themselves often depend on a single vendor for critical components such as chipsets. Supply failures from geopolitical factors, public health crises, disasters or tariff changes could stop Verizon maintaining or upgrading networks, and switching suppliers carries cost and time lag. Many suppliers operate outside the U.S., adding cybersecurity, privacy, compliance, currency and labor exposure, and supplier patent litigation is common in the industry. - **Labor.** Approximately 27% of the workforce was represented by the Communications Workers of America or the International Brotherhood of Electrical Workers at December 31, 2025. Contract renegotiation could bring higher costs or work stoppages, and increased union density outside traditional wireline operations is an unpredictable factor. - **Reputation and brand.** Damage could reduce demand and revenue, attract regulatory scrutiny, raise litigation risk, impair talent attraction and retention, and reduce investor confidence; changes to social media content standards could also affect marketing and advertising. **Regulatory and legal** - **Regulatory framework.** New laws, regulations, executive orders, court decisions or changed enforcement priorities — federal, state, local or international — could restrict network management and operations, impose costs, diminish revenue opportunities and impede service offerings. Named pressure points are privacy and data protection (CCPA, GDPR and newer state and national laws with significant penalties), state-level broadband regulation including low-income pricing and service quality rules, the FCC's "open access" device rules (one aspect of which relating to device locking was recently waived), and conflicting federal, state and international regimes. Licences must be obtained and maintained; wireless licences generally run 10 years subject to renewal. - **Tax.** Complex and changing tax law and interpretation, pending legislation in various jurisdictions, and ongoing audits and controversies could materially affect the tax rate, tax liabilities and the carrying value of deferred tax assets and liabilities. - **Litigation.** Verizon faces shareholder suits, patent and copyright infringement claims, wage and hour class actions, contract and commercial claims, personal injury, property and environmental claims, and suits over advertising, sales, billing and collection practices. The wireless business also faces claims alleging adverse health effects of wireless phones and radio frequency transmitters. - **Lead-sheathed copper cables.** Media reports allege that lead-sheathed cables in the legacy copper network may present health or environmental risks. These allegations have already produced government investigations, regulatory inquiries and litigation, and could bring legislative or regulatory action, penalties, remediation and compliance costs, operational impact and reputational harm. Insurance may not cover the costs, which cannot be reasonably estimated but could be material. **Financial** - **Debt load.** At December 31, 2025 Verizon had approximately **$131.1 billion of outstanding unsecured indebtedness, $27.1 billion of outstanding secured indebtedness and $12.0 billion of unused capacity** under its revolving credit facility. Servicing that debt diverts cash from working capital, capital expenditure, dividends, buybacks and acquisitions; makes future financing harder or costlier; reduces flexibility; increases vulnerability in a downturn; and raises interest rate exposure on variable-rate and refinanced debt. Deleveraging initiatives and target leverage ratios may not be achieved. - **Financial markets.** Higher rates, currency moves or market disruption could raise borrowing costs, require collateral, or restrict financing and refinancing; asset-backed funding depends on originating enough eligible assets; and a credit ratings downgrade would increase costs. - **Pension and healthcare costs.** With approximately 89,900 employees and approximately 179,400 retirees eligible to participate at December 31, 2025, benefit costs materially affect profitability and are driven by healthcare inflation, investment returns, and discount rate and mortality assumptions. - **Capital return.** In January 2026 Verizon said its strategic plans would give it capacity to return approximately **$55 billion to shareholders through the end of 2028** in dividends and buybacks, the Board authorized a **share repurchase program of up to $25 billion** and a dividend increase, and the company said it expected to repurchase at least $3 billion of stock during 2026. None of that is guaranteed: repurchases are discretionary and may be suspended, dividend increases require Board declaration and may depart from historical practice, and buybacks and dividend changes reduce cash reserves and can affect the stock's price and volatility. - **M&A and divestitures.