UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
For the transition period from
to
Commission file number: 1-8606
Verizon Communications Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
1095 Avenue of the Americas
New York, New York
(Address of principal executive offices)
23-2259884
(I.R.S. Employer Identification No.)
10036
(Zip Code)
Registrant’s telephone number, including area code: (212) 395-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $0.10
Common Stock, par value $0.10
1.625% Notes due 2024
4.073% Notes due 2024
0.875% Notes due 2025
3.25% Notes due 2026
1.375% Notes due 2026
0.875% Notes due 2027
1.375% Notes due 2028
1.125% Notes due 2028
2.350% Fixed Rate Notes due 2028
1.875% Notes due 2029
0.375% Notes due 2029
1.250% Notes due 2030
1.875% Notes due 2030
4.250% Notes due 2030
2.625% Notes due 2031
2.500% Notes due 2031
3.000% Fixed Rate Notes due 2031
0.875% Notes due 2032
0.750% Notes due 2032
1.300% Notes due 2033
4.75% Notes due 2034
4.750% Notes due 2034
3.125% Notes due 2035
1.125% Notes due 2035
Trading Symbol(s)
VZ
VZ
VZ 24B
VZ 24C
VZ 25
VZ 26
VZ 26B
VZ 27E
VZ 28
VZ 28A
VZ 28C
VZ 29B
VZ 29D
VZ 30
VZ 30A
VZ 30D
VZ 31
VZ 31A
VZ 31D
VZ 32
VZ 32A
VZ 33B
VZ 34
VZ 34C
VZ 35
VZ 35A
Name of Each Exchange on Which
Registered
New York Stock Exchange
The Nasdaq Global Select Market
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(b) of the Act (continued):
Title of Each Class
3.375% Notes due 2036
2.875% Notes due 2038
1.875% Notes due 2038
1.500% Notes due 2039
3.50% Fixed Rate Notes due 2039
1.850% Notes due 2040
3.850% Fixed Rate Notes due 2041
Trading Symbol(s)
VZ 36A
VZ 38B
VZ 38C
VZ 39C
VZ 39D
VZ 40
VZ 41C
Securities registered pursuant to Section 12(g) of the Act: None
Name of Each Exchange on Which
Registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☒ Yes ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Accelerated filer
Smaller reporting company
Emerging growth company
Large accelerated filer
Non-accelerated filer
☐
☐
☐
☒
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No
At June 30, 2023, the aggregate market value of the registrant’s voting stock held by non-affiliates was approximately
$156.3 billion.
At January 31, 2024, 4,204,272,443 shares of the registrant’s common stock were outstanding, after deducting 87,161,203
shares held in treasury.
Documents Incorporated By Reference:
Portions of the registrant’s definitive Proxy Statement to be delivered to shareholders in connection with the registrant’s 2024
Annual Meeting of Shareholders (Part III).
TABLE OF CONTENTS
Item No.
PART I
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6.
[Reserved]
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
Item 16.
Form 10-K Summary
Signatures
Certifications
Page
4
13
18
18
20
20
20
21
21
22
47
50
104
104
105
105
105
105
106
106
106
107
111
111
PART I
Item 1. Business
General
Verizon Communications Inc. (the Company) is a holding company that, acting through its subsidiaries (together with the
Company, collectively, Verizon), is one of the world’s leading providers of communications, technology, information and
entertainment products and services to consumers, businesses and government entities. With a presence around the world, we
offer data, video and voice services and solutions on our networks and platforms that are designed to meet customers’ demand
for mobility, reliable network connectivity and security.
Our principal executive offices are located at 1095 Avenue of the Americas, New York, New York 10036 (telephone number
212-395-1000).
We have two reportable segments that we operate and manage as strategic business units - Verizon Consumer Group
(Consumer) and Verizon Business Group (Business).
Verizon Consumer Group
Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless
services are provided across one of the most extensive wireless networks in the United States (U.S.) under the Verizon family of
brands and through wholesale and other arrangements. We also provide fixed wireless access (FWA) broadband through our
fifth-generation (5G) or fourth-generation (4G) Long-Term Evolution (LTE) networks as an alternative to traditional landline
internet access. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as
Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-
based network to customers who are not served by Fios.
In 2023, the Consumer segment’s revenues were $101.6 billion, representing approximately 76% of Verizon’s consolidated
revenues. As of December 31, 2023, Consumer had approximately 115 million wireless retail connections (including FWA), of
which 82% are postpaid connections. In addition, at December 31, 2023, Consumer had approximately 9 million total broadband
connections (which includes Fios internet, Digital Subscriber Line (DSL) and FWA connections), and approximately 3 million Fios
video connections.
Verizon Business Group
Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data,
video and conferencing services, corporate networking solutions, security and managed network services, local and long
distance voice services and network access to deliver various Internet of Things (IoT) services and products. We provide these
products and services to businesses, government customers and wireless and wireline carriers across the U.S. and a subset of
these products and services to customers around the world.
In 2023, the Business segment's revenues were $30.1 billion, representing approximately 22% of Verizon’s consolidated
revenues. As of December 31, 2023, Business had approximately 30 million wireless retail postpaid connections (including FWA)
and approximately 2 million total broadband connections (which includes Fios internet, DSL and FWA connections).
Additional discussion of our reportable segments is included in Item 7. under the headings "Management’s Discussion and
Analysis of Financial Condition and Results of Operations — Overview" and "— Segment Results of Operations" and in Note 13
to the consolidated financial statements included in this Annual Report.
Service and Product Offerings
Our Consumer segment's wireless and wireline products and services are available to our retail customers, as well as resellers
that purchase wireless network access from us on a wholesale basis. Our Business segment’s wireless and wireline products
and services are organized by the primary customer groups targeted by these offerings: Enterprise and Public Sector, Business
Markets and Other, and Wholesale.
Wireless
We offer wireless services and equipment to both Consumer customers and Business customers.
Wireless Services
Our Consumer and Business segments provide a wide variety of wireless services accessible on a broad range of devices.
Customers can obtain our wireless services on a postpaid or prepaid basis. Retail (non-wholesale) postpaid accounts primarily
represent retail customers that are directly served and managed by Verizon and use Verizon branded services. A single account
Verizon 2023 Annual Report on Form 10-K 4
may include monthly wireless services for a variety of connected devices. Our postpaid service is generally billed one month in
advance for a monthly access charge in return for access to and usage of network services. Our prepaid service is offered only
to Consumer customers and enables individuals to obtain wireless services without credit verification by paying for all services in
advance. As of December 31, 2023, we had 94 million postpaid connections and 21 million prepaid connections, representing
approximately 82% and 18% of our Consumer wireless retail connections, respectively.
Access to the internet is available on all smartphones and nearly all basic phones. In addition, our customers can access the
internet at broadband speeds on notebook computers, tablets and smartwatches that are either wireless-enabled or that are
used in conjunction with separate dedicated devices that provide a mobile Wi-Fi connection.
Historically, customers on our fixed-term service plans paid higher access fees for their wireless service in exchange for the
ability to purchase their wireless devices at subsidized prices. We no longer offer Consumer customers new fixed-term,
subsidized service plans for devices; however, we continue to offer subsidized plans to our Business customers.
We also provide FWA broadband through our 5G or 4G LTE wireless networks to our Consumer and Business customers. FWA
enables fixed broadband access using radio frequencies instead of cables and can be used to connect homes and businesses to
the internet. As of December 31, 2023, we had approximately 3.1 million FWA broadband connections.
Wireless Equipment
Consumer and Business offer several categories of wireless equipment to customers, including a variety of smartphones and
other handsets, wireless-enabled internet devices, such as tablets, and other wireless-enabled connected devices, such as
smart watches. We permit customers to acquire equipment from us using device payment plans, which permit the customer to
pay for the device in installments over time.
Verizon Consumer Group
In addition to the wireless services and equipment discussed above, the Consumer segment sells residential fixed connectivity
solutions, including internet, video and voice services, and wireless network access to resellers on a wholesale basis. Consumer
also provides non-connectivity services including device protection, content offerings, cloud storage, and other products.
Residential Fixed Services. We provide residential fixed connectivity solutions to customers over our 100% fiber-optic network
through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios.
In addition, we provide FWA broadband through both 5G and our LTE Home Internet offerings, which are available in most states
across the U.S.
We offer residential fixed services tailored to the needs of our customers. Depending on those needs at a particular time, our
services may include features related to, among other things: internet access at different speed tiers using fiber-optic, copper or
wireless technology; video services that may feature a variety of channel options, video on demand products, cloud-based
services and digital video recording capabilities; over-the-top (OTT) video services; voice services; and other home solutions.
Network Access Services. We sell network access to mobile virtual network operators (MVNOs) on a wholesale basis, who in
turn resell wireless service under their own brand(s) to consumers.
Verizon Business Group
In addition to the wireless services and equipment discussed above, our Business segment provides wireless and wireline
communications services and products, including data, video and conferencing services, corporate networking solutions, security
and managed network services, local and long distance voice services and network access to deliver various IoT services and
products.
Enterprise and Public Sector
Enterprise and Public Sector offers wireless products and services as well as wireline connectivity and managed solutions to our
large business and government customers. Large businesses are identified based on their size and volume of business with
Verizon. Public sector offers these services with features and pricing designed to address the needs of U.S. federal, state and
local governments and educational institutions. In 2023, Enterprise and Public Sector revenues were $15.1 billion, representing
approximately 50% of Business’s total revenues.
Enterprise and Public Sector offers a broad portfolio of connectivity, security and professional services designed to enable our
customers to optimize their business operations, mitigate business risks and capitalize on data. These services include the
following:
• Network Services. We offer a portfolio of network connectivity products to help our customers connect with their
employees, partners, vendors and customers. These products include private networking services, private cloud
connectivity services, virtual and software defined networking services and internet access services.
5 Verizon 2023 Annual Report on Form 10-K
•
•
Advanced Communications Services. We offer a suite of services to our customers to help them communicate with their
employees, partners, vendors, constituents and customers. These products include Internet Protocol (IP)-based voice
and video services, unified communications and collaboration tools and customer contact center solutions.
Security services. We offer a suite of management and data security services that help our customers protect, detect
and respond to security threats to their networks, data, applications and infrastructure.
• Core services. We provide a portfolio of domestic and global voice and data solutions utilizing traditional
telecommunications technology, including voice calling, messaging services, conferencing, contact center solutions and
private line and data access networks. Core services also include the provision of customer premises equipment, and
installation, maintenance and site services.
•
IoT services. We provide the network access required to deliver various IoT products and services. We work with
companies that purchase network access from us to connect their devices, bundled together with their own solutions,
which they sell to end users. We are building IoT capabilities by leveraging business models that monetize usage on our
networks at the connectivity, platform and solution layers.
Business Markets and Other
Business Markets and Other offers wireless services and equipment, conferencing services, tailored voice and networking
products, Fios services, advanced voice solutions and security services to businesses that ordinarily do not meet the
requirements to be categorized as Enterprise and Public Sector, as described above. Business Markets and Other also includes
solutions that support mobile resource management. In 2023, Business Markets and Other revenues were $12.7 billion,
representing approximately 42% of Business’s total revenues.
In addition to the wireless services and equipment discussed above, Business Markets and Other provides fixed connectivity
solutions comparable to the residential fixed services provided by Consumer, as well as business services and connectivity
similar to the products and services offered by Global Enterprise, in each case with features and pricing designed to address the
needs of small and medium businesses.
Wholesale
Wholesale offers wireline communications services including data, voice, local dial tone and broadband services primarily to
local, long distance, and wireless carriers that use our facilities to provide services to their customers. In 2023, Wholesale
revenues were $2.3 billion, representing approximately 8% of Business’s total revenues. A portion of Wholesale revenues are
generated by a few large telecommunications companies, most of which compete directly with us. Wholesale's services include:
• Data services. We offer a portfolio of data services to enhance our Wholesale customers’ networks and provide
connections to their end users and subscribers.
•
•
Voice services. We provide switched access services that allow carriers to complete their end-user calls that originate
or terminate within our territory. In addition, we provide originating and terminating voice services throughout the U.S.
and globally utilizing our time-division multiplexing and Voice over Internet Protocol (VoIP) networks.
Local services. We offer an array of local dial tone and broadband services to competitive local exchange carriers, some
of which are offered to comply with telecommunications regulations. In addition, we offer services such as colocation,
resale and unbundled network elements in compliance with applicable regulations.
Distribution
We use a combination of direct, indirect and alternative distribution channels to market and distribute our products and services
to Consumer and Business customers.
Our direct channel, including our company-operated stores, is a core component of our distribution strategy. Our sales and
service centers and business direct sales teams also represent significant distribution channels for our services. In addition, we
have a robust digital channel and omni-channel as a part of the customer experience in order to offer choice and convenience.
Our indirect channel includes agents that sell our wireless and wireline products and services at retail locations throughout the
U.S., as well as through the internet. The majority of these sales are made under exclusive selling arrangements with us. We
also have relationships with high-profile national retailers that sell our wireless and wireline products and services, as well as
convenience store chains that sell our wireless prepaid products and services.
In addition to our direct channel, our Business segment has additional distribution channels that include business solution
fulfillment provided by resellers, non-stocked device fulfillment performed by distributors and integrated mobility services
provided by system integrators and resellers.
Verizon 2023 Annual Report on Form 10-K
6
Global Network and Technology
Our global network architecture is used by Consumer and Business. Our network technology platforms include both wireless and
wireline technologies.
Network Evolution
We are transforming the architecture of our networks into our next-generation multi-use platform, which we call the Intelligent
Edge Network. This technology enhances applications by hosting them at the end of the network, closer to devices and end
points, which lowers response time and boosts performance.
We expect that this new architecture will simplify operations by eliminating legacy network elements, speed the deployment of
5G wireless technology and create new opportunities in the business market in a cost-efficient manner.
5G
Over the past several years, we have been leading the development of 5G wireless technology industry standards and the
ecosystems for fixed and mobile 5G wireless services. 5G technology enables higher throughput and lower latency than 4G LTE
technology and allows our networks to handle more traffic as the number of internet-connected devices grows.
We provide high quality 5G wireless service utilizing millimeter wave and C-Band spectrum. Other licensed spectrum bands are
used to support our 5G service. In January 2022, we began rapidly deploying our C-Band spectrum, which, as of December 31,
2023, covers approximately 242 million people in the U.S. We obtained full access to our C-Band spectrum in August 2023 and
will continue deploying this spectrum across the continental U.S. Our FWA broadband services also leverage the 5G network and
our expanding C-Band footprint, in addition to our 4G FWA offerings.
4G LTE
The wireless network technology platform that carries about half of our wireless traffic is 4G LTE. As of December 31, 2023, our
4G LTE network covers approximately 330 million people, excluding those in areas served by our LTE in Rural America partners.
Under this program, we have collaborated with wireless carriers in rural areas to build and operate a 4G LTE network using each
carrier’s network assets with our core 4G LTE equipment and 700 Megahertz (MHz) C Block and Advanced Wireless Services
(AWS) spectrum. LTE Home Internet, our home broadband internet service leverages the Verizon 4G LTE network.
Wireless Network Reliability and Build-Out
We consider the reliability, speed, capacity and coverage of our wireless network to be key factors for our continued success. We
believe that steady and consistent network and platform investments provide the foundation for innovative products and services.
As we design and deploy our network, we focus on the number of successful data sessions the network enables, delivering on
our advertised throughput speeds, and the number of calls that are connected on the first attempt and completed without being
dropped. We utilize three strategies to maintain the quality of our network: increasing the density of our network elements,
deploying new technologies as they are developed and putting additional wireless spectrum into service.
We are densifying our networks by utilizing macro and small cell technology, in-building solutions and distributed antenna
systems. Network densification enables us to add capacity to address increasing mobile video consumption and the growing
demand for IoT products and services on our 4G LTE and 5G networks. We are also utilizing existing network capabilities to
handle increased traffic without interrupting the quality of the customer experience. We continue to deploy advanced
technologies to increase both network capacity and data rates.
In order to deploy our 5G network and build and upgrade our existing 4G LTE network, we must secure rights to a large number
of sites and obtain zoning and other governmental approvals and fiber facilities for our macro and small cells, in-building systems
and antennas and related radio equipment that comprise distributed antenna systems. We have relationships with a wide variety
of vendors that supply various products and services that support our wireless network operations. We utilize tower site
management firms as lessors or managers of a portion of our existing leased and owned tower sites.
Our networks in the U.S. include various elements of redundancy designed to enhance the reliability of the services provided to
our customers. To mitigate the impact of power disruptions on our operations, we have battery backup at every switch and every
macro cell. We also utilize backup generators at a majority of our macro cells and at every switch location. In addition, we have a
fleet of portable backup generators that can be deployed if needed. We further enhance reliability by using a fully redundant
Multiprotocol Label Switching backbone network in critical locations.
In addition to our own network coverage, we have roaming agreements with a number of wireless service providers to enable our
customers to receive wireless service in nearly all other areas in the U.S. where wireless service is available. We also offer a
variety of international wireless voice and data services to our customers through roaming arrangements with wireless service
providers outside the U.S.
7 Verizon 2023 Annual Report on Form 10-K
Fios
Residential broadband service has seen significant growth in bandwidth demand over the past several years, and we believe that
demand will continue to grow. We expect that the continued emergence of new video services, new data applications and the
proliferation of IP devices in the home will continue to drive new network requirements for increased data speeds and
throughput. We believe that the Passive Optical Network (PON) technology underpinning Fios positions us well to meet these
demands in a cost-effective and efficient manner.
While deployed initially as a consumer broadband network, our PON infrastructure is also experiencing more widespread
application in the Business segment, especially as businesses increasingly migrate to Ethernet-based access services.
Global IP
Verizon owns and operates one of the largest global fiber-optic networks in the world, providing connectivity to Business
customers in more than 190 countries. Our global IP network includes long-haul, metro and submarine assets that enable and
support international operations.
Global business is rapidly evolving to an "everything-as-a-service" model in which Business customers seek cloud-based,
converged enterprise solutions delivered securely via managed and professional services. We are continuing to deploy packet
optical transport technology in order to create a global network platform to meet this demand.
Spectrum
The spectrum licenses we hold can be used for mobile and fixed wireless voice, video and data communications services. We
are licensed by the Federal Communications Commission (FCC) to provide these wireless services on the following low and mid-
band spectrum in areas that collectively cover nearly all of the population of the U.S.: (i) the 700 MHz Upper C block, (ii) Cellular
spectrum (850 MHz), (iii) Personal Communication Services (PCS) spectrum (1900 MHz), (iv) AWS 1 and AWS 3 bands (1700
MHz uplink and 2100 MHz downlink), and (v) the 3.7 GHz band ("C-Band"). We also hold spectrum licenses in the 28, Upper 37
and 39 GHz bands, known as millimeter wave spectrum, and utilize both Priority Access Licenses (PALs) and General
Authorized Access (GAA) in the 3.5 GHz band (Citizens Broadband Radio Service).
We use our low and mid-band spectrum to provide wireless services. Millimeter wave spectrum is currently used to provide, or
increase capacity for, mobile and fixed wireless services in areas of high demand. We utilize DSS technology to allow 5G service
to run simultaneously with 4G LTE on multiple spectrum bands. With DSS, whenever customers move outside Verizon’s
millimeter wave and C-Band coverage areas, their 5G-enabled devices will remain on 5G technology using the lower spectrum
bands where this network is available.
We anticipate that demand for spectrum will continue to increase over time, driven by growth in customer connections and the
increased usage of wireless broadband services that use more bandwidth and require faster rates of speed, as well as the wider
deployment of 5G mobile and fixed services. We expect to meet the demand for 4G and 5G spectrum needs with our existing
spectrum assets. If demand continues to increase or if new spectrum is required for a future generation of technology, we can
meet that demand by acquiring licenses or leasing spectrum from other licensees, or by acquiring new spectrum licenses from
the FCC, if and when future FCC spectrum auctions occur.
From time to time we have exchanged spectrum licenses with other wireless service providers through secondary market swap
transactions. We expect to continue to pursue similar opportunities to trade spectrum licenses in order to meet capacity and
expansion needs in the future. We also gain access to spectrum through cross-lease transactions. In certain cases, we have
entered into intra-market spectrum swaps designed to increase the amount of contiguous spectrum within frequency bands in a
specific market. Contiguous spectrum improves network performance and efficiency. These swaps, as well as any spectrum
purchases, require us to obtain governmental approvals.
Information regarding spectrum license transactions is included in Note 3 to the consolidated financial statements included in this
Annual Report.
Competition and Related Trends
The telecommunications industry is highly competitive. The rapid development of new technologies, services and products has
eliminated many of the distinctions among wireless, cable, internet and traditional telephone services and brought new
competitors to our markets. We expect competition to remain intense as traditional and non-traditional participants seek
increased market share.
Competitive factors within the telecommunications industry include, among others, network reliability, speed, capacity and
coverage; pricing; the quality of customer service; marketing, sales and distribution capabilities; development of new and
enhanced products and services; ability to anticipate and respond to various factors and trends affecting our industry; the
availability of capital resources; and regulatory changes.
Verizon 2023 Annual Report on Form 10-K
8
Competition remains intense as a result of various factors, including aggressive pricing, increased levels of promotions and
service plan discounts, and offerings that include additional bundled premium content, in some cases specifically targeting
Verizon customers. Competition may increase as smaller, stand-alone wireless service providers merge or transfer licenses to
larger, better capitalized wireless service providers and as MVNOs resell wireless communication services. In addition,
increasing government incentives related to network deployment may enhance the ability of certain of our competitors to
compete with us.
With respect to our wireless connectivity products and services, we compete against other national wireless service providers,
including AT&T Inc. and T-Mobile US, Inc., as well as various regional wireless service providers. We also compete for retail
activations with resellers that buy bulk wholesale service from wireless service providers, including Verizon, and resell it to their
customers. Resellers include cable companies, such as Comcast Corporation and Charter Communications, Inc., and others.
We also face competition from other communications and technology companies seeking to increase their brand recognition and
capture market share with respect to the provision of wireless products and services, in addition to non-traditional offerings in
mobile data. For example, Microsoft Corporation, Alphabet Inc., Apple Inc., Meta Platforms, Inc. and others are offering
alternative means for messaging and making wireless voice calls that, in certain cases, can be used in lieu of the wireless
providers' voice service, as well as alternative means of accessing video content. In addition, we expect to see increasing
competition in the provisioning of internet access by low Earth orbit satellite companies as well in the area of fixed wireless
offerings that provide an alternative to traditional landline internet service providers.
With respect to Fios and our other wireline connectivity services, we compete against cable companies, wireless service
providers, domestic and foreign telecommunications providers, satellite television companies, internet service providers, OTT
providers and other companies that offer network services and managed enterprise solutions. We also face increasing
competition from other internet portal providers. We expect the market will continue to shift from traditional linear video to OTT
offerings. We also expect customer migration from traditional voice services to wireless services to continue as a growing
number of customers place greater value on mobility and wireless companies position their services as a landline alternative.
Companies with a global presence are increasingly competing with us in our Business segment. A relatively small number of
telecommunications and integrated service providers with global operations serve customers in the global enterprise market and,
to a lesser extent, the global wholesale market. We compete with these providers for large contracts to provide integrated
solutions to global enterprises and government customers. Many of these companies have strong market presence, brand
recognition and existing customer relationships, all of which contribute to intensifying competition that may affect our future
revenue growth.
In the Enterprise and Public Sector markets, competition levels remain high, primarily as a result of increased industry focus on
technology convergence. We compete in this area with system integrators, carriers, and hardware and software providers. In
addition, some of the largest information technology services companies are making strategic acquisitions, divesting non-
strategic assets and forging new alliances to improve their cost structure. Many new alliances and acquisitions have focused on
emerging fields, such as cloud computing, software defined networking, communication applications and other computing tasks
via networks, rather than by the use of in-house machines.
In the Business Markets and Other category, customer purchasing behaviors and preferences continue to evolve. Solution speed
and simplicity are becoming key differentiators for customers who are seeking full life-cycle offers that simplify the process of
starting, running and growing their businesses. Several major cable operators also offer bundles with wireless services through
strategic relationships.
Our Wholesale business competes with traditional carriers for metro/mid/long-haul fiber, voice and IP services. In addition,
mobile video and data needs are driving a greater need for wireless backhaul. Network providers, cable companies and specialty
firms are competitors for this business opportunity.
Regulatory Trends
Regulatory Landscape
Verizon operates in a regulated and highly competitive market, as described above. Some of our competitors are subject to fewer
regulatory constraints than Verizon. For many services offered by Verizon, the FCC is our primary regulator. The FCC has
jurisdiction over interstate telecommunications services and other matters under the Communications Act of 1934, as amended
(Communications Act). Other Verizon services are subject to state and local regulation.
Federal, State and Local Regulation
Wireless Services
The FCC regulates several aspects of our wireless operations. Generally, the FCC has jurisdiction over the construction,
operation, acquisition and transfer of wireless communications systems. All wireless services require use of radio frequency
spectrum, the assignment and distribution of which is subject to FCC oversight. If demand continues to increase or if new
9 Verizon 2023 Annual Report on Form 10-K
spectrum is required for a future generation of technology, we can meet our needs for licensed spectrum by purchasing licenses
or leasing spectrum from others, or by participating in a competitive bidding process to acquire new spectrum from the FCC.
Those processes are subject to certain reviews, approvals and potential conditions.
Today, Verizon holds FCC spectrum licenses that allow it to provide a wide range of mobile and fixed communications services,
including both voice and data services. FCC spectrum licenses typically have a term of 10 years, at which time they are subject
to renewal. While the FCC has routinely renewed all of Verizon’s wireless licenses, challenges could be raised in the future. If a
wireless license was revoked or not renewed, Verizon would not be permitted to provide services on the spectrum covered by
that license. Some of our licenses require us to comply with so-called "open access" FCC regulations, which generally require
licensees of particular spectrum to allow customers to use devices and applications of their choice, subject to certain technical
limitations. The FCC has also imposed certain specific mandates on wireless carriers, including construction and geographic
coverage requirements, technical operating standards, provision of enhanced 911 services, roaming obligations and
requirements for wireless tower and antenna facilities.
The Communications Act generally preempts regulation by state and local governments of the entry of, or the rates charged by,
wireless carriers. It does not prohibit states from regulating the other "terms and conditions" of wireless service. For example,
some states impose reporting and consumer protection requirements. Several states also have laws or regulations that address
safety issues (for example, use of wireless handsets while driving), universal service funding, and taxation matters. Some states
are also considering new network reliability or service quality requirements that may affect how and where we provide services if
not preempted by federal law. In addition, wireless tower and antenna facilities are often subject to state and local zoning and
land use regulation, and securing approvals for new or modified facilities is often a lengthy and expensive process.
Broadband
Verizon offers many different broadband services. In 2023, the FCC proposed to return to regulation of broadband services under
Title II of the Communications Act. The proposal would revive and expand the FCC's 2015 approach (that was reversed in 2017)
to regulating broadband internet access services as telecommunications services subject to utilities-style common carriage
regulation. Several states have also adopted or are considering adopting laws or executive orders that would impose net
neutrality and other requirements on some of our broadband services. The FCC also adopted broad rules related to "digital
discrimination" that could further increase regulatory oversight of broadband services. Regardless of regulation, Verizon remains
committed to the open internet, which provides consumers with competitive choices and unblocked access to lawful websites
and content. Our broadband commitment can be found on our website at https://www.verizon.com/about/our-company/verizon-
broadband-commitment.
Wireline Voice
Verizon offers many different wireline voice services, including traditional telephone service and other services that rely on
technologies such as VoIP. For regulatory purposes, legacy telephone services are generally considered to be "common carrier"
services. Common carrier services are subject to heightened regulatory oversight with respect to rates, terms and conditions and
other aspects of the services. The FCC has not decided the regulatory classification of VoIP but has said VoIP service providers
must comply with certain rules, such as 911 capabilities and law enforcement assistance requirements.
State public utility commissions regulate Verizon’s telephone operations with respect to certain telecommunications intrastate
matters. Verizon operates as an "incumbent local exchange carrier" in nine states and the District of Columbia. These incumbent
operations are subject to various levels of pricing flexibility and other state oversight and requirements. Verizon also has other
wireline operations that are more lightly regulated. Some states, including California, impose reporting requirements and are
considering new network reliability or service quality requirements for wireline voice services, including for VoIP.
Video
Verizon offers a multichannel video service that is regulated like traditional cable service. The FCC has a body of rules that apply
to cable operators, and these rules also generally apply to Verizon. In areas where Verizon offers its facilities-based multichannel
video services, Verizon has been required to obtain a cable franchise from local government entities, or in some cases a state-
wide franchise, and comply with certain one-time and ongoing obligations as a result.
Privacy, Data Protection, and Artificial Intelligence
We are subject to local, state, federal, and international laws and regulations relating to privacy and data protection that impact
all parts of our business, including wireline, wireless, broadband and the development and roll out of new products, such as
those in the IoT space. At the federal level, our business is governed by the FCC or the Federal Trade Commission (FTC),
depending on the product or service. The California Consumer Privacy Act, Europe's General Data Protection Regulation and a
number of other privacy laws more recently adopted by other states and countries include significant penalties for non-
compliance. Generally, attention to privacy and data security requirements is increasing at all levels of government globally, and
privacy-related legislation has been introduced or is under consideration in many locations. These regulations could have a
significant impact on our businesses. Policymakers at the local, state, federal and international levels are also considering
imposing laws and regulations on the use of artificial intelligence. This is a nascent area of regulatory focus, so it is unclear how
such regulation could impact our business.
Verizon 2023 Annual Report on Form 10-K
10
Public Safety and Cybersecurity
The FCC plays a role in addressing public safety concerns by regulating emergency communications services and mandating
widespread availability of both media (broadcast/cable) and wireless emergency alerting services. In addition, federal and state
agencies have mandated and may impose additional regulations to ensure continuity of service during disasters. For example,
the FCC adopted rules requiring wireless providers to support roaming on each other’s networks during disasters, and the
California Public Utilities Commission has imposed regulations relating to back-up power for communications facilities. In
response to prior cyber attacks and increasing risks from cybersecurity threats, the FCC and other regulators are attempting to
increase regulation of the cybersecurity practices of providers. The FCC is also addressing the use by American companies of
equipment produced by certain companies deemed to cause potential national security risks. Verizon does not currently use
equipment in its networks from vendors under such restrictions.
Intercarrier Compensation and Network Access
The FCC regulates some of the rates that carriers pay each other for the exchange of voice traffic (particularly traditional wireline
traffic) over different networks and other aspects of interconnection for some voice services. The FCC also regulates some of the
rates and terms and conditions for certain wireline "business data services" and other services and network facilities. Verizon is
both a seller and a buyer of these services, and both makes and receives interconnection payments.
Human Capital Resources
With approximately 105,400 employees on a full-time equivalent basis as of December 31, 2023, 89% of whom are based in the
U.S., we know that our people are one of our most valuable assets. In order to realize our core business strategy, we have
developed human capital programs and practices that support, develop and care for our employees throughout their careers with
Verizon. Our strategy to build a workforce with talent, skills and motivation to give the company a competitive edge now and into
the future rests on three pillars:
•
Attract and maintain a diverse workforce with the necessary skills and talent to execute on our business priorities.
• Develop our employees' potential by offering educational opportunities that keep pace with changes occurring across
our industry.
•
Inspire individuals to build a career at Verizon by providing meaningful work and opportunities for career advancement
in a collaborative and inclusive environment.
Verizon strives to be an employer of choice by offering our employees competitive compensation and benefits packages. We
seek to recruit and retain employees with diverse backgrounds, experiences and perspectives to best meet the needs of the
diverse customers and communities we serve. We provide extensive on-the-job training opportunities, tuition reimbursement
programs and career development support to enable our employees to maximize their potential and thrive professionally. Our
long-standing commitment to diversity, equity and inclusion has resulted in a strong representation of women and people of color.
As of December 31, 2023, Verizon's global workforce was approximately 68.0% male, 31.7% female and 0.3% unknown or
undeclared, and the race/ethnicity of our U.S. workforce was 53.4% White, 18.5% Black, 13.2% Hispanic, 8.7% Asian, 0.4%
American Indian/Alaskan Native, 0.3% Native Hawaiian/Pacific Islander, 2.5% two or more races, and 3.0% unknown or
undeclared. Women represented 36.9% of U.S. senior leadership (vice president level and above). People of color represented
32.1% of U.S. senior leadership.
Verizon respects our employees’ rights to freedom of association and collective bargaining in compliance with applicable law,
including the right to join or not join labor unions. We have a long history of working with the Communications Workers of
America and the International Brotherhood of Electrical Workers — the two unions that in total represent approximately 24.0% of
our employees as of December 31, 2023. The current collective bargaining agreements covering our union-represented
employees who serve customers in our Mid-Atlantic and Northeast service areas extend through August 1, 2026. In addition,
where applicable outside of the U.S., we engage with employee representative bodies such as works council. Verizon meets with
U.S. national and local union leaders, as well as works council leaders outside the U.S., to talk about key business topics,
including safety, customer service, plans to improve operational processes, our business performance and the impacts that
changing technology and competition are having on our customers, employees and business strategy.
For a discussion of Verizon's Board oversight of our human capital management practices, see the section entitled "Governance
— Our governance framework — Oversight of human capital management" in our definitive Proxy Statement to be filed with the
Securities and Exchange Commission and delivered to shareholders in connection with our 2024 Annual Meeting of
Shareholders.
Patents, Trademarks and Licenses
We own or have licenses to various patents, copyrights, trademarks, domain names and other intellectual property rights
necessary to conduct our business. We actively pursue the filing and registration of patents, copyrights, trademarks and domain
names to protect our intellectual property rights within the United States and abroad. We also actively grant licenses, in
11
Verizon 2023 Annual Report on Form 10-K
exchange for appropriate fees or other consideration and subject to appropriate safeguards and restrictions, to other companies
that enable them to utilize certain of our intellectual property rights and proprietary technology as part of their products and
services. Such licenses enable the licensees to take advantage of Verizon's brands and the results of Verizon’s research and
development efforts. While these licenses result in valuable consideration for Verizon, we do not believe that the loss of such
consideration, or the expiration of any of our intellectual property rights, would have a material effect on our results of operations.
We periodically receive offers from third parties to purchase or obtain licenses for patents and other intellectual property rights in
exchange for royalties or other payments. We also periodically receive notices alleging that our products or services infringe on
third-party patents or other intellectual property rights. These claims, whether against us directly or against third-party suppliers
of products or services that we sell to our customers, if successful, could require us to pay damages or royalties, rebrand, or
cease offering the relevant products or services.
Information About Our Executive Officers
See Part III, Item 10. "Directors, Executive Officers and Corporate Governance" of this Annual Report on Form 10-K for
information about our executive officers.
Information on Our Internet Website
We make available, free of charge on our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and all amendments to those reports, at https://www.verizon.com/about/investors as soon as reasonably
practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission (SEC). These
reports and other information are also available on the SEC's website at https://www.sec.gov. We periodically provide other
information for investors on our website, including news and announcements regarding our financial performance, information on
environmental, social and corporate governance matters, and details related to our annual meeting of shareholders. We
encourage investors, the media, our customers, business partners and other stakeholders to review the information we post on
this channel. Website references in this report are provided as a convenience and do not constitute, and should not be viewed
as, incorporation by reference of the information contained on, or available through, the websites. Therefore, such information
should not be considered part of this report.
Cautionary Statement Concerning Forward-Looking Statements
In this report we have made forward-looking statements. These statements are based on our estimates and assumptions and are
subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future
results of operations. Forward-looking statements also include those preceded or followed by the words "anticipates," "assumes,"
"believes," "estimates," "expects," "forecasts," "hopes," "intends," "plans," "targets" or similar expressions. For those statements,
we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act
of 1995. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements,
except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements.
