Verizon

Verizon Prepared by – Vikram Mohan Brief Overview of the Company: Verizon Communications Inc., based in New York and incorporated in Delaware, was formed on June 30, 2000, with the merger of Bell Atlantic Corp. and GTE Corp. Verizon began trading on the New York Stock Exchange (NYSE) under the VZ symbol on Monday, July 3, 2000. Key Facts

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Dow 30 company 59 million wireless customers 45 million wire line access lines Serving 94 percent of Fortune 500 companies 242,000 employees Over 2,200 Verizon Wireless retail stores across the country Employees in over 300 Verizon Business offices in 75 countries across six continents First company to provide fibre-based digital TV to the mass market First company to provide wide-area wireless broadband service First commercial provider of Internet access

Business Solutions: Verizon has two major segments that it operates as business units and they are organized by products and services. These BU’s are, - Wireline o Telecom (Verizon Telecom) o Business - Domestic Wireless

Verizon Telecom consists of the operations of Verizon Telecom, a provider of telephone services, including voice, broadband, data, network access, long distance, video, and other services to consumer and small business customers and carriers.

Verizon Business is a global IP footprint that mainly caters to Fortune 500 companies (97 percent of them) and over 130,000 customers. The domestic wireless business, operating as Verizon Wireless, provides wireless voice and data products and services across the United States using one of the most extensive wireless networks. Major Customers: Mainly caters to residential customers with a footprint over the United States of America. Major Events in the company (M&A etc.): -

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GTE Merger o Bell Atlantic acquired GTE on June 30, 2000 o Changed its name to Verizon Communications, Inc. o It was among the largest mergers in United States business history o Result of a definitive merger agreement, dated July 27, 1998, between Bell Atlantic, based in New York City since the merger with NYNEX in 1996, and GTE o Price at more than $52 billion o September 21, 1999  Bell Atlantic and UK-based Vodafone AirTouch Plc (now Vodafone Group Plc) announced that they had agreed to create a new wireless business with a national footprint, a single brand and a common digital technology  Began operations as Verizon Wireless on April 4, 2000 o This merger helped it expand user base and cater to what it called secondary markets (in US) by acquisition of BE’s clients MCI acquisition o February 14, 2005  Verizon agreed to acquire MCI, formerly WorldCom  SBC Communications agreed to acquire AT&T just a few weeks earlier  Benefited Verizon by including economies of scale derived from a potential productivity boost to be achieved via the elimination of thousands of jobs at the combined company  Access to the large base of business customers currently served by MCI  Real benefit to Verizon was the acquisition of long-haul lines • Verizon no longer had to pay royalties to other providers when calls had to be routed outside its coverage footprint • This was the key to Verizon’s long term market positioning strategy

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Verizon, with MCI, was the largest telecommunications company in the United States based on sales of $75.11 billion, profits of $7.4 billion and assets of $168.13 billion

Financials: Selected financial data (dollars in milions, except per share amounts) 2006 Results of Operations Operating revenues Operating income Income before discontinued operations and cumulative effect of accounting change Per common share - basic Per common share - diluted Net income Net income available to common shareowners Per common share - basic Per common share - diluted Cash dividends declared per common share Financial Position Total assets Long-term debt Employee benefit obligations Minority interest Shareowners' investment

2005

2004

2003

2002

$88,144 $69,518 $65,751 $61,754 $60,907 13,373 12,581 10,870 5,312 12,386 5,480 1.88 1.88 6,197 6,197 2.13 2.12 1.62

6,027 2.18 2.16 7,397 7,397 2.67 2.65 1.62

5,899 2.13 2.11 7,831 7,831 2.83 2.79 1.54

2,168 .79 .79 3,077 3,077 1.12 1.12 1.54

3,016 1.11 1.11 4,079 4,079 1.49 1.49 1.54

$188,804 $168,130 $165,958 $165,968 $167,468 28,646 31,569 34,970 38,609 43,066 30,779 17,693 16,796 15,726 14,484 28,337 26,433 24,709 24,023 23,749 48,535 39,680 37,560 33,466 32,616

Stock Performance Graph Comparison of Five-Year Total Return Among Verizon, S&P 500 Telecom Services Index and S&P 500 Stock Index

Data Points in Dollars* At December 31, 2001 2002 2003 2004 2005 2006 Verizon 100.0 84.9 80.3 96.5 75.2 101.1 S&P 500 100.0 77.9 100.2 111.1 116.6 135.0 S&P 500 Telecom Services 100.0 65.9 70.7 84.7 80.2 109.5

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Assumes $100 invested on December 31, 2001 The graph compares the cumulative total returns of Verizon, the S&P 500 Telecommunications Services Index, and the S&P 500 Stock Index over a fiveyear period.

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It assumes $100 was invested on December 31, 2001, with dividends reinvested.

Performance Summary,

Sources of Revenue: Revenue contribution from the various BU’s can be shown as,

Wireline

Verizon owns and operates one of the most expansive end-to-end global IP networks providing access to over 150 countries worldwide and next-generation IP network services to medium and large businesses and government customers. Verizon Telecom Financial

2005

2006

(Dollars in Millions) Revenues

31,694

Operations

32,938

As of 06/30/07

States w/Wireline Presence

28 + DC

Access Lines (000)

43,288

Broadband Connections (000)

7,686

Video Subscribers* * includes both FiOS and DirecTV customers

1,258

Verizon Business Financial

2005

2006 (Dollars in Millions)

Revenues Operations Cities Countries POPs Customer Relationships

7,771

20,678 As of 06/30/07 2,700+ 150 4,500+ 130,000+

Domestic Wireless

Verizon Wireless owns and operates America’s most reliable wireless network, serving more than 62 million voice and data customers nationwide. Leveraging its greatest asset -

its network - Verizon Wireless continues to lead the industry by offering the highest quality products and services while introducing innovative technology solutions. The domestic wireless business, operating as Verizon Wireless, provides wireless voice and data products and services across the United States using one of the most extensive wireless networks.

Financial

2005

2006 (Dollars in Millions)

Revenues

32,301

Operations

38,043

As of 06/30/07

Customers (000)

62,054

Penetration

23.8%

Customer Net Adds for current period (000)

1,338

Total churn, including prepaid

1.3%

Competitors: Cellular service -

Alltel AT&T MetroPCS Sprint Nextel T-Mobile

Broadband -

AT&T Cablevision Comcast Embarq Qwest RCN Time Warner Cable Insight Communications

Television -

Comcast DirecTV Time Warner Cable Dish Network Charter Communications Cox Communications Cablevision RCN Insight Communications

Company Strategy: -

Continual restructuring of assets to focus on broadband, wireless and entertainment

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Dissolving investments in Puerto Rica and Venezuela as well as access lines in Maine, Vermont and New Hampshire o

Generate cash and strengthen strategic focus

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Expect to invest $17.5 – 17.9 billion in 2007 to increase coverage, reliability and speed of wireless, broadband and global IP networks

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Introducing bundled services that give customer convenience of a single source and single bill o

Have one of first mover advantage in introducing service and communication and delivering them to any screen the customer wants

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Working with a wide variety of partners to deliver their content across their three broadband networks

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Using scale and structure to drive profits as well as revenues

Summary - Take aways: A business model based on superior networks, customer loyalty and efficiency that leads to year on year of margin leadership.