** Strategic transactions carry financial, managerial and operational challenges, may not deliver cost savings or synergies, may produce impairment and disposition charges or continuing obligations through indemnities, and may expose Verizon to undiscovered liabilities or transaction litigation — explicitly including the recently completed Frontier acquisition. --- ## Management's discussion — fiscal year 2025 *From the FY2025 Form 10-K, accession 0000732712-26-000007, Item 7.* **Consolidated results.** Operating revenues rose **2.5% to $138,191 million** from $134,788 million in 2024, driven by Consumer (up $3,903 million, or 3.8%, to $106,807 million) and offset by Business (down $462 million, or 1.6%, to $29,069 million); Corporate and other contributed $2,642 million. Operating expenses rose 2.7% to $108,932 million, producing **consolidated operating income of $29,259 million** versus $28,686 million in 2024. Consolidated net income was **$17,608 million**, down from $17,949 million; after $434 million attributable to noncontrolling interests, **net income attributable to Verizon was $17,174 million**, or **$4.06 per share basic and diluted**. **Consolidated Adjusted EBITDA (a non-GAAP measure) rose to $49,997 million** from $48,791 million. Within operating expenses, cost of services fell 0.7% to $27,789 million — personnel costs down $222 million on prior-year workforce reductions, access costs down $169 million, device protection down $105 million and other direct legacy wireline costs down $91 million, against $198 million more in regulatory fees (a growing Federal Universal Service Fund assessable base plus a higher net rate) and $145 million more in rent and lease expense tied to the Vertical Bridge tower transaction and continued C-Band deployment. Cost of wireless equipment rose 11.0% to $28,976 million, with $1.7 billion from higher device volumes on a **12% increase in upgrades** and $1.2 billion from a mix shift to higher-priced devices. Selling, general and administrative expense fell 0.9% to $33,818 million (device insurance claims down $241 million, advertising down $150 million, personnel down $115 million, offset by $193 million more in asset and business rationalization charges). Depreciation and amortization rose 2.6% to $18,349 million on asset mix and continued C-Band deployment. Below the operating line, other income (expense), net fell to $107 million from $995 million, principally because a **net pension and postretirement remeasurement loss of $453 million** in 2025 replaced a $657 million gain in 2024, partly offset by fair value gains on certain investments. Interest expense of $6,694 million rose slightly as capitalized interest fell with C-Band licences being placed into service, partly offset by lower average balances and rates. The effective tax rate rose because the prior period benefited from favorable resolution of income tax matters and a state apportionment-driven deferred tax reduction. **Consumer.** Revenue growth came from service, wireless equipment and other revenue. Wireless service revenue rose on $775 million more postpaid revenue (higher adoption of perks and premium MyPlan offerings, pricing actions and a **26% increase in the FWA subscriber base**, partly offset by amortization of equipment sales promotions) and $673 million of non-retail service revenue growth. Wireless equipment revenue rose $1.3 billion on volume — a **16% increase in upgrades** — and $916 million on mix. Other revenue rose $189 million on regulatory surcharges. Segment cost of services rose on regulatory fees (+$172 million), rent and lease (+$172 million), and digital content (+$129 million from MyPlan subscriptions, offset by lower linear content costs as Fios video declined). **Business.