The following important factors, along with those discussed elsewhere in this report and in other filings with the SEC, could affect
future results and could cause those results to differ materially from those expressed in the forward-looking statements:
•
•
•
•
•
•
•
•
the effects of competition in the markets in which we operate, including the inability to successfully respond to
competitive factors such as prices, promotional incentives and evolving consumer preferences;
failure to take advantage of, or respond to competitors' use of, developments in technology and address changes in
consumer demand;
performance issues or delays in the deployment of our 5G network resulting in significant costs or a reduction in the
anticipated benefits of the enhancement to our networks;
the inability to implement our business strategy;
adverse conditions in the U.S. and international economies, including inflation and changing interest rates in the
markets in which we operate;
cyber attacks impacting our networks or systems and any resulting financial or reputational impact;
damage to our infrastructure or disruption of our operations from natural disasters, extreme weather conditions, acts of
war, terrorist attacks or other hostile acts and any resulting financial or reputational impact;
disruption of our key suppliers’ or vendors' provisioning of products or services, including as a result of geopolitical
factors or the potential impacts of global climate change;
Verizon 2023 Annual Report on Form 10-K
12
• material adverse changes in labor matters and any resulting financial or operational impact;
•
•
•
•
•
•
•
•
•
•
damage to our reputation or brands;
the impact of public health crises on our operations, our employees and the ways in which our customers use our
networks and other products and services;
changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to
operate our networks or businesses;
allegations regarding the release of hazardous materials or pollutants into the environment from our, or our
predecessors', network assets and any related government investigations, regulatory developments, litigation, penalties
and other liability, remediation and compliance costs, operational impacts or reputational damage;
our high level of indebtedness;
significant litigation and any resulting material expenses incurred in defending against lawsuits or paying awards or
settlements;
an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse
conditions in the credit markets affecting the cost, including interest rates, and/or availability of further financing;
significant increases in benefit plan costs or lower investment returns on plan assets;
changes in tax laws or regulations, or in their interpretation; or challenges to our tax positions, resulting in additional tax
expense or liabilities; and
changes in accounting assumptions that regulatory agencies, including the SEC, may require or that result from
changes in the accounting rules or their application, which could result in an impact on earnings.
Item 1A. Risk Factors
The following discussion of "Risk Factors" identifies factors that may adversely affect our business, operations, financial
condition or future performance. This information should be read in conjunction with "Management’s Discussion and Analysis of
Financial Condition and Result of Operations" and the consolidated financial statements and related notes. The following
discussion of risks is not all-inclusive but is designed to highlight what we believe are the material factors to consider when
evaluating our business and expectations. These factors could cause our future results to differ materially from our historical
results and from expectations reflected in forward-looking statements.
Economic and Strategic Risks
We face significant competition that may reduce our profits.
We face significant competition in our industries. The rapid development of new technologies, services and products has
eliminated many of the traditional distinctions among wireless, cable, internet and local and long distance communication
services and brought new competitors to our markets, including other telecommunications companies, cable companies, wireless
service providers, satellite providers, technology companies and application and device providers. While these changes have
enabled us to offer new types of products and services, they have also allowed other providers to broaden the scope of their own
competitive offerings. If we are unable to compete effectively, we could experience lower than expected revenues and earnings.
Wireless service providers are significantly altering the financial relationships with their customers through commercial offers that
vary service and device pricing, promotions, incentives and levels of service provided – in some cases specifically targeting our
customers and putting pressure on pricing and margins. In addition, we expect the wireless industry’s customer growth rate to
moderate over time in comparison to historical growth rates, leading to increased competition for customers. Our ability to
compete effectively will depend on, among other things, our network reliability, speed, capacity and coverage, the pricing of our
products and services, the quality of our customer service, our development of new and enhanced products and services, the
reach and quality of our sales and distribution channels, our ability to market our products and services effectively and our capital
resources. It will also depend on how successfully we anticipate and respond to various factors affecting our industries, including
regulatory changes, new technologies and business models, such as the increasing use of artificial intelligence and machine
learning technologies, changes in consumer preferences and demand for existing services, demographic trends and evolving
economic conditions, including inflation. If we are not able to respond successfully to these competitive challenges, our results of
operations and financial condition could be adversely impacted. In addition, a sustained decline in a reporting unit's revenues
and earnings has resulted in the past, and may again result in the future, in a significant negative impact on its fair value
requiring us to record an impairment charge, which could have an adverse impact on our results of operations.
13 Verizon 2023 Annual Report on Form 10-K
If we are not able to take advantage of developments in technology and address changing consumer
demand on a timely basis, or if the deployment of our 5G network is delayed or hindered for any reason, we
may experience a decline in the demand for our services, be unable to implement our business strategy and
experience reduced profits.
Our industries are rapidly changing as new technologies are developed that offer consumers an array of choices for their
communications needs and allow new entrants into the markets we serve. In order to grow and remain competitive, we will need
to adapt to future changes in technology, enhance our existing offerings and introduce new offerings to address our customers’
changing demands. If we are unable to meet future challenges from competing technologies on a timely basis or at an
acceptable cost, we could lose customers to our competitors. We may not be able to accurately predict technological trends or
the success of new services in the market. If our new services fail to gain acceptance in the marketplace, or if costs associated
with the implementation and introduction of these services materially increase, our ability to retain and attract customers could be
adversely affected.
The deployment of our 5G network is subject to a variety of risks, including those related to equipment availability, unexpected
costs, and regulatory matters that could cause deployment delays or network performance issues. In addition, certain use cases
for 5G technologies and related ecosystems are still in early development stages and their ultimate adoption or success is
uncertain. These issues could result in significant costs, put us at a competitive disadvantage, or reduce the anticipated benefits
of the enhancements to our networks.
As we introduce new offerings and technologies, we expect to phase out outdated and unprofitable technologies and services. If
we are unable to do so on a cost-effective basis, we could experience reduced profits. In addition, there could be legal or
regulatory restraints on our ability to phase out current services.
Adverse conditions in the U.S. and international economies could impact our results of operations and
financial condition.
Unfavorable economic conditions, such as a recession or economic slowdown in the U.S. or elsewhere, or inflation in the
markets in which we operate, could negatively affect the affordability of and demand for some of our products and services and
our cost of doing business. In difficult economic conditions, consumers may seek to reduce discretionary spending by forgoing
purchases of our products, electing to use fewer higher margin services, dropping down in price plans or obtaining lower-cost
products and services offered by other companies. Similarly, under these conditions, the business customers that we serve may
delay purchasing decisions, delay full implementation of service offerings or reduce their use of services. In addition, adverse
economic conditions may lead to an increased number of our consumer and business customers that are unable to pay for
services. Unfavorable economic conditions could also amplify other risk factors discussed in this section, including, but not
limited to, our competitive position and margins. Over the last two years, as a result of the inflationary environment in the U.S.,
we experienced increases in our direct costs, including electricity and other energy-related costs for our network operations, and
transportation and labor costs, as well as increased interest expenses related to rising interest rates. In 2022, these factors,
along with impacts of the intense competition in our industries, resulted in lower earnings per share and caused us to lower our
growth expectations and related financial guidance for that year. We expect the inflationary environment and related pressures to
continue into 2024. In that case and if other unfavorable economic conditions continue or worsen, they could have a material
adverse effect on our results of operations and financial condition.
Operational Risks
Cyber attacks impacting our networks or systems could have an adverse effect on our business.
Cyber attacks, including through the use of ransomware and other forms of malware, distributed denial of services attacks,
credential harvesting, social engineering and other means for obtaining unauthorized access to or disrupting the operation of our
networks and systems and those of our suppliers, vendors and other service providers, could have an adverse effect on our
business. Cyber attacks may cause equipment failures, loss of information, including sensitive personal information of customers
or employees or valuable technical and marketing information, as well as disruptions to our or our customers’ operations. Cyber
attacks against companies, including Verizon, have increased in frequency, scope and potential harm in recent years. They may
occur alone or in conjunction with physical attacks, especially where disruption of service is an objective of the attacker. The
development and maintenance of systems to prevent such attacks is costly and requires ongoing monitoring and updating to
address their increasing prevalence and sophistication. While, to date, we have not been subject to cyber attacks that,
individually or in the aggregate, have been material to Verizon's operations or financial condition, the preventive actions we take
to reduce the risks associated with cyber attacks, including protection of our systems and networks, may be insufficient to repel
or mitigate the effects of a cyber attack in the future.
The inability to operate or use our networks and systems or those of our suppliers, vendors and other service providers as a
result of cyber attacks, even for a limited period of time, may result in significant expenses to Verizon and/or a loss of market
share to our competitors. The costs associated with a cyber attack on Verizon could include expensive incentives offered to
existing customers and business partners to retain their business, increased expenditures on cybersecurity measures and the
use of alternate resources, lost revenues from business interruption and litigation. Further, certain of Verizon’s businesses, such
as those offering security solutions and infrastructure and cloud services to business customers, could be negatively affected if
Verizon 2023 Annual Report on Form 10-K
14
our ability to protect our own networks and systems is called into question as a result of a cyber attack. Our presence in the IoT
industry, which includes offerings of telematics products and services, could also increase our exposure to potential costs and
expenses and reputational harm in the event of cyber attacks impacting these products or services. In addition, a compromise of
security or a theft or other compromise of valuable information, such as financial data and sensitive or private personal
information, could result in lawsuits and government claims, investigations or proceedings. Any of these occurrences could
damage our reputation, adversely impact customer and investor confidence and result in a material adverse effect on Verizon’s
results of operation or financial condition.
Natural disasters, extreme weather conditions, acts of war, terrorist or other hostile acts could cause
damage to our infrastructure and result in significant disruptions to our operations.
Our business operations are subject to interruption by power outages, acts of war, terrorist or other hostile acts, natural disasters
or the potential impacts of climate change, including the increasing prevalence and intensity of hurricanes, wildfires, flooding, hail
and storms. Such events could cause significant damage to our infrastructure upon which our business operations rely, resulting
in degradation or disruption of service to our customers, as well as significant recovery time and expenditures to resume
operations. Our system redundancy may be ineffective or inadequate to sustain our operations through all such events. We are
implementing, and will continue to implement, measures to protect our infrastructure and operations from the impacts of these
events in the future, but these measures and our overall disaster recovery planning may not be sufficient for all eventualities.
These events could also damage the infrastructure of the suppliers that provide us with the equipment and services that we need
to operate our business and provide products to our customers. These occurrences could result in lost revenues from business
interruption, damage to our reputation and reduced profits.
We depend on key suppliers and vendors to provide services and equipment that we need to operate our
business.
We depend on various key suppliers and vendors to provide us, directly or through other suppliers, with equipment and services,
such as fiber, switch and network equipment, smartphones and other wireless devices, customer service support and other
services that we need in order to operate our business. For example, our smartphone and other device suppliers often rely on
one vendor for the manufacture and supply of critical components, such as chipsets, used in their devices, and there are a
limited number of companies capable of supplying the network infrastructure equipment on which we depend.
Our suppliers or vendors could fail to provide equipment or service on a timely basis, or fail to meet our performance
expectations, for a number of reasons, including, for example, disruption to the global supply chain as a result of geopolitical
factors, public health crises, natural disasters or the potential impacts of global climate change. If such failures occur, we may be
unable to provide products and services as and when requested by our customers, or we may be unable to continue to maintain
or upgrade our networks. Due to the cost and time lag that can be associated with transitioning from one supplier to another, our
business could be substantially disrupted if we were required to, or chose to, replace the products or services of one or more
major suppliers with products or services from another source, especially if the replacement became necessary on short notice.
Any such disruption could increase our costs, decrease our operating efficiencies and have a material adverse effect on our
business, results of operations and financial condition.
A significant number of our suppliers and vendors are located or rely on operations outside of the U.S., which carries additional
risks and regulatory obligations, including those related to cybersecurity, data privacy and compliance. Certain business
practices in foreign countries may not align with U.S. laws and regulations. In addition, international operations increase our
exposure to other risks, such as economic and geopolitical instability, fluctuations in exchange rates, and labor-related risks.
The suppliers and vendors on which we rely are and may in the future be subject to litigation with respect to technology on which
we depend, including litigation involving claims of patent infringement. Such claims are frequently made in the communications
industry. We are unable to predict whether our business will be affected by any such litigation. We expect our dependence on
key suppliers to continue as we develop and introduce more advanced generations of technology.
A significant portion of our workforce is represented by labor unions, and we could incur additional costs
or experience work stoppages as a result of the renegotiation of our labor contracts.
As of December 31, 2023, approximately 24.0% of our workforce is represented by the Communications Workers of America or
the International Brotherhood of Electrical Workers. While we have labor contracts in place with these unions, with subsequent
negotiations we could incur additional costs and/or experience work stoppages, which could adversely affect our business
operations. In addition, while a small percentage of the workforce outside of our traditional wireline operations is represented by
unions for bargaining, we cannot predict what impact increased union density in this workforce could have on our operations.
Damage to our reputation or brands could adversely affect our business.
We believe that our reputation and brands significantly contribute to the success of our business and our relationships with our
customers, employees and other stakeholders.
Our reputation and brands could be negatively affected by a number of factors, including actual or alleged quality or reliability
issues related to our services and products; cybersecurity incidents and data breaches; allegations of legal noncompliance;
15 Verizon 2023 Annual Report on Form 10-K
litigation or regulatory activity; incidents involving unethical behavior or misconduct; material weaknesses in our internal controls
over financial reporting; safety, human rights, workplace or labor issues; environmental incidents or impacts; governance issues;
our sustainability goals and practices; our actual or perceived position or lack of position on social and other sensitive matters;
the conduct of our employees, representatives or partners; activists’ campaigns; negative sentiment about us shared over social
media or the press; and other issues, incidents, or statements that, whether based on actual or perceived circumstances, result
in adverse publicity.
Damage to our reputation and brands could undermine our customers’ confidence in us and reduce demand for our products and
services, which could result in decreased revenue and adversely affect our business and financial results. If our reputation or
brands are damaged, it could also attract regulatory scrutiny, increase litigation risks, affect our ability to attract and retain top
talent, and reduce investor confidence in us.
Public health crises could materially adversely affect our business, financial condition and results of
operations.
We are subject to risks related to public health crises, such as the COVID-19 pandemic, which had an adverse effect on our
operating results in 2020. Our business is based on our ability to provide products and services to customers throughout the
United States and around the world and the ability of those customers to use and pay for those products and services for their
businesses and in their daily lives. As a result, our business, financial condition and results of operations could be materially
adversely affected by a public health crisis that significantly impacts the way customers use and are able to pay for our products
and services, the way our employees are able to provide services to our customers, and the ways that our partners and suppliers
are able to provide products and services to us. For example, public and private sector policies and initiatives to reduce the
transmission of COVID-19 and initiatives Verizon took in response to the health crisis to promote the health and safety of our
employees and provide critical infrastructure and connectivity to our customers, along with the related global slowdown in
economic activity, resulted in decreased revenues, increased costs and lower earnings per share during 2020. In addition, such a
crisis could significantly increase the probability or consequences of the risks our business faces in ordinary circumstances, such
as risks associated with our supplier and vendor relationships, risks of an economic slowdown, regulatory risks, and the costs
and availability of financing.
Regulatory and Legal Risks
Changes in the regulatory framework under which we operate could adversely affect our business
prospects or results of operations.
Our domestic operations are subject to regulation by the FCC and other federal, state, and local agencies, and our international
operations are regulated by various foreign governments and international bodies. These regulatory regimes frequently restrict or
impose conditions on our ability to operate in designated areas and provide specified products or services. We are frequently
required to maintain licenses for our operations and conduct our operations in accordance with prescribed standards. We are
often involved in regulatory and other governmental proceedings or inquiries related to the application of these requirements. It is
impossible to predict with any certainty the outcome of pending federal and state regulatory proceedings relating to our
operations, or the reviews by federal or state courts of regulatory rulings. Without relief, existing laws and regulations may inhibit
our ability to expand our business and introduce new products and services. Similarly, we cannot guarantee that we will be
successful in obtaining the licenses needed to carry out our business plan or in maintaining our existing licenses. For example,
the FCC grants wireless licenses for terms generally lasting 10 years, subject to renewal. The loss of, or a material limitation on,
certain of our licenses could have a material adverse effect on our business, results of operations and financial condition.
New laws or regulations or changes to the existing regulatory framework at the federal, state, and local, or international level,
such as those described below, those that incentivize business models or technologies different from ours or requirements
limiting our ability to continue or discontinue service to customers could restrict the ways in which we manage our wireline and
wireless networks and operate our businesses, impose additional costs, diminish revenue opportunities, and potentially impede
our ability to provide services in a manner that would be attractive to us and our customers.
•
Privacy and data protection – We are subject to local, state, federal and international laws and regulations related to
privacy and data protection. In particular, the California Consumer Privacy Act, Europe's General Data Protection
Regulation and a number of other privacy laws more recently adopted by other states and countries include significant
penalties for non-compliance. Generally, attention to privacy and data security requirements is increasing at all levels of
government globally, and privacy-related legislation has been introduced or is under consideration in many locations.
These regulations could have a significant impact on our businesses.
• Regulation of broadband internet access services – In 2023, the FCC proposed to return to regulation of broadband
services under Title II of the Communications Act. The proposal would revive and expand the FCC's 2015 approach
(that was reversed in 2017) to regulating broadband internet access services as telecommunications services subject to
utilities-style common carriage regulation. Several states have also adopted or are considering adopting laws or
executive orders that would impose net neutrality and other requirements on some of our broadband services. The FCC
also adopted broad rules related to "digital discrimination" that could further increase regulatory oversight of broadband
services.
Verizon 2023 Annual Report on Form 10-K
16
•
"Open Access" – We hold certain wireless licenses that require us to comply with so-called "open access" FCC
regulations, which generally require licensees of particular spectrum to allow customers to use devices and applications
of their choice. Moreover, certain services could be subject to conflicting regulation by the FCC and/or various state and
local authorities, which could significantly increase the cost of implementing and introducing new services.
• Climate-Related Regulation and Policy – Due to the nature of our operations, we have been, and expect to continue to
be impacted by regulatory developments related to climate change, including, for example, the direct regulation of
greenhouse gas emissions or carbon policies that could result in a tax on such emissions. In addition, policy-driven
changes in the prices of fuel or energy in geographies in which we operate could make it more expensive for us to
purchase energy to power our networks and data centers, and any increase in taxes on fuel could increase our costs
associated with operating those vehicles in our fleet that are dependent on traditional fuels.
These developments and the further regulation of broadband, wireless, and our other activities and any related court decisions
could result in significant increases in costs for us or restrict our ability to compete in the marketplace and limit the return we can
expect to achieve on past and future investments in our networks.
Our business may be impacted by changes in tax laws and regulations, or their interpretations, and
challenges to our tax positions.
Tax laws and regulations are complex, dynamic, and subject to change and varying interpretations, especially when evaluated
against new technologies and telecommunications services. In addition, tax legislation has been introduced or is being
considered in various jurisdictions that could significantly impact our tax rate, tax liabilities, and carrying value of deferred tax
assets or deferred tax liabilities. Any of these changes could materially impact our financial performance and our tax provision,
net income and cash flows.
We are also subject to ongoing audits, examinations and other tax controversies in various jurisdictions. Although we regularly
assess the likelihood of an adverse outcome resulting from these controversies to determine the adequacy of provisions for
taxes, the final outcome of any such controversy may be materially different from our expectations. In the event that we have not
accurately or fully described, disclosed or determined, calculated or remitted amounts that were due to taxing authorities or if the
ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, we could be subject to
additional taxes, penalties and interest, which could materially impact our business, financial condition and operating results.
We are subject to a substantial amount of litigation, which could require us to pay significant damages or
settlements.
We are subject to a substantial amount of litigation and claims in arbitration, including, but not limited to, shareholder lawsuits,
patent and copyright infringement lawsuits, wage and hour class actions, contract and commercial claims, personal injury claims,
property claims, environmental claims, and lawsuits relating to our advertising, sales, billing and collection practices. In addition,
our wireless business also faces personal injury and wrongful death lawsuits relating to alleged health effects of wireless phones
or radio frequency transmitters. We may incur significant expenses in defending these lawsuits. In addition, we may be required
to pay significant awards or settlements.
Allegations related to lead sheathed copper cables in our copper network infrastructure could expose us to
regulatory scrutiny, litigation, penalties, removal and compliance costs, operational impact or reputational
damage.
There have been media reports alleging that certain lead sheathed copper cables that are part of our copper-based network
infrastructure may present health or environmental risks in areas where those facilities are deployed. These allegations could
result in government investigations, legislative or regulatory actions, litigation, penalties and other liability, remediation and
compliance costs or negative operational impacts. In addition, we are currently subject to regulatory inquiries and lawsuits
related to these allegations, and additional legal proceedings and other contingencies may arise in the future. Our insurance
policies may not cover or may not be sufficient to fully cover the costs of these claims. Accordingly, we may incur substantial
expenses as a result of these allegations, which cannot be reasonably estimated at this time but could be material.
In addition, negative assertions about the health or environmental impact of our lead sheathed cables may harm our reputation,
which could adversely affect our business and our relationship with various stakeholders, even if such allegations ultimately
prove to be inaccurate.
Financial Risks
Verizon has significant debt, which could increase further if Verizon incurs additional debt in the future and
does not retire existing debt.
As of December 31, 2023, Verizon had approximately $128.5 billion of outstanding unsecured indebtedness, $9.5 billion of
unused borrowing capacity under our existing revolving credit facility and $22.2 billion of outstanding secured indebtedness.
Verizon’s debt level and related debt service obligations could have negative consequences, including:
17 Verizon 2023 Annual Report on Form 10-K
•
requiring Verizon to dedicate significant cash flow from operations to the payment of principal, interest and other
amounts payable on our debt, which would reduce the funds we have available for other purposes, such as working
capital, capital expenditures, dividend payments and acquisitions;
• making it more difficult or expensive for Verizon to obtain any necessary future financing for working capital, capital
expenditures, debt service requirements, debt refinancing, acquisitions or other purposes and limiting its ability to
repurchase common stock;
•
reducing Verizon’s flexibility in planning for or reacting to changes in our industries and market conditions;
• making Verizon more vulnerable in the event of a downturn in our business; and
•
exposing Verizon to increased interest rate risk to the extent that (i) our debt obligations are subject to variable interest
rates or (ii) we need to refinance existing debt that bears interest at a rate lower than current market rates.
Adverse changes in the financial markets and other factors could increase our borrowing costs and the
availability of financing.
We require a significant amount of capital to operate and grow our business. We fund our capital needs in part through
borrowings in the public and private credit markets. Adverse changes in the financial markets, including increases in interest
rates or changes in exchange rates, could increase our cost of borrowing, require us to post a significant amount of collateral,
and/or make it more difficult for us to obtain financing for our operations or refinance existing indebtedness. In addition, our ability
to obtain funding under asset-backed debt transactions is subject to our ability to continue to originate a sufficient amount of
assets eligible to be securitized. Our borrowing costs also can be affected by short- and long-term debt ratings assigned by
independent rating agencies, which are based, in significant part, on our performance as measured by customary credit metrics.
A decrease in these ratings would likely increase our cost of borrowing and/or make it more difficult for us to obtain financing. A
severe disruption in the global financial markets could impact some of the financial institutions with which we do business, and
such instability could also affect our access to financing.
Increases in costs for pension benefits and active and retiree healthcare benefits may reduce our
profitability and increase our funding commitments.
With approximately 105,400 employees and approximately 182,700 retirees as of December 31, 2023 eligible to participate in
Verizon’s benefit plans, the costs of pension benefits and active and retiree healthcare benefits have a significant impact on our
profitability. Our costs of maintaining these plans, and the future funding requirements for these plans, are affected by several
factors, including increases in healthcare costs, decreases in investment returns on funds held by our pension and other benefit
plan trusts and changes in the discount rate and mortality assumptions used to calculate pension and other postretirement
expenses. If we are unable to limit future increases in the costs of our benefit plans, those costs could reduce our profitability and
increase our funding commitments.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Cybersecurity Program
Verizon’s comprehensive cybersecurity program is designed to identify and protect against cybersecurity risks and to position
Verizon to rapidly detect, respond to, and recover from cybersecurity incidents that impact our company. The program is built on
the following pillars:
• NIST Cybersecurity Framework. Our program is aligned to the National Institute of Standards and Technology’s
(NIST) Cybersecurity Framework, which outlines the core components and responsibilities necessary to sustain a
healthy and well-balanced cybersecurity program.
• Risk identification. We continually assess the cybersecurity threat and vulnerability landscape using various
commercial, government and publicly available information sources.
• Risk detection. We use both manual and automated detection methods on a scheduled and ad-hoc basis to identify
vulnerabilities within, and threats to, our operations and network infrastructure.
• Risk evaluation. Once a cybersecurity vulnerability is detected, we assign a threat severity classification based on the
risk profile associated with the vulnerability.
Verizon 2023 Annual Report on Form 10-K
18
• Remediation. Verizon’s information security team reports all cybersecurity vulnerabilities and their associated threat
classification to the appropriate business team for remediation. Deadlines for remediation are set based on the severity
of the threat and closely tracked in a central system of record. In the instances when a remediation deadline cannot be
met, the information security team and the business team work together to deploy appropriate mitigating or
compensating controls until the remediation work is complete.
• Metrics and analysis. We track the performance of our cybersecurity program by collecting, retaining and analyzing a
broad range of data related to our threat identification, detection and response activity. We use this data to assess
threat trends, for strategic planning purposes and to enhance management accountability for cybersecurity.
Verizon has a comprehensive enterprise cybersecurity incident response plan, which is activated in the event of a cybersecurity
incident. The plan is a detailed playbook that specifies how Verizon classifies, responds to, and recovers from cybersecurity
incidents and includes notification procedures that vary depending on the significance of the incident. When warranted by the
severity of the incident, our Chief Executive Officer and other senior executives are part of the notification chain.
Verizon validates enterprise cybersecurity maturity every two years through a third-party maturity assessment. This assessment
measures Verizon’s ability to identify, prevent, detect, respond to, and recover from threats to systems, assets and data. The
results of the assessment serve as the baseline for enterprise cybersecurity across the company. In addition to this baseline,
certain subsets of our technology environment are subject to incremental cybersecurity certification and periodic third party
validation under applicable regulatory or contractual requirements.
Integrated Cybersecurity Risk Management
Verizon’s Senior Vice President and Chief Information Security Officer (CISO) has responsibility for the management of
cybersecurity risks at Verizon. The CISO and their team are responsible for Verizon’s information security strategy, policy,
standards, architecture and processes.
The CISO brings nearly two decades of cybersecurity experience to their work at Verizon. Prior to joining Verizon, they held
executive-level cybersecurity roles at other large public companies, where they were responsible for cybersecurity strategy and
operations, including incident response, threat intelligence, security services, architecture, commercial operational technology
security, and regulatory and compliance matters.
Verizon effectuates cybersecurity management by providing for close cooperation among the CISO’s team and other teams
within the company, as well as by integrating cybersecurity risk into Verizon’s overall enterprise risk management structures and
processes. Each of our business units and certain functional groups have a Business Information Security Officer, who is an
integral member of that unit or group, but reports to the CISO. This structure provides the CISO with line of sight across the
enterprise. The CISO and members of their leadership team also meet regularly with business unit senior leaders, including the
CEO, the Chief Financial Officer and the Chief Human Resources Officer, to discuss business priorities, emerging threats and
trends, and the performance of the cybersecurity program.
The Verizon Executive Security Council (VESC) oversees and evaluates the work of the CISO and their team. The VESC is
jointly chaired by the presidents of Verizon Global Services and Global Networks and Technology and includes Verizon’s Chief
Compliance Officer, Chief Legal Officer, Senior Vice President of Internal Audit and senior executives in business and technology
functions. The VESC provides oversight of all aspects of Verizon’s cybersecurity program and, at regular intervals throughout the
year, evaluates key cybersecurity metrics as well as planned and ongoing initiatives to reduce cybersecurity risks.
Verizon’s Management Audit Committee (VMAC), which includes our Chief Financial Officer, Senior Vice President of Internal
Audit and other senior executives, is responsible for overseeing components of our overall risk management strategy. The VMAC
receives quarterly updates from the CISO on Verizon’s cybersecurity program.
Verizon also operates a robust internal audit program. Each year, Verizon’s internal audit team conducts an overall business risk
assessment, which includes an evaluation of cybersecurity risks. The results of the assessment are presented to the leaders of
the relevant business teams, who are responsible for prioritizing and addressing the risks identified.
Board Oversight of Cybersecurity Risk
The Audit Committee of the Board of Directors (Board) has primary responsibility for overseeing Verizon’s risk management and
compliance programs relating to cybersecurity and data protection and privacy.
As part of the Board’s oversight of risks from cybersecurity threats, the CISO leads an annual review and discussion with the full
Board dedicated to Verizon’s cybersecurity risks, threats and protections. The CISO provides a mid-year update to this annual
review to the Audit Committee and, as warranted, additional updates throughout the year. The Audit Committee also receives a
report from senior management on Verizon’s cybersecurity posture and related matters at each of its other meetings during the
year at which the CISO is not present.
19 Verizon 2023 Annual Report on Form 10-K
Supplier Risk Management
We have implemented processes to identify and manage risks from cybersecurity threats associated with our use of third-party
service providers. The Verizon Supplier Risk Management Program establishes governance, processes and tools for managing
various supplier-related risks, including information security. As a condition of working with Verizon, suppliers who access
sensitive business or customer information are expected to meet certain information security requirements.
Risks from Cybersecurity Threats
We are subject to increasing and evolving cybersecurity threats as cyber attacks against companies, including Verizon, have
increased in frequency, scope and potential harm in recent years. While, to date, we have not been subject to cyber attacks that,
individually or in the aggregate, have been material to Verizon's operations or financial condition, there can be no guarantee that
we will not experience such an incident in the future. For more information on the risks from cybersecurity threats that we face,
refer to “Risk Factors — Operational Risks — Cyber attacks impacting our networks or systems could have an adverse effect on
our business” in Part I, Item 1A of this Annual Report on Form 10-K.
Item 2. Properties
Our principal properties do not lend themselves to simple description by character and location. Our total gross investment in
property, plant and equipment was approximately $320 billion at December 31, 2023 and $308 billion at December 31, 2022,
including the effect of retirements, but before deducting accumulated depreciation. Our gross investment in property, plant and
equipment consisted of the following:
At December 31,
Network equipment
Land, buildings and building equipment
Furniture and other
2023
77.6%
11.8%
10.6%
100.0%
2022
77.2%
11.7%
11.1%
100.0%
Network equipment consists primarily of cable (aerial, buried, underground or undersea) and the related support structures of
poles and conduit, wireless plant, switching equipment, network software, transmission equipment and related facilities. Land,
buildings and building equipment consists of land and land improvements, central office buildings or any other buildings that
house network equipment, and buildings that are used for administrative and other purposes. Substantially all the switching
centers are located on land and in buildings we own due to their critical role in the networks and high set-up and relocation
costs. We also maintain facilities throughout the U.S. comprised of administrative and sales offices, customer care centers, retail
sales locations, garage work centers, switching centers, cell sites and data centers. Furniture and other consists of telephone
equipment, furniture, data processing equipment, office equipment, motor vehicles, construction in process, and leasehold
improvements.
Item 3. Legal Proceedings
In the ordinary course of business, Verizon is involved in various litigation and regulatory proceedings at the state and federal
level. As of the date of this report, we do not believe that any pending legal proceedings to which we or our subsidiaries are
subject are required to be disclosed as material legal proceedings pursuant to this item. Verizon is not subject to any
administrative or judicial proceeding arising under any federal, state or local provisions that have been enacted or adopted
regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment that is likely
to result in monetary sanctions of $1 million or more. For a discussion of our litigation risks, refer to Item 1A Risk Factors.
Item 4. Mine Safety Disclosures
None.
Verizon 2023 Annual Report on Form 10-K
20
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
The principal market for trading in the common stock of the Company is the New York Stock Exchange under the symbol "VZ".
As of December 31, 2023, there were 421,493 shareholders of record. In addition, a significant number of holders of the
Company's common stock are "street name" or beneficial holders, whose shares are held of record by banks, brokers, and other
financial institutions.
Stock Repurchases
In February 2020, the Board of Directors of the Company authorized a share buyback program to repurchase up to 100 million
shares of our common stock. The program will terminate when the aggregate number of shares purchased reaches 100 million,
or a new share repurchase plan superseding the current plan is authorized, whichever is sooner. Under the program, shares may
be repurchased in privately negotiated transactions, on the open market, or otherwise, including through plans complying with
Rule 10b5-1 under the Exchange Act. The timing and number of shares purchased under the program, if any, will depend on
market conditions and our capital allocation priorities.
During the years ended December 31, 2023 and 2022, Verizon did not repurchase any shares of the Company's common stock
under our authorized share buyback program. At December 31, 2023, the maximum number of shares that could be purchased
by or on behalf of Verizon under our share buyback program was 100 million.
Stock Performance Graph
Comparison of Five-Year Total Return Among Verizon, S&P 500 and S&P 500 Telecommunications Services Index
Verizon
S&P 500
S&P 500 Telecom Services
$250
$225
$200
$175
$150
$125
$100
$75
2018
2019
2020
2021
2022
2023
Verizon
S&P 500
S&P 500 Telecom Services
The graph compares the cumulative total returns of Verizon, the S&P 500 Stock Index and the S&P 500 Telecommunications
Services Index over a five-year period. It assumes $100 was invested on December 31, 2018 with dividends being reinvested.
$ 100.0 $ 113.9 $ 113.7 $ 105.2 $
155.7
164.0
100.0
100.0
200.3
199.4
131.5
132.7
164.0
119.9
2022
84.1 $
2023
86.5
207.0
186.8
2018
2019
2020
2021
Item 6. [Reserved]
21 Verizon 2023 Annual Report on Form 10-K
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Verizon Communications Inc. is a holding company that, acting through its subsidiaries, is one of the world’s leading providers of
communications, technology, information and entertainment products and services to consumers, businesses and government
entities. With a presence around the world, we offer data, video and voice services and solutions on our networks and platforms
that are designed to meet customers’ demand for mobility, reliable network connectivity and security.
To compete effectively in today’s dynamic marketplace, we are focused on the capabilities of our high-performing networks to
drive growth based on delivering what customers want and need in the digital world. We are consistently deploying new network
architecture and technologies to secure our leadership in both 4G and 5G wireless networks. Our network quality is the hallmark
of our brand and the foundation for the connectivity, platforms and solutions upon which we build our competitive advantage. In
2023, we continued deploying our C-Band spectrum, enhancing and driving the monetization of our networks, platforms and
solutions, while focusing on improving our financial and operating performance.
Our strategy requires significant capital investments primarily to acquire wireless spectrum, put the spectrum into service,
provide additional capacity for growth in our networks, invest in the fiber that supports our businesses, evolve and maintain our
networks and develop and maintain significant advanced information technology systems and data system capabilities. We
believe that our C-Band spectrum, together with our industry leading millimeter wave spectrum holdings and our 4G LTE network
and fiber infrastructure, will drive innovative products and services and fuel our growth.
Highlights of Our 2023 Financial Results
(dollars in millions)
Operating Revenues
$133,974
$136,835
Operating Income
Net Income
$30,467
$21,748
$22,877
$12,095
2023
2022
2023
2022
2023
2022
Cash Flows from
Operations
$37,475
$37,141
Capital Expenditures
$23,087
$18,767
2023
2022
2023
2022
Business Overview
We have two reportable segments that we operate and manage as strategic business units - Verizon Consumer Group
(Consumer) and Verizon Business Group (Business).
Verizon 2023 Annual Report on Form 10-K
22
Revenue by Segment
2023
1.8%
2022
1.8%
22.4%
22.7%
75.8%
75.5%
———
Note: Excludes eliminations.
Verizon Consumer Group
Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless
services are provided across one of the most extensive wireless networks in the U.S. under the Verizon family of brands and
through wholesale and other arrangements. We also provide FWA broadband through our 5G or 4G LTE networks as an
alternative to traditional landline internet access. Our wireline services are provided in nine states in the Mid-Atlantic and
Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and
over a traditional copper-based network to customers who are not served by Fios. Our Consumer segment's wireless and
wireline products and services are available to our retail customers, as well as resellers that purchase wireless network access
from us on a wholesale basis.
Customers can obtain our wireless services on a postpaid or prepaid basis. Our postpaid service is generally billed one month in
advance for a monthly access charge in return for access to and usage of network services. Our prepaid service is offered only
to Consumer customers and enables individuals to obtain wireless services without credit verification by paying for all services in
advance. The Consumer segment also offers several categories of wireless equipment to customers, including a variety of
smartphones and other handsets, wireless-enabled internet devices, such as tablets, and other wireless-enabled connected
devices, such as smart watches.
In addition to the wireless services and equipment discussed above, the Consumer segment sells residential fixed connectivity
solutions, including internet, video and voice services, and wireless network access to resellers on a wholesale basis. The
Consumer segment's operating revenues for the year ended December 31, 2023 totaled $101.6 billion, a decrease of
$1.9 billion, or 1.8%, compared to the year ended December 31, 2022. See "Segment Results of Operations" for additional
information regarding our Consumer segment’s operating performance and selected operating statistics.
Verizon Business Group
Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data,
video and conferencing services, corporate networking solutions, security and managed network services, local and long
distance voice services and network access to deliver various IoT services and products, including solutions that support mobile
resource management. We provide these products and services to businesses, government customers and wireless and wireline
carriers across the U.S. and a subset of these products and services to customers around the world. The Business segment's
operating revenues for the year ended December 31, 2023 totaled $30.1 billion, a decrease of $950 million, or 3.1%, compared
to the year ended December 31, 2022. See "Segment Results of Operations" for additional information regarding our Business
segment’s operating performance and selected operating statistics.
Corporate and Other
Corporate and other primarily includes device insurance programs, investments in unconsolidated businesses and development
stage businesses that support our strategic initiatives, as well as unallocated corporate expenses, certain pension and other
employee benefit related costs and interest and financing expenses. Corporate and other also includes the historical results of
divested businesses and other adjustments and gains and losses that are not allocated or used in assessing segment
performance due to their nature. Although such transactions are excluded from the business segment results, they are included
in reported consolidated earnings. Gains and losses from these transactions that are not individually significant are included in
segment results and therefore included in the chief operating decision maker’s assessment of segment performance. See
"Consolidated Results of Operations" for additional information regarding Corporate and other results.
23 Verizon 2023 Annual Report on Form 10-K
Capital Expenditures and Investments
We continue to invest in our wireless networks, high-speed fiber and other advanced technologies to position ourselves at the
center of growth trends for the future. During the year ended December 31, 2023, these investments included $18.8 billion for
capital expenditures. See "Cash Flows Used in Investing Activities" and "Liquidity and Capital Resources" for additional
information. In the second quarter of 2023, we completed our accelerated $10 billion capital program related to C-Band spectrum
deployment. Our ongoing C-Band spectrum deployment is funded through our general capital expenditure program.
Global Network and Technology
Over the past several years, we have been leading the development of 5G wireless technology industry standards and the
ecosystems for fixed and mobile 5G wireless services. 5G technology enables higher throughput and lower latency than 4G LTE
technology and allows our networks to handle more traffic as the number of internet-connected devices grows.
We are focusing our capital investment on building our next generation 5G network, while also adding capacity and density to our
4G LTE network. We are densifying our networks by utilizing macro and small cell technology, in-building solutions and
distributed antenna systems. Network densification enables us to add capacity to address increasing mobile video consumption
and the growing demand for IoT products and services on our 5G and 4G LTE networks. In January 2022, we began rapidly
deploying our C-Band spectrum, which, as of December 31, 2023, covers approximately 242 million people in the U.S. We
obtained full access to our C-Band spectrum in August 2023 and will continue deploying this spectrum across the continental
U.S.
To compensate for the shrinking market for traditional copper-based products, we continue to build fiber-based networks
supporting data, video and advanced business services - areas where demand for reliable high-speed connections is growing. In
addition, we leverage our 5G and 4G LTE networks for our FWA broadband service.
Consolidated Results of Operations
In this section, we discuss our overall results of operations and highlight special items that are not included in our segment
results. In "Segment Results of Operations," we review the performance of our two reportable segments in more detail.
During the first quarter of 2023, Verizon reorganized the customer groups within its Business segment. Previously, this segment
was comprised of four customer groups: Small and Medium Business, Global Enterprise, Public Sector and Other, and
Wholesale. Following the reorganization, there are now three customer groups: Enterprise and Public Sector, Business Markets
and Other, and Wholesale. Enterprise and Public Sector combines the customers previously included in Global Enterprise and
Public Sector and Other (excluding BlueJeans and Connect customers) as well as the commercial wireline customers previously
included in Small and Medium Business. Business Markets and Other combines the customers previously included in Small and
Medium Business (excluding commercial wireline customers), the BlueJeans customers previously included in Global Enterprise
and Public Sector and Other, and the Connect customers previously included in Public Sector and Other. The Wholesale
customer group remained unchanged. Prior period operating revenue results within the Business segment have been recast for
these reorganized customer groups. There was no change to the composition of our reportable segments and total segment
results, nor the determination of segment profit.
A discussion of the Business segment's 2021 operating revenue results reflecting the current customer groups and year-over-
year comparisons between 2022 and 2021 have been included in "Segment Results of Operations" below. A discussion of the
2021 items and year-over-year comparisons between 2022 and 2021 for all other items that are not included in this Form 10-K
can be found in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual
Report on Form 10-K for the year ended December 31, 2022.
Consolidated Operating Revenues
Years Ended December 31,
Consumer
Business
Corporate and other
Eliminations
Consolidated Operating Revenues
2023
2022
$ 101,626 $ 103,506 $
30,122
2,479
(253)
31,072
2,510
(253)
$ 133,974 $ 136,835 $
(dollars in millions)
Decrease
2023 vs. 2022
(1,880)
(950)
(31)
—
(2,861)
(1.8) %
(3.1)
(1.2)
—
(2.1)
Consolidated operating revenues decreased during 2023 compared to 2022 primarily due to decreases in Wireless equipment
revenues.
Revenues for our segments are discussed separately below under the heading "Segment Results of Operations."
Verizon 2023 Annual Report on Form 10-K
24
Consolidated Operating Expenses
Years Ended December 31,
Cost of services
Cost of wireless equipment
Selling, general and administrative expense
Depreciation and amortization expense
Verizon Business Group goodwill impairment
Consolidated Operating Expenses
nm - not meaningful
2022
2023
$ 28,100 $ 28,637 $
(dollars in millions)
Increase/(Decrease)
2023 vs. 2022
(537)
(3,709)
2,609
525
5,841
$ 111,097 $ 106,368 $ 4,729
26,787
32,745
17,624
5,841
30,496
30,136
17,099
—
(12.2)
8.7
3.1
4.4
(1.9) %
nm
Operating expenses for our segments are discussed separately below under the heading "Segment Results of Operations."
Cost of Services
Cost of services includes the following costs directly attributable to a service: salaries and wages, benefits, materials and
supplies, content costs, contracted services, network access and transport costs, customer provisioning costs, computer
systems support and costs to support our outsourcing contracts and technical facilities. Aggregate customer service costs, which
include billing and service provisioning, are allocated between Cost of services and Selling, general and administrative expense.
Cost of services decreased during 2023 compared to 2022 primarily as a result of:
•
•
•
•
a decrease of $658 million in access costs primarily as a result of pricing changes and usage declines largely related to
the shutdown of our competitors' third-generation (3G) networks in 2022 and ongoing efforts to migrate off network
prepaid subscribers to the Verizon network;
a decrease of $156 million in direct costs primarily related to certain professional services that did not reoccur in 2023;
an increase of $204 million in regulatory costs primarily related to a higher net Federal Universal Service Fund (FUSF)
rate; and
an increase of $149 million in rent and lease expense primarily driven by new leases and lease modifications related to
the deployment of the C-Band spectrum.
Cost of Wireless Equipment
Cost of wireless equipment decreased during 2023 compared to 2022 primarily as a result of:
•
•
a decrease of $4.7 billion driven by a lower volume of wireless devices sold primarily related to a decrease of 24% in
upgrades; and
an increase of $953 million due to a shift to higher priced equipment in the mix of wireless devices sold.
Selling, General and Administrative Expense
Selling, general and administrative expense includes salaries and wages and benefits not directly attributable to a service or
product, the provision for credit losses, taxes other than income taxes, advertising and sales commission costs, call center and
information technology costs, regulatory fees, professional service fees and rent and utilities for administrative space. Also
included is a portion of the aggregate customer care costs as discussed above in "Cost of Services."
Selling, general and administrative expense increased during 2023 compared to 2022 primarily due to:
•
•
•
•
•
•
•
•
an increase of $603 million in the provision for credit losses resulting from additional bad debt reserves as collections
return to pre-pandemic levels, coupled with an increase in wireless retail postpaid gross additions;
an increase of $533 million in personnel costs from severance charges;
an increase of $458 million primarily related to asset rationalization charges;
an increase of $393 million primarily related to higher costs for device insurance programs due to an increase in claims;
an increase of $299 million in advertising costs driven by costs associated with the myPlan launch in the second quarter
of 2023 and the scaling of our Total by Verizon prepaid brand;
an increase of $161 million related to business transformation costs;
an increase of $113 million in connection with the non-strategic business shutdown of our BlueJeans business offering;
and
an increase of $100 million related to a legal settlement.
See "Special Items" for additional information on the severance charges, asset rationalization charges, business transformation
costs, the non-strategic business shutdown and the legal settlement.
Depreciation and Amortization Expense
Depreciation and amortization expense increased during 2023 compared to 2022, primarily due to the change in the mix of net
depreciable and amortizable assets, including acquisition-related intangible assets, and the continued deployment of C-Band
network assets.
25 Verizon 2023 Annual Report on Form 10-K
Verizon Business Group Goodwill Impairment
During 2023, we recorded a pre-tax charge of $5.8 billion as a result of the annual goodwill impairment test performed in the
fourth quarter. See "Critical Accounting Estimates" for additional information.
Other Consolidated Results
Other Income (Expense), Net
Additional information relating to Other income (expense), net is as follows:
Years Ended December 31,
Interest income
Other components of net periodic benefit income (cost)
Net debt extinguishment gains (losses)
Other, net
Other Income (Expense), Net
nm - not meaningful
2023
354 $
(938)
308
(37)
(313) $
$
$
(dollars in millions)
2022
146 $
2,386
(1,077)
(82)
1,373 $
Increase/(Decrease)
2023 vs. 2022
208
(3,324)
1,385
45
(1,686)
nm
nm
nm
54.9 %
nm
Other income (expense), net reflects certain items not directly related to our core operations, including interest income, debt
extinguishment costs, components of net periodic pension and postretirement benefit cost and income and certain foreign
exchange gains and losses.
Other income (expense), net decreased during 2023 compared to 2022 primarily due to:
•
•
•
a net pension and postretirement benefits remeasurement loss of $992 million recorded during 2023, compared with a
gain of $1.7 billion recorded during 2022, as well as an increase in interest costs in 2023 of $421 million primarily due to
an increase in discount rates;
net debt extinguishment gains of $308 million related to open market repurchases of various Company notes and tender
offers in 2023, compared with losses of $1.1 billion primarily related to tender offers in 2022; and
an increase in interest income due to higher interest rates.
Interest Expense
Years Ended December 31,
Total interest costs on debt balances
Less capitalized interest costs
Interest Expense
2023
2022
$ 7,342
1,818
$ 5,524
$ 5,643
2,030
$ 3,613
(dollars in millions)
Increase/(Decrease)
2023 vs. 2022
$ 1,699
(212)
$ 1,911
30.1 %
(10.4)
52.9
Average debt outstanding(1)(3)
Effective interest rate(2)(3)
(1) The average debt outstanding is a financial measure and is calculated by applying a simple average of prior thirteen-month
$ 151,062
$ 151,226
4.9 %
3.7 %
end balances of total short-term and long-term debt, net of discounts, premiums and unamortized debt issuance costs.
(2) The effective interest rate is the rate of actual interest incurred on debt. It is calculated by dividing the total interest costs on
debt balances by the average debt outstanding.
(3) We believe that this measure is useful to management, investors and other users of our financial information in evaluating our
debt financing cost and trends in our debt leverage management.
Total interest expense increased during 2023 compared to 2022 primarily as a result of an increase in interest costs due to a
higher average interest rate and a decrease in capitalized interest costs due to the early clearance and deployment of C-Band
spectrum in the current period, which were partially offset by lower average debt balances.
Provision for Income Taxes
Years Ended December 31,
Provision for income taxes
Effective income tax rate
2023
2022
$ 4,892
$ 6,523
$
28.8 %
23.1 %
(dollars in millions)
Decrease
2023 vs. 2022
(1,631)
(25.0) %
Verizon 2023 Annual Report on Form 10-K
26
The effective income tax rate is calculated by dividing the provision for income taxes by income before the provision for income
taxes. The increase in the effective income tax rate was primarily due to the Verizon Business Group goodwill impairment charge
of $5.8 billion that substantially decreased income before income taxes and is not deductible. The decrease in the provision for
income taxes was primarily due to the decrease in income before income taxes in the current period.
A reconciliation of the statutory federal income tax rate to the effective income tax rate for each period is included in Note 12 to
the consolidated financial statements.
Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA
Consolidated earnings before interest, taxes, depreciation and amortization expense (Consolidated EBITDA) and Consolidated
Adjusted EBITDA, which are presented below, are non-GAAP financial measures that we believe are useful to management,
investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as they
exclude the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in
prior years, as well as in evaluating operating performance in relation to Verizon’s competitors. Consolidated EBITDA is
calculated by adding back interest, taxes, depreciation and amortization expense to net income.
Consolidated Adjusted EBITDA is calculated by excluding from Consolidated EBITDA the effect of the following non-operational
items: equity in earnings and losses of unconsolidated businesses and other income and expense, net, as well as the effect of
certain special items. We believe that this measure is useful to management, investors and other users of our financial
information in evaluating the effectiveness of our operations and underlying business trends in a manner that is consistent with
management’s evaluation of business performance. We believe that Consolidated Adjusted EBITDA is widely used by investors
to compare a company’s operating performance to its competitors by minimizing impacts caused by differences in capital
structure, taxes, and depreciation and amortization policies. Further, the exclusion of non-operational items and special items
enables comparability to prior period performance and trend analysis. See "Special Items" for additional information.
It is management’s intent to provide non-GAAP financial information to enhance the understanding of Verizon’s GAAP financial
information, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in
accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not
to imply that more emphasis should be placed on the non-GAAP measure. We believe that providing these non-GAAP measures
in addition to the GAAP measures allows management, investors and other users of our financial information to more fully and
accurately assess both consolidated and segment performance. The non-GAAP financial information presented may be
determined or calculated differently by other companies and may not be directly comparable to that of other companies.
Years Ended December 31,
Consolidated Net Income
Add:
Provision for income taxes
Interest expense
Depreciation and amortization expense(1)
Consolidated EBITDA
Add (Less):
Other (income) expense, net(2)(3)
Equity in (earnings) losses of unconsolidated businesses
Severance charges
Verizon Business Group goodwill impairment
Asset rationalization
Legal settlement
Business transformation costs
Non-strategic business shutdown
$
$
$
(dollars in millions)
2022
21,748
2023
12,095 $
4,892
5,524
17,624
40,135 $
6,523
3,613
17,099
48,983
313 $
53
533
5,841
480
100
176
158
47,789 $
(1,373)
(44)
304
—
—
—
—
—
47,870
$
Consolidated Adjusted EBITDA
(1) Includes Amortization of acquisition-related intangible assets, which were $865 million and $826 million during the years ended
December 31, 2023 and 2022, respectively. The result for the year ended December 31, 2023 also includes a portion of the
Non-strategic business shutdown. See "Special Items" for additional information.
(2) Includes Pension and benefits remeasurement charges of $992 million during the year ended December 31, 2023 and credits
of $1.7 billion during the year ended December 31, 2022. See "Special Items" and "Other Income (Expense), Net" for
additional information.
(3) Includes Early debt redemption costs, which were $1.2 billion during the year ended December 31, 2022. See "Special Items"
and "Other Income (Expense), Net" for additional information.
27 Verizon 2023 Annual Report on Form 10-K
The changes in Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA in the table above during
2023 compared to 2022 were primarily a result of the factors described above in connection with operating revenues and
operating expenses.
Segment Results of Operations
We have two reportable segments that we operate and manage as strategic business units - Consumer and Business. We
measure and evaluate our segments based on segment operating income. The use of segment operating income is consistent
with the chief operating decision maker’s assessment of segment performance.
To aid in the understanding of segment performance as it relates to segment operating income, management uses the following
operating statistics to evaluate the overall effectiveness of our segments. We believe these operating statistics are useful to
investors and other users of our financial information because they provide additional insight into drivers of our segments’
operating results, key trends and performance relative to our peers. These operating statistics may be determined or calculated
differently by other companies and may not be directly comparable to those statistics of other companies.
Wireless retail connections are retail customer device postpaid and prepaid connections as of the end of the period. Retail
connections under an account may include those from smartphones and basic phones (collectively, phones), postpaid and
prepaid FWA, as well as tablets and other internet devices, wearables and retail IoT devices. Wireless retail connections are
calculated by adding total retail postpaid and prepaid new connections in the period to prior period retail connections, and
subtracting total retail postpaid and prepaid disconnects in the period.
Wireless retail postpaid connections are retail postpaid customer device connections as of the end of the period. Retail postpaid
connections under an account may include those from phones, postpaid FWA, as well as tablets and other internet devices,
wearables and retail IoT devices. Wireless retail postpaid connections are calculated by adding retail postpaid new connections
in the period to prior period retail postpaid connections, and subtracting retail postpaid disconnects in the period.
Wireless retail prepaid connections are retail prepaid customer device connections as of the end of the period. Retail prepaid
connections may include those from phones, prepaid FWA, as well as tablets and other internet devices, and wearables.
Wireless retail prepaid connections are calculated by adding retail prepaid new connections in the period to prior period retail
prepaid connections, and subtracting retail prepaid disconnects in the period.
Fios internet connections are the total number of connections to the internet using Fios internet services as of the end of the
period. Fios internet connections are calculated by adding Fios internet new connections in the period to prior period Fios
internet connections, and subtracting Fios internet disconnects in the period.
Fios video connections are the total number of connections to traditional linear video programming using Fios video services as
of the end of the period. Fios video connections are calculated by adding Fios video net additions in the period to prior period
Fios video connections. Fios video net additions are calculated by subtracting the Fios video disconnects from the Fios video
new connections.
Total broadband connections are the total number of connections to the internet using Fios internet services, Digital Subscriber
Line (DSL), and postpaid, prepaid and IoT FWA as of the end of the period. Total broadband connections are calculated by
adding total broadband connections, net additions in the period to prior period total broadband connections.
Wireless retail connections, net additions are the total number of additional retail customer device postpaid and prepaid
connections, less the number of device disconnects in the period. Wireless retail connections, net additions in each period
presented are calculated by subtracting the total retail postpaid and prepaid disconnects, net of certain adjustments, from the
total retail postpaid and prepaid new connections in the period.
Wireless retail postpaid connections, net additions are the total number of additional retail customer device postpaid connections,
less the number of device disconnects in the period. Wireless retail postpaid connections, net additions in each period presented
are calculated by subtracting the retail postpaid disconnects, net of certain adjustments, from the retail postpaid new connections
in the period.
Wireless retail prepaid connections, net additions are the total number of additional retail customer device prepaid connections,
less the number of device disconnects in the period. Wireless retail prepaid connections, net additions in each period presented
are calculated by subtracting the retail prepaid disconnects, net of certain adjustments, from the retail prepaid new connections
in the period.
Wireless retail postpaid phone connections, net additions are the total number of additional retail customer postpaid phone
connections, less the number of phone disconnects in the period. Wireless retail postpaid phone connections, net additions in
each period presented are calculated by subtracting the retail postpaid phone disconnects, net of certain adjustments, from the
retail postpaid phone new connections in the period.
Verizon 2023 Annual Report on Form 10-K
28
Total broadband connections, net additions are the total number of additional total broadband connections, less the number of
total broadband disconnects in the period. Total broadband connections, net additions in each period presented are calculated by
subtracting the total broadband disconnects, net of certain adjustments, from the total broadband new connections in the period.
Wireless churn is the rate at which service to retail, retail postpaid, or retail postpaid phone connections is terminated on average
in the period. The churn rate in each period presented is calculated by dividing retail disconnects, retail postpaid disconnects, or
retail postpaid phone disconnects by the average retail connections, average retail postpaid connections, or average retail
postpaid phone connections, respectively, in the period.
Wireless retail postpaid ARPA is the calculated average retail postpaid service revenue per account (ARPA) from retail postpaid
accounts in the period. Wireless retail postpaid service revenue does not include recurring device payment plan billings related to
the Verizon device payment program, plan billings related to device warranty and insurance or regulatory fees. Wireless retail
postpaid ARPA in each period presented is calculated by dividing retail postpaid service revenue by the average retail postpaid
accounts in the period.
Wireless retail postpaid accounts are wireless retail customers that are directly served and managed under the Verizon brand
and use its services as of the end of the period. Accounts include unlimited plans, shared data plans and corporate accounts, as
well as legacy single connection plans and multi-connection family plans. A single account may include monthly wireless services
for a variety of connected devices. Wireless retail postpaid accounts are calculated by adding retail postpaid new accounts to the
prior period retail postpaid accounts.
Wireless retail postpaid connections per account is the calculated average number of retail postpaid connections per retail
postpaid account as of the end of the period. Wireless retail postpaid connections per account is calculated by dividing the total
number of retail postpaid connections by the number of retail postpaid accounts as of the end of the period.
Segment operating income margin reflects the profitability of the segment as a percentage of revenue. Segment operating
income margin is calculated by dividing total segment operating income by total segment operating revenues.
Segment earnings before interest, taxes, depreciation and amortization (Segment EBITDA), which is presented below, is a non-
GAAP measure and does not purport to be an alternative to operating income (loss) as a measure of operating performance. We
believe this measure is useful to management, investors and other users of our financial information in evaluating operating
profitability on a more variable cost basis as it excludes the depreciation and amortization expense related primarily to capital
expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to our
competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income
(loss). Segment EBITDA margin is calculated by dividing Segment EBITDA by total segment operating revenues. See Note 13 to
the consolidated financial statements for additional information.
Verizon Consumer Group
Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless
services are provided across one of the most extensive wireless networks in the U.S. under the Verizon family of brands and
through wholesale and other arrangements. We also provide FWA broadband through our 5G or 4G LTE networks as an
alternative to traditional landline internet access. Our wireline services are provided in nine states in the Mid-Atlantic and
Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and
over a traditional copper-based network to customers who are not served by Fios.
29 Verizon 2023 Annual Report on Form 10-K
Operating Revenues and Selected Operating Statistics
Years Ended December 31,
Service(1)
Wireless equipment
Other
Total Operating Revenues
Connections (‘000):(2)
Wireless retail postpaid
Wireless retail prepaid
Total wireless retail
Fios internet
Fios video
Total broadband
Net Additions in Period (‘000):
Wireless retail postpaid
Wireless retail prepaid
Total wireless retail
Wireless retail postpaid phones
Total broadband
Churn Rate:
Wireless retail
Wireless retail postpaid
Wireless retail postpaid phones
2023
2022
$ 74,874
20,645
6,107
$ 101,626
$ 73,139
23,168
7,199
$ 103,506
(dollars in millions,
except ARPA)
Increase/(Decrease)
2023 vs. 2022
$
$
1,735
(2,523)
(1,092)
(1,880)
2.4 %
(10.9)
(15.2)
(1.8)
93,850
21,122
114,972
6,976
2,951
9,056
91,856
22,664
114,520
6,740
3,234
7,900
1,994
(1,542)
452
236
(283)
1,156
2.2
(6.8)
0.4
3.5
(8.8)
14.6
2,044
(1,151)
893
965
(445)
520
1,079
(706)
373
nm
nm
71.7
(132)
(655)
523
79.8
1,163
904
259
28.7
1.67 %
1.03 %
0.83 %
1.63 %
1.01 %
0.81 %
Account Statistics:
Wireless retail postpaid ARPA
Wireless retail postpaid accounts (‘000)(2)
Wireless retail postpaid connections per account(2)
(1) Wireless service revenues included in our Consumer segment were approximately $63.4 billion and $61.5 billion for the years
$ 125.97
33,183
2.77
$ 132.36
32,990
2.84
6.39
(193)
0.07
5.1
(0.6)
2.5
$
ended December 31, 2023 and 2022, respectively.
(2) As of end of period
Where applicable, the operating results reflect certain adjustments, including those related to the 3G network shutdowns,
migration activity among different types of devices and plans, customer profile changes, and adjustments in connection with
mergers, acquisitions and divestitures.
nm - not meaningful
Consumer's total operating revenues decreased during 2023 compared to 2022 as a result of decreases in Wireless equipment
revenue and Other revenue, partially offset by an increase in Service revenue.
Service Revenue
Service revenue increased during 2023 compared to 2022 primarily driven by an increase in Wireless service revenue.
Wireless service revenue increased $1.8 billion during 2023 compared to 2022 primarily as a result of:
•
•
•
•
an increase of $1.7 billion in access revenues related to our postpaid plans primarily driven by pricing actions
implemented in recent periods; a larger allocation of administrative and telco recovery charges, which partly recover
network operating costs, to Wireless service revenue from Other revenue; an increase in our FWA subscriber base; and
an increase in device protection revenue primarily due to an increase in the price of the bundled offering. These
increases were partially offset by the amortization of wireless equipment sales promotions;
an increase of $405 million related to growth in non-retail service revenue;
an increase of $287 million in TravelPass revenue related to increased customer international travel; and
a decrease of $500 million in prepaid revenue primarily due to a decrease in the prepaid subscriber base.
Verizon 2023 Annual Report on Form 10-K
30
For the year ended December 31, 2023, Fios service revenue totaled $10.9 billion and remained relatively flat compared to the
similar period in 2022.
Wireless Equipment Revenue
Wireless equipment revenue decreased during 2023 compared to 2022 primarily as a result of:
•
•
a decrease of $3.9 billion driven by a lower volume of wireless devices sold primarily related to a decrease of 26% in
upgrades; and
an increase of $1.4 billion related to a shift to higher priced equipment in the mix of wireless devices sold.
Other Revenue
Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry
obligations and programs, revenues associated with certain products included in our device protection offerings, leasing and
interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.
Other revenue decreased during 2023 compared to 2022 primarily as a result of:
•
•
a decrease of $1.2 billion in revenue primarily related to a larger allocation of administrative and telco recovery charges,
which partly recover network operating costs, to Wireless service revenue from Other revenue; and
an increase of $109 million in revenue from regulatory surcharges, primarily related to FUSF surcharges driven by a
higher net rate, partially offset by a decrease related to other regulatory surcharges.
Operating Expenses
Years Ended December 31,
Cost of services
Cost of wireless equipment
Selling, general and administrative expense
Depreciation and amortization expense
Total Operating Expenses
Cost of Services
2023
2022
(dollars in millions)
Increase/(Decrease)
2023 vs. 2022
$ 17,580 $ 17,746 $
21,827
20,131
13,077
25,134
19,064
12,716
$ 72,615 $ 74,660 $
(166)
(3,307)
1,067
361
(2,045)
(0.9) %
(13.2)
5.6
2.8
(2.7)
Cost of services decreased during 2023 compared to 2022 primarily as a result of:
•
•
•
•
a decrease of $566 million in access costs primarily as a result of pricing changes, the shutdown of our competitors' 3G
networks in 2022 and ongoing efforts to migrate off network prepaid subscribers to the Verizon network;
an increase of $177 million in personnel costs mainly driven by a decrease in capitalized labor in connection with the
completion of our incremental C-Band capital spending program, and valuation assumption changes in connection with
certain post-employment benefits;
an increase of $154 million in regulatory costs primarily related to a higher net FUSF rate; and
an increase of $92 million in rent and lease expense primarily driven by new leases and lease modifications related to
the deployment of the C-Band spectrum.
Cost of Wireless Equipment
Cost of wireless equipment decreased during 2023 compared to 2022 primarily as a result of:
•
•
a decrease of $4.1 billion driven by a lower volume of wireless devices sold primarily related to a decrease of 26% in
upgrades; and
an increase of $858 million related to a shift to higher priced equipment in the mix of wireless devices sold.
Selling, General and Administrative Expense
Selling, general and administrative expense increased during 2023 compared to 2022 primarily due to:
•
•
•
an increase of $458 million in the provision for credit losses resulting from additional bad debt reserves as collections
return to pre-pandemic levels, coupled with an increase in wireless retail postpaid gross additions;
an increase of $352 million in advertising costs driven by costs associated with the myPlan launch in the second quarter
of 2023 and the scaling of our Total by Verizon prepaid brand; and
an increase of $237 million in personnel costs mainly driven by an increase in commission expense due to the
amortization of deferred contract costs, along with an increase in costs associated with third-party contracted resources.
Depreciation and Amortization Expense
Depreciation and amortization expense increased during 2023 compared to 2022 driven by the change in the mix of total Verizon
depreciable and amortizable assets and Consumer's usage of those assets.
31
Verizon 2023 Annual Report on Form 10-K
Segment Operating Income and EBITDA
Years Ended December 31,
Segment Operating Income
Add Depreciation and amortization expense
Segment EBITDA
Segment operating income margin
Segment EBITDA margin
2023
2022
(dollars in millions)
Increase
2023 vs. 2022
$ 29,011
13,077
$ 42,088
$ 28,846
12,716
$ 41,562
$
$
165
361
526
%
0.6
2.8
1.3
28.5 %
41.4 %
27.9 %
40.2 %
The changes in the table above during the periods presented were primarily a result of the factors described above in connection
with Consumer operating revenues and operating expenses.
Verizon Business Group
Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data,
video and conferencing services, corporate networking solutions, security and managed network services, local and long
distance voice services and network access to deliver various IoT services and products. We provide these products and
services to businesses, government customers and wireless and wireline carriers across the U.S. and a subset of these products
and services to customers around the world. The Business segment is organized in three customer groups: Enterprise and
Public Sector, Business Markets and Other, and Wholesale.
Operating Revenues and Selected Operating Statistics
Years Ended December 31,
Enterprise and Public Sector
Business Markets and Other
Wholesale
Total Operating Revenues(1)(2)
2023
2022
2021
2023 vs. 2022
2022 vs. 2021
$ 15,076
12,715
2,331
$ 30,122
$ 15,693
12,772
2,607
$ 31,072
$ 16,393
11,929
2,720
$ 31,042
$
$
(617)
(57)
(276)
(950)
(3.9) % $
(0.4)
(10.6)
(3.1)
$
(700)
843
(113)
30
(4.3) %
7.1
(4.2)
0.1
(dollars in millions)
Increase/(Decrease)
Connections (‘000):(3)
Wireless retail postpaid
Fios internet
Fios video
Total broadband
Net Additions in Period ('000):
Wireless retail postpaid
Wireless retail postpaid phones
Total broadband
29,779
385
61
1,661
1,242
562
539
28,733
373
67
1,036
1,640
856
386
27,411
356
71
599
1,001
509
81
1,046
12
(6)
625
3.6
3.2
(9.0)
60.3
1,322
17
(4)
437
4.8
4.8
(5.6)
73.0
(398)
(294)
153
(24.3)
(34.3)
39.6
639
347
305
63.8
68.2
nm
Churn Rate:
1.38%
Wireless retail postpaid
1.07%
Wireless retail postpaid phones
(1) Service and other revenues included in our Business segment were approximately $26.4 billion, $27.0 billion and $27.7 billion
for the years ended December 31, 2023, 2022 and 2021, respectively. Wireless equipment revenues included in our Business
segment were approximately $3.7 billion, $4.0 billion and $3.4 billion for the years ended December 31, 2023, 2022 and 2021,
respectively.
1.27%
1.03%
1.48%
1.13%
(2) Wireless service revenues of our Business segment, which are included in Service and other revenues in our consolidated
statements of income, were approximately $13.4 billion, $12.8 billion and $12.4 billion for the years ended December 31, 2023,
2022 and 2021, respectively.
(3) As of end of period
Where applicable, the operating results reflect certain adjustments, including those related to the 3G network shutdowns,
migration activity among different types of devices and plans, customer profile changes, and adjustments in connection with
mergers, acquisitions and divestitures.
nm - not meaningful
Verizon 2023 Annual Report on Form 10-K
32
Business's total operating revenues decreased during 2023 compared to 2022 as a result of decreases in revenue from each of
the three Business customer groups.
Business's total operating revenues increased during 2022 compared to 2021 as a result of an increase in Business Markets and
Other revenue, partially offset by decreases in Enterprise and Public Sector and Wholesale revenues.
Enterprise and Public Sector
Enterprise and Public Sector offers wireless products and services as well as wireline connectivity and managed solutions to our
large business and government customers. Large businesses are identified based on their size and volume of business with
Verizon. Public sector offers these services with features and pricing designed to address the needs of U.S. federal, state and
local governments and educational institutions.
Enterprise and Public Sector revenues decreased during 2023 compared to 2022 primarily due to:
•
•
a decrease of $530 million in wireline networking revenue and traditional data and voice communication services along
with related professional services, driven by secular pressures in the marketplace; and
a decrease of $98 million in Wireless equipment revenue driven by a lower volume of devices sold primarily related to
fewer phone activations, partially offset by a shift to higher priced equipment in the mix of devices sold.
Enterprise and Public Sector revenues decreased during 2022 compared to 2021 primarily as a result of:
•
•
•
•
•
a decrease of $763 million in wireline networking revenue and traditional data and voice communication services along
with related professional services, driven by secular pressures in the marketplace;
a decrease of $181 million due to lower FUSF volume and rate along with resulting surcharges;
an increase of $152 million in Wireless equipment revenue driven by a shift to higher priced equipment in the mix of
devices sold and a higher volume of devices sold, partially offset by the impact of related promotions;
an increase of $84 million in Wireless service revenue primarily driven by an increase in wireless retail postpaid
connections as well as the economic adjustment charge that took effect late in the second quarter of 2022; and
an increase of $37 million in customer premise equipment primarily due to higher volumes.
Business Markets and Other
Business Markets and Other offers wireless services and equipment, conferencing services, tailored voice and networking
products, Fios services, advanced voice solutions and security services to businesses that ordinarily do not meet the
requirements to be categorized as Enterprise and Public Sector, as described above. Business Markets and Other also includes
solutions that support mobile resource management.
Business Markets and Other revenue decreased during 2023 compared to 2022 primarily as a result of:
•
•
•
•
a decrease of $267 million in Wireless equipment revenue primarily driven by a lower volume of devices sold primarily
related to fewer phone upgrades;
a decrease of $155 million in Other revenue primarily related to a larger allocation of administrative and telco recovery
charges, which partly recover network operating costs, to Wireless service revenue from Other revenue;
a decrease of $77 million related to a decrease in wireline voice and DSL service connections; and
an increase of $496 million in Wireless service revenue primarily driven by the economic adjustment charge that took
effect late in the second quarter of 2022; an increase in our wireless retail postpaid connections, including our FWA
subscriber base; and a larger allocation of administrative and telco recovery charges, which partly recover network
operating costs, to Wireless service revenue from Other revenue.
Business Markets and Other revenue increased during 2022 compared to 2021 primarily as a result of:
•
•
•
an increase of $507 million in Wireless equipment revenue driven by a higher volume of devices sold and a shift to
higher priced equipment in the mix of devices sold, partially offset by an increase in promotions;
an increase of $395 million in Wireless service revenue primarily driven by an increase in our wireless retail postpaid
connections as well as the economic adjustment charge that took effect late in the second quarter of 2022; and
a decrease of $72 million related to a decrease in wireline voice and DSL service connections.
For the years ended December 31, 2023, 2022 and 2021, Fios revenues totaled $923 million, $927 million and $905 million,
respectively.