** Revenue fell on Enterprise and Public Sector and Wholesale, partly offset by Business Markets and Other. Enterprise and Public Sector lost $532 million of wireline revenue to secular pressure and technology shifts in networking, traditional data and voice and related professional services, plus lower customer premise equipment volumes, and $193 million of wireless service revenue driven by Public Sector pressure "in part from government efficiency efforts." Business Markets and Other gained $392 million of wireless service revenue on pricing and FWA growth. Wholesale fell $260 million on technology substitution. Segment SG&A fell $283 million on personnel costs, mainly from the voluntary separation program announced in June 2024 and completed in March 2025. **Special items in 2025** totalled: amortization of acquisition-related intangibles of $760 million (2024: $817 million); pre-tax severance charges of **$1.7 billion** from workforce reduction initiatives; a net pre-tax pension and benefits charge of $441 million (2024: a $532 million credit), driven by a $345 million charge from discount rate reductions to a weighted average 5.7% for pension and 5.4% for postretirement plans; asset and business rationalization charges of **$583 million** (2024: $374 million) for ceasing use of real estate and exiting non-strategic businesses; and $110 million of acquisition and integration charges for Frontier. 2024 also carried a $106 million legacy legal charge relating to telephone directory production in Costa Rica. **Operating environment and trends as management framed them.** U.S. wireless smartphone penetration is high, limiting new phone connection growth, and industry customer growth is expected to keep moderating; future revenue growth should come from deepening existing customer relationships, more connected devices, and greater FWA and IoT penetration. Pricing, aggressive device promotions and price lock guarantees remain central competitive tools. Fiber connections are expected to grow with expanded availability and penetration, aided by the Frontier footprint, with FWA complementing fiber and both supporting convergence. Video faces ongoing pressure across the linear television market, and access line and DSL losses continue as customers move to wireless, VoIP and cable. Management stated that it **anticipates 2026 will be a transitional year for revenue** as Verizon works toward sustainable volume-based growth, and that promotion amortization pressure on wireless service revenue would continue in 2026. **Liquidity and capital.** Cash and cash equivalents were **$19.0 billion at December 31, 2025**. Capital expenditures including capitalized software were $17.0 billion in 2025 (2024: $17.1 billion), and the 2026 capital program was set at **$16.0 billion to $16.5 billion**. Operating cash flow rose $225 million, helped by lower cash tax payments under the One Big Beautiful Bill legislation and hurt by lower earnings and the absence of $2.0 billion of Vertical Bridge proceeds received in 2024. Financing used $5.6 billion (2024: $17.1 billion): $27.6 billion of long-term borrowing proceeds including $9.3 billion of asset-backed debt, against $19.8 billion of repayments and repurchases, $11.5 billion of dividends and $1.9 billion of other financing. **Total debt rose to $158.2 billion from $144.0 billion**, at a 5.0% effective interest rate (2024: 5.1%), with $38.2 billion — 23.6% — foreign denominated, chiefly Euro and Sterling and hedged with cross currency swaps. Approximately 79% of the portfolio was fixed-rate including swaps, and a 100 basis point rate move would change annual interest expense by roughly $340 million. The Board raised the quarterly dividend 1.8% to $0.6900 in the third quarter of 2025, the nineteenth consecutive annual increase, and $11.5 billion of dividends were paid. Contractual commitments at year end included $155.8 billion of long-term debt with $79.1 billion of related interest, $28.2 billion of operating and $2.7 billion of finance lease obligations plus $3.2 billion under the cell tower leaseback and sublease, $15.0 billion of unconditional purchase obligations, and an unrecognized tax benefits balance of $2.6 billion. Verizon expects no required qualified pension funding through the end of 2030. **Critical accounting estimates.** Wireless licences carried at approximately **$157.0 billion** and goodwill of approximately **$22.8 billion** ($21.2 billion Consumer, $1.7 billion Business) are indefinite-lived and tested annually. Qualitative assessments in the fourth quarter of 2025 found no impairment of wireless licences or Consumer goodwill. A quantitative test of the **Business reporting unit** was performed in both 2024 and 2025 and found no impairment, but at the October 31, 2025 measurement date **Business's fair value exceeded its carrying amount by only approximately 9%** and "remains susceptible to future impairment risk"; management believes there is a continued risk of a future impairment charge. Sensitivities disclosed — a 50 basis point lower terminal growth rate, a 50 basis point higher discount rate, or a 100 basis point lower EBITDA margin — would each still leave fair value above carrying value. Verizon also disclosed that a one-year increase in property, plant and equipment useful lives would have cut 2025 depreciation by $2.5 billion and a one-year decrease would have raised it by approximately $3.8 billion. **Pending at the date of the annual report.