Wholesale
Wholesale offers wireline communications services including data, voice, local dial tone and broadband services primarily to
local, long distance, and wireless carriers that use our facilities to provide services to their customers.
Wholesale revenues decreased during 2023 compared to 2022 primarily due to a decrease of $276 million related to declines in
traditional voice communication and network connectivity as a result of technology substitution, certain fiber transactions
completed in 2022 that did not reoccur, as well as a decrease in core data.
33
Verizon 2023 Annual Report on Form 10-K
Wholesale revenues decreased during 2022 compared to 2021 primarily due to a decrease of $113 million related to declines in
traditional voice communication and network connectivity as a result of technology substitution and rationalization of international
traffic, as well as a decrease in core data.
Operating Expenses
Years Ended December 31,
Cost of services
Cost of wireless equipment
Selling, general and administrative expense
Depreciation and amortization expense
Total Operating Expenses
Cost of Services
2023
2022
(dollars in millions)
Increase/(Decrease)
2023 vs. 2022
$ 10,180 $ 10,483 $
4,959
8,429
4,488
5,362
8,284
4,312
$ 28,056 $ 28,441 $
(303)
(403)
145
176
(385)
(2.9) %
(7.5)
1.8
4.1
(1.4)
Cost of services decreased during 2023 compared to 2022 primarily due to:
•
•
•
a decrease of $142 million in direct costs primarily related to certain professional services that did not reoccur in 2023;
a decrease of $114 million in personnel costs related to the impact of workforce changes; and
a decrease of $95 million in access costs related to changes in usage and circuit access prices.
Cost of Wireless Equipment
Cost of wireless equipment decreased during 2023 compared to 2022 primarily as a result of:
•
•
a decrease of $577 million driven by a lower volume of wireless devices sold primarily related to a decrease of 11% in
upgrades; and
an increase of $174 million related to a shift to higher priced equipment in the mix of wireless devices sold.
Selling, General and Administrative Expense
Selling, general and administrative expense increased during 2023 compared to 2022 primarily due to an increase of
$148 million in the provision for credit losses resulting from additional bad debt reserves as collections return to pre-pandemic
levels, coupled with an increase in wireless retail postpaid gross additions.
Depreciation and Amortization Expense
Depreciation and amortization expense increased during 2023 compared to 2022 driven by the change in the mix of total Verizon
depreciable and amortizable assets and Business's usage of those assets.
Segment Operating Income and EBITDA
Years Ended December 31,
Segment Operating Income
Add Depreciation and amortization expense
Segment EBITDA
Segment operating income margin
Segment EBITDA margin
2023
2022
(dollars in millions)
Increase/(Decrease)
2023 vs. 2022
$ 2,066
4,488
$ 6,554
$ 2,631
4,312
$ 6,943
$
$
(565)
176
(389)
(21.5) %
4.1
(5.6)
6.9%
21.8%
8.5%
22.3%
The changes in the table above during the periods presented were primarily a result of the factors described above in connection
with Business operating revenues and operating expenses.
Verizon 2023 Annual Report on Form 10-K
34
Special Items
Special items included in Income Before Provision For Income Taxes were as follows:
Years Ended December 31,
Amortization of acquisition-related intangible assets(1)
Depreciation and amortization expense
Severance, pension and benefits charges (credits)
Selling, general and administrative expense
Other (income) expense, net
Verizon Business Group goodwill impairment
Verizon Business Group goodwill impairment
Asset rationalization
Cost of services
Selling, general and administrative expense
Legal settlement
Selling, general and administrative expense
Business transformation costs
Cost of services
Selling, general and administrative expense
Non-strategic business shutdown
Depreciation and amortization expense
Cost of services
Selling, general and administrative expense
Early debt redemption costs
Other (income) expense, net
Total
(1) Amounts are included in segment results of operations.
(dollars in millions)
2022
2023
$
865 $
826
533
992
5,841
22
458
100
15
161
21
45
113
304
(1,675)
—
—
—
—
—
—
—
—
—
—
9,166 $
1,241
696
$
Consolidated Adjusted EBITDA, a non-GAAP measure discussed in the section titled "Consolidated Net Income, Consolidated
EBITDA and Consolidated Adjusted EBITDA" as part of Consolidated Results of Operations, excludes all of the amounts
included above.
The income and expenses related to special items included in our consolidated results of operations were as follows:
Years Ended December 31,
Within Total Operating Expenses
Within Other (income) expense, net
Total
(dollars in millions)
2022
1,130
(434)
696
2023
8,174 $
992
9,166 $
$
$
Amortization of Acquisition-Related Intangible Assets
During 2023 and 2022, we recorded pre-tax amortization expense of $865 million and $826 million, respectively, related to
acquired intangible assets.
Severance, Pension and Benefits Charges (Credits)
During 2023, in accordance with our accounting policy to recognize actuarial gains and losses in the period in which they occur,
we recorded net pre-tax pension and benefits charges of $992 million in our pension and postretirement benefit plans. The
charges were recorded in Other income (expense), net in our consolidated statement of income and were primarily driven by:
•
•
•
a charge of $534 million due to an increase in our healthcare cost trend rate assumption used to determine the current
year liabilities of our postretirement benefit plans from a weighted-average of 6.6% at December 31, 2022 to a
weighted-average of 7.3% at December 31, 2023;
a charge of $503 million ($288 million for pension plans and $215 million for postretirement benefit plans) due to a
decrease in our discount rate assumption used to determine the current year liabilities of our plans from a weighted-
average of 5.2% at December 31, 2022 to a weighted-average of 5.0% at December 31, 2023;
a net credit of $45 million primarily due to other actuarial assumption adjustments, which includes the difference
between our estimated and our actual return on plan assets.
During 2023, we also recorded net pre-tax severance charges of $533 million, primarily related to involuntary separations under
our existing plans, in Selling, general and administrative expense in our consolidated statement of income.
35
Verizon 2023 Annual Report on Form 10-K
During 2022, in accordance with our accounting policy to recognize actuarial gains and losses in the period in which they occur,
we recorded net pre-tax pension and benefits credits of $1.7 billion in our pension and postretirement benefit plans. The credits
were recorded in Other income (expense), net in our consolidated statement of income and were primarily driven by:
•
•
•
a credit of $7.0 billion ($4.1 billion for pension plans and $2.9 billion for postretirement benefit plans) due to an increase
in our discount rate assumption used to determine the current year liabilities of our plans from a weighted-average of
2.9% at December 31, 2021 to a weighted-average of 5.2% at December 31, 2022;
a charge of $5.5 billion due to the difference between our estimated and actual return on assets; and
a credit of $206 million due to other actuarial assumption adjustments.
During 2022, we also recorded net pre-tax severance charges of $304 million, related to involuntary separations under our
existing plans, in Selling, general and administrative expense in our consolidated statement of income.
Due to the presentation of the other components of net periodic benefit cost, we recognize a portion of the pension and benefits
charges (credits) in Other income (expense), net in our consolidated statements of income.
See Note 11 to the consolidated financial statements for additional information related to severance, pension and benefits
charges (credits).
Verizon Business Group Goodwill Impairment
During 2023, we recorded a pre-tax charge of $5.8 billion as a result of the annual goodwill impairment test performed in the
fourth quarter. See "Critical Accounting Estimates" for additional information.
Asset Rationalization
During 2023, we recorded pre-tax asset rationalization charges of $480 million. Asset rationalization charges of $155 million
recorded during the second quarter of 2023 related to certain real estate and non-strategic assets that we made a decision to
cease use of as part of our transformation initiatives. Asset rationalization charges of $325 million recorded during the fourth
quarter of 2023 primarily related to Business network assets that we made a decision to cease use of as part of our continued
transformation initiatives.
Legal Settlement
During 2023, we recorded a pre-tax charge of $100 million related to the settlement of a litigation matter regarding certain
administrative fees.
Business Transformation Costs
During 2023, we recorded pre-tax charges of $176 million primarily related to costs incurred in connection with strategic
partnership initiatives in our managed network support services for certain Business customers.
Non-Strategic Business Shutdown
During 2023, we recorded pre-tax charges of $179 million related to the shutdown of our BlueJeans business offering.
Early Debt Redemption Costs
During 2022, we recorded pre-tax early debt redemption costs of $1.2 billion primarily in connection with tender offers. See Note
7 to the consolidated financial statements for additional information related to our early debt redemptions.
Operating Environment and Trends
The telecommunications industry is highly competitive. The rapid development of new technologies, services and products has
eliminated many of the distinctions among wireless, cable, internet and traditional telephone services and brought new
competitors to our markets. We expect competition to remain intense as traditional and non-traditional participants seek
increased market share.
We believe that our high-quality networks and customer base differentiate us from our competitors and give us the ability to plan
and manage through changing economic and competitive conditions. We remain focused on executing on the fundamentals of
the business: enhancing our networks, maintaining a high-quality customer base, and delivering strong financial and operating
results. We also continue to focus on cost efficiencies in order to have flexibility to adjust to changes in the competitive and
economic environments and increase shareholder value.
The U.S. wireless market has achieved a high penetration of smartphones, which reduces the opportunity for new phone
connection growth for the industry. We expect the wireless industry's customer growth rate to moderate over time in comparison
to historical growth rates, furthering competition for customers. Future revenue growth in the industry is expected to be driven by
expanding existing customer relationships, increasing the number of ways customers can connect with wireless networks and
Verizon 2023 Annual Report on Form 10-K
36
services and increasing the penetration of FWA and connected devices including wearables, tablets and IoT devices. Although
certain use cases for 5G technologies and related ecosystems are in early development stages, we expect that this technology
will provide a significant opportunity for growth in the coming years.
We expect future service revenue growth opportunities to arise from increased access revenue as customer demand for mobile
and FWA 5G connectivity continues to expand and customers shift to higher access plans, driven in part by access to our high
quality network. Additionally, we expect service revenue to benefit from targeted pricing actions and increased connections per
account. Future service revenue growth opportunities will be dependent on expanding the penetration of our services, increasing
the number of ways that our customers can connect with our networks and services and the development of new ecosystems.
With respect to wireless services and equipment, pricing plays an increasingly important role in the wireless competitive
landscape. As the demand for wireless services continues to grow, wireless service providers are offering a range of service
plans at competitive prices. In addition, aggressive device promotions have become more common in recent years in an effort to
encourage customers to switch carriers, as well as retain existing customers. We compete in this area by offering our customers
services and devices that we believe provide significant value for the price. We and other wireless service providers, as well as
equipment manufacturers, offer device payment options, which provide customers with the ability to pay for their device over a
period of time, and some providers offer device leasing arrangements.
For further details on competitive environment and trends, refer to "Business — Competition and Related Trends" in Part I, Item
1 and "Risk Factors — Economic and Strategic Risks — We face significant competition that may reduce our profits" in Part I,
Item 1A of this Annual Report on Form 10-K.
Connection Trends
In our Consumer segment, we are focused on attracting new customers and maintaining our high-quality retail postpaid customer
base by capitalizing on demand for reliable high-speed connectivity. We believe the combination of our wireless network quality
and service and product offerings represents an attractive value proposition and provides a compelling customer experience,
supporting increased penetration of data services. While our Consumer segment experienced diminished connection growth in
recent years, we expect that future connection growth opportunities will be driven by the comparative value we provide to our
customers, as well as our FWA broadband service. In our prepaid business, we expect to continue to operate in a highly
competitive environment while making improvements to achieve long-term growth.
We expect to continue to grow our Fios internet connections as we seek to increase our penetration rates within our Fios service
areas, further supported by the demand for higher speed internet connections. At the same time, we expect continued growth of
FWA connections to complement strong Fios results as demand for broadband services continues to grow. In Fios video, the
business continues to face ongoing pressure as observed throughout the linear television market. We have experienced
continuing access line and DSL losses as customers have switched to alternative technologies such as wireless, VoIP, and cable
for voice and data services, and we expect this trend to continue.
In our Business segment, we offer wireless products and services to business and government customers across the U.S. We
continue to grow our connections while operating in a highly competitive environment. We expect that this connection growth,
combined with our industry-leading network assets, will provide additional opportunities to sell solutions, such as those around
security, private networking and other network connectivity services, advanced communications and professional services.
In addition, in both our Consumer and our Business segments, we expect to support connection growth in part by adding
capacity and further expanding our wireless coverage, and by continuing the build-out of our 5G network.
Service Revenue Trends
In our Consumer segment, we expect continued growth in our wireless service revenue, driven by targeted pricing actions,
migrations to higher priced plans, and increases in FWA connections. We expect Fios revenue to benefit in 2024 as growth in our
broadband customer base and an increased demand for higher speed internet connections offset the impact of the shift from
bundled wireline services to standalone internet service.
In our Business segment, we expect wireless service revenue to expand, driven by growth from an increase in wireless volumes
and FWA contributions. We expect that Fios, through increased penetration, will also contribute to revenue growth and that
legacy traditional wireline services will continue to face secular pressures.
Cash Flow Trends
We are focused on achieving profitable growth as we continue to deliver strong revenues and undertake initiatives to reduce our
overall cost structure. We expect that our ability to generate cash flows will benefit from our expected service revenue growth
and our anticipated reduction in capital expenditures. See "Liquidity and Capital Resources" for additional information on our
capital program.
37
Verizon 2023 Annual Report on Form 10-K
Liquidity and Capital Resources
We use the net cash generated from our operations to fund expansion and modernization of our networks, service and repay
external financing, pay dividends, invest in new businesses and spectrum and, when appropriate, buy back shares of our
outstanding common stock. Our sources of funds, primarily from operations and, to the extent necessary, from external financing
arrangements, are sufficient to meet ongoing operating and investing requirements over the next 12 months and beyond.
Our cash and cash equivalents balance is $2.1 billion as of December 31, 2023. Our cash and cash equivalents are held both
domestically and internationally, and are invested to maintain principal and provide liquidity. See "Market Risk" for additional
information regarding our foreign currency risk management strategies.
We expect that our capital spending requirements will continue to be financed primarily through internally generated funds. Debt
or equity financing may be needed to fund additional investments or development activities, or to maintain an appropriate capital
structure to ensure our financial flexibility. Our external financing arrangements include credit facilities and other bank lines of
credit, an active commercial paper program, vendor financing arrangements, issuances of registered debt or equity securities,
U.S. retail medium-term notes and other securities that are privately-placed or offered overseas. In addition, we monetize certain
receivables through asset-backed debt transactions.
Capital Expenditures
Our 2024 capital program includes capital to fund advanced networks and services, including expanding and adding capacity
and density to our core networks, deploying C-Band spectrum, and advancing our network architecture. We anticipate cash
requirements for our 2024 capital program to be between $17.0 billion and $17.5 billion.
Contractual Obligations and Commitments
We have various contractual obligations and commitments. The following represent our anticipated material cash requirements
from known contractual and other obligations as of December 31, 2023:
•
Long-term debt, including current maturities, commitments of $149.2 billion, of which $12.3 billion (including $3.6 billion
of unsecured debt) are expected to be due within the next twelve months. Related interest payments are $68.6 billion,
of which $5.9 billion, are expected to be due within the next twelve months. Items included in long-term debt with
variable coupon rates exclude unamortized debt issuance costs, and are described in Note 7 to the consolidated
financial statements.
• Operating lease obligations of $28.4 billion and Finance lease obligations of $2.3 billion, of which $4.8 billion and
$793 million, respectively, are expected to be due within the next twelve months. In addition, Verizon has an obligation
of $378 million representing future minimum payments under the sublease arrangement for our cell towers, of which
$302 million is expected to be due within the next twelve months. See Note 6 to the consolidated financial statements
for additional information.
• Unconditional purchase obligations, with terms in excess of one year, amount to $21.7 billion, of which $8.9 billion is
expected to be due within the next twelve months. Items included in unconditional purchase obligations are primarily
commitments to purchase network equipment, software and services, content, marketing services and other items
which will be used or sold in the ordinary course of business. These amounts do not represent our entire anticipated
purchases in the future, but represent only those items that are the subject of contractual obligations. We also purchase
products and services as needed with no firm commitment. See Note 16 to the consolidated financial statements for
additional information.
Estimated commitments for our allocable share of clearing costs incurred by, and incentive payments due to, the
incumbent license holders associated with C-Band wireless spectrum acquired under Auction 107. The remaining
commitment is estimated to be approximately $400 million, all of which is expected to be due within the next twelve
months.
•
• Other long-term liabilities, including current maturities, of $4.0 billion, of which approximately $770 million is expected to
be due within the next twelve months. Other long-term liabilities represent estimated postretirement benefit and qualified
pension plan contributions. Qualified pension plan contributions include estimated minimum funding contributions. We
expect that there will be no required pension funding through the end of 2024, subject to changes in market conditions.
Postretirement benefit payments include future postretirement benefit payments. These estimated amounts: (1) are
subject to change based on changes to assumptions and future plan performance, which could impact the timing and/or
amounts of these payments; and (2) exclude expectations beyond 5 years due to uncertainty of the timing and amounts.
• We are not able to make a reasonable estimate of when the unrecognized tax benefits balance of $2.7 billion and
related interest and penalties will be settled with the respective taxing authorities until the related tax audits are further
developed or resolved. See Note 12 to the consolidated financial statements for additional information.
Verizon 2023 Annual Report on Form 10-K
38
Consolidated Financial Condition
Years Ended December 31,
Cash Flows Provided By (Used In)
Operating activities
Investing activities
Financing activities
Decrease in cash, cash equivalents and restricted cash
Cash Flows Provided By Operating Activities
(dollars in millions)
2022
2023
$
$
37,475 $
(23,432)
(14,657)
(614) $
37,141
(28,662)
(8,529)
(50)
Our primary source of funds continues to be cash generated from operations. Net cash provided by operating activities increased
$334 million during 2023 compared to 2022 primarily due to an improvement in working capital. The improvement in working
capital was primarily driven by changes in accounts payable as a result of timing, changes in inventory levels and fewer phone
upgrades compared to the prior year. This increase in net cash provided by operating activities was partially offset by higher cash
interest payments and a decrease in earnings. During 2023, we made a discretionary contribution of $200 million to one of our
qualified pension plans. Additionally, we expect that there will be no required pension funding through the end of 2024, subject to
changes in market conditions.
Cash Flows Used In Investing Activities
Capital Expenditures
Capital expenditures continue to relate primarily to the use of capital resources to enhance the operating efficiency and
productivity of our networks, maintain our existing infrastructure, facilitate the introduction of new products and services and
enhance responsiveness to competitive challenges.
Capital expenditures, including capitalized software, were $18.8 billion and $23.1 billion for 2023 and 2022, respectively. Capital
expenditures decreased approximately $4.3 billion during 2023, compared to 2022, primarily due to the completion of our
accelerated $10 billion C-Band deployment program in the first half of 2023. See "Global Network and Technology" for more
details.
Acquisitions of Wireless Licenses
During 2023 and 2022, we made payments of $4.3 billion and $1.6 billion, respectively, for obligations related to clearing costs
and accelerated clearing incentives associated with Auction 107.
During 2023 and 2022, we recorded capitalized interest related to wireless licenses of $1.4 billion and $1.7 billion, respectively.
In March 2022, Verizon signed agreements with satellite operators in which operators agreed to clear C-Band spectrum in certain
markets and frequencies ahead of the previously expected timeframe. During 2022, Verizon made payments of approximately
$310 million associated with these agreements.
Collateral Receipts (Payments) Related to Derivative Contracts, Net
During 2023, we received return of collateral posted of $880 million related to derivative contracts, net of payments. During 2022,
we made collateral payments of $2.3 billion related to derivative contracts, net of receipts. See Note 9 to the consolidated
financial statements for additional information.
Cash Received Related to Acquisitions of Businesses, Net
On November 23, 2021 (the Acquisition Date), we completed the acquisition of TracFone Wireless, Inc. (TracFone). During 2022,
Verizon received net cash proceeds of $248 million for the final settlement of working capital, which was included in our
consideration as of the Acquisition Date. See Note 3 to the consolidated financial statements for additional information.
Cash Flows Used In Financing Activities
We seek to maintain a mix of fixed and variable rate debt to lower borrowing costs within reasonable risk parameters and to
protect against earnings and cash flow volatility resulting from changes in market conditions. During 2023 and 2022, net cash
used in financing activities was $14.7 billion and $8.5 billion, respectively.
2023
During 2023, our net cash used in financing activities of $14.7 billion was primarily driven by $11.0 billion used for dividend
payments, $10.6 billion used for repayments and repurchases of long-term borrowings (secured and unsecured) as well as
finance lease obligations and $1.5 billion used for other financing activities. These cash flows used in financing activities were
39
Verizon 2023 Annual Report on Form 10-K
partially offset by $8.6 billion provided by proceeds from long-term borrowings, which included $6.6 billion of proceeds from our
asset-backed debt transactions.
Proceeds from and Repayments and Repurchases of Long-Term Borrowings
At December 31, 2023, our total debt increased to $150.7 billion compared to $150.6 billion at December 31, 2022. Our effective
interest rate was 4.9% and 3.7% during the years ended December 31, 2023 and 2022, respectively. We have entered into
interest rate swaps to achieve a targeted mix of fixed and variable rate debt, managing our exposure to changes in interest rates.
See also "Market Risk" and Note 7 to the consolidated financial statements for additional information.
At December 31, 2023, approximately $33.7 billion, or 21.7%, of the aggregate principal amount of our total debt portfolio
consisted of foreign denominated debt, primarily Euro and British Pound Sterling. We have entered into cross currency swaps on
our foreign denominated debt in order to fix our future interest and principal payments in U.S. dollars and mitigate the impact of
foreign currency transaction gains or losses. See "Market Risk" for additional information.
Verizon may acquire debt securities issued by Verizon and its affiliates through open market purchases, redemptions, privately
negotiated transactions, tender offers, exchange offers, or otherwise, upon such terms and at such prices as Verizon may from
time to time determine, for cash or other consideration.
Other, Net
Other, net financing activities during 2023 includes $302 million in payments made under the sublease arrangement for our cell
towers, $257 million in payments for TracFone contingent consideration and $252 million in payments related to vendor financing
arrangements. See Note 3 to the consolidated financial statements for additional information on the TracFone contingent
considerations.
Dividends
The Board of Directors of the Company assesses the level of our dividend payments on a periodic basis taking into account such
factors as long-term growth opportunities, internal cash requirements and the expectations of our shareholders. During the third
quarter of 2023, our Board of Directors increased our quarterly dividend payment by 1.9% to $0.6650 from $0.6525 per share in
the preceding quarter. This is the seventeenth consecutive year that Company’s Board of Directors has approved a quarterly
dividend increase.
As in prior periods, dividend payments were a significant use of capital resources. During 2023, we paid $11.0 billion in
dividends.
2022
During 2022, our net cash used in financing activities of $8.5 billion was primarily driven by $13.6 billion used for repayments,
redemptions and repurchases of long-term borrowings (secured and unsecured) as well as finance lease obligations,
$10.8 billion used for dividend payments and $2.1 billion used for other financing activities. These cash flows used in financing
activities were partially offset by $17.8 billion provided by proceeds from long-term borrowings, which included $10.7 billion of
proceeds from our asset-backed debt transactions.
Proceeds from and Repayments, Redemptions, and Repurchases of Long-Term Borrowings
At December 31, 2022, our total debt was $150.6 billion. During the year ended December 31, 2022, our effective interest rate
was 3.7%. We have entered into interest rate swaps to achieve a targeted mix of fixed and variable rate debt, managing our
exposure to changes in interest rates. See "Market Risk" and Note 7 to the consolidated financial statements for additional
information.
At December 31, 2022, approximately $34.0 billion, or 22.5%, of the aggregate principal amount of our total debt portfolio
consisted of foreign denominated debt, primarily Euro and British Pound Sterling. We have entered into cross currency swaps on
our foreign denominated debt in order to fix our future interest and principal payments in U.S. dollars and mitigate the impact of
foreign currency transaction gains or losses. See "Market Risk" for additional information.
Other, Net
Other, net financing activities during 2022 includes the cash consideration payments to acquire additional interests in certain
controlled wireless partnerships and early debt redemption costs. See Note 15 to the consolidated financial statements for
additional information on the early debt redemption costs.
Dividends
During the third quarter of 2022, our Board of Directors increased our quarterly dividend payment by 2.0% to $0.6525 per share.
During 2022, we paid $10.8 billion in dividends.
Verizon 2023 Annual Report on Form 10-K
40
Asset-Backed Debt
As of December 31, 2023, the carrying value of our asset-backed debt was $22.2 billion. Our asset-backed debt includes Asset-
Backed Notes (ABS Notes) issued to third-party investors (Investors) and loans (ABS Financing Facilities) received from banks
and their conduit facilities (collectively, the Banks). Our consolidated asset-backed debt bankruptcy remote legal entities (each,
an ABS Entity, or collectively, the ABS Entities) issue the debt or are otherwise party to the transaction documentation in
connection with our asset-backed debt transactions. Under the terms of our asset-backed debt, Cellco Partnership (Cellco), a
wholly-owned subsidiary of the Company, and certain other Company affiliates (collectively, the Originators) transfer device
payment plan agreement receivables and certain other receivables (collectively referred to as certain receivables) or a
participation interest in certain other receivables to one of the ABS Entities, which in turn transfers such receivables and
participation interest to another ABS Entity that issues the debt. Verizon entities retain the equity interests and residual interests,
as applicable, in the ABS Entities, which represent the rights to all funds not needed to make required payments on the asset-
backed debt and other related payments and expenses.
Our asset-backed debt is secured by the transferred receivables and participation interest, and future collections on such
receivables and underlying receivables related to such participation interest. These receivables and participation interest
transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of
asset-backed debt and expenses related thereto, payments to the Originators in respect of additional transfers of certain
receivables and participation interest, and other obligations arising from our asset-backed debt transactions, and will not be
available to pay other obligations or claims of Verizon’s creditors until the associated asset-backed debt and other obligations are
satisfied. The Investors or Banks, as applicable, which hold our asset-backed debt have legal recourse to the assets securing the
debt, but do not have any recourse to Verizon with respect to the payment of principal and interest on the debt. Under a parent
support agreement, the Company has agreed to guarantee certain of the payment obligations of Cellco and the Originators to the
ABS Entities.
Cash collections on the receivables and on the underlying receivables related to the participation interest collateralizing our
asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the
segregated accounts are considered restricted cash and are included in Prepaid expenses and other and Other assets in our
consolidated balance sheets.
Proceeds from our asset-backed debt transactions are reflected in Cash flows from financing activities in our consolidated
statements of cash flows. The asset-backed debt issued is included in Debt maturing within one year and Long-term debt in our
consolidated balance sheets.
See Note 7 to the consolidated financial statements for additional information.
Long-Term Credit Facilities
Facility
Capacity
At December 31, 2023
Principal
Amount
Outstanding
Unused
Capacity
$
(dollars in millions)
Verizon revolving credit facility(1)
Various export credit facilities(2)
Total
(1) The revolving credit facility does not require us to comply with financial covenants or maintain specified credit ratings, and it
permits us to borrow even if our business has incurred a material adverse change. The revolving credit facility provides for the
issuance of letters of credit. As of December 31, 2023, there have been no drawings against the $9.5 billion revolving credit
facility since its inception.
Maturities
2026
2024 - 2031
11,000
20,500 $
—
9,457 $
6,618
6,618
9,500 $
9,457 $
—
(2) During 2023 and 2022, we drew down $1.0 billion and $3.0 billion, respectively, from these facilities. Borrowings under certain
of these facilities are amortized semi-annually in equal installments up to the applicable maturity dates. Maturities reflect
maturity dates of principal amounts outstanding. Any amounts borrowed under these facilities and subsequently repaid cannot
be reborrowed.
$
Common Stock
Common stock has been used from time to time to satisfy some of the funding requirements of employee and shareholder plans.
During the years ended December 31, 2023 and 2022, we issued 4.4 million and 2.1 million shares of common stock from
treasury stock, which had aggregate values of $192 million and $91 million, respectively.
In February 2020, the Board of Directors of the Company authorized a share buyback program to repurchase up to 100 million
shares of our common stock. The program will terminate when the aggregate number of shares purchased reaches 100 million,
or a new share repurchase plan superseding the current plan is authorized, whichever is sooner. The program permits Verizon to
41
Verizon 2023 Annual Report on Form 10-K
repurchase shares over time, with the amount and timing of repurchases depending on market conditions and corporate needs.
There were no repurchases of common stock during 2023 and 2022 under our authorized share buyback program.
Credit Ratings
Verizon’s credit ratings did not change in 2023 or 2022.
Securities ratings assigned by rating organizations are expressions of opinion and are not recommendations to buy, sell or hold
securities. A securities rating is subject to revision or withdrawal at any time by the assigning rating organization. Each rating
should be evaluated independently of any other rating.
Covenants
Our credit agreements contain covenants that are typical for large, investment grade companies. These covenants include
requirements to pay interest and principal in a timely fashion, pay taxes, maintain insurance with responsible and reputable
insurance companies, preserve our corporate existence, keep appropriate books and records of financial transactions, maintain
our properties, provide financial and other reports to our lenders, limit pledging and disposition of assets and mergers and
consolidations, and other similar covenants.
We and our consolidated subsidiaries are in compliance with all of our restrictive covenants in our debt agreements.
Change In Cash, Cash Equivalents and Restricted Cash
Our Cash and cash equivalents at December 31, 2023 totaled $2.1 billion, a $540 million decrease compared to December 31,
2022, primarily as a result of the factors discussed above.
Restricted cash at December 31, 2023 totaled $1.4 billion, a $74 million decrease compared to restricted cash at December 31,
2022, primarily related to cash collections on certain receivables and on the underlying receivables related to the participation
interest that are required at certain specified times to be placed into segregated accounts.
Free Cash Flow
Free cash flow is a non-GAAP financial measure that reflects an additional way of viewing our liquidity that, we believe, when
viewed with our GAAP results, provides management, investors and other users of our financial information with a more
complete understanding of factors and trends affecting our cash flows. Free cash flow is calculated by subtracting capital
expenditures (including capitalized software) from net cash provided by operating activities. We believe it is a more conservative
measure of cash flow since capital expenditures are necessary for ongoing operations. Free cash flow has limitations due to the
fact that it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does
not incorporate payments made on finance lease obligations or cash payments for business acquisitions or wireless licenses.
Therefore, we believe it is important to view free cash flow as a complement to our entire consolidated statements of cash flows.
The following table reconciles net cash provided by operating activities to free cash flow:
Years Ended December 31,
Net cash provided by operating activities
Less Capital expenditures (including capitalized software)
Free cash flow
(dollars in millions)
2022
37,141
23,087
14,054
2023
37,475 $
18,767
18,708 $
$
$
The increase in free cash flow during 2023 is a reflection of the increase in operating cash flows, as well as the decrease in
capital expenditures, both of which are discussed above.
Employee Benefit Plans Funded Status and Contributions
Employer Contributions
We operate numerous qualified and nonqualified pension plans and other postretirement benefit plans. These plans primarily
relate to our domestic business units. During 2023, we made a discretionary contribution of $200 million to one of our qualified
pension plans. We made no discretionary contributions to our qualified pension plans in 2022. During 2023 and 2022, we made
contributions of $52 million and $53 million to our nonqualified pension plans, respectively.
Our overall investment strategy is to achieve a mix of assets that allows us to meet projected benefit payments while taking into
consideration risk and return. In an effort to reduce the risk of our portfolio strategy and better align assets with liabilities, we
have adopted a liability driven pension strategy that seeks to better match the interest rate sensitivity of the liability hedging
assets with the interest rate sensitivity of the liability. We expect that the strategy will reduce the likelihood that assets will decline
at a time when liabilities increase (referred to as liability hedging), with the goal to reduce the risk of underfunding to the plan and
its participants and beneficiaries. Over time, as the asset allocation shifts to more liability hedging assets, this strategy will
Verizon 2023 Annual Report on Form 10-K
42
generally result in lower expected asset returns. For 2024, we expect no required qualified pension plan contributions and
insignificant nonqualified pension plan contributions.
Contributions to our other postretirement benefit plans generally relate to payments for benefits on an as-incurred basis since
these other postretirement benefit plans do not have funding requirements similar to the pension plans. We contributed
$936 million and $692 million to our other postretirement benefit plans in 2023 and 2022, respectively. Contributions to our other
postretirement benefit plans are estimated to be approximately $770 million in 2024.
Leasing Arrangements
See Note 6 to the consolidated financial statements for additional information related to leasing arrangements.
Guarantees
We guarantee the debentures of our operating telephone company subsidiaries. See Note 7 to the consolidated financial
statements for additional information.
In connection with the execution of agreements for the sale of businesses and investments, Verizon ordinarily provides
representations and warranties to the purchasers pertaining to a variety of nonfinancial matters, such as ownership of the
securities being sold, as well as financial losses. See Note 16 to the consolidated financial statements for additional information.
As of December 31, 2023, letters of credit totaling approximately $803 million, which were executed in the normal course of
business and support several financing arrangements and payment obligations to third parties, were outstanding. See Note 16 to
the consolidated financial statements for additional information.
Other Future Obligations
As of December 31, 2023, Verizon had 26 renewable energy purchase agreements (REPAs) with third parties. See Note 16 to
the consolidated financial statements for additional information. Under the REPAs, we plan to purchase up to an aggregate of
approximately 3.5 gigawatts of capacity across multiple states.
Critical Accounting Estimates
Critical Accounting Estimates
A summary of the critical accounting estimates used in preparing our financial statements are as follows:
Wireless Licenses and Goodwill
Wireless licenses and goodwill are a significant component of our consolidated assets. Both our wireless licenses and goodwill
are treated as indefinite-lived intangible assets and, therefore are not amortized, but rather are tested for impairment annually in
the fourth fiscal quarter, unless there are events requiring an earlier assessment or changes in circumstances during an interim
period suggesting impairment indicators are present. We believe our estimates and assumptions are reasonable and represent
appropriate marketplace considerations as of the valuation date. Although we use consistent methodologies in developing the
assumptions and estimates underlying the fair value calculations used in our impairment tests, these estimates and assumptions
are uncertain by nature, may change over time and can vary from actual results. It is possible that in the future there may be
changes in our estimates and assumptions, including the timing and amount of future cash flows, margins, growth rates, market
participant assumptions, comparable benchmark companies and related multiples and discount rates, which could result in
different fair value estimates. Significant and adverse changes to any one or more of the above-noted estimates and
assumptions could result in an impairment to our wireless licenses and goodwill impairment for one or more of our reporting
units.
Wireless Licenses
The carrying value of our wireless licenses was approximately $155.7 billion as of December 31, 2023. We aggregate our
wireless licenses into one single unit of accounting, as we utilize our wireless licenses on an integrated basis as part of our
nationwide wireless network. Our wireless licenses provide us with the exclusive right to utilize certain radio frequency spectrum
to provide wireless communication services. There are currently no legal, regulatory, contractual, competitive, economic or other
factors that limit the useful life of our wireless licenses.
We test our wireless licenses for potential impairment annually or more frequently if impairment indicators are present. We have
the option to first perform a qualitative assessment to determine whether it is necessary to perform a quantitative impairment
test. However, we may elect to bypass the qualitative assessment in any period and proceed directly to performing the
quantitative impairment test. It is our policy to perform quantitative impairment assessment at least every three years.
During the fourth quarter of 2023 and 2022, we performed a qualitative impairment assessment as our annual impairment test to
determine whether it is more likely than not that the fair value of our wireless licenses was less than the carrying amount. As part
of our qualitative assessment we considered several factors including the business enterprise value of our combined wireless
43
Verizon 2023 Annual Report on Form 10-K
business, macroeconomic conditions (including changes in interest rates and discount rates), industry and market considerations
(including industry revenue and EBITDA margin results, projections and recent merger and acquisition activity), the recent and
projected financial performance of our combined wireless business as a whole, as well as other factors including the result of our
last quantitative assessment. Our annual impairment tests in 2023 and 2022 indicated that it is more likely than not that the fair
value of our wireless licenses remained above their carrying value and, therefore, did not result in an impairment.