** Verizon's agreement of October 17, 2024 to acquire select spectrum licences of United States Cellular Corporation (then known as Array Digital Infrastructure, Inc.) and certain subsidiaries for total consideration of **$1.0 billion** remained subject to regulatory approvals and closing conditions. --- ## Current quarter — three and six months ended June 30, 2026 *From the Form 10-Q for the quarter ended June 30, 2026, accession 0000732712-26-000046, with guidance from the results release furnished on Form 8-K, accession 0000732712-26-000040, Exhibit 99.* **The headline shape of the quarter.** Total operating revenues were **$34,253 million, down 0.7%** from $34,504 million a year earlier; for the six months they were $68,693 million, up 1.0%. **Operating income fell to $7,179 million from $8,172 million** and **net income attributable to Verizon fell to $3,835 million from $5,003 million**, with EPS of **$0.92 basic and diluted versus $1.18**. The revenue decline is entirely a mix story: service revenues and other rose to $29,229 million from $28,249 million while **wireless equipment revenues fell to $5,024 million from $6,255 million** on a deliberate reduction in upgrade volumes and device subsidy spending. The earnings decline is a charges story: **$1,810 million of pre-tax special items** in the quarter against $192 million a year earlier. Excluding those, **Consolidated Adjusted EBITDA rose 7.2% to $13,723 million**, which management described as the highest it has ever reported. **The special items.** A **$746 million pre-tax loss on disposition of business** was recorded on classifying the international wireline connectivity and managed network services business as held for sale; **$397 million of severance charges** for workforce reduction initiatives; **$258 million of asset rationalization charges** for ceasing use of certain real estate and network assets; **$135 million of Frontier acquisition and integration charges** ($396 million for the six months); and $274 million of amortization of acquisition-related intangibles. For the six months, special items totalled $2,074 million net, including a **$237 million pre-tax pension and benefits remeasurement gain** recorded in other income following amendments to collective bargaining agreements. **Segment performance.** - **Consumer** revenue was $26,242 million, **down 1.5%**, as a $1,191 million (22.2%) fall in wireless equipment revenue outweighed a $635 million (3.3%) rise in mobility and broadband service revenue and a $150 million rise in other revenue. Within service revenue, fiber broadband rose **$712 million on the inclusion of Frontier**, non-retail service revenue rose $193 million and prepaid rose $94 million, against a **$365 million decline in postpaid revenue** from promotion and acquisition-related discount amortization. Segment operating income rose 5.1% to $8,032 million and segment operating income margin widened to **30.6% from 28.7%**. - **Business** revenue was $7,155 million, **up 2.6%**, driven by a $227 million rise in other revenue — of which $277 million was legacy wireline revenue from Frontier — while mobility and broadband service revenue was essentially flat (down $5 million) as a $75 million postpaid decline from a shift toward lower-tier plans among new customers offset FWA growth and pricing adjustments. Segment operating income rose **36.9% to $991 million** and margin widened to **13.9% from 10.4%**, helped by lower personnel costs from workforce reductions and lower access costs. Note that the Verizon Contributed Business (the international wireline unit) was moved out of the Business segment into Corporate and other in the second quarter of 2026 and prior-period segment results were reclassified; separately, from the first quarter of 2026 Verizon revised segment revenue disaggregation to Mobility and broadband service revenue, Wireless equipment revenue and Other revenue, and began reporting operating metrics only on a consolidated basis. **Subscribers and unit economics.** Wireless retail connections reached 146,953 thousand, up 0.6% year over year; **fiber broadband connections reached 10,913 thousand, up 43.3%** on Frontier, and FWA broadband 6,208 thousand, up 21.4%, for total broadband of 17,121 thousand, up 34.5%. Quarterly net additions were 184 thousand postpaid phone (against a loss of 9 thousand a year earlier), 73 thousand core prepaid, 155 thousand fiber broadband and 193 thousand FWA broadband. **Postpaid phone churn improved to 0.92% from 0.97%** and the **upgrade rate fell to 2.6% from 3.6%**. Postpaid ARPA slipped 1.4% to $168.35 while core prepaid ARPU rose 2.5% to $33.37. **Cost and financing pressure.