Goodwill
At December 31, 2023, the balance of our goodwill was approximately $22.8 billion, of which $21.2 billion was in our Consumer
reporting unit and $1.7 billion was in our Business reporting unit.
To determine if goodwill is potentially impaired, we have the option to perform a qualitative assessment to determine whether it is
more likely than not that the fair value of a reporting unit is less than its carrying value. If we elect not to conduct the qualitative
assessment or if indications of a potential impairment exist, the determination of whether an impairment has occurred requires
the fair value of each reporting unit to be assessed. It is our policy to perform quantitative impairment assessments at least every
three years.
Under the qualitative assessment, we consider several factors, including the business enterprise value of the reporting unit from
the last quantitative test and the excess of fair value over carrying value from this test, macroeconomic conditions (including
changes in interest rates and discount rates), industry and market considerations (including industry revenue and EBITDA
margin results, projections and recent merger and acquisition activity), the recent and projected financial performance of the
reporting unit, as well as other factors.
Under the quantitative assessment, the fair value of the reporting unit is calculated using a market approach and a discounted
cash flow method, as a form of the income approach. The market approach includes the use of comparative multiples to
complement discounted cash flow results. The discounted cash flow method is based on the present value of two components-
projected cash flows and a terminal value. The terminal value represents the expected normalized future cash flows of the
reporting unit beyond the cash flows from the discrete projection period. The fair value of the reporting unit is calculated based
on the sum of the present value of the cash flows from the discrete period and the present value of the terminal value. The
discount rate represents our estimate of the weighted-average cost of capital, or expected return, that a marketplace participant
would have required as of the valuation date. The application of our goodwill impairment test requires key assumptions
underlying our valuation model. The discounted cash flow analysis factors in assumptions on discount rates and terminal growth
rates to reflect risk profiles of key strategic revenue and cost initiatives, as well as revenue and EBITDA growth relative to history
and market trends and expectations. The market multiples approach reflects significant judgment involved in the selection of
comparable public company multiples and benchmarks. The selection of companies and multiples is influenced by differences in
growth and profitability, and volatility in market prices of peer companies. These valuation inputs are inherently judgmental, and
an adverse change in one or a combination of these inputs could result in a goodwill impairment loss.
During the fourth quarter of 2023, we performed a qualitative impairment assessment for our Consumer reporting unit. Our
qualitative assessment indicated that it was more likely than not that the fair value of our Consumer reporting unit exceeded its
carrying value and, therefore, did not result in an impairment.
During the fourth quarter of 2023, we performed a quantitative impairment assessment for our Business reporting unit given the
low excess of fair value over carrying value identified in our prior annual impairment assessment and increased competitive and
market pressures experienced throughout 2023. These pressures have resulted in lower projected cash flows primarily driven by
secular declines in wireline services and products across our Business customer groups. In connection with Verizon’s annual
budget process in the fourth quarter of 2023, leadership completed a comprehensive five-year strategic planning review of our
Business reporting unit resulting in declines in financial projections driven by market dynamics as compared to the prior year five-
year strategic planning cycle. The revised projections were used as a key input into the Business reporting unit’s annual goodwill
impairment test performed in the fourth quarter. In addition, changes in the macroeconomic environment, including interest rate
and inflationary pressures have also impacted the fair value of the reporting unit.
We applied a combination of a market approach and a discounted cash flow method reflecting current assumptions and inputs,
including our revised projections, discount rate and expected growth rates, which resulted in the determination that the fair value
of our Business reporting unit was less than its carrying amount. As a result, in the fourth quarter of 2023 we recorded a non-
cash goodwill impairment charge of approximately $5.8 billion ($5.8 billion after-tax) in our consolidated statement of income.
The goodwill balance of the Business reporting unit was approximately $7.5 billion prior to the occurrence of this impairment
charge. In our Business reporting unit, if all other assumptions were to remain unchanged, we expect the impairment charge
would increase by approximately $1.0 billion if the terminal value growth rate declined by 50 basis points, or $1.3 billion if the
discount rate increased by 50 basis points, or $1.1 billion if the EBITDA margin decreased by 100 basis points. See Note 4 to the
consolidated financial statements for additional information.
At December 31, 2023, the balance of goodwill in our Business reporting unit, after the goodwill impairment charge, was
$1.7 billion. Though we have determined that no further impairment exists for our Business reporting unit as of December 31,
2023, a future projected sustained decline in the reporting unit's revenues and earnings could have a significant negative impact
on its fair value and could result in future impairment charges. Such a decline could be driven by, among other things: (1)
Verizon 2023 Annual Report on Form 10-K
44
decreases in sales volumes or long-term growth rate as a result of competitive pressures or other factors; or (2) the inability to
achieve or delays in achieving the goals in our strategic initiatives. Adverse changes to macroeconomic factors, such as
increases in long-term interest rates, would also negatively impact the fair value of the reporting unit.
At December 31, 2022, the balance of our goodwill was approximately $28.7 billion, of which $21.1 billion was in our Consumer
reporting unit and $7.5 billion was in our Business reporting unit. During the fourth quarter of 2022, we performed a qualitative
impairment assessment for our Consumer reporting unit. Our qualitative assessment indicated that it was more likely than not
that the fair value of our Consumer reporting unit exceeded its carrying value and, therefore, did not result in an impairment.
During the fourth quarter of 2022, we performed a quantitative impairment assessment for our Business reporting unit. At the
goodwill impairment measurement date of October 31, 2022, our quantitative assessment indicated that the fair value for our
Business reporting unit exceeded its carrying amount by approximately 8% and, therefore, did not result in an impairment.
Pension and Other Postretirement Benefit Plans
We maintain benefit plans for most of our employees, including, for certain employees, pension and other postretirement benefit
plans. Benefit plan assumptions, including the discount rate used, the long-term rate of return on plan assets, the determination
of the substantive plan and health care trend rates are periodically updated and impact the amount of benefit plan income,
expense, assets and obligations. Changes to one or more of these assumptions could significantly impact our accounting for
pension and other postretirement benefits.
In determining pension and other postretirement obligations, the weighted-average discount rate was selected to approximate
the composite interest rates available on a selection of high-quality bonds available in the market at December 31, 2023. The
bonds selected had maturities that coincided with the time periods during which benefit payments are expected to occur, were
non-callable (or callable with certain selection criteria met) and available in sufficient quantities to ensure marketability (at least
$300 million par outstanding). Bond yields are subject to uncertainty for a number of reasons including corporate performance,
credit rating downgrades and upgrades, government fiscal policy decisions, and general market volatility. The expected long-term
rates of return on plan assets used in determining Verizon’s pension and other postretirement obligations are based on
expectations for future investment returns for the plans’ asset allocation. The rates are subject to uncertainty for a number of
reasons including corporate performance, credit ratings, monetary policy, inflation, exchange rates, investor behavior and
general market volatility.
A sensitivity analysis of the impact of changes in the discount rate and the long-term rate of return on plan assets on the benefit
obligations and expense (income) recorded, as well as an increase or a decrease in the actual versus expected return on plan
assets as of December 31, 2023 and for the year then ended pertaining to Verizon’s pension and postretirement benefit plans, is
provided in the table below. The amounts in the table below related to discount rate changes are gross impacts on benefit
obligations and expense, and do not reflect changes in asset values as a result of interest rate changes, for which our pension
plan is highly hedged.
(dollars in millions)
Pension plans discount rate
Rate of return on pension plan assets
Postretirement plans discount rate
Rate of return on postretirement plan assets
Percentage point
change
Increase/(decrease) at
December 31, 2023
(691)
757
(131)
131
(520)
564
(4)
4
+0.50 $
-0.50
+1.00
-1.00
+0.50
-0.50
+1.00
-1.00
In addition to our liability hedging assets, we also employ an interest rate hedging strategy to further minimize the impact of
discount rate changes on the funded ratio of the pension plan. While the target hedge ratio varies depending on the funded
status of the plan and the level of interest rates, the target hedge ratio was 80% at December 31, 2023, significantly limiting
volatility.
The annual measurement date for both our pension and other postretirement benefits is December 31. We use the full yield
curve approach to estimate the interest cost component of net periodic benefit cost for pension and other postretirement benefits.
The full yield curve approach refines our estimate of interest cost by applying the individual spot rates from a yield curve
composed of the rates of return on several hundred high-quality fixed income corporate bonds available at the measurement
date. These individual spot rates align with the timing of each future cash outflow for benefit payments and therefore provide a
more precise estimate of interest cost.
See Note 11 to the consolidated financial statements for additional information.
45
Verizon 2023 Annual Report on Form 10-K
Income Taxes
Our current and deferred income taxes and associated valuation allowances are impacted by events and transactions arising in
the normal course of business as well as in connection with the adoption of new accounting standards, changes in tax laws and
rates, acquisitions and dispositions of businesses and non-recurring items. As a global commercial enterprise, our income tax
rate and the classification of income taxes can be affected by many factors, including estimates of the timing and realization of
deferred income tax assets and the timing and amount of income tax payments. We account for tax benefits taken or expected to
be taken in our tax returns in accordance with the accounting standard relating to the uncertainty in income taxes, which requires
the use of a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. We
review and adjust our liability for unrecognized tax benefits based on our best judgment given the facts, circumstances and
information available at each reporting date. To the extent that the final outcome of these tax positions is different than the
amounts recorded, such differences may impact income tax expense and actual tax payments. We recognize any interest and
penalties accrued related to unrecognized tax benefits in income tax expense. Actual tax payments may materially differ from
estimated liabilities as a result of changes in tax laws as well as unanticipated transactions impacting related income tax
balances. See Note 12 to the consolidated financial statements for additional information.
Property, Plant and Equipment
Our Property, plant and equipment balance represents a significant component of our consolidated assets. We record property,
plant and equipment at cost. We depreciate property, plant and equipment on a straight-line basis over the estimated useful life
of the assets. The estimated useful life is subject to change due to a variety of factors such as change in asset capacity or
performance, technical obsolescence, market expectations and competition impacts. In connection with our ongoing review of
the estimated useful lives of property, plant and equipment during 2023, we determined that the estimated useful life of our
property, plant and equipment would remain unchanged. We expect that a one year increase in estimated useful lives of our
property, plant and equipment would result in a decrease to our 2023 depreciation expense of $2.3 billion and that a one year
decrease would result in an increase of approximately $3.6 billion in our 2023 depreciation expense.
Accounts Receivable
Accounts receivable are recorded at amortized cost less an allowance for credit losses that are not expected to be recovered.
The gross amount of accounts receivable and corresponding allowance for credit losses are presented separately in the
consolidated balance sheets. We maintain allowances for credit losses resulting from the expected failure or inability of our
customers to make required payments. We recognize the allowance for credit losses at inception and reassess quarterly based
on management’s expectation of the asset’s collectability. The allowance is based on multiple factors including historical
experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic
conditions, as well as management’s expectations of conditions in the future, as applicable. The impact of these factors on the
allowance involves significant level of estimation and is subject to uncertainty. Our allowance for credit losses is based on
management’s assessment of the collectability of assets pooled together with similar risk characteristics.
We record an allowance to reduce the receivables to the amount that is expected to be collectible. For device payment plan
agreement receivables, we record bad debt expense based on a default and loss calculation using our proprietary loss model.
The expected loss rate is determined based on customer credit scores and other qualitative factors as noted above. The loss
rate is assigned individually on a customer by customer basis and the custom credit scores are then aggregated by vintage and
used in our proprietary loss model to calculate the weighted-average loss rate used for determining the allowance balance. The
weighted-average expected loss rate increased 1.36% at December 31, 2023 as compared to at December 31, 2022. We expect
that an increase or decrease of 0.25% in the weighted-average loss rate would result in a change of $111 million in bad debt
expense.
We monitor the collectability of our wireless service receivables as one overall pool. Wireline service receivables are
disaggregated and pooled by the following customer groups: consumer, small and medium business, enterprise, public sector
and wholesale. For wireless service receivables and wireline consumer and small and medium business receivables, the
allowance is calculated based on a 12 month rolling average write-off balance multiplied by the average life-cycle of an account
from billing to write-off. The risk of loss is assessed over the contractual life of the receivables and is adjusted based on the
historical loss amounts for current and future conditions based on management’s qualitative considerations. For enterprise,
public sector and wholesale wireline receivables, the allowance for credit losses is based on historical write-off experience and
individual customer credit risk, as applicable. We consider multiple factors in determining the allowance as discussed above.
If there is a deterioration of our customers’ financial condition or if future actual default rates on receivables in general differ from
those currently anticipated, we may have to adjust our allowance for credit losses, which would affect earnings in the period the
adjustments are made. See Note 8 to the consolidated financial statements for additional information.
Verizon 2023 Annual Report on Form 10-K
46
Acquisitions and Divestitures
Spectrum License Transactions
From time to time we enter into agreements to buy, sell or exchange spectrum licenses. We believe these spectrum license
transactions have allowed us to continue to enhance the reliability of our wireless network while also resulting in a more efficient
use of spectrum.
In February 2021, the Federal Communications Commission (FCC) concluded Auction 107 for C-Band wireless spectrum.
Verizon paid $45.5 billion for the licenses it won, of which $44.6 billion was paid in the first quarter of 2021. In accordance with
the rules applicable to the auction, Verizon is required to make payments for our allocable share of clearing costs incurred by,
and incentive payments due to, the incumbent license holders associated with the auction, which are estimated to be $7.6 billion.
During 2023 and 2022, we made payments of $4.3 billion and $1.6 billion, respectively, for obligations related to clearing costs
and accelerated clearing incentives. During 2021, we made payments of $1.3 billion primarily related to certain obligations for
projected clearing costs. We expect to continue to make payments of approximately $400 million for the remaining obligations
through 2024. The final timing and amounts of these payments could differ based on the actual amount of incumbent holders’
reimbursement claims and the speed with which those claims are approved and processed. The carrying value of the wireless
spectrum won in Auction 107 consists of all payments required to participate and purchase licenses in the auction, including
Verizon’s allocable share of clearing costs incurred by, and incentive payments due to, the incumbent license holders associated
with the auction that we are obligated to pay in order to acquire the licenses, as well as capitalized interest to the extent
qualifying activities have occurred.
In March 2022, Verizon signed agreements with satellite operators in which operators agreed to clear C-Band spectrum in certain
markets and frequencies ahead of the previously expected timeframe. During 2022, Verizon incurred costs associated with these
agreements of approximately $340 million, of which $310 million was paid as of December 31, 2022 and the remainder was paid
in 2023. This early clearance accelerated Verizon's access to more spectrum in a number of key markets to support its 5G
network initiatives.
See Note 3 to the consolidated financial statements for additional information regarding our spectrum license transactions.
TracFone Wireless, Inc.
In November 2021, we completed the acquisition of TracFone. Verizon acquired all of TracFone's outstanding stock in exchange
for approximately $3.5 billion in cash, net of cash acquired and working capital and other adjustments, 57,596,544 shares of
common stock of the Company valued at approximately $3.0 billion, and up to an additional $650 million in future cash
contingent consideration related to the achievement of certain performance measures and other commercial arrangements. The
fair value of the common stock was determined on the basis of its closing market price on the Acquisition Date. The estimated
fair value of the contingent consideration as of the Acquisition Date was approximately $560 million and represents a Level 3
measurement. The contingent consideration payable is based on the achievement of certain revenue and operational targets,
measured over a two year earn out period. During 2023 and 2022, Verizon made payments of $257 million and $188 million,
respectively, related to the contingent consideration, which is reflected in Cash flows from financing activities in our consolidated
statements of cash flows. See Note 3 and Note 9 to the consolidated financial statements for additional information.
Verizon Media Divestiture
On September 1, 2021, we completed the sale of Verizon Media Group. As of the close of the transaction, cash proceeds, the
fair value of the non-convertible preferred limited partnership units of an affiliate of Apollo Global Management Inc. (the Apollo
Affiliate) and the fair value of 10% of the fully-diluted common limited partnership units of the Apollo Affiliate were $4.3 billion,
$496 million, and $124 million, respectively. We recorded a pre-tax gain on sale of approximately $1.0 billion (after-tax
$1.0 billion) in Selling general and administrative expense in our consolidated statement of income for the year ended December
31, 2021. In addition, we incurred $346 million of various costs associated with this disposition which are primarily recorded in
Selling general and administrative expense in our consolidated statement of income for the year ended December 31, 2021. See
Note 3 to the consolidated financial statements for additional information.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various types of market risk in the normal course of business, including the impact of interest rate changes,
foreign currency exchange rate fluctuations, changes in investment, equity and commodity prices and changes in corporate tax
rates. We employ risk management strategies, which may include the use of a variety of derivatives including cross currency
swaps, forward starting interest rate swaps, interest rate swaps, interest rate caps, treasury rate locks and foreign exchange
forwards. We do not hold derivatives for trading purposes.
It is our general policy to enter into interest rate, foreign currency and other derivative transactions only to the extent necessary
to achieve our desired objectives in optimizing exposure to various market risks. Our objectives include maintaining a mix of fixed
and variable rate debt to lower borrowing costs within reasonable risk parameters and to protect against earnings and cash flow
47
Verizon 2023 Annual Report on Form 10-K
volatility resulting from changes in market conditions. We do not hedge our market risk exposure in a manner that would
completely eliminate the effect of changes in interest rates and foreign exchange rates on our earnings.
Counterparties to our derivative contracts are major financial institutions with whom we have negotiated derivatives agreements
(ISDA master agreements) and credit support annex (CSA) agreements which provide rules for collateral exchange. The CSA
agreements contain fixed cap amounts or rating based thresholds such that we or our counterparties may be required to hold or
post collateral based upon changes in outstanding positions as compared to established thresholds or caps and changes in
credit ratings. We do not offset fair value amounts recognized for derivative instruments and fair value amounts recognized for
the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments recognized at fair
value. At both December 31, 2023 and 2022, we did not hold any collateral. At December 31, 2023 and 2022, we posted
$1.4 billion and $2.3 billion, respectively, of collateral related to derivative contracts under collateral exchange agreements, which
were recorded as Prepaid expenses and other in our consolidated balance sheets. While we may be exposed to credit losses
due to the nonperformance of our counterparties, we consider the risk remote and do not expect that any such nonperformance
would result in a significant effect on our results of operations or financial condition due to our diversified pool of counterparties.
See Note 9 to the consolidated financial statements for additional information regarding the derivative portfolio.
Interest Rate Risk
We are exposed to changes in interest rates, primarily on our short-term debt and the portion of long-term debt that carries
floating interest rates. As of December 31, 2023, approximately 76% of the aggregate principal amount of our total debt portfolio
consisted of fixed-rate indebtedness, including the effect of interest rate swap agreements designated as hedges. The impact of
a 100-basis-point change in interest rates affecting our floating rate debt would result in a change in annual interest expense,
including our interest rate swap agreements that are designated as hedges, of approximately $379 million. The interest rates on
our existing long-term debt obligations are unaffected by changes to our credit ratings.
U.S. dollar London Inter-Bank Offered Rate (LIBOR) rates ceased publication on June 30, 2023. Outstanding debt and derivative
transactions that were benchmarked to LIBOR were repaid or transitioned to interest rates that are linked to the Secured
Overnight Financing Rate as the benchmark rate by June 30, 2023. There was not a significant impact to our financial position
given our current mix of variable and fixed-rate debt and taking into account the impact of our interest rate hedging.
The table that follows summarizes the fair values of our long-term debt, including current maturities, and interest rate swap
derivatives as of December 31, 2023 and 2022. The table also provides a sensitivity analysis of the estimated fair values of these
financial instruments assuming 100-basis-point upward and downward shifts in the yield curve. Our sensitivity analysis does not
include the fair values of our commercial paper and bank loans, if any, because they are not significantly affected by changes in
market interest rates.
(dollars in millions)
Long-term debt and related derivatives
At December 31, 2023
At December 31, 2022
Interest Rate Swaps
Fair Value
Fair Value assuming
+ 100 basis point shift
Fair Value assuming
- 100 basis point shift
158,912
152,427
142,551 $
136,199
$
150,058 $
143,648
We enter into interest rate swaps to achieve a targeted mix of fixed and variable rate debt. We principally receive fixed rates and
pay variable rates, resulting in a net increase or decrease to Interest expense. These swaps are designated as fair value hedges
and hedge against interest rate risk exposure of designated debt issuances. At December 31, 2023, the fair value of the liability
of these contracts was $4.5 billion. At December 31, 2022, the fair value of the liability of these contracts was $4.6 billion. At both
December 31, 2023 and 2022, the total notional amount of the interest rate swaps was $26.1 billion.
Foreign Currency Risk
The functional currency for our foreign operations is primarily the local currency. The translation of income statement and
balance sheet amounts of our foreign operations into U.S. dollars is recorded as cumulative translation adjustments, which are
included in Accumulated other comprehensive loss in our consolidated balance sheets. Gains and losses on foreign currency
transactions are recorded in the consolidated statements of income. At December 31, 2023, our primary translation exposure
was to the British Pound Sterling, Euro, Australian Dollar and Swedish Krona.
Cross Currency Swaps
We have entered into cross currency swaps to exchange our British Pound Sterling, Euro, Swiss Franc, Canadian Dollar and
Australian Dollar-denominated cash flows into U.S. dollars and to fix our cash payments in U.S. dollars, as well as to mitigate the
impact of foreign currency transaction gains or losses. On March 31, 2022, we voluntarily elected to de-designate our cross
currency swaps previously designated as cash flow hedges and re-designated the swaps as fair value hedges. Subsequently
Verizon 2023 Annual Report on Form 10-K
48
executed cross currency swaps are also designated as fair value hedges. The fair value of the asset of these contracts was
$762 million and $305 million at December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, the fair value of
the liability of these contracts was $2.1 billion and $3.6 billion, respectively. At December 31, 2023 and 2022, the total notional
amount of the cross currency swaps was $33.5 billion and $35.0 billion, respectively.
Foreign Exchange Forwards
We also have foreign exchange forwards which we use as an economic hedge but for which we have elected not to apply hedge
accounting. We enter into British Pound Sterling and Euro foreign exchange forwards to mitigate our foreign exchange rate risk
related to non-functional currency denominated monetary assets and liabilities of international subsidiaries.
At both December 31, 2023 and 2022, the fair value of the asset and liability of these contracts was insignificant. At
December 31, 2023 and 2022, the total notional amount of the foreign exchange forwards was $1.1 billion and $920 million,
respectively.
49
Verizon 2023 Annual Report on Form 10-K
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Verizon Communications Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Verizon Communications Inc. and subsidiaries’ (Verizon) internal control over financial reporting as of
December 31, 2023, based on criteria established in Internal Control – Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Verizon
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the
COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of Verizon as of December 31, 2023 and 2022, the related consolidated statements
of income, comprehensive income, cash flows, and changes in equity for each of the three years in the period ended December
31, 2023, and the related notes and the financial statement schedule listed in the Index at Item 15(a) and our report dated
February 9, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
Verizon’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on
Internal Control over Financial Reporting. Our responsibility is to express an opinion on Verizon’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to Verizon in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Ernst & Young LLP
New York, New York
February 9, 2024
Verizon 2023 Annual Report on Form 10-K
50
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Verizon Communications Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Verizon Communications Inc. and subsidiaries (Verizon or
the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, cash
flows, and changes in equity for each of the three years in the period ended December 31, 2023, and the related notes and the
financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Verizon at
December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), Verizon’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated February 9, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of Verizon’s management. Our responsibility is to express an opinion on
Verizon’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to Verizon in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
Description of the
Matter
Valuation of Employee Benefit Obligations
The Company sponsors several pension plans and other post-employment benefit plans. At
December 31, 2023, the Company’s aggregate defined benefit pension obligation was $15.1 billion
and exceeded the fair value of pension plan assets of $13.5 billion, resulting in an unfunded defined
benefit pension obligation of $1.6 billion. Also, at December 31, 2023, the other postretirement
benefits obligation was approximately $11.5 billion. As explained in Note 11 of the consolidated
financial statements, the Company updates the estimates used to measure employee benefit
obligations and plan assets in the fourth quarter and upon a remeasurement event to reflect the actual
return on plan assets and updated actuarial assumptions.
Auditing the employee benefit obligations was complex due to the highly judgmental nature of the
actuarial assumption relating to the discount rates used in the measurement process. This assumption
had a significant effect on the projected benefit obligations.
51
Verizon 2023 Annual Report on Form 10-K
How We Addressed the
Matter in Our Audit
Description of the
Matter
We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over the employee benefits obligation valuation process. For example, we tested controls
over management’s review of the employee benefit obligation calculations, the actuarial assumption
relating to the discount rates and the data inputs provided to the actuary.
To test the employee benefit obligations, our audit procedures included, among others, evaluating the
methodologies used, the actuarial assumption relating to the discount rates and the underlying data
used by the Company. We compared the actuarial assumption used by management to historical
trends, current economic factors and evaluated the change in the employee benefit obligations from
prior year due to the change in service cost, interest cost, actuarial gains and losses, benefit
payments, contributions and other activities. In addition, we involved an actuarial specialist to assist in
evaluating management’s methodology for determining the discount rates that reflect the maturity and
duration of the benefit payments and are used to measure the employee benefit obligations. As part of
this assessment, we compared the projected cash flows to prior year projections and compared the
current year benefits paid to the prior year projected cash flows. We also tested the completeness and
accuracy of the underlying data.
Impairment Evaluation for Verizon Business Group Goodwill
At December 31, 2023, the Company’s goodwill related to its Verizon Business Group (Business)
reporting unit was $1.7 billion and represented 0.4% of total assets. As discussed in Notes 1 and 4 of
the consolidated financial statements, goodwill is not amortized but rather is tested for impairment at
the reporting unit level at least annually, or more frequently if impairment indicators are present. The
impairment test compares the fair value of the reporting unit (calculated using a combination of a
market approach and an income approach) to its carrying amount. As described in Note 4 to the
consolidated financial statements, an impairment charge of $5.8 billion in the Business reporting unit
was recorded during the year.
Auditing management’s goodwill impairment test was complex and highly judgmental due to the
inherent subjectivity of developing an estimate of the fair value of the reporting unit, which is based on
assumptions about future conditions, transactions, or events whose outcome is uncertain and will
therefore be subject to change over time. In particular, the fair value estimate was sensitive to
significant assumptions such as the discount rate, revenue growth rates and earnings before interest,
taxes, depreciation and amortization (EBITDA) margins, which are affected by expected future market
and economic conditions.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over the Company’s goodwill impairment review process. For example, we tested controls
over management’s review of the valuation models and the significant assumptions described above.
To test the estimated fair value of the Company’s Business reporting unit, our audit procedures
included, among others, assessing the suitability and application of the valuation methodologies
selected and evaluating the significant assumptions discussed above and underlying data used by the
Company in its analysis. We compared the significant assumptions used by management to current
industry and economic trends, market information, and other relevant factors. We performed
sensitivity analyses of significant assumptions to determine what changes in assumptions are
particularly sensitive when assessing the likelihood of impairment, or when calculating the amount of
an impairment. In addition, we involved a valuation specialist to assist in the evaluation of the
assumptions and other relevant information that are most significant to the fair value estimate. We
also assessed the historical accuracy of management’s forecasts of financial results used in
developing prior fair value estimates to assist in evaluating the reliability of the current forecasts.
/s/ Ernst & Young LLP
Ernst & Young LLP
We have served as Verizon's auditor since 2000.
New York, New York
February 9, 2024
Verizon 2023 Annual Report on Form 10-K
52
Consolidated Statements of Income
Verizon Communications Inc. and Subsidiaries
Years Ended December 31,
Operating Revenues
Service revenues and other
Wireless equipment revenues
Total Operating Revenues
Operating Expenses
Cost of services (exclusive of items shown below)
Cost of wireless equipment
Selling, general and administrative expense
Depreciation and amortization expense
Verizon Business Group goodwill impairment
Total Operating Expenses
Operating Income
Equity in earnings (losses) of unconsolidated businesses
Other income (expense), net
Interest expense
Income Before Provision For Income Taxes
Provision for income taxes
Net Income
Net income attributable to noncontrolling interests
Net income attributable to Verizon
Net Income
Basic Earnings Per Common Share
Net income attributable to Verizon
Weighted-average shares outstanding (in millions)
Diluted Earnings Per Common Share
Net income attributable to Verizon
Weighted-average shares outstanding (in millions)
(dollars in millions, except per share amounts)
2021
2023
2022
$
109,652 $
24,322
133,974
109,625 $
27,210
136,835
110,449
23,164
133,613
28,100
26,787
32,745
17,624
5,841
111,097
28,637
30,496
30,136
17,099
—
106,368
22,877
(53)
(313)
(5,524)
16,987
(4,892)
12,095 $
481 $
11,614
12,095 $
30,467
44
1,373
(3,613)
28,271
(6,523)
21,748 $
492 $
21,256
21,748 $
31,234
25,067
28,658
16,206
—
101,165
32,448
145
312
(3,485)
29,420
(6,802)
22,618
553
22,065
22,618
2.76 $
4,211
5.06 $
4,202
5.32
4,148
2.75 $
4,215
5.06 $
4,204
5.32
4,150
$
$
$
$
$
See Notes to Consolidated Financial Statements
53
Verizon 2023 Annual Report on Form 10-K
2023
(dollars in millions)
2021
2022
$ 12,095 $ 21,748 $ 22,618
62
88
536
7
(208)
485
(141)
(85)
—
(9)
(621)
(856)
$ 12,580 $ 20,810 $ 21,762
(153)
322
(431)
(25)
(651)
(938)
$
481 $
553
21,209
$ 12,580 $ 20,810 $ 21,762
492
20,318
12,099
$
Consolidated Statements of Comprehensive Income
Verizon Communications Inc. and Subsidiaries
Years Ended December 31,
Net Income
Other Comprehensive Income (Loss), Net of Tax (Expense) Benefit
Foreign currency translation adjustments, net of tax of $6, $(13) and $(17)
Unrealized gain (loss) on cash flow hedges, net of tax of $(30), $(111) and $30
Unrealized gain (loss) on fair value hedges, net of tax of $(181), $148 and $0
Unrealized gain (loss) on marketable securities, net of tax of $(2), $8 and $3
Defined benefit pension and postretirement plans, net of tax of $68, $221 and $205
Other comprehensive income (loss) attributable to Verizon
Total Comprehensive Income
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Verizon
Total Comprehensive Income
See Notes to Consolidated Financial Statements
Verizon 2023 Annual Report on Form 10-K
54
Consolidated Balance Sheets
Verizon Communications Inc. and Subsidiaries
At December 31,
Assets
Current assets
Cash and cash equivalents
Accounts receivable
Less Allowance for credit losses
Accounts receivable, net
Inventories
Prepaid expenses and other
Total current assets
Property, plant and equipment
Less Accumulated depreciation
Property, plant and equipment, net
Investments in unconsolidated businesses
Wireless licenses
Goodwill
Other intangible assets, net
Operating lease right-of-use assets
Other assets
Total assets
Liabilities and Equity
Current liabilities
Debt maturing within one year
Accounts payable and accrued liabilities
Current operating lease liabilities
Other current liabilities
Total current liabilities
Long-term debt
Employee benefit obligations
Deferred income taxes
Non-current operating lease liabilities
Other liabilities
Total long-term liabilities
Commitments and Contingencies (Note 16)
Equity
(dollars in millions, except per share amounts)
2022
2023
$
$
$
2,065 $
26,102
1,017
25,085
2,057
7,607
36,814
320,108
211,798
108,310
953
155,667
22,843
11,057
24,726
19,885
380,255 $
12,973 $
23,453
4,266
12,531
53,223
137,701
13,189
45,781
20,002
16,560
233,233
2,605
25,332
826
24,506
2,388
8,358
37,857
307,689
200,255
107,434
1,071
149,796
28,671
11,461
26,130
17,260
379,680
9,963
23,977
4,134
12,097
50,171
140,676
12,974
43,441
21,558
18,397
237,046
Series preferred stock ($0.10 par value; 250,000,000 shares authorized; none issued)
—
—
Common stock ($0.10 par value; 6,250,000,000 shares authorized in each period;
4,291,433,646 shares issued in each period)
Additional paid in capital
Retained earnings
Accumulated other comprehensive loss
Common stock in treasury, at cost (87,172,997 and 91,572,258 shares outstanding)
Deferred compensation – employee stock ownership plans (ESOPs) and other
Noncontrolling interests
Total equity
Total liabilities and equity
See Notes to Consolidated Financial Statements
429
13,631
82,915
(1,380)
(3,821)
656
1,369
93,799
380,255 $
429
13,420
82,380
(1,865)
(4,013)
793
1,319
92,463
379,680
$
55
Verizon 2023 Annual Report on Form 10-K
Consolidated Statements of Cash Flows
Verizon Communications Inc. and Subsidiaries
Years Ended December 31,
Cash Flows from Operating Activities
Net Income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense
Employee retirement benefits
Deferred income taxes
Provision for expected credit losses
Equity in losses (earnings) of unconsolidated businesses, net of dividends received
Verizon Business Group goodwill impairment
Changes in current assets and liabilities, net of effects from acquisition/disposition of
businesses:
Accounts receivable
Inventories
Prepaid expenses and other
Accounts payable and accrued liabilities and Other current liabilities
Other, net
Net cash provided by operating activities
Cash Flows from Investing Activities
Capital expenditures (including capitalized software)
Cash received (paid) related to acquisitions of businesses, net of cash acquired
Acquisitions of wireless licenses
Collateral receipts (payments) related to derivative contracts, net
Proceeds from disposition of business
Other, net
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from long-term borrowings
Proceeds from asset-backed long-term borrowings
Net proceeds from (repayments of) short-term commercial paper
Repayments of long-term borrowings and finance lease obligations
Repayments of asset-backed long-term borrowings
Dividends paid
Other, net
Net cash provided by (used in) financing activities
2023
(dollars in millions)
2021
2022
$ 12,095 $ 21,748 $ 22,618
17,624
1,206
2,388
2,214
84
5,841
(2,198)
287
(435)
2,079
(3,710)
37,475
(18,767)
(30)
(5,796)
880
—
281
(23,432)
2,018
6,594
(150)
(6,181)
(4,443)
(11,025)
(1,470)
(14,657)
17,099
(2,046)
2,973
1,611
(10)
—
(1,978)
627
928
(33)
(3,778)
37,141
16,206
(3,391)
4,264
789
36
—
(1,592)
(905)
150
1,457
(93)
39,539
(23,087)
248
(3,653)
(2,265)
33
62
(28,662)
(20,286)
(4,065)
(47,596)
(21)
4,122
693
(67,153)
7,074
10,732
106
(8,616)
(4,948)
(10,805)
(2,072)
(8,529)
33,034
8,383
—
(14,063)
(4,800)
(10,445)
(3,832)
8,277
Decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of period
Cash, cash equivalents and restricted cash, end of period (Note 1)
(614)
4,111
3,497 $
(19,337)
(50)
4,161
23,498
4,111 $ 4,161
$
See Notes to Consolidated Financial Statements
Verizon 2023 Annual Report on Form 10-K
56
Consolidated Statements of Changes in Equity
Verizon Communications Inc. and Subsidiaries
Years Ended December 31,
Common Stock
Balance at beginning of year
Balance at end of year
Additional Paid In Capital
Balance at beginning of year
Other
Balance at end of year
Retained Earnings
Balance at beginning of year
Net income attributable to Verizon
Dividends declared ($2.635, $2.585, $2.535 per share)
Other
Balance at end of year
Accumulated Other Comprehensive Income (Loss)
Balance at beginning of year attributable to Verizon
Foreign currency translation adjustments
Unrealized gain (loss) on cash flow hedges
Unrealized gain (loss) on fair value hedges
Unrealized gain (loss) on marketable securities
Defined benefit pension and postretirement plans
Other comprehensive income (loss)
Balance at end of year attributable to Verizon
Treasury Stock
Balance at beginning of year
Employee plans (Note 14)
Shareholder plans (Note 14)
Acquisitions (Note 3)
Balance at end of year
Deferred Compensation-ESOPs and Other
Balance at beginning of year
Restricted stock equity grant
Amortization
Balance at end of year
Noncontrolling Interests
Balance at beginning of year
Total comprehensive income
Distributions and other
Balance at end of year
Total Equity
(dollars in millions, except per share amounts, and shares in thousands)
2021
Amount
2023
Shares Amount
2022
Amount
Shares
Shares
4,291,434 $
4,291,434
429
429
4,291,434 $
4,291,434
429
429
4,291,434 $
4,291,434
429
429
13,420
211
13,631
82,380
11,614
(11,082)
3
82,915
(1,865)
62
88
536
7
(208)
485
(1,380)
13,861
(441)
13,420
71,993
21,256
(10,860)
(9)
82,380
(927)
(153)
322
(431)
(25)
(651)
(938)
(1,865)
13,404
457
13,861
60,464
22,065
(10,532)
(4)
71,993
(71)
(141)
(85)
—
(9)
(621)
(856)
(927)
(91,572)
4,380
19
—
(87,173)
(4,013)
191
1
—
(3,821)
(93,635)
2,048
15
—
(91,572)
(4,104)
90
1
—
(4,013)
(153,304)
2,057
15
57,597
(93,635)
(6,719)
90
1
2,524
(4,104)
793
296
(433)
656
1,319
481
(431)
1,369
$ 93,799
538
423
(168)
793
1,410
492
(583)
1,319
$ 92,463
335
369
(166)
538
1,430
553
(573)
1,410
$ 83,200
See Notes to Consolidated Financial Statements
57 Verizon 2023 Annual Report on Form 10-K
Notes to Consolidated Financial Statements
Verizon Communications Inc. and Subsidiaries
Note 1. Description of Business and Summary of Significant Accounting Policies
Description of Business
Verizon Communications Inc. (the Company) is a holding company that, acting through its subsidiaries (together with the
Company, collectively, Verizon), is one of the world’s leading providers of communications, technology, information and
entertainment products and services to consumers, businesses and government entities. With a presence around the world, we
offer data, video and voice services and solutions on our networks and platforms that are designed to meet customers’ demand
for mobility, reliable network connectivity and security.
We have two reportable segments that we operate and manage as strategic business units - Verizon Consumer Group
(Consumer) and Verizon Business Group (Business).
Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless
services are provided across one of the most extensive wireless networks in the United States (U.S.) under the Verizon family of
brands and through wholesale and other arrangements. We also provide fixed wireless access (FWA) broadband through our
fifth-generation (5G) or fourth-generation (4G) Long-Term Evolution (LTE) networks as an alternative to traditional landline
internet access. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as
Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-
based network to customers who are not served by Fios. Our Consumer segment's wireless and wireline products and services
are available to our retail customers, as well as resellers that purchase wireless network access from us on a wholesale basis.
Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data,
video and conferencing services, corporate networking solutions, security and managed network services, local and long
distance voice services and network access to deliver various Internet of Things (IoT) services and products. We provide these
products and services to businesses, government customers and wireless and wireline carriers across the U.S. and a subset of
these products and services to customers around the world. During the first quarter of 2023, Verizon reorganized the customer
groups within its Business segment. See Note 13 for additional information.
Consolidation
The method of accounting applied to investments, whether consolidated or equity, involves an evaluation of all significant terms
of the investments that explicitly grant or suggest evidence of control or influence over the operations of the investee. The
consolidated financial statements include our controlled subsidiaries, as well as variable interest entities (VIE) where we are
deemed to be the primary beneficiary. For controlled subsidiaries that are not wholly-owned, the noncontrolling interests are
included in Net income and Total equity. Investments in businesses that we do not control, but have the ability to exercise
significant influence over operating and financial policies, are accounted for using the equity method. Equity method investments
are included in Investments in unconsolidated businesses in our consolidated balance sheets. All significant intercompany
accounts and transactions have been eliminated.
Basis of Presentation
We have reclassified certain prior year amounts to conform to the current year presentation.
Use of Estimates
We prepare our financial statements using U.S. generally accepted accounting principles (GAAP), which requires management
to make estimates and assumptions that affect reported amounts and disclosures. These estimates and assumptions take into
account historical and forward-looking factors that the Company believes are reasonable, including but not limited to public
health crises and related economic implications. Actual results could differ significantly from those estimates.
Examples of significant estimates include the allowance for credit losses, the recoverability of intangible assets, property, plant
and equipment, and other long-lived assets, the incremental borrowing rate for the lease liability, fair value measurements,
including those related to financial instruments, goodwill, spectrum licenses and intangible assets, unrecognized tax benefits,
valuation allowances on tax assets, pension and postretirement benefit obligations, contingencies and the identification and
valuation of assets acquired and liabilities assumed in connection with business combinations.
Revenue Recognition
We earn revenue from contracts with customers, primarily through the provision of telecommunications and other services and
through the sale of wireless equipment. These services include a variety of communication and connectivity services for our
Consumer and Business customers including other carriers that use our facilities to provide services to their customers, as well
as professional and integrated managed services for our large enterprise and government customers. We account for these
revenues under Topic 606.
Verizon 2023 Annual Report on Form 10-K
58
We also earn revenues that are not accounted for under Topic 606 from leasing arrangements (such as those for towers and
equipment), captive reinsurance arrangements primarily related to wireless device insurance and the interest recognized when
equipment is sold to the customer by an authorized agent under a device payment plan agreement.
Nature of Products and Services
Telecommunications
Service
We offer wireless services through a variety of plans on a postpaid or prepaid basis. For wireless service, we recognize revenue
using an output method, either as the service allowance units are used or as time elapses, because it reflects the pattern by
which we satisfy our performance obligation through the transfer of service to the customer. Monthly service is generally billed in
advance, which results in a contract liability. See Note 2 for additional information. For postpaid plans, where monthly usage
exceeds the allowance, the overage usage represents options held by the customer for incremental services and the usage-
based fee is recognized when the customer exercises the option (typically on a month-to-month basis).
For our contracts related to wireline communication and connectivity services, in general, fixed monthly fees for service are billed
one month in advance, which results in a contract liability, and service revenue is recognized over the enforceable contract term
as the service is rendered, as the customer simultaneously receives and consumes the benefits of the services through network
access and usage. While substantially all of our wireline service revenue contracts are the result of providing access to our
networks, revenue from services that are not fixed in amount and, instead, are based on usage are generally billed in arrears and
recognized as the usage occurs.
Equipment
We sell wireless devices and accessories under the Verizon brand and other brands. Equipment revenue is generally recognized
when the products are delivered to and accepted by the customer, as this is when control passes to the customer. In addition to
offering the sale of equipment on a standalone basis, we have two primary offerings through which customers pay for a wireless
device, in connection with a service contract: fixed-term plans (for our Business customers) and device payment plans.
Under a fixed-term plan, the customer is sold the wireless device without any upfront charge or at a discounted price in exchange
for entering into a fixed-term service contract (typically for a term of 24 months or less).
Under a device payment plan, the customer is sold the wireless device in exchange for a non-interest-bearing installment note,
which is repaid by the customer, typically over a 36-month term, and concurrently enters into a month-to-month contract for
wireless service. We may offer certain promotions that provide billing credits applied over a specified term, contingent upon the
customer maintaining service. The credits are included in the transaction price, which are allocated to the performance
obligations based on their relative selling price and are recognized when earned.
A financing component exists in both our fixed-term plans and device payment plans because the timing of the payment for the
device, which occurs over the contract term, differs from the satisfaction of the performance obligation, which occurs at contract
inception upon transfer of the device to the customer. We periodically assess, at the contract level, the significance of the
financing component inherent in our fixed-term and device payment plan receivable based on qualitative and quantitative
considerations related to our customer classes. These considerations include assessing the commercial objective of our plans,
the term and duration of financing provided, interest rates prevailing in the marketplace, and credit risks of our customer classes,
all of which impact our selection of appropriate discount rates. Based on current facts and circumstances, we determined that the
financing component in our existing wireless device payments and fixed-term contracts sold through the direct channel is not
significant and therefore is not accounted for separately. See Note 8 for additional information on the interest on equipment
financed on a device payment plan agreement when sold to the customer by an authorized agent in our indirect channel.
Wireless Contracts
For our wireless contracts, total contract revenue, which represents the transaction price for wireless service and wireless
equipment, is allocated between service and equipment revenue based on their estimated standalone selling prices. We
estimate the standalone selling price of the device or accessory to be its retail price excluding subsidies or conditional purchase
discounts. We estimate the standalone selling price of wireless service to be the price that we offer to customers on month-to-
month contracts that can be cancelled at any time without penalty (i.e., when there is no fixed-term for service) or when service is
procured without the concurrent purchase of a wireless device. In addition, we also assess whether the service term is impacted
by certain legally enforceable rights and obligations in our contract with customers, such as penalties that a customer would have
to pay to early terminate a fixed-term contract or billing credits that would cease if the month-to-month wireless service is
canceled. The assessment of these legally enforceable rights and obligations involves judgment and impacts our determination
of the transaction price and related disclosures.
From time to time, we may offer certain promotions that provide our customers on device payment plans with the right to upgrade
to a new device after paying a specified portion of their device payment plan agreement amount and trading in their device in
good working order. We account for this trade-in right as a guarantee obligation. The full amount of the trade-in right's fair value
59 Verizon 2023 Annual Report on Form 10-K
is recognized as a guarantee liability and results in a reduction to the revenue recognized upon the sale of the device. The total
transaction price is reduced by the guarantee, which is accounted for outside the scope of Topic 606, and the remaining
transaction price is allocated between the performance obligations within the contract.
Our fixed-term plans generally include the sale of a wireless device at subsidized prices. This results in the creation of a contract
asset at the time of sale, which represents the recognition of equipment revenue in excess of amounts billed.
For our device payment plans, billing credits are accounted for as consideration payable to a customer and are included in the
determination of total transaction price, resulting in a contract liability.
We may provide a right of return on our products and services for a short time period after a sale. These rights are accounted for
as variable consideration when determining the transaction price, and accordingly we recognize revenue based on the estimated
amount to which we expect to be entitled after considering expected returns. Returns and credits are estimated at contract
inception and updated at the end of each reporting period as additional information becomes available. We also may provide
credits or incentives on our products and services for contracts with resellers, which are accounted for as variable consideration
when estimating the amount of revenue to recognize.
Wireline Contracts
Total consideration for wireline services that are bundled in a single contract is allocated to each performance obligation based
on our standalone selling price for each service. While many contracts include one or more service performance obligations, the
revenue recognition pattern is generally not impacted by the allocation since the services are generally satisfied over the same
period of time. We estimate the standalone selling price to be the price of the services when sold on a standalone basis without
any promotional discount. In addition, we also assess whether the service term is impacted by certain legally enforceable rights
and obligations in our contract with customers such as penalties that a customer would have to pay to early terminate a fixed-
term contract. The assessment of these legally enforceable rights and obligations involves judgment and impacts our
determination of transaction price and related disclosures.
We may provide performance-based credits or incentives on our products and services for contracts with our Business
customers, which are accounted for as variable consideration when estimating the transaction price. Credits are estimated at
contract inception and are updated at the end of each reporting period as additional information becomes available.
Wireless and Wireline Contracts
For offers that include third-party providers, we evaluate whether we are acting as the principal or as the agent with respect to
the goods or services provided to the customer. This principal-versus-agent assessment involves judgment and focuses on
whether the facts and circumstances of the arrangement indicate that the goods or services were controlled by us prior to
transferring them to the customer. To evaluate if we have control, we consider various factors including whether we are primarily
responsible for fulfillment, bear risk of loss and have discretion over pricing.
Other
Advertising revenues are generated through display advertising and search advertising. Display advertising revenue is generated
by the display of graphical advertisements and other performance-based advertising. Search advertising revenue is generated
when a consumer clicks on a text-based advertisement on the search results page. The divested Verizon Media Group (Verizon
Media), primarily earned revenue through display advertising on Verizon Media properties, as well as on third-party properties
through our advertising platforms, search advertising, and subscription arrangements. Revenue for display and search
advertising contracts is recognized as ads are delivered, while subscription contracts are recognized over time. We are generally
the principal in transactions carried out through our advertising platforms, and therefore report gross revenue based on the
amount billed to our customers. The control and transfer of digital advertising inventory occurs in a rapid, real-time environment,
where our proprietary technology enables us to identify, enhance, verify and solely control digital advertising inventory that we
then sell to our customers. Our control is further supported by us being primarily responsible to our customers for fulfillment and
the fact that we can exercise a level of discretion over pricing. We completed the sale of Verizon Media on September 1, 2021.
See Note 3 for additional information on the sale of Verizon Media.
We offer telematics services including smart fleet management and optimization software. Telematics service revenue is
generated primarily through subscription contracts. We recognize revenue over time for our subscription contracts.
We report taxes collected from customers on behalf of governmental authorities on revenue-producing transactions on a net
basis.
Maintenance and Repairs
We charge the cost of maintenance and repairs, including the cost of replacing minor items not constituting substantial
betterments, principally to Cost of services as these costs are incurred.
Verizon 2023 Annual Report on Form 10-K
60
Advertising Costs
Costs for advertising products and services, as well as other promotional and sponsorship costs, are charged to Selling, general
and administrative expense in the periods in which they are incurred. See Note 15 for additional information.
Earnings Per Common Share
Basic earnings per common share are based on the weighted-average number of shares outstanding during the period. Where
appropriate, diluted earnings per common share include the dilutive effect of shares issuable under our stock-based
compensation plans.
There was a total of approximately 4.2 million outstanding dilutive securities, primarily consisting of performance stock units and
restricted stock units, included in the computation of diluted earnings per common share for the year ended December 31, 2023.
There were a total of approximately 1.9 million and 1.7 million outstanding dilutive securities, primarily consisting of restricted
stock units, included in the computation of diluted earnings per common share for the years ended December 31, 2022 and
2021, respectively.
Cash, Cash Equivalents and Restricted Cash
We consider all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents.
Cash equivalents are stated at cost, which approximates quoted market value and includes amounts held in money market
funds.
Cash collections on the receivables and on the underlying receivables related to the participation interest collateralizing our
asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the
segregated accounts are considered restricted cash and are included in Prepaid expenses and other and Other assets in our
consolidated balance sheets.
Cash, cash equivalents and restricted cash are included in the following line items in the consolidated balance sheets:
At December 31,
Cash and cash equivalents
Restricted cash:
Prepaid expenses and other
Other assets
Cash, cash equivalents and restricted cash
Investments in Debt and Equity Securities
$
$
2023
2,065 $
1,244
188
3,497 $
(dollars in millions)
Increase /
(Decrease)
(540)
2022
2,605 $
1,343
163
4,111 $
(99)
25
(614)
Investments in equity securities that are not accounted for under equity method accounting or result in consolidation are to be
measured at fair value. For investments in equity securities without readily determinable fair values, Verizon elects the
measurement alternative permitted under GAAP to measure these investments at cost, less any impairment, plus or minus
changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.
For investments in debt securities without quoted prices, Verizon uses an alternative matrix pricing method. Investments in equity
securities that do not result in consolidation of the investee are included in Investments in unconsolidated businesses and debt
securities are included in Other assets in our consolidated balance sheets.
Allowance for Credit Losses
Accounts receivable are recorded at amortized cost less an allowance for credit losses that are not expected to be recovered.
The gross amount of accounts receivable and corresponding allowance for credit losses are presented separately in the
consolidated balance sheets. We maintain allowances for credit losses resulting from the expected failure or inability of our
customers to make required payments. We recognize the allowance for credit losses at inception and reassess quarterly based
on management’s expectation of the asset’s collectability. The allowance is based on multiple factors including historical
experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic
conditions, as well as management’s expectations of conditions in the future, as applicable. Our allowance for credit losses is
based on management’s assessment of the collectability of assets pooled together with similar risk characteristics.
We pool our device payment plan agreement receivables based on the credit quality indicators and shared risk characteristics of
"new customers" and "existing customers." New customers are defined as customers who have been with Verizon for less than
210 days. Existing customers are defined as customers who have been with Verizon for 210 days or more. We record an
allowance to reduce the receivables to the amount that is expected to be collectible. For device payment plan agreement
receivables, we record bad debt expense based on a default and loss calculation using our proprietary loss model. The expected
loss rate is determined based on customer credit scores and other qualitative factors as noted above. The loss rate is assigned
61 Verizon 2023 Annual Report on Form 10-K
individually on a customer by customer basis and the custom credit scores are then aggregated by vintage and used in our
proprietary loss model to calculate the weighted-average loss rate used for determining the allowance balance.
We monitor the collectability of our wireless service receivables as one overall pool. Wireline service receivables are
disaggregated and pooled by the following customer groups: consumer, small and medium business, enterprise, public sector
and wholesale. For wireless service receivables and wireline consumer and small and medium business receivables, the
allowance is calculated based on a 12 month rolling average write-off balance multiplied by the average life-cycle of an account
from billing to write-off. The risk of loss is assessed over the contractual life of the receivables and is adjusted based on the
historical loss amounts for current and future conditions based on management’s qualitative considerations. For enterprise,
public sector and wholesale wireline receivables, the allowance for credit losses is based on historical write-off experience and
individual customer credit risk, as applicable. We consider multiple factors in determining the allowance as discussed above.
Inventories
Inventory consists of wireless and wireline equipment held for sale, which is carried at the lower of cost (determined principally
on either an average cost or first-in, first-out basis) or net realizable value.
Property, Plant and Equipment and Depreciation
We record property, plant and equipment at cost. Property, plant and equipment are generally depreciated on a straight-line
basis.
Leasehold improvements are amortized over the shorter of the estimated life of the improvement or the remaining term of the
related lease, calculated from the time the asset was placed in service.
When depreciable assets are retired or otherwise disposed of, the related cost and accumulated depreciation are deducted from
the property, plant and equipment accounts and any gains or losses on disposition are recognized in Selling, general and
administrative expense.
We capitalize and depreciate network software purchased or developed within property, plant and equipment assets. We also
capitalize interest associated with the acquisition or construction of network-related assets. Capitalized interest is reported as a
reduction in interest expense and depreciated as part of the cost of the network-related assets.
Computer Software and Cloud Computing Costs
We capitalize the cost of internal-use network and non-network software and defer the costs associated with cloud computing
arrangements that have a useful life and term in excess of one year. Subsequent additions, modifications or upgrades to internal-
use network and non-network software are capitalized only to the extent that they add significant new functionality. Planning,
software maintenance and training costs for internal-use software and cloud computing arrangements are expensed in the period
in which they are incurred. We capitalize interest associated with the development of internal-use network and non-network
software. Capitalized non-network internal-use software costs are amortized using the straight-line method over a period of
7 years and are included in Other intangible assets, net in our consolidated balance sheets. Costs incurred in implementing a
cloud computing arrangement are deferred during the application-development stage and recorded as Prepaid expense and
other in our consolidated balance sheets. Once a project is substantially complete and ready for its intended use, we stop
deferring the related cloud computing arrangement costs.
For a discussion of our impairment policy for capitalized non-network software costs, see "Goodwill and Other Intangible Assets"
below. See Note 4 for additional information of internal-use non-network software reflected in our consolidated balance sheets.
Similar to capitalized software costs, deferred costs associated with cloud computing arrangements are subject to impairment
testing.
Goodwill and Other Intangible Assets
Goodwill
Goodwill is the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. Impairment
testing for goodwill is performed annually in the fourth quarter or more frequently if impairment indicators are present.
To determine if goodwill is potentially impaired, we have the option to perform a qualitative assessment. However, we may elect
to bypass the qualitative assessment and perform a quantitative impairment test even if no indications of a potential impairment
exist. It is our policy to perform quantitative impairment assessment at least every three years.
Under the qualitative assessment, we consider several factors, including the business enterprise value of the reporting unit from
the last quantitative test and the excess of fair value over carrying value from this test, macroeconomic conditions (including
changes in interest rates and discount rates), industry and market considerations (including industry revenue and earnings
before interest, taxes, depreciation and amortization (EBITDA) margin results, projections and recent merger and acquisition
activity), the recent and projected financial performance of the reporting unit, as well as other factors.
Verizon 2023 Annual Report on Form 10-K
62
The quantitative impairment test for goodwill is performed at the reporting unit level and compares the fair value of the reporting
unit (calculated using a combination of a market approach and a discounted cash flow method, as a form of the income
approach) to its carrying value. Estimated fair values of reporting units are Level 3 measures in the fair value hierarchy, see "Fair
Value Measurements" discussion below for additional information. The market approach includes the use of comparative
multiples of guideline companies to complement discounted cash flow results. The discounted cash flow method is based on the
present value of two components, projected cash flows and a terminal value. The terminal value represents the expected
normalized future cash flows of the reporting unit beyond the cash flows from the discrete projection period. The fair value of the
reporting unit is calculated based on the sum of the present value of the cash flows from the discrete period and the present
value of the terminal value. The discount rate represents our estimate of the weighted-average cost of capital, or expected
return, that a marketplace participant would have required as of the valuation date. If the carrying value exceeds the fair value,
an impairment charge is booked for the excess carrying value over fair value, limited to the total amount of goodwill of that
reporting unit. During the fourth quarter each year, we update our five-year strategic planning review for each of our reporting
units. Those plans consider current economic conditions and trends, estimated future operating results, our view of growth-rates
and anticipated future economic and regulatory conditions.
See Note 4 for additional information regarding our goodwill impairment testing.
Intangible Assets Not Subject to Amortization
A significant portion of our intangible assets are wireless licenses that provide our wireless operations with the exclusive right to
utilize designated radio frequency spectrum to provide wireless communication services. While licenses are issued for only a
fixed time, generally ten to fifteen years, such licenses are subject to renewal by the Federal Communications Commission
(FCC). License renewals have occurred routinely and at nominal cost. Moreover, we have determined that there are currently no
legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of our wireless licenses. As a result,
we treat the wireless licenses as an indefinite-lived intangible asset. We re-evaluate the useful life determination for wireless
licenses each year to determine whether events and circumstances continue to support an indefinite useful life. We aggregate
our wireless licenses into one single unit of accounting, as we utilize our wireless licenses on an integrated basis as part of our
nationwide wireless network.
We test our wireless licenses for potential impairment annually or more frequently if impairment indicators are present. We have
the option to first perform a qualitative assessment to determine whether it is necessary to perform a quantitative impairment
test. However, we may elect to bypass the qualitative assessment in any period and proceed directly to performing the
quantitative impairment test. It is our policy to perform quantitative impairment assessment at least every three years.
As part of our qualitative assessment we consider several factors including the business enterprise value of our combined
wireless business, macroeconomic conditions (including changes in interest rates and discount rates), industry and market
considerations (including industry revenue and EBITDA margin results, projections and recent merger and acquisition activity),
the recent and projected financial performance of our combined wireless business as a whole, as well as other factors including
the result of our last quantitative assessment. See Note 4 for additional information regarding our impairment tests.
Our quantitative impairment assessment consists of comparing the estimated fair value of our aggregate wireless licenses to the
aggregated carrying amount as of the test date. Under our quantitative assessment, we estimate the fair value of our wireless
licenses using the Greenfield approach. The Greenfield approach is an income based valuation approach that values the
wireless licenses by calculating the cash flow generating potential of a hypothetical start-up company that goes into business
with no assets except the wireless licenses to be valued. A discounted cash flow analysis is used to estimate what a marketplace
participant would be willing to pay to purchase the aggregated wireless licenses as of the valuation date. If the estimated fair
value of the aggregated wireless licenses is less than the aggregated carrying amount of the wireless licenses, then an
impairment charge is recognized.
Interest expense incurred while qualifying activities are performed to ready wireless licenses for their intended use is capitalized
as part of wireless licenses. The capitalization period ends when the development is discontinued or substantially completed and
the license is ready for its intended use.
Wireless licenses can be purchased through public auctions conducted by the FCC. Deposits required to participate in these
auctions and purchase licenses are recorded within Other assets in our consolidated balance sheets until the corresponding
licenses are received and within Net cash used in investing activities in our consolidated statements of cash flows.
Intangible Assets Subject to Amortization and Long-Lived Assets
Our intangible assets that do not have indefinite lives (primarily customer lists and non-network internal-use software) are
amortized over their estimated useful lives. All of our intangible assets subject to amortization and other long-lived assets are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be
recoverable. If any indications of impairment are present, we would test for recoverability by comparing the carrying amount of
the asset group to the net undiscounted cash flows expected to be generated from the asset group. If those net undiscounted
cash flows do not exceed the carrying amount, we would perform the next step, which is to determine the fair value of the asset
63 Verizon 2023 Annual Report on Form 10-K
and record an impairment, if any. We re-evaluate the useful life determinations for these intangible assets each year to determine
whether events and circumstances warrant a revision to their remaining useful lives.
See Note 4 for information related to the carrying amount of goodwill, wireless licenses and other intangible assets, as well as
the major components and average useful lives of our other acquired intangible assets.
Leases
We lease network equipment including towers, distributed antenna systems, small cells, real estate, connectivity mediums which
include dark fiber, equipment, and other various types of assets for use in our operations under both operating and finance
leases. We assess whether an arrangement is a lease or contains a lease at inception. For arrangements considered leases or
that contain a lease that is accounted for separately, we determine the classification and initial measurement of the right-of-use
asset and lease liability at the lease commencement date, which is the date that the underlying asset becomes available for use.
For both operating and finance leases, we recognize a right-of-use asset, which represents our right to use the underlying asset
for the lease term, and a lease liability, which represents the present value of our obligation to make payments arising over the
lease term. The present value of the lease payments is calculated using the incremental borrowing rate for operating and finance
leases. The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company
would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. Management
uses the unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate, which is updated on a quarterly
basis.
In those circumstances where Verizon is the lessee, we account for non-lease components associated with our leases (e.g.,
common area maintenance costs) and lease components as a single lease component for substantially all of our asset classes.
Additionally, in arrangements where we are the lessor, we have customer premise equipment for which we account for non-lease
components (e.g., service revenue) and lease components as combined components under the revenue recognition guidance in
Topic 606 as the service revenues are the predominant components in the arrangements.
Rent expense for operating leases is recognized on a straight-line basis over the term of the lease and is included in either Cost
of services or Selling, general and administrative expense in our consolidated statements of income, based on the use of the
facility or equipment on which rent is being paid. Variable rent payments related to both operating and finance leases are
expensed in the period incurred. Our variable lease payments consist of payments dependent on various external indicators,
including real estate taxes, common area maintenance charges and utility usage.
Operating leases with a term of 12 months or less are not recorded in our consolidated balance sheets; we recognize rent
expense for these leases on a straight-line basis over the lease term.
We recognize the amortization of the right-of-use asset for our finance leases on a straight-line basis over the shorter of the
lease term or the useful life of the right-of-use asset in Depreciation and amortization expense in our consolidated statements of
income. The interest expense related to finance leases is recognized using the effective interest method based on the discount
rate determined at lease commencement and is included within Interest expense in our consolidated statements of income.
See Note 6 for additional information related to leases, including disclosure required under Topic 842.
Fair Value Measurements
Fair value of financial and non-financial assets and liabilities is defined as an exit price, representing the amount that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The three-tier
hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value
for assets and liabilities, is as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities
Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities
Level 3 — Unobservable pricing inputs in the market
Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the
fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires
judgment and may affect the valuation of the assets and liabilities being measured and their categorization within the fair value
hierarchy.
Income Taxes
Our effective tax rate is based on pre-tax income, statutory tax rates, tax laws and regulations and tax planning strategies
available to us in the various jurisdictions in which we operate.
Verizon 2023 Annual Report on Form 10-K
64
Deferred income taxes are provided for temporary differences in the basis between financial statement and income tax assets
and liabilities. Deferred income taxes are recalculated annually at tax rates in effect for the years in which those tax assets and
liabilities are expected to be realized or settled. We record valuation allowances to reduce our deferred tax assets to the amount
that is more likely than not to be realized.
We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. The first
step is recognition: we determine whether it is more likely than not that a tax position will be sustained upon examination,
including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating
whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position will be examined by
the appropriate taxing authority that has full knowledge of all relevant information. The second step is measurement: a tax
position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in
the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being
realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the
financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a
reduction of an income tax refund receivable, a reduction in a deferred tax asset or an increase in a deferred tax liability.
Significant management judgment is required in evaluating our tax positions and in determining our effective tax rate.
Stock-Based Compensation
We measure and recognize compensation expense for all stock-based compensation awards made to employees and directors
based on estimated fair values. See Note 10 for additional information.
Foreign Currency Translation and Transactions
The functional currency of our foreign operations is generally the local currency. For these foreign entities, we translate their
financial statements into U.S. dollars using average exchange rates for the period for income statement amounts and using end-
of-period exchange rates for assets and liabilities. We record these translation adjustments in Accumulated other comprehensive
loss, a separate component of Equity, in our consolidated balance sheets. We record exchange gains and losses resulting from
the conversion of transaction currency to functional currency as a component of Other income (expense), net.
Employee Benefit Plans
Pension and postretirement health care and life insurance benefits earned during the year, as well as interest on projected
benefit obligations, are accrued. Prior service costs and credits resulting from changes in plan benefits are generally amortized
over the average remaining service period of the employees expected to receive benefits. Expected return on plan assets is
determined by applying the return on assets assumption to the actual fair value of plan assets. Actuarial gains and losses are
recognized in Other income (expense), net in the year in which they occur. These gains and losses are measured annually as of
December 31 and upon a remeasurement event. Verizon management employees no longer earn pension benefits or earn
service towards the Company retiree medical subsidy. See Note 11 for additional information.
We recognize a pension or a postretirement plan’s funded status as either an asset or liability in the consolidated balance sheets.
Also, we measure any unrecognized prior service costs and credits that arise during the period as a component of Accumulated
other comprehensive income (loss), net of applicable income tax.
Derivative Instruments
We enter into derivative transactions primarily to manage our exposure to fluctuations in foreign currency exchange rates and
interest rates. We employ risk management strategies, which may include the use of a variety of derivatives including cross
currency swaps, forward starting interest rate swaps, interest rate swaps, treasury rate locks, interest rate caps, swaptions and
foreign exchange forwards. We do not hold derivatives for trading purposes.
We measure all derivatives at fair value and recognize them as either assets or liabilities in our consolidated balance sheets. Our
derivative instruments are valued primarily using models based on readily observable market parameters for all substantial terms
of our derivative contracts and thus are classified as Level 2. Changes in the fair values of derivative instruments applied as
economic hedges are recognized in earnings in the current period. For fair value hedges, the change in the fair value of the
derivative instruments is recognized in earnings, along with the change in the fair value of the hedged item. Unrealized gains or
losses on excluded components of fair value hedges are recorded in Other comprehensive income (loss) and are recognized into
earnings on a systematic and rational basis through the swap accrual over the life of the hedged item. For cash flow hedges, the
change in the fair value of the derivative instruments is reported in Other comprehensive income (loss) and recognized in
earnings when the hedged item is recognized in earnings. For net investment hedges of certain of our foreign operations, the
change in the fair value of the hedging instruments is reported in Other comprehensive income (loss) as part of the cumulative
translation adjustment and partially offsets the impact of foreign currency changes on the value of our net investment.
Cash flows from derivatives, which are designated as accounting hedges or applied as economic hedges, are presented
consistently with the cash flow classification of the related hedged items. See Note 9 for additional information.
65 Verizon 2023 Annual Report on Form 10-K
Variable Interest Entities
VIEs are entities that lack sufficient equity to permit the entity to finance its activities without additional subordinated financial
support from other parties, have equity investors that do not have the ability to make significant decisions relating to the entity’s
operations through voting rights, do not have the obligation to absorb the expected losses, or do not have the right to receive the
residual returns of the entity. We consolidate the assets and liabilities of VIEs when we are deemed to be the primary beneficiary.
The primary beneficiary is the party that has the power to make the decisions that most significantly affect the economic
performance of the VIE and has the obligation to absorb losses or the right to receive benefits that could potentially be significant
to the VIE.
Recently Issued Accounting Standards
The following Accounting Standards Updates (ASUs) have been recently issued by the Financial Accounting Standards Board
(FASB).
Description
Effect on Financial Statements
ASU 2023-07, Segment Reporting (Topic 280)
In November 2023, the FASB issued this standard update which
requires additional information about a public company’s significant
segment expenses and more timely and detailed segment information
reporting throughout the fiscal period. The standard is effective for
fiscal years beginning after December 15, 2023, and interim periods
within fiscal years beginning after December 15, 2024. A retrospective
transition approach is required. Early adoption of this standard is
permitted.
ASU 2023-09, Income Taxes (Topic 740)
In December 2023, the FASB issued this standard update which
requires enhanced disclosures primarily related to rate reconciliation
and income taxes paid information. The standard is effective for
annual periods beginning after December 15, 2024. A prospective
transition approach should be applied; however, a retrospective
application is permitted. Early adoption of this standard is permitted.
Upon adoption of this standard, we expect to include
the required disclosures in our notes to the financial
statements for our segment reporting. This standard
update will not affect our operating results.
Upon adoption of this standard, we expect to include
the required disclosures in our notes to the financial
statements for our income taxes. This standard update
will not affect our operating results.
Note 2. Revenue and Contract Costs
We earn revenue from contracts with customers, primarily through the provision of telecommunications and other services and
through the sale of wireless equipment.
Revenue by Category
We have two reportable segments that we operate and manage as strategic business units, Consumer and Business. Revenue
is disaggregated by products and services within Consumer, and customer groups (Enterprise and Public Sector, Business
Markets and Other, and Wholesale) within Business. See Note 13 for additional information on revenue by segment, including
Corporate and other.
We also earn revenues that are not accounted for under Topic 606 from leasing arrangements (such as those for towers and
equipment), captive reinsurance arrangements primarily related to wireless device insurance and the interest recognized when
equipment is sold to the customer by an authorized agent under a device payment plan agreement. We have elected the
practical expedient within Topic 842, to combine the lease and non-lease components for those customer arrangements under
Topic 606 that involve customer premise equipment where we are the lessor. Revenues from arrangements that were not
accounted for under Topic 606 were approximately $2.9 billion, $3.2 billion and $3.1 billion for the years ended December 31,
2023, 2022 and 2021, respectively.
Remaining Performance Obligations
When allocating the total contract transaction price to identified performance obligations, a portion of the total transaction price
may relate to service performance obligations which were not satisfied or are partially satisfied as of the end of the reporting
period. Below we disclose information relating to these unsatisfied performance obligations. We apply the practical expedient
available under Topic 606 that provides the option to exclude the expected revenues arising from unsatisfied performance
obligations related to contracts that have an original expected duration of one year or less. This situation primarily arises with
respect to certain month-to-month service contracts. At December 31, 2023, month-to-month service contracts represented
approximately 95% of our wireless postpaid contracts and approximately 94% of our wireline Consumer and our Business
Markets and Other contracts, compared to December 31, 2022, for which month-to-month service contracts represented
approximately 94% of our wireless postpaid contracts and 92% of our wireline Consumer and our Business Markets and Other
contracts.
Verizon 2023 Annual Report on Form 10-K
66
Additionally, certain contracts provide customers the option to purchase additional services. The fees related to these additional
services are recognized when the customer exercises the option (typically on a month-to-month basis).
Contracts for wireless services, with or without promotional credits that require maintenance of service, are generally either
month-to-month and cancellable at any time, or considered to contain terms ranging from greater than one month to up to thirty-
six months (typically under a device payment plan), or contain terms ranging from greater than one month to up to twenty-four
months (typically under a fixed-term plan). Additionally, customers may incur charges based on usage or additional optional
services purchased in conjunction with entering into a contract that can be cancelled at any time and therefore are not included
in the transaction price. The transaction price allocated to service performance obligations, which are not satisfied or are partially
satisfied as of the end of the reporting period, are generally related to contracts that are not accounted for as month-to-month
contracts.
Our Consumer group customers also include traditional wholesale resellers that purchase and resell wireless service under their
own brands to their respective customers. Reseller arrangements generally include a stated contract term, which typically
extends longer than two years and, in some cases, include a periodic minimum revenue commitment over the contract term for
which revenues will be recognized in future periods.