** Cost of services rose 5.0% to $7,225 million, largely on Frontier-related headcount, buildings and content; cost of wireless equipment fell 16.4% to $5,859 million on lower upgrade volumes; SG&A rose 15.0% to $8,982 million on the special items above, partly offset by $193 million lower advertising; and depreciation and amortization rose 8.0% to $5,008 million on Frontier assets. **Interest expense rose 21.1% to $1,985 million** on average debt outstanding of $170,098 million versus $144,695 million, at an effective rate of 5.0% (down from 5.1%). The effective tax rate rose to 25.1% from 22.5%, chiefly because the loss on the held-for-sale classification is nondeductible. **Balance sheet and cash.** Six-month operating cash flow was **$18,419 million, up $1,662 million**, on the timing of cash tax payments under the One Big Beautiful Bill legislation and working capital benefits from lower upgrade volumes, against lower earnings. Capital expenditures were $8,210 million, giving **free cash flow (a non-GAAP measure) of $10,209 million against $8,804 million**. Investing used $18,500 million, including **$9.5 billion for acquisitions of businesses net of cash acquired** and **$1.0 billion for the UScellular spectrum licences**. Financing used $17,114 million: $14.4 billion of repayments, redemptions and repurchases of long-term borrowings and finance leases — including approximately **$12.4 billion of principal on debt assumed with Frontier** — plus $13.9 billion of asset-backed repayments, $5.9 billion of dividends and $3.5 billion of share purchases, against $12.0 billion of asset-backed proceeds and $9.9 billion of long-term borrowing proceeds. **Cash and cash equivalents fell to $1.8 billion at June 30, 2026, a $17.3 billion decrease** from year end. **Total debt rose to $165.2 billion** ($136.5 billion unsecured, $28.8 billion secured) from $158.2 billion. Approximately 76% of the portfolio was fixed-rate including swaps, and a 100 basis point rate move would change annual interest expense by roughly $412 million. The revolver was undrawn, with $11,976 million unused of $12,000 million capacity; $1.6 billion was drawn on export credit facilities in the half. Debt activity in the quarter included a $1,858 million tender offer (cash consideration $1,877 million) for 2.100%–8.750% notes due 2027–2033, launched alongside an exchange of $161 million of subsidiary notes into Verizon notes. **Capital returns.** Under the $25 billion program authorized January 30, 2026, Verizon repurchased **50,758,023 shares at an average $49.25** through accelerated share repurchase agreements entered in February 2026 and completed in March, and a further **21,289,443 shares at an average $46.97** under an April 2026 ASR completed in June — **72,047,466 shares for $3.5 billion** in the half, leaving **$21.5 billion of remaining capacity**. Dividends of $5.9 billion were paid (prior-year half: $5.7 billion). The **full-year repurchase target was raised from $3.0 billion to up to $4.5 billion**. **Guidance.** With the second-quarter results Verizon raised full-year 2026 guidance for the second consecutive quarter: mobility and broadband service revenue growth of **2.5% to 3.0%** (with wireless service revenue growth approximately flat as the company transitions to volume-based growth, and total mobility and broadband service revenue growth expected to approach 3.0% in the third quarter and approximately 4.0% in the fourth, from 2.8% in the second); **adjusted EPS of $4.99 to $5.04**, up 6.0% to 7.0%; cash flow from operations growth of approximately 2.0% to 4.0%; and free cash flow growth of 9.0% to 10.0%. Verizon continues to expect total retail postpaid phone net additions in the upper half of a 750,000 to 1.0 million range and **capital expenditures of $16.0 billion to $16.5 billion**. **Transactions signed or completed during the quarter.** - **UScellular spectrum.** The acquisition of select spectrum licences of United States Cellular Corporation (now Array Digital Infrastructure, Inc.) and certain subsidiaries, agreed October 17, 2024, **closed on June 1, 2026 for total cash consideration of $1.0 billion**. - **FCC Auction 113 (AWS-3).** The auction concluded in June 2026 with Verizon the winning bidder on **82 spectrum licences valued at approximately $3.2 billion**. Only an immaterial deposit had been paid as of quarter end; the timing of licence issuance remains subject to FCC determination. - **Joint venture with BT Group plc.