Consumer customer contracts for wireline services are generally month-to-month; however, they may have a service term of two
years or shorter than twelve months. Certain contracts with Business customers for wireline services extend into future periods,
contain fixed monthly fees and usage-based fees, and can include annual commitments in each year of the contract or
commitments over the entire specified contract term; however, a significant number of contracts for wireline services with our
Business customers have a contract term that is twelve months or less.
Additionally, there are certain contracts with Business customers for wireline services that have a contractual minimum fee over
the total contract term. We cannot predict the time period when revenue will be recognized related to those contracts; thus, they
are excluded from the time bands below. These contracts have varying terms spanning over approximately thirty years ending in
September 2053 and have aggregate contract minimum payments totaling $2.1 billion.
At December 31, 2023, the transaction price related to unsatisfied performance obligations that are expected to be recognized
for 2024, 2025 and thereafter was $25.7 billion, $18.7 billion and $7.5 billion, respectively. Remaining performance obligation
estimates are subject to change and are affected by several factors, including terminations and changes in the timing and scope
of contracts, arising from contract modifications.
Accounts Receivable and Contract Balances
The timing of revenue recognition may differ from the time of billing to our customers. Receivables presented in our consolidated
balance sheets represent an unconditional right to consideration. Contract balances represent amounts from an arrangement
when either Verizon has performed, by transferring goods or services to the customer in advance of receiving all or partial
consideration for such goods and services from the customer, or the customer has made payment to Verizon in advance of
obtaining control of the goods and/or services promised to the customer in the contract.
The following table presents information about receivables from contracts with customers:
(dollars in millions)
Accounts Receivable(1)
Device payment plan agreement receivables(2)
(1) Balances do not include receivables related to the following: activity associated with certain vendor agreements, leasing
arrangements (such as those for towers and equipment), captive reinsurance arrangements primarily related to wireless
device insurance and device payment plan agreement receivables presented separately.
(2) Included in device payment plan agreement receivables presented in Note 8. Receivables derived from the sale of equipment
$
$
December 31,
2023
9,760
18,528
At December 31,
2022
11,274
16,648
on a device payment plan through an authorized agent are excluded.
Contract assets primarily relate to our rights to consideration for goods or services provided to customers but for which we do not
have an unconditional right at the reporting date. Under a fixed-term plan, total contract revenue is allocated between wireless
service and equipment revenues. In conjunction with these arrangements, a contract asset is created, which represents the
difference between the amount of equipment revenue recognized upon sale and the amount of consideration received from the
customer when the performance obligation related to the transfer of control of the equipment is satisfied. The contract asset is
reclassified to accounts receivable as wireless services are provided and billed. We have the right to bill the customer as service
is provided over time, which results in our right to the payment being unconditional. The contract asset balances are presented in
our consolidated balance sheets as Prepaid expenses and other and Other assets. We recognize the allowance for credit losses
at inception and reassess quarterly based on management's expectation of the asset's collectability.
Contract assets remained relatively flat during the year ended December 31, 2023.
67 Verizon 2023 Annual Report on Form 10-K
Contract liabilities arise when we bill our customers and receive consideration in advance of providing the goods or services
promised in the contract. We typically bill service one month in advance, which is the primary component of the contract liability
balance. Contract liabilities are recognized as revenue when services are provided to the customer. The contract liability
balances are presented in our consolidated balance sheets as Other current liabilities and Other liabilities.
Contract liabilities increased $668 million during the year ended December 31, 2023. The change in contract liabilities was
primarily due to increases in sales promotions recognized over time and upfront fees.
Revenue recognized during the years ended December 31, 2023 and 2022 related to contract liabilities existing at January 1,
2023 and 2022 were $4.9 billion and $5.0 billion, respectively, as performance obligations related to services were satisfied.
The balance of contract assets and contract liabilities recorded in our consolidated balance sheets were as follows:
(dollars in millions)
Assets
Prepaid expenses and other
Other assets
Total Contract Assets
Liabilities
Other current liabilities
Other liabilities
Total Contract Liabilities
Contract Costs
At December 31,
2023
At December 31,
2022
$
$
$
$
546 $
268
814 $
6,955 $
1,947
8,902 $
656
207
863
6,583
1,651
8,234
As discussed in Note 1, Topic 606 requires the recognition of an asset for incremental costs to obtain a customer contract, which
are then amortized to expense over the respective periods of expected benefit. We recognize an asset for incremental
commission expenses paid to internal and external sales personnel and agents in conjunction with obtaining customer contracts.
We only defer these costs when we have determined the commissions are incremental costs that would not have been incurred
absent the customer contract and are expected to be recoverable. Costs to obtain a contract are amortized and recorded ratably
as commission expense over the period representing the transfer of goods or services to which the assets relate. Costs to obtain
wireless contracts are amortized over both of our Consumer and Business customers' estimated upgrade cycles, as such costs
are typically incurred each time a customer upgrades. Costs to obtain wireline contracts are amortized as expense over the
estimated customer relationship period for our Consumer customers. Incremental costs to obtain wireline contracts for our
Business customers are insignificant. Costs to obtain contracts are recorded in Selling, general and administrative expense.
We also defer costs incurred to fulfill contracts that: (1) relate directly to the contract; (2) are expected to generate resources that
will be used to satisfy our performance obligation under the contract; and (3) are expected to be recovered through revenue
generated under the contract. Contract fulfillment costs are expensed as we satisfy our performance obligations and recorded in
Cost of services. These costs principally relate to direct costs that enhance our wireline business resources, such as costs
incurred to install circuits.
We determine the amortization periods for our costs incurred to obtain or fulfill a customer contract at a portfolio level due to the
similarities within these customer contract portfolios.
Other costs, such as general costs or costs related to past performance obligations, are expensed as incurred.
Collectively, costs to obtain a contract and costs to fulfill a contract are referred to as deferred contract costs, and amortized over
a one-to seven-year period. Deferred contract costs are classified as current or non-current within Prepaid expenses and other
and Other assets, respectively.
The balances of deferred contract costs included in our consolidated balance sheets were as follows:
(dollars in millions)
Assets
Prepaid expenses and other
Other assets
Total
At December 31,
2023
At December 31,
2022
$
$
2,756 $
2,639
5,395 $
2,629
2,475
5,104
Verizon 2023 Annual Report on Form 10-K
68
For the years ended December 31, 2023 and 2022, we recognized expense of $3.2 billion and $3.0 billion, respectively,
associated with the amortization of deferred contract costs, primarily within Selling, general and administrative expense in our
consolidated statements of income.
We assess our deferred contract costs for impairment on a quarterly basis. We recognize an impairment charge to the extent the
carrying amount of a deferred cost exceeds the remaining amount of consideration we expect to receive in exchange for the
goods and services related to the cost, less the expected costs related directly to providing those goods and services that have
not yet been recognized as expenses. There were insignificant impairment charges recognized for the year ended December 31,
2023. There were no impairment charges recognized for the year ended December 31, 2022.
Note 3. Acquisitions and Divestitures
Spectrum License Transactions
In February 2021, the FCC concluded Auction 107 for C-Band wireless spectrum. Verizon paid $45.5 billion for the licenses it
won, of which $44.6 billion was paid in the first quarter of 2021. In accordance with the rules applicable to the auction, Verizon is
required to make payments for our allocable share of clearing costs incurred by, and incentive payments due to, the incumbent
license holders associated with the auction, which are estimated to be $7.6 billion. During 2023 and 2022, we made payments of
$4.3 billion and $1.6 billion, respectively, for obligations related to clearing costs and accelerated clearing incentives. During
2021, we made payments of $1.3 billion primarily related to certain obligations for clearing costs. We expect to continue to make
payments of approximately $400 million for the remaining obligations through 2024. The final timing and amounts of these
payments could differ based on the actual amount of incumbent holders’ reimbursement claims and the speed with which those
claims are approved and processed. The carrying value of the wireless spectrum won in Auction 107 consists of all payments
required to participate and purchase licenses in the auction, including Verizon’s allocable share of clearing costs incurred by, and
incentive payments due to, the incumbent license holders associated with the auction that we are obligated to pay in order to
acquire the licenses, as well as capitalized interest to the extent qualifying activities have occurred.
In March 2022, Verizon signed agreements with satellite operators in which operators agreed to clear C-Band spectrum in certain
markets and frequencies ahead of the previously expected timeframe. During 2022, Verizon incurred costs associated with these
agreements of approximately $340 million, of which $310 million was paid as of December 31, 2022 and the remainder was paid
in 2023. This early clearance accelerated Verizon's access to more spectrum in a number of key markets to support its 5G
network initiatives.
Business Acquisitions and Divestitures
TracFone Wireless, Inc.
On November 23, 2021 (the Acquisition Date), we completed the acquisition of TracFone Wireless, Inc. (TracFone). Verizon
acquired all of TracFone's outstanding stock in exchange for approximately $3.5 billion in cash, net of cash acquired and working
capital and other adjustments, 57,596,544 shares of common stock of the Company valued at approximately $3.0 billion, and up
to an additional $650 million in future cash contingent consideration related to the achievement of certain performance measures
and other commercial arrangements. The fair value of the common stock was determined on the basis of its closing market price
on the Acquisition Date. The estimated fair value of the contingent consideration as of the Acquisition Date was approximately
$560 million and represents a Level 3 measurement as defined in ASC 820, Fair Value Measurements and Disclosures. See
Note 9 for additional information. The contingent consideration payable is based on the achievement of certain revenue and
operational targets, measured over a two-year earn out period. Contingent consideration payments were completed in January of
2024.
During 2023 and 2022, Verizon made payments of $257 million and $188 million, respectively, related to the contingent
consideration, which is reflected in Cash flows from financing activities in our consolidated statements of cash flows.
During 2022, Verizon received net cash proceeds of $248 million for the final settlement of working capital, which was included in
our consideration as of the Acquisition Date.
Verizon Media Divestiture
On September 1, 2021, we completed the sale of Verizon Media. As of the close of the transaction, cash proceeds, the fair value
of the non-convertible preferred limited partnership units of an affiliate of Apollo Global Management Inc. (the Apollo Affiliate) and
the fair value of 10% of the fully-diluted common limited partnership units of the Apollo Affiliate were $4.3 billion, $496 million,
and $124 million, respectively. We recorded a pre-tax gain on sale of approximately $1.0 billion (after-tax $1.0 billion) in Selling
general and administrative expense in our consolidated statement of income for the year ended December 31, 2021. In addition,
we incurred $346 million of various costs associated with this disposition which are primarily recorded in Selling general and
administrative expense in our consolidated statement of income for the year ended December 31, 2021.
Under our ownership, Verizon Media generated revenues from contracts with customers under Topic 606 of approximately
$5.3 billion for the year ended December 31, 2021, reflected within our Corporate and Other segment.
69 Verizon 2023 Annual Report on Form 10-K
Note 4. Wireless Licenses, Goodwill and Other Intangible Assets
Wireless Licenses
The carrying amounts of Wireless licenses are as follows:
At December 31,
Wireless licenses
(dollars in millions)
2022
149,796
2023
155,667 $
$
During 2023 and 2022, we made payments of $4.3 billion and $1.6 billion, respectively, for obligations related to clearing costs
and accelerated clearing incentives for wireless licenses in connection with Auction 107. During 2022, we made additional
payments of $310 million related to accelerated clearing agreements for C-Band spectrum. See Note 3 for additional information.
At December 31, 2023 and 2022, approximately $15.0 billion and $41.7 billion, respectively, of wireless licenses were under
development for commercial service for which we were capitalizing interest costs. We recorded approximately $1.4 billion and
$1.7 billion of capitalized interest on wireless licenses for the years ended December 31, 2023 and 2022, respectively.
During 2023 and 2022, we renewed various wireless licenses in accordance with FCC regulations with an average renewal
period of 10 years and 15 years, respectively. See Note 1 for additional information.
As discussed in Note 1, we test our wireless licenses for potential impairment annually or more frequently if impairment
indicators are present. In 2023 and 2022, we performed a qualitative impairment assessment, which indicated it was more likely
than not that the fair value of our wireless licenses remained above their carrying amount and, therefore, did not result in an
impairment.
Our strategy requires significant capital investments primarily to acquire wireless spectrum, put the spectrum into service,
provide additional capacity for growth in our networks, invest in the fiber that supports our businesses, evolve and maintain our
networks and develop and maintain significant advanced information technology systems and data system capabilities.
Goodwill
Changes in the carrying amount of Goodwill are as follows:
Balance at January 1, 2022
Acquisitions(1)
Reclassifications, adjustments and others(2)
Balance at December 31, 2022(3)
Acquisitions
Verizon Business Group goodwill impairment
Reclassifications, adjustments and other(4)
Consumer
Business
$
21,042 $
100
—
7,515 $
—
(13)
Other
(dollars in millions)
Total
28,603
100
(32)
46 $
—
(19)
21,142
35
—
—
7,502
—
(5,841)
5
27
—
—
(27)
28,671
35
(5,841)
(22)
Balance at December 31, 2023(5)
1,666 $
(1) Changes in goodwill due to acquisitions is related to TracFone. See Note 3 for additional information.
(2) Includes a goodwill impairment charge of $16 million related to an early stage development company presented within Other,
recorded in Selling, general and administrative expense in our consolidated statement of income for the year ended December
31, 2022.
21,177 $
(3) Goodwill balances are net of an accumulated impairment charge of $16 million presented within both Other and Total at
22,843
— $
$
December 31, 2022.
(4) Includes a goodwill impairment charge of $27 million related to non-strategic businesses presented within Other, recorded in
Selling, general and administrative expense in our consolidated statement of income for the year ended December 31, 2023.
(5) Goodwill balances are net of accumulated impairment charges of $5.8 billion, $43 million and $5.9 billion presented within
Business, Other and Total, respectively, at December 31, 2023.
During the fourth quarter of 2023, we performed a qualitative impairment assessment for our Consumer reporting unit. Our
qualitative impairment assessment indicated that it was more likely than not that the fair value of our Consumer reporting unit
exceeded its carrying value and, therefore, did not result in an impairment.
During the fourth quarter of 2023, we performed a quantitative impairment assessment for our Business reporting unit given the
low excess of fair value over carrying value identified in our prior annual impairment assessment and increased competitive and
market pressures experienced throughout 2023. These pressures have resulted in lower projected cash flows primarily driven by
secular declines in wireline services and products across our Business customer groups. In connection with Verizon’s annual
budget process in the fourth quarter, leadership completed a comprehensive five-year strategic planning review of our Business
Verizon 2023 Annual Report on Form 10-K
70
reporting unit resulting in declines in financial projections driven by market dynamics as compared to the prior year five-year
strategic planning cycle. The revised projections were used as a key input into the Business reporting unit’s annual goodwill
impairment test performed in the fourth quarter. In addition, changes in the macroeconomic environment, including interest rate
and inflationary pressures have also impacted the fair value of the reporting unit.
We applied a combination of a market approach and a discounted cash flow method, as a form of the income approach,
reflecting current assumptions and inputs, including our revised projections, discount rate and expected growth rates, which
resulted in the determination that the fair value of our Business reporting unit was less than its carrying amount. As a result, in
the fourth quarter of 2023, we recorded a non-cash goodwill impairment charge of approximately $5.8 billion ($5.8 billion after-
tax) in our consolidated statement of income.
We performed a qualitative impairment assessment for our Consumer reporting unit in 2022. Our qualitative assessment
indicated that it was more likely than not that the fair value of our Consumer reporting unit exceeded its carrying value and,
therefore, did not result in an impairment. We performed a quantitative impairment assessment for our Business reporting unit in
2022. At the goodwill impairment measurement date of October 31, 2022, our quantitative assessment indicated that the fair
value for our Business reporting unit exceeded its carrying amount and, therefore, did not result in an impairment.
Other Intangible Assets
The following table displays the composition of Other intangible assets, net as well as the respective amortization period:
At December 31,
Customer lists (5 to 13 years)
Non-network internal-use
software (7 years)
Other (4 to 25 years)
Total
Gross
Amount
Accumulated
Amortization
2023
Net
Amount
Gross
Amount
Accumulated
Amortization
$
4,335 $
(2,193) $
2,142 $
4,335 $
(1,646) $
25,524
2,656
$
32,515 $
(17,949)
(1,316)
(21,458) $
7,575
1,340
23,421
2,806
11,057 $
30,562 $
(16,397)
(1,058)
(19,101) $
Net
Amount
2,689
7,024
1,748
11,461
(dollars in millions)
2022
The amortization expense for Other intangible assets was as follows:
Years
2023
2022
2021
Estimated annual amortization expense for Other intangible assets is as follows:
Years
2024
2025
2026
2027
2028
$
(dollars in millions)
2,687
2,507
2,087
$
(dollars in millions)
2,640
2,356
2,116
1,569
1,163
Note 5. Property, Plant and Equipment
The following table displays the details of Property, plant and equipment, which is stated at cost:
At December 31,
Land
Buildings and equipment
Central office and other network equipment
Antennas, cable, conduit, poles and towers
Leasehold improvements
Work in progress
Furniture, vehicles and other
Less accumulated depreciation
Property, plant and equipment, net
Lives (years)
-
7 to 45
3 to 15
4 to 50
5 to 20
-
3 to 20
$
$
2023
751 $
(dollars in millions)
2022
747
35,382
162,001
75,622
10,159
12,889
10,889
307,689
200,255
107,434
36,940
170,161
78,355
10,355
12,092
11,454
320,108
211,798
108,310 $
71 Verizon 2023 Annual Report on Form 10-K
Note 6. Leasing Arrangements
We enter into various lease arrangements for network equipment including towers, distributed antenna systems, small cells, real
estate and connectivity mediums including dark fiber, equipment, and other various types of assets for use in our operations. Our
leases have remaining lease terms ranging from 1 year to 30 years, some of which include options that we can elect to extend
the leases term for up to 25 years, and some of which include options to terminate the leases. For the majority of leases entered
into during the current period, we have concluded it is not reasonably certain that we would exercise the options to extend the
lease or not terminate the lease. Therefore, as of the lease commencement date, our lease terms generally do not include these
options. We include options to extend the lease when it is reasonably certain that we will exercise that option.
During March 2015, we completed a transaction with American Tower Corporation (American Tower) pursuant to which American
Tower acquired the exclusive rights to lease and operate approximately 11,300 of our wireless towers for an upfront payment of
$5.0 billion. We have subleased capacity on the towers from American Tower for a minimum of 10 years at current market rates
in 2015, with options to renew. We continue to include the towers in Property, plant and equipment, net in our consolidated
balance sheets and depreciate them accordingly. In addition to the rights to lease and operate the towers, American Tower
assumed the interest in the underlying ground leases related to these towers. While American Tower can renegotiate the terms of
and is responsible for paying the ground leases, we are still the primary obligor for these leases and accordingly, the present
value of these ground leases are included in our operating lease right-of-use assets and operating lease liabilities. We do not
expect to be required to make ground lease payments unless American Tower defaults, which we determined to be remote.
The components of net lease cost were as follows:
Years Ended December 31,
Operating lease cost(1)
Finance lease cost:
Classification
Cost of services
Selling, general and administrative expense $
Amortization of right-of-use assets Depreciation and amortization expense
Interest on lease liabilities
Short-term lease cost(1)
Variable lease cost(1)
Interest expense
Cost of services
Selling, general and administrative expense
Cost of services
Selling, general and administrative expense
Service revenues and other
2023
(dollars in millions)
2021
2022
5,432 $
5,345 $
5,248
259
69
29
224
36
23
259
34
21
Sublease income
Total net lease cost
(1) All operating lease costs, including short-term and variable lease costs, are split between Cost of services and Selling, general
and administrative expense in the consolidated statements of income based on the use of the facility or equipment that the
rent is being paid on. See Note 1 for additional information. Variable lease costs represent payments that are dependent on a
rate or index, or on usage of the asset.
$
313
(210)
5,892 $
294
(199)
5,723 $
307
(193)
5,676
Supplemental disclosure for the statements of cash flows related to operating and finance leases were as follows:
Years Ended December 31,
Cash Flows from Operating Activities
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases
Operating cash flows for finance leases
Cash Flows from Financing Activities
Financing cash flows for finance leases
Supplemental lease cash flow disclosures
2023
(dollars in millions)
2021
2022
$
(4,929) $
(69)
(4,490) $
(36)
(4,658)
(34)
(612)
(449)
(394)
Operating lease right-of-use assets obtained in exchange for new operating lease
liabilities
Right-of-use assets obtained in exchange for new finance lease liabilities
2,634
968
2,392
832
9,778
461
Verizon 2023 Annual Report on Form 10-K
72
Supplemental disclosures for the balance sheet related to finance leases were as follows:
At December 31,
Assets
Property, plant and equipment, net
Liabilities
Debt maturing within one year
Long-term debt
Total Finance lease liabilities
(dollars in millions)
2022
2023
$
1,459 $
1,138
$
$
753 $
1,338
2,091 $
565
1,167
1,732
The weighted-average remaining lease term and the weighted-average discount rate of our leases were as follows:
2023
At December 31,
Weighted-average remaining lease term (years)
Operating leases
Finance leases
Weighted-average discount rate
Operating leases
Finance leases
2022
8
4
8
3
3.6%
2.9%
3.2%
2.5%
The following table presents the maturity analysis of operating and finance lease liabilities as of December 31, 2023:
Years
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less interest
Present value of lease liabilities
Less current obligation
Long-term obligation at December 31, 2023
Operating Leases
$
$
4,763 $
4,416
4,065
3,744
2,406
9,008
28,402
4,134
24,268
4,266
20,002 $
(dollars in millions)
Finance Leases
793
665
424
217
94
61
2,254
163
2,091
753
1,338
As of December 31, 2023, we have contractually obligated lease payments amounting to $1.7 billion primarily for office facility
operating leases and small cell colocation and fiber operating leases that have not yet commenced. We have legally obligated
lease payments for various other operating leases that have not yet commenced for which the total obligation was not significant.
We have certain rights and obligations for these leases, but have not recognized an operating lease right-of-use asset or an
operating lease liability since they have not yet commenced.
73 Verizon 2023 Annual Report on Form 10-K
Note 7. Debt
Outstanding long-term debt obligations as of December 31, 2023 and 2022 are as follows:
(dollars in millions)
At December 31,
Verizon Communications
Alltel Corporation
Operating telephone company subsidiaries—debentures
Other subsidiaries—asset-backed debt
Finance lease obligations (average rate of 2.9% and 2.5% in
2023 and 2022, respectively)(2)
Vendor financing arrangements(2)
Unamortized discount, net of premium
Unamortized debt issuance costs
Total long-term debt, including current maturities
Less long-term debt maturing within one year
Total long-term debt
Maturities
< 5 Years
5-10 Years
> 10 Years
< 5 Years
5-10 Years
5-10 Years
< 5 Years
5-10 Years
> 10 Years
< 5 Years
< 5 Years
$
Interest
Rates %
0.75 - 6.94
1.50 - 7.88
1.13 - 8.95
Floating(1)
Floating(1)
6.80 - 7.88
6.00 - 6.50
5.13 - 8.75
5.13
0.41 - 6.09
Floating(1)
2023
33,316 $
37,229
55,355
2,099
2,029
94
79
535
—
14,048
8,163
2,091
64
(3,812)
(616)
150,674
12,973
$
137,701 $
2022
23,929
42,637
60,134
2,992
3,029
94
—
475
139
9,767
10,271
1,732
—
(4,039)
(671)
150,489
9,813
140,676
Long-term debt maturing within one year
Add commercial paper
Debt maturing within one year
Add long-term debt
Total debt
(1) For the period ending December 2023, the debt obligations bore interest at floating rates, including floating rates associated
with the Secured Overnight Financing Rate (SOFR) for the interest period plus an applicable interest margin per annum.
Floating rates associated with SOFR for the interest payments made in December 2023 ranged from 5.338% to 6.142%. For
the period ending December 2022, the debt obligations bore interest at a floating rate associated with SOFR for the interest
period or the London Interbank Offered Rate plus an applicable interest margin per annum, as applicable.
12,973 $
—
12,973
137,701
150,674 $
9,813
150
9,963
140,676
150,639
$
$
(2) Finance lease and vendor financing obligations are part of alternative financing arrangements.
Maturities of long-term debt (secured and unsecured) outstanding, including current maturities, excluding finance lease
obligations and unamortized debt issuance costs, at December 31, 2023 are as follows:
Years
2024
2025
2026
2027
2028
Thereafter
$
(dollars in millions)
12,253
17,783
10,586
7,198
12,467
88,912
During 2023, we received $8.6 billion of proceeds from long-term borrowings, which included $6.6 billion of proceeds from asset-
backed debt transactions. The net proceeds were primarily used for general corporate purposes including the repayment of debt
and the funding of certain renewable energy projects. We used $10.6 billion of cash to repay and repurchase long-term
borrowings and finance lease obligations, including $4.4 billion to prepay and repay asset-backed, long-term borrowings. The net
proceeds of approximately $1.0 billion from the notes issued in 2023 are expected to be used to fund certain renewable energy
projects.
During 2022, we received $17.8 billion of proceeds from long-term borrowings, which included $10.7 billion of proceeds from
asset-backed debt transactions. The net proceeds were primarily used for general corporate purposes including the repayment
of debt and the funding of certain renewable energy projects. We used $13.6 billion of cash to repay, redeem and repurchase
long-term borrowings and finance lease obligations, including $4.9 billion to prepay and repay asset-backed, long-term
Verizon 2023 Annual Report on Form 10-K 74
borrowings. The net proceeds of approximately $1.0 billion from the notes issued in 2022 were used to fund certain renewable
energy projects.
2023 Significant Debt Transactions
Debt or equity financing may be needed to fund additional investments or development activities or to maintain an appropriate
capital structure to ensure our financial flexibility.
The following tables show the significant transactions involving the senior unsecured debt securities of the Company and its
subsidiaries that occurred during the year ended December 31, 2023.
Tender Offers
(dollars in millions)
Verizon 2.550% - 5.050% notes and floating rate notes, due 2024 - 2036
(1) The total cash consideration includes the tender offer consideration, plus any accrued and unpaid interest to the date of
Cash Consideration(1)
2,471
2,579 $
$
Principal Amount
Purchased
purchase.
Repayments and Repurchases
(dollars in millions)
Verizon 3.500% notes and floating rate notes due 2023(2)
Verizon 0.375% bonds due 2023(2)
Open market repurchases of various Verizon notes(3)
Total
(1) Represents amount paid to repay or repurchase, including any accrued interest. In addition, for securities denominated in a
Amount Paid(1)
850
633
539
2,022
1,050 $
600
774
A$
CHF
$
$
Principal Repaid/
Repurchased
currency other than the U.S. dollar, amount paid is shown on a U.S. dollar equivalent basis.
(2) U.S. dollar amount paid represents the amount payable at maturity per the derivatives entered into in connection with the
transaction. See Note 9 for additional information on cross currency swap transactions related to the repayment.
(3) During 2023, we recorded gains of $235 million in connection with the open market repurchases, which were reflected within
Other income (expense), net in our consolidated statement of income.
Issuances
(dollars in millions)
Verizon 5.050% notes due 2033(2)
Principal Amount
Issued
1,000 $
$
Net Proceeds(1)
994
(1) Net proceeds were net of underwriting discounts and other issuance costs.
(2) An amount equal to the net proceeds from these notes is expected to be used to fund, in whole or in part, certain renewable
energy projects, including new and existing investments made by us during the period from January 1, 2023 through the
maturity date of the notes.
Short-Term Borrowing and Commercial Paper Program
In March 2023, we entered into and fully drew from a $500 million short-term revolving credit facility. In July 2023, the short-term
revolving credit facility matured and was fully repaid. As of December 31, 2023, we had no short-term borrowing outstanding.
In 2023, we issued $15.9 billion in commercial paper and we repaid $16.1 billion of commercial paper. As of December 31, 2023,
we had no commercial paper outstanding. These transactions are reflected within Cash flows from financing activities in our
consolidated statements of cash flows on a net basis.
Asset-Backed Debt
As of December 31, 2023, the carrying value of our asset-backed debt was $22.2 billion. Our asset-backed debt includes Asset-
Backed Notes (ABS Notes) issued to third-party investors (Investors) and loans (ABS Financing Facilities) received from banks
and their conduit facilities (collectively, the Banks). Our consolidated asset-backed debt bankruptcy remote legal entities (each,
an ABS Entity, or collectively, the ABS Entities) issue the debt or are otherwise party to the transaction documentation in
connection with our asset-backed debt transactions. Under the terms of our asset-backed debt, Cellco Partnership (Cellco), a
wholly-owned subsidiary of the Company, and certain other Company affiliates (collectively, the Originators) transfer device
payment plan agreement receivables and certain other receivables (collectively referred to as certain receivables) or a
participation interest in certain other receivables to one of the ABS Entities, which in turn transfers such receivables and
participation interest to another ABS Entity that issues the debt. Verizon entities retain the equity interests and residual interests,
as applicable, in the ABS Entities, which represent the rights to all funds not needed to make required payments on the asset-
backed debt and other related payments and expenses.
75 Verizon 2023 Annual Report on Form 10-K
Our asset-backed debt is secured by the transferred receivables and participation interest, and future collections on such
receivables and underlying receivables related to such participation interest. These receivables and participation interest
transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of
asset-backed debt and expenses related thereto, payments to the Originators in respect of additional transfers of certain
receivables and participation interest, and other obligations arising from our asset-backed debt transactions, and will not be
available to pay other obligations or claims of Verizon’s creditors until the associated asset-backed debt and other obligations are
satisfied. The Investors or Banks, as applicable, which hold our asset-backed debt have legal recourse to the assets securing the
debt, but do not have any recourse to Verizon with respect to the payment of principal and interest on the debt. Under a parent
support agreement, the Company has agreed to guarantee certain of the payment obligations of Cellco and the Originators to the
ABS Entities.
Cash collections on the receivables and on the underlying receivables related to the participation interest collateralizing our
asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the
segregated accounts are considered restricted cash and are included in Prepaid expenses and other and Other assets in our
consolidated balance sheets.
Proceeds from our asset-backed debt transactions are reflected in Cash flows from financing activities in our consolidated
statements of cash flows. The asset-backed debt issued is included in Debt maturing within one year and Long-term debt in our
consolidated balance sheets.
Verizon 2023 Annual Report on Form 10-K
76
ABS Notes
During the year ended December 31, 2023, we completed the following ABS Notes transactions:
(dollars in millions)
January 2023
Series 2023-1
A Senior class notes
B Junior class notes
C Junior class notes
January 2023 total
April 2023
Series 2023-2
A Senior class notes
B Junior class notes
C Junior class notes
Series 2023-3
A Senior class notes
B Junior class notes
C Junior class notes
April 2023 total
June 2023
Series 2023-4
A-1a Senior fixed rate class notes
A-1b Senior floating rate class notes
B Junior class notes
C Junior class notes
June 2023 total
September 2023
Series 2023-5
A-1a Senior fixed rate class notes
A-1b Senior floating rate class notes
B Junior class notes
C Junior class notes
Series 2023-6
A Senior class notes
B Junior class notes
C Junior class notes
September 2023 total
November 2023
Series 2023-7
A-1a Senior fixed rate class notes
A-1b Senior floating rate class notes
B Junior class notes
C Junior class notes
November 2023 total
Total
Interest Rates %
Expected
Weighted-average
Life to Maturity (in
years)
Principal Amount
Issued
4.490
4.740
4.980
4.890
5.130
5.380
4.730
4.970
5.220
5.160
Compounded
SOFR + 0.850
5.400
5.650
5.610
Compounded
SOFR + 0.680
5.850
6.090
5.350
5.590
5.840
5.670
Compounded
SOFR + 0.950
5.960
6.210
2.98
2.98
2.98
1.99
1.99
1.99
4.99
4.99
4.99
2.97
2.97
2.97
2.97
2.00
2.00
2.00
2.00
5.00
5.00
5.00
3.00
3.00
3.00
3.00
$
$
891
—
41
932
891
—
41
268
—
12
1,212
538
175
—
33
746
265
114
—
17
557
—
—
953
435
100
41
—
576
4,419
Under the terms of each series of ABS Notes outstanding as of December 31, 2023, there is a revolving period of up to 18
months, two years, three years, or five years, as applicable, during which we may transfer additional receivables to the ABS
77 Verizon 2023 Annual Report on Form 10-K
Entity. During the year ended December 31, 2023, we made aggregate principal repayments of $3.7 billion in connection with
anticipated redemptions of ABS Notes and notes that have entered the amortization period, including payments in connection
with any note redemptions. During the year ended December 31, 2022, we made aggregate principal repayments of $4.3 billion
in connection with ABS Notes that have entered the amortization period, including payments in connection with any note
redemptions.
In January 2024, we issued $1.9 billion aggregate principal amount of two series of senior and junior ABS Notes, with a blended
interest rate of approximately 4.867% and 5.028%, through an ABS Entity. In addition, in connection with an anticipated
redemption of ABS Notes, we made a principal repayment, in whole, for $408 million.
ABS Financing Facilities
Under the two loan agreements outstanding in connection with the ABS Financing Facility originally entered into in December
2021 and previously renewed in 2022 (2021 ABS Financing Facility), we borrowed an additional $325 million in March 2023 and
prepaid an aggregate of $700 million in April 2023. In December 2023, we renewed the loan agreements in connection with the
2021 ABS Financing Facility which reset the revolving periods by 18 months, and we borrowed an additional $925 million. The
aggregate outstanding balance under the 2021 ABS Financing Facility was $8.5 billion as of December 31, 2023. In January
2024, we prepaid an aggregate of $900 million under the loan agreements outstanding in connection with the 2021 ABS
Financing Facility.
In March 2023, we borrowed an additional $500 million under the loan agreement outstanding in connection with the ABS
Financing Facility that we originally entered into in 2022 (2022 ABS Financing Facility). In December 2023, we renewed the loan
agreement in connection with the 2022 ABS Financing Facility which reset the revolving period by one year, and we borrowed an
additional $450 million. The aggregate outstanding balance under the 2022 ABS Financing Facility was $3.0 billion as of
December 31, 2023.
Variable Interest Entities
The ABS Entities meet the definition of a VIE for which we have determined that we are the primary beneficiary as we have both
the power to direct the activities of the entity that most significantly impact the entity’s performance and the obligation to absorb
losses or the right to receive benefits of the entity. Therefore, the assets, liabilities and activities of the ABS Entities are
consolidated in our financial results and are included in amounts presented on the face of our consolidated balance sheets.
The assets and liabilities related to our asset-backed debt arrangements included in our consolidated balance sheets were as
follows:
(dollars in millions)
Assets
Accounts receivable, net
Prepaid expenses and other
Other assets
Liabilities
Accounts payable and accrued liabilities
Debt maturing within one year
Long-term debt
At December 31,
2023
At December 31,
2022
$
14,550 $
1,288
11,682
29
7,483
14,700
13,906
1,409
9,894
22
6,809
13,199
The Accounts receivable, net amount above does not include underlying receivables for which a participation interest has been
transferred to the ABS Entities. See Note 8 for additional information on certain receivables and participation interest used to
secure asset-backed debt.
Verizon 2023 Annual Report on Form 10-K
78
Long-Term Credit Facilities
Facility
Capacity
At December 31, 2023
Principal
Amount
Outstanding
Unused
Capacity
(dollars in millions)
Verizon revolving credit facility(1)
Various export credit facilities(2)
Total
(1) The revolving credit facility does not require us to comply with financial covenants or maintain specified credit ratings, and it
permits us to borrow even if our business has incurred a material adverse change. The revolving credit facility provides for the
issuance of letters of credit. As of December 31, 2023, there have been no drawings against the $9.5 billion revolving credit
facility since its inception.