** On **June 28, 2026** Verizon entered a Transaction Agreement with BT Group plc and Jasper NewCo Limited under which **Verizon and BT will each acquire a 50% equity interest in NewCo**. Verizon will contribute the subsidiaries comprising its international wireline connectivity and managed network services business and make a **$625 million cash payment** to NewCo, which NewCo will distribute to BT; BT will contribute the subsidiaries comprising its own international wireline connectivity and managed network services business. Relative values are subject to customary post-closing adjustments for cash, net working capital and indebtedness. **Closing remains subject to customary regulatory approvals and other closing conditions.** The contributed business was classified as held for sale in the second quarter, producing the $746 million pre-tax write-down to fair value less costs to sell; held-for-sale assets were $579 million current and $51 million non-current (after a $746 million valuation allowance) and held-for-sale liabilities $375 million current and $255 million non-current at June 30, 2026. - **Satellite direct-to-device joint venture.** On **May 14, 2026** Verizon entered an agreement in principle with AT&T Inc. and T-Mobile US, Inc. to form a joint venture aimed at ending wireless dead zones in the U.S., including rural areas, by pooling limited spectrum resources and investing jointly in satellite-based direct-to-device technologies on a unified platform. The venture **remains subject to negotiating definitive agreements and satisfying customary closing conditions.** **Frontier and Starry, as accounted for in the quarter.** Frontier closed January 20, 2026 at $38.50 per share in cash; Verizon paid approximately **$9.8 billion in cash inclusive of $335 million of cash acquired** and assumed approximately **$12.9 billion of Frontier debt at fair value**. The preliminary purchase price allocation records purchase consideration of $9,916 million against $16,698 million of property, plant and equipment, **$7,795 million of goodwill**, $2,897 million of other intangible assets, $770 million of current assets and $324 million of other non-current assets, less $3,132 million of current liabilities excluding debt, $1,693 million of current debt, $11,590 million of long-term debt and finance leases and $2,153 million of other non-current liabilities. The allocation is preliminary and will be finalized within one year of the acquisition date. Starry closed January 30, 2026 for immaterial consideration. Results of both are consolidated from their respective closing dates, and together they contributed less than 5% of total operating revenues in the quarter and half. **Other disclosures.** There were no material changes to the risk factors disclosed in the FY2025 Form 10-K. Verizon does not believe any pending legal proceeding requires disclosure as material, and none of the accruals in currently pending matters is material. Unrecognized tax benefits were $2.5 billion at June 30, 2026. Confirmed obligations under the voluntary supplier finance program fell to $491 million from $723 million at year end. Verizon held 29 renewable energy purchase agreements, 22 of the underlying facilities in commercial operation. First-quarter 2026 postpaid revenue was reduced by credits provided to customers in connection with **the network outage in the first quarter of 2026**. --- ## Subsequent events *From the Form 10-Q for the quarter ended June 30, 2026, accession 0000732712-26-000046. The quarterly report does not present a separate subsequent-events note; the following post-period items are disclosed within its notes and management's discussion.* - **Spectrum payments — approximately $3.1 billion.** In **July 2026**, following the June 2026 conclusion of FCC Auction 113 for Advanced Wireless Services (AWS-3) licences, Verizon made additional payments totalling **approximately $3.1 billion** in connection with the **82 spectrum licences valued at approximately $3.2 billion** on which it was the winning bidder. The timing of licence issuance remains subject to FCC determination. - **Asset-backed financing — approximately $500 million.** In **July 2026**, Verizon entered an additional repurchase agreement with a bank to sell the residual equity interest in two of its ABS Entities, receiving **approximately $500 million in proceeds**. The BT Group plc joint venture was signed on June 28, 2026 and the satellite direct-to-device joint venture with AT&T and T-Mobile was agreed in principle on May 14, 2026; both are described above, and neither had closed as of the quarterly report. No further material post-period acquisitions, divestitures, financings or litigation outcomes are disclosed in the quarterly report.