Maturities
2026
2024 - 2031
11,000
20,500 $
—
9,457 $
6,618
6,618
9,500 $
9,457 $
—
$
$
(2) During 2023 and 2022, we drew down $1.0 billion and $3.0 billion, respectively, from these facilities. Borrowings under certain
of these facilities are amortized semi-annually in equal installments up to the applicable maturity dates. Maturities reflect
maturity dates of principal amounts outstanding. Any amounts borrowed under these facilities and subsequently repaid cannot
be reborrowed.
Non-Cash Transactions
During the years ended December 31, 2023, 2022 and 2021, we financed, primarily through alternative financing arrangements,
the purchase of approximately $1.3 billion, $832 million, and $461 million, respectively, of long-lived assets consisting primarily of
network equipment. As of December 31, 2023 and 2022, $2.2 billion and $1.7 billion, respectively, relating to these financing
arrangements, including those entered into in prior years and liabilities assumed through acquisitions, remained outstanding.
These purchases are non-cash financing activities and therefore are not reflected within Capital expenditures in our consolidated
statements of cash flows.
Net Debt Extinguishment Gains (Losses)
During the year ended December 31, 2023, we recorded net debt extinguishment gains of $308 million. During the years ended
December 31, 2022 and 2021, we recorded net debt extinguishment losses of $1.1 billion and $3.6 billion, respectively. The net
gains and losses are recorded in Other income (expense), net in our consolidated statements of income. The total gains and
losses are reflected within Other, net cash flow from operating activities, and the portion of the gains and losses representing
cash payments are reflected within Other, net cash flow from financing activities in our consolidated statements of cash flows.
Guarantees
We guarantee the debentures of our operating telephone company subsidiaries. As of December 31, 2023, $614 million
aggregate principal amount of these obligations remained outstanding. Each guarantee will remain in place for the life of the
obligation unless terminated pursuant to its terms, including the operating telephone company no longer being a wholly-owned
subsidiary of the Company.
Debt Covenants
We and our consolidated subsidiaries are in compliance with all of our restrictive covenants in our debt agreements.
Note 8. Device Payment Plan Agreement and Wireless Service Receivables
The following table presents information about accounts receivable, net of allowances, recorded in our consolidated balance
sheet:
At December 31, 2023
(dollars in millions)
Accounts receivable
Less Allowance for credit losses
$
Accounts receivable, net of allowance
(1) Other receivables primarily include wireline and other receivables, of which the allowances are individually insignificant.
13,732 $
559
13,173 $
7,018 $
245
6,773 $
5,352 $
213
5,139 $
$
Total
26,102
1,017
25,085
Device
payment plan
agreement
Wireless
service
Other
receivables(1)
Included in Other assets and Accounts receivable, net at December 31, 2023 and December 31, 2022 are net device payment
plan agreement receivables and net wireless service receivables of $26.1 billion and $23.6 billion, respectively, which have been
transferred to ABS Entities and continue to be reported in our consolidated balance sheets. Included in Accounts receivable, net
at December 31, 2023 are net other receivables of $911 million, on which a participation interest has been transferred to ABS
Entities and continue to be reported in our consolidated balance sheet. See Note 7 for additional information. We believe the
carrying value of these receivables approximate their fair value using a Level 3 expected cash flow model.
79 Verizon 2023 Annual Report on Form 10-K
Under the Verizon device payment program, our eligible wireless customers purchase wireless devices under a device payment
plan agreement. Customers that activate service on devices purchased under the device payment program pay lower service
fees as compared to those under our fixed-term service plans, and their device payment plan charge is included on their wireless
monthly bill. We no longer offer Consumer customers new fixed-term, subsidized service plans for devices; however, we continue
to offer subsidized plans to our Business customers. We also continue to service existing plans for customers who have not yet
purchased and activated devices under the Verizon device payment program.
Wireless Device Payment Plan Agreement Receivables
The following table displays both the current and non-current portions of device payment plan agreement receivables, net,
recognized in our consolidated balance sheets:
At December 31,
Device payment plan agreement receivables, gross
Unamortized imputed interest
Device payment plan agreement receivables, at amortized cost
Allowance(1)
Device payment plan agreement receivables, net
(dollars in millions)
2022
26,188
(479)
25,709
(881)
24,828
2023
29,206 $
(758)
28,448
(1,151)
27,297 $
$
$
Classified in our consolidated balance sheets:
Accounts receivable, net
Other assets
Device payment plan agreement receivables, net
(1) Includes allowance for both short-term and long-term device payment plan agreement receivables.
$
$
13,173 $
14,124
27,297 $
12,929
11,898
24,828
For indirect channel wireless contracts with customers, we impute risk adjusted interest on the device payment plan agreement
receivables. We record the imputed interest as a reduction to the related accounts receivable. The associated interest income,
which is included within Service revenues and other in our consolidated statements of income, is recognized over the financed
device payment term.
Promotions
In connection with certain device payment plan agreements, we may offer a promotion to allow our customers to upgrade to a
new device after paying down a certain specified portion of the required device payment plan agreement amount as well as
trading in their device in good working order. When a customer enters into a device payment plan agreement with the right to
upgrade to a new device, we account for this trade-in right as a guarantee obligation. We recognize a liability measured at fair
value for the customer’s right to trade in the device which is determined by considering several factors, including the weighted-
average selling prices obtained in recent resales of similar devices eligible for trade-in. At December 31, 2023 and December 31,
2022, the amount of the guarantee liability was insignificant and $54 million, respectively.
We may offer certain promotions that allow a customer to trade in their owned device in connection with the purchase of a new
device. Under these types of promotions, the customer receives a credit for the value of the trade-in device. At December 31,
2023 and December 31, 2022, the amount of trade-in liability was $566 million and $562 million, respectively.
In addition, we may provide the customer with additional future billing credits that will be applied against the customer’s monthly
bill as long as service is maintained. These future billing credits are accounted for as consideration payable to a customer and
are included in the determination of total transaction price, resulting in a contract liability.
Device payment plan agreement receivables, net, disclosed in the table above, does not reflect the trade-in liability, additional
future credits or the guarantee liability.
Origination of Device Payment Plan Agreements
When originating device payment plan agreements, we use internal and external data sources to create a credit risk score to
measure the credit quality of a customer and to determine eligibility for the device payment program. Verizon’s experience has
been that the payment attributes of longer tenured customers are highly predictive for estimating their reliability to make future
payments. Customers with longer tenures tend to exhibit similar risk characteristics to other customers with longer tenures, and
receivables due from customers with longer tenures tend to perform better than receivables from customers that have not
previously been Verizon customers. As a result of this experience, we make initial lending decisions based upon whether the
customers are "established customers" or "short-tenured customers." If a Consumer customer has been a customer for 45 days
or more, or if a Business customer has been a customer for 12 months or more, the customer is considered an "established
customer." For established customers, the credit decision and ongoing credit monitoring processes rely on a combination of
internal and external data sources. If a Consumer customer has been a customer less than 45 days, or a Business customer has
Verizon 2023 Annual Report on Form 10-K
80
been a customer for less than 12 months, the customer is considered a "short-tenured customer." For short-tenured customers,
the credit decision and credit monitoring processes rely more heavily on external data sources.
Available external credit data from credit reporting agencies along with internal data are used to create custom credit risk scores
for Consumer customers. The custom credit risk score is generated automatically from the applicant’s credit data using
proprietary custom credit models. The credit risk score measures the likelihood that the potential customer will become severely
delinquent and be disconnected for non-payment. For a small portion of short-tenured customer applications, a traditional credit
report is not available from one of the national credit reporting agencies because the potential customer does not have sufficient
credit history. In those instances, alternative credit data is used for the risk assessment. For Business customers, we also verify
the existence of the business with external data sources.
Based on the custom credit risk score, we assign each customer a credit class, each of which has specified offers of credit. This
includes an account level spending limit and a maximum amount of credit allowed per device for Consumer customers or a
required down payment percentage for Business customers.
Credit Quality Information
Subsequent to origination, we assess indicators for the quality of our wireless device payment plan agreement portfolio using two
models, one for new customers and one for existing customers. The model for new customers pools all Consumer and Business
wireless customers based on less than 210 days as "new customers." The model for existing customers pools all Consumer and
Business wireless customers based on 210 days or more as "existing customers."
The following table presents device payment plan agreement receivables, at amortized cost, and gross write-offs recorded, as of
and for the twelve months ended December 31, 2023, by credit quality indicator and year of origination:
(dollars in millions)
Device payment plan agreement receivables, at
amortized cost
New customers
Existing customers
Total
Gross write-offs
New customers
Existing customers
Total
Year of Origination(1)
2022
2021 and prior
2023
Total
$
$
$
$
3,232 $
14,120
17,352 $
1,332 $
9,083
10,415 $
366 $
50
416 $
403 $
227
630 $
92 $
589
681 $
58 $
97
155 $
4,656
23,792
28,448
827
374
1,201
(1) Includes accounts that have been suspended at a point in time.
The data presented in the table above was last updated on December 31, 2023.
We assess indicators for the quality of our wireless service receivables portfolio as one overall pool. The following table presents
wireless service receivables, at amortized cost, and gross write-offs recorded, as of and for the twelve months ended December
31, 2023, by year of origination:
(dollars in millions)
Wireless service receivables, at amortized cost
Gross write-offs
Year of Origination
2023
2022 and prior
Total
$
5,307 $
317
45 $
153
5,352
470
The data presented in the table above was last updated on December 31, 2023.
Allowance for Credit Losses
The credit quality indicators are used in determining the estimated amount and the timing of expected credit losses for the device
payment plan agreement and wireless service receivables portfolios.
For device payment plan agreement receivables, we record bad debt expense based on a default and loss calculation using our
proprietary loss model. The expected loss rate is determined based on customer credit scores and other qualitative factors as
noted above. The loss rate is assigned individually on a customer by customer basis and the custom credit scores are then
aggregated by vintage and used in our proprietary loss model to calculate the weighted-average loss rate used for determining
the allowance balance.
We monitor the collectability of our wireless service receivables as one overall pool. Wireline service receivables are
disaggregated and pooled by the following types of customers and related contracts: consumer, small and medium business,
81
Verizon 2023 Annual Report on Form 10-K
enterprise, public sector and wholesale. For wireless service receivables and wireline consumer and small and medium business
receivables, the allowance is calculated based on a 12 month rolling average write-off balance multiplied by the average life-
cycle of an account from billing to write-off. The risk of loss is assessed over the contractual life of the receivables and is
adjusted based on the historical loss amounts for current and future conditions based on management’s qualitative
considerations. For enterprise, public sector and wholesale wireline receivables, the allowance for credit losses is based on
historical write-off experience and individual customer credit risk, if applicable.
Activity in the allowance for credit losses by portfolio segment of receivables was as follows:
(dollars in millions)
Balance at January 1, 2023
Current period provision for expected credit losses
Write-offs charged against the allowance
Recoveries collected
Balance at December 31, 2023
(1) Includes allowance for both short-term and long-term device payment plan agreement receivables.
$
$
881 $
1,439
(1,201)
32
1,151 $
Device Payment
Plan Agreement
Receivables(1)
Wireless Service
Plan Receivables
143
502
(470)
38
213
We monitor delinquency and write-off experience based on the quality of our device payment plan agreement and wireless
service receivables portfolios. The extent of our collection efforts with respect to a particular customer are based on the results of
our proprietary custom internal scoring models that analyze the customer’s past performance to predict the likelihood of the
customer falling further delinquent. These custom scoring models assess a number of variables, including origination
characteristics, customer account history and payment patterns. Since our customers’ behaviors may be impacted by general
economic conditions, we analyzed whether changes in macroeconomic conditions impact our credit loss experience and have
concluded that our credit loss estimates are generally not materially impacted by reasonable and supportable forecasts of future
economic conditions. Based on the score derived from these models, accounts are grouped by risk category to determine the
collection strategy to be applied to such accounts. For device payment plan agreement receivables and wireless service
receivables, we consider an account to be delinquent and in default status if there are unpaid charges remaining on the account
on the day after the bill’s due date. The risk class determines the speed and severity of the collections effort including initiatives
taken to facilitate customer payment.
The balance and aging of the device payment plan agreement receivables, at amortized cost, were as follows:
At December 31, 2023
27,174
$
1,000
274
28,448
(dollars in millions)
Unbilled
Billed:
Current
Past due
Device payment plan agreement receivables, at amortized cost
$
Verizon 2023 Annual Report on Form 10-K
82
Note 9. Fair Value Measurements and Financial Instruments
Recurring Fair Value Measurements
The following table presents the balances of assets and liabilities measured at fair value on a recurring basis as of December 31,
2023:
Level 1(1)
Level 2(2)
(dollars in millions)
Total
Level 3(3)
Assets:
Prepaid expenses and other:
Fixed income securities
Cross currency swaps
Foreign exchange forwards
Interest rate caps
Other assets:
Fixed income securities
Cross currency swaps
Interest rate caps
Total
Liabilities:
Other current liabilities:
Interest rate swaps
Cross currency swaps
Interest rate caps
Foreign exchange forwards
Contingent consideration
Other liabilities:
Interest rate swaps
Cross currency swaps
Interest rate caps
$
$
$
— $
—
—
—
—
—
—
— $
— $
—
—
—
—
25 $
4
4
37
254
758
7
1,089 $
823 $
294
37
1
—
—
—
—
— $
3,648
1,791
7
6,601 $
— $
—
—
—
—
—
—
— $
— $
—
—
—
52
—
—
—
52 $
25
4
4
37
254
758
7
1,089
823
294
37
1
52
3,648
1,791
7
6,653
Total
(1) Quoted prices in active markets for identical assets or liabilities.
(2) Observable inputs other than quoted prices in active markets for identical assets and liabilities.
(3) Unobservable pricing inputs in the market.
$
83
Verizon 2023 Annual Report on Form 10-K
The following table presents the balances of assets and liabilities measured at fair value on a recurring basis as of December 31,
2022:
Level 1(1)
Level 2(2)
(dollars in millions)
Total
Level 3(3)
Assets:
Prepaid expenses and other:
Fixed income securities
Cross currency swaps
Foreign exchange forwards
Interest rate caps
Other assets:
Fixed income securities
Cross currency swaps
Interest rate caps
Total
Liabilities:
Other current liabilities:
Interest rate swaps
Cross currency swaps
Interest rate caps
Foreign exchange forwards
Contingent consideration
Other liabilities:
Interest rate swaps
Cross currency swaps
Interest rate caps
Contingent consideration
$
$
$
— $
—
—
—
—
—
—
— $
— $
—
—
—
—
37 $
42
6
63
349
263
30
790 $
731 $
346
63
1
—
—
—
—
—
— $
3,902
3,295
30
—
8,368 $
— $
—
—
—
—
—
—
— $
— $
—
—
—
274
—
—
—
43
317 $
37
42
6
63
349
263
30
790
731
346
63
1
274
3,902
3,295
30
43
8,685
Total
(1) Quoted prices in active markets for identical assets or liabilities.
(2) Observable inputs other than quoted prices in active markets for identical assets and liabilities.
(3) Unobservable pricing inputs in the market.
$
Certain of our equity investments do not have readily determinable fair values and are excluded from the tables above. Such
investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in
orderly transactions for an identical or similar investment of the same issuer and are included in Investments in unconsolidated
businesses in our consolidated balance sheets. As of December 31, 2023 and December 31, 2022, the carrying amount of our
investments without readily determinable fair values was $764 million and $804 million, respectively. During 2023, there were
insignificant adjustments due to observable price changes and insignificant impairment charges. Cumulative adjustments due to
observable price changes and impairment charges were approximately $209 million and $98 million, respectively.
Verizon has a liability for contingent consideration related to its acquisition of TracFone, completed in November 2021. The fair
value is calculated using a probability-weighted discounted cash flow model and represents a Level 3 measurement. Level 3
instruments include valuation based on unobservable inputs reflecting our own assumptions, consistent with reasonably
available assumptions made by other market participants. Subsequent to the Acquisition Date, at each reporting date, the
contingent consideration liability is remeasured to fair value. During 2023 and 2022, we made payments of $257 million and
$188 million, respectively, related to the contingent consideration. The payments were completed in January of 2024. See Note 3
for additional information.
Fixed income securities consist primarily of investments in municipal bonds. The valuation of the fixed income securities is based
on the quoted prices for similar assets in active markets or identical assets in inactive markets or models that apply inputs from
observable market data. The valuation determines that these securities are classified as Level 2.
Derivative contracts are valued using models based on readily observable market parameters for all substantial terms of our
derivative contracts and thus are classified within Level 2. We use mid-market pricing for fair value measurements of our
derivative instruments. Our derivative instruments are recorded on a gross basis.
We recognize transfers between levels of the fair value hierarchy as of the end of the reporting period.
Verizon 2023 Annual Report on Form 10-K
84
Fair Value of Short-term and Long-term Debt
The fair value of our debt is determined using various methods, including quoted prices for identical debt instruments, which is a
Level 1 measurement, as well as quoted prices for similar debt instruments with comparable terms and maturities, which is a
Level 2 measurement.
The fair value of our short-term and long-term debt, excluding finance leases, was as follows:
(dollars in millions)
At December 31, 2022
At December 31, 2023
Derivative Instruments
Fair Value
Carrying
Amount
148,906 $
148,583
$
Level 1
84,385 $
86,806
Level 2
54,656 $
58,804
Level 3
Total
— $ 139,041
145,610
—
We enter into derivative transactions primarily to manage our exposure to fluctuations in foreign currency exchange rates and
interest rates. We employ risk management strategies, which may include the use of a variety of derivatives including interest
rate swaps, cross currency swaps, forward starting interest rate swaps, treasury rate locks, interest rate caps, swaptions and
foreign exchange forwards. We do not hold derivatives for trading purposes.
The following table sets forth the notional amounts of our outstanding derivative instruments:
$
$
At December 31,
Interest rate swaps
Cross currency swaps
Foreign exchange forwards
The following tables summarize the activities of our designated derivatives:
Years Ended December 31,
Interest Rate Swaps:
Notional value entered into
Notional value settled
Pre-tax gain recognized in Interest expense
Cross Currency Swaps:
Notional value entered into
Notional value settled
Pre-tax loss recognized in Other comprehensive income (loss)(1)
Pre-tax gain (loss) on cross currency swaps recognized in Interest expense
Pre-tax gain (loss) on hedged debt recognized in Interest expense
Excluded components recognized in Other comprehensive income (loss)
Initial value of the excluded component amortized into Interest expense
Forward Starting Interest Rate Swaps:
Notional value entered into
Notional value settled
Pre-tax gain recognized in Other comprehensive income (loss)
Treasury Rate Locks:
Notional value entered into
Notional value settled
Pre-tax gain recognized in Other comprehensive income (loss)
2023
26,071 $
33,526
1,050
(dollars in millions)
2022
26,071
34,976
920
2023
(dollars in millions)
2022
— $
—
1
—
1,450
N/A
1,119
(1,119)
826
109
—
—
—
500
500
5
7,155
863
2
2,474
—
(430)
(1,373)
1,373
(498)
81
—
1,000
196
—
—
—
N/A - not applicable
(1) Represents amounts recorded under the cash flow hedge model. These instruments were re-designated as fair value hedges
on March 31, 2022.
85
Verizon 2023 Annual Report on Form 10-K
Years Ended December 31,
Other, net Cash Flows from Operating Activities:
Cash received for settlement of interest rate swaps
Cash paid for settlement of forward starting interest rate swaps
Cash received for settlement of treasury rate locks
Other, net Cash Flows from Financing Activities:
Cash paid for settlement of cross currency swaps, net
$
2023
(dollars in millions)
2022
— $
—
5
(67)
40
(107)
—
—
The following table displays the amounts recorded in Long-term debt in our consolidated balance sheets related to cumulative
basis adjustments for our interest rate swaps designated as fair value hedges. The cumulative amounts exclude cumulative
basis adjustments related to foreign exchange risk.
At December 31,
Carrying amount of hedged liabilities
Cumulative amount of fair value hedging adjustment included in the carrying amount
of the hedged liabilities
Cumulative amount of fair value hedging adjustment remaining for which hedge
accounting has been discontinued
$
2023
21,838 $
(dollars in millions)
2022
21,741
(4,354)
(4,512)
400
488
Interest Rate Swaps
We enter into interest rate swaps to achieve a targeted mix of fixed and variable rate debt. We principally receive fixed rates and
pay variable rates, resulting in a net increase or decrease to Interest expense. These swaps are designated as fair value hedges
and hedge against interest rate risk exposure of designated debt issuances. We record the interest rate swaps at fair value in our
consolidated balance sheets as assets and liabilities. Changes in the fair value of the interest rate swaps are recorded to Interest
expense, which are primarily offset by changes in the fair value of the hedged debt due to changes in interest rates.
Cross Currency Swaps
We have entered into cross currency swaps previously designated as cash flow hedges through March 31, 2022 to exchange our
British Pound Sterling, Euro, Swiss Franc, Canadian Dollar and Australian Dollar-denominated cash flows into U.S. dollars and to
fix our cash payments in U.S. dollars, as well as to mitigate the impact of foreign currency transaction gains or losses. A portion
of the loss recognized in Other comprehensive income (loss) was reclassified to Interest expense to offset the related pre-tax
foreign currency transaction gain or loss on the underlying hedged item.
On March 31, 2022, we elected to de-designate our cross currency swaps as cash flow hedges and re-designated these swaps
as fair value hedges. For these hedges, we have elected to exclude the change in fair value of the cross currency swaps related
to both time value and cross currency basis spread from the assessment of hedge effectiveness (the excluded components). The
initial value of the excluded components of $1.0 billion as of March 31, 2022 will continue to be amortized into Interest expense
over the remaining life of the hedging instruments. We estimate that $104 million will be amortized into Interest expense within
the next 12 months.
In addition to the previously mentioned cross currency swaps, we have executed additional cross currency swaps to exchange
Euro-denominated cash flows into U.S. dollars to fix our cash payments in U.S. dollars. These swaps are designated as fair
value hedges. We record the cross currency swaps at fair value in our consolidated balance sheets as assets and liabilities.
Changes in the fair value of the cross currency swaps attributable to changes in the spot rate of the hedged item and changes in
the recorded value of the hedged debt due to changes in spot rates are recorded in the same income statement line item. We
present exchange gains and losses from the conversion of foreign currency denominated debt as a part of Interest expense.
During the years ended December 31, 2023 and 2022, these amounts completely offset each other and no net gain or loss was
recorded.
Changes in the fair value of cross currency swaps attributable to time value and cross currency basis spread are initially
recorded to Other comprehensive income (loss). Unrealized gains or losses on excluded components are recorded in Other
comprehensive income (loss) and are recognized into Interest expense on a systematic and rational basis through the swap
accrual over the life of the hedging instrument. The amount remaining in Accumulated other comprehensive loss related to cash
flow hedges on the date of transition will be reclassified to earnings when the hedged item is recognized in earnings or when it
becomes probable that the forecasted transactions will not occur. During the years ended December 31, 2023 and 2022, the
amortization of the initial value of the excluded component completely offset the amortization related to the amount remaining in
Other comprehensive income (loss) related to cash flow hedges. See Note 14 for additional information.
Verizon 2023 Annual Report on Form 10-K
86
Forward Starting Interest Rate Swaps
From time to time we enter into forward starting interest rate swaps designated as cash flow hedges in order to manage our
exposure to interest rate changes on future forecasted transactions. We hedge our exposure to the variability in future cash flows
based on the expected maturities of the related forecasted debt issuance. We recognize gains and losses resulting from interest
rate movements in Other comprehensive income (loss).
Treasury Rate Locks
We have entered into treasury rate locks designated as cash flow hedges to mitigate our interest rate risk on future transactions.
We recognize gains and losses resulting from interest rate movements in Other comprehensive income (loss).
Net Investment Hedges
We have designated certain foreign currency debt instruments as net investment hedges to mitigate foreign exchange exposure
related to non-U.S. dollar net investments in certain foreign subsidiaries against changes in foreign exchange rates. The notional
amount of Euro-denominated debt designated as a net investment hedge was €750 million as of both December 31, 2023 and
2022.
Undesignated Derivatives
We also have the following derivative contracts which we use as economic hedges but for which we have elected not to apply
hedge accounting.
The following table summarizes the activity of our derivatives not designated in hedging relationships:
Years Ended December 31,
Foreign Exchange Forwards:
Notional value entered into
Notional value settled
Pre-tax gain (loss) recognized in Other income (expense), net
$
Swaptions:
Notional value sold
Notional value settled
Pre-tax loss recognized in Interest expense
Foreign Exchange Forwards
2023
(dollars in millions)
2022
11,175 $
11,045
25
—
—
—
10,689
10,701
(97)
1,000
1,000
(33)
We enter into British Pound Sterling and Euro foreign exchange forwards to mitigate our foreign exchange rate risk related to
non-functional currency denominated monetary assets and liabilities of international subsidiaries.
Swaptions
We enter into swaptions to achieve a targeted mix of fixed and variable rate debt.
Concentrations of Credit Risk
Financial instruments that subject us to concentrations of credit risk consist primarily of temporary cash investments, short-term
and long-term investments, trade receivables, including device payment plan agreement receivables, certain notes receivable,
including lease receivables, and derivative contracts.
Counterparties to our derivative contracts are major financial institutions with whom we have negotiated derivatives agreements
(ISDA master agreements) and credit support annex (CSA) agreements which provide rules for collateral exchange. The CSA
agreements contain fixed cap amounts or rating based thresholds such that we or our counterparties may be required to hold or
post collateral based upon changes in outstanding positions as compared to established thresholds or caps and changes in
credit ratings. We do not offset fair value amounts recognized for derivative instruments and fair value amounts recognized for
the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments recognized at fair
value. At both December 31, 2023 and 2022, we did not hold any collateral. At December 31, 2023 and 2022, we posted
$1.4 billion and $2.3 billion, respectively, of collateral related to derivative contracts under collateral exchange agreements, which
were recorded as Prepaid expenses and other in our consolidated balance sheets. While we may be exposed to credit losses
due to the nonperformance of our counterparties, we consider the risk remote and do not expect that any such nonperformance
would result in a significant effect on our results of operations or financial condition due to our diversified pool of counterparties.
87
Verizon 2023 Annual Report on Form 10-K
Note 10. Stock-Based Compensation
Verizon Long-Term Incentive Plan
In May 2017, our shareholders approved the 2017 Long-Term Incentive Plan (the 2017 Plan) and terminated the Company's
authority to grant new awards under the Verizon 2009 Long-Term Incentive Plan (the 2009 Plan). The 2017 Plan provides for
broad-based equity grants to employees, including executive officers, and permits the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other awards. Upon
approval of the 2017 Plan, we reserved for issuance under the 2017 Plan the number of shares that were remaining but not
issued under the 2009 Plan. Shares subject to outstanding awards under the 2009 Plan that expire, are canceled or otherwise
terminated will also be available for awards under the 2017 Plan. As of December 31, 2023, 57 million shares are reserved for
future issuance under the 2017 Plan.
Restricted Stock Units
Restricted Stock Units (RSUs) granted under the 2017 Plan generally vest in three equal installments on each anniversary of the
grant date. The RSUs that are paid in stock upon vesting and are thus classified as equity awards are measured using the grant
date fair value of Verizon common stock and are not remeasured at the end of each reporting period. In 2020, Verizon
announced a broad-based program that provides for the annual award of cash-settled RSUs under the 2017 Plan to all full-time
and part-time employees who meet eligibility requirements. The RSUs that are settled in cash are classified as liability awards
and the liability is measured at its fair value at the end of each reporting period. All RSUs granted under the 2017 Plan have
dividend equivalent units (DEUs), which will be paid to participants if, and only to the extent the applicable RSU award vests, and
is paid at the time the RSU award is paid, and in the same proportion as the RSU award.
We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those
estimates. We use historical data to estimate forfeitures and recognize that estimated compensation cost of restricted stock
units, net of estimated forfeitures, on a straight-line basis over the vesting period.
Performance Stock Units
The 2017 Plan also provides for grants of Performance Stock Units (PSUs) that generally vest at the end of the third year after
the grant. As defined by the 2017 Plan, the Human Resources Committee of the Board of Directors determines the number of
PSUs a participant earns based on the extent to which the corresponding performance goals have been achieved over the three-
year performance cycle. The PSUs that are paid in stock upon vesting and are classified as equity awards are measured using
the grant date fair value of Verizon common stock and are not remeasured at the end of each reporting period. The PSUs that
are settled in cash and are classified as liability awards are measured at its fair value at the end of each reporting period and,
therefore, will fluctuate based on the price of Verizon common stock as well as performance relative to the targets. All PSUs
granted under the 2017 Plan have DEUs, which will be paid to participants if, and only to the extent the applicable PSU award
vests, and is paid at the time that PSU award is paid, and in the same proportion as the PSU award. The granted and cancelled
activity for the PSU award includes adjustments for the performance goals achieved.
The following table summarizes Verizon’s Restricted Stock Unit and Performance Stock Unit activity:
(shares in thousands)
Outstanding January 1, 2021
Granted
Payments
Cancelled/Forfeited
Outstanding December 31, 2021
Granted
Payments
Cancelled/Forfeited
Outstanding December 31, 2022
Granted
Payments
Cancelled/Forfeited
Outstanding December 31, 2023
Restricted Stock Units
Performance Stock Units
Equity Awards
6,901
4,079
(3,417)
(784)
6,779
4,149
(3,313)
(362)
7,253
13,047
(3,612)
(836)
15,852
Liability Awards
19,559
16,845
(10,797)
(8,317)
17,290
11,309
(6,363)
(1,627)
20,609
17,441
(12,198)
(2,366)
23,486
Equity Awards
4,242
5,353
—
(955)
8,640
5,752
—
(567)
13,825
2,537
(3,495)
(693)
12,174
Liability Awards
9,637
1,692
(6,718)
(146)
4,465
197
(2,075)
(2,171)
416
12
(121)
(31)
276
As of December 31, 2023, unrecognized compensation expense related to the unvested portion of Verizon’s RSUs and PSUs
was approximately $719 million and is expected to be recognized over approximately 2 years.
The equity awards granted in 2023, 2022 and 2021 have weighted-average grant date fair values of $37.53, $53.26 and $55.39
per unit, respectively. During 2023, 2022 and 2021, we paid $415 million, $433 million and $986 million, respectively, to settle
RSUs and PSUs classified as liability awards.
Verizon 2023 Annual Report on Form 10-K
88
Stock-Based Compensation Expense
After-tax compensation expense for stock-based compensation related to RSUs and PSUs described above included in Net
income attributable to Verizon was $533 million, $609 million and $625 million for 2023, 2022 and 2021, respectively.
Note 11. Employee Benefits
We maintain non-contributory defined benefit pension plans for certain employees. In addition, we maintain postretirement health
care and life insurance plans for certain retirees and their dependents, which are both contributory and non-contributory, and
include a limit on our share of the cost for certain current and future retirees. In accordance with our accounting policy for
pension and other postretirement benefits, operating expenses include service costs associated with pension and other
postretirement benefits while other credits and/or charges based on actuarial assumptions, including projected discount rates, an
estimated return on plan assets, and impact from health care trend rates are reported in Other income (expense), net. These
estimates are updated in the fourth quarter or upon a remeasurement event, to reflect actual return on plan assets and updated
actuarial assumptions. The adjustment is recognized in the income statement during the fourth quarter and upon a
remeasurement event pursuant to our accounting policy for the recognition of actuarial gains and losses.
Pension and Other Postretirement Benefits
Pension and other postretirement benefits for certain employees are subject to collective bargaining agreements. Modifications in
benefits have been bargained from time to time, and we may also periodically amend the benefits in the management plans. The
following tables summarize benefit costs, as well as the benefit obligations, plan assets, funded status and rate assumptions
associated with pension and postretirement health care and life insurance benefit plans.
Obligations and Funded Status
At December 31,
Change in Benefit Obligations
Beginning of year
Service cost
Interest cost
Plan amendments
Actuarial (gain) loss, net
Benefits paid
Curtailment and termination benefits
Settlements paid
End of year
Change in Plan Assets
Beginning of year
Actual return on plan assets
Company contributions
Benefits paid
Settlements paid
End of year
Funded Status - End of year
2023
Pension
2022
(dollars in millions)
Health Care and Life
2022
2023
$
15,369 $
208
752
—
5
(1,008)
5
(198)
15,133
20,167 $
246
544
427
(3,865)
(782)
2
(1,370)
15,369
11,107 $
54
545
(26)
757
(982)
—
—
11,455
13,739
751
252
(1,008)
(198)
13,536
20,087
(4,249)
53
(782)
(1,370)
13,739
450
62
936
(982)
—
466
14,710
94
332
4
(3,297)
(736)
—
—
11,107
581
(87)
692
(736)
—
450
$
(1,597) $
(1,630) $
(10,989) $
(10,657)
At December 31,
Amounts recognized in the balance sheets
Non-current assets
Current liabilities
Non-current liabilities
Total
Amounts recognized in Accumulated other comprehensive
loss (pre-tax)
Prior service cost (benefit)
Total
$
$
$
$
Pension
2022
(dollars in millions)
Health Care and Life
2022
2023
4 $
(48)
(1,586)
(1,630) $
— $
(685)
(10,304)
(10,989) $
—
(718)
(9,939)
(10,657)
2023
— $
(42)
(1,555)
(1,597) $
635 $
635 $
747 $
747 $
(962) $
(962) $
(1,355)
(1,355)
89 Verizon 2023 Annual Report on Form 10-K
The accumulated benefit obligation for all defined benefit pension plans was $15.1 billion and $15.3 billion at December 31, 2023
and 2022, respectively.
Actuarial (Gain) Loss, Net
The net actuarial loss in 2023 is primarily the result of a $534 million loss in our postretirement benefit plans due to an increase
in our healthcare cost trend rate assumption used to determine the current year liabilities of our postretirement benefit plans from
a weighted-average of 6.6% at December 31, 2022 to a weighted-average of 7.3% at December 31, 2023; and a $503 million
loss ($288 million in our pension plans and $215 million in our postretirement benefit plans) due to a decrease in our discount
rate assumption used to determine the current year liabilities of our pension plans and postretirement benefit plans from a
weighted-average of 5.2% at December 31, 2022 to a weighted-average of 5.0% at December 31, 2023.
The net actuarial gain in 2022 is primarily the result of a $7.0 billion gain ($4.1 billion gain in our pension plans and $2.9 billion
gain in our postretirement benefit plans) due to an increase in our discount rate assumption used to determine the current year
liabilities of our pension plans and postretirement benefit plans from a weighted-average of 2.9% at December 31, 2021 to a
weighted-average of 5.2% at December 31, 2022.
Plan Amendments
The reclassifications from the amounts recorded in Accumulated other comprehensive income (loss) as a result of collective
bargaining agreements and plan amendments made in 2016, 2017, 2018 and 2022 resulted in a net decrease to net periodic
benefit cost and net increase to pre-tax income of approximately $252 million, $390 million and $708 million during 2023, 2022
and 2021, respectively.
Information for pension plans with an accumulated benefit obligation in excess of plan assets follows:
At December 31,
Accumulated benefit obligation
Fair value of plan assets
Information for pension plans with a projected benefit obligation in excess of plan assets follows:
At December 31,
Projected benefit obligation
Fair value of plan assets
Net Periodic Benefit Cost (Income)
(dollars in millions)
2022
15,286
13,694
2023
15,086 $
13,534
(dollars in millions)
2022
15,328
13,694
2023
15,133 $
13,536
$
$
The following table summarizes the components of net periodic benefit cost (income) related to our pension and postretirement
health care and life insurance plans:
Years Ended December 31,
Service cost - Cost of services
Service cost - Selling, general and administrative expense
Service cost
2023
182 $
$
Pension
2021
247 $
2022
216 $
26
208
30
246
35
282
2023
46 $
2022
(dollars in millions)
Health Care and Life
2021
94
18
112
79 $
15
94
8
54
Amortization of prior service cost (credit)
Expected return on plan assets
Interest cost
Remeasurement loss (gain), net
Curtailment and termination benefits
Other components
112
82
61
(1,013)
(1,119)
(1,234)
752
266
—
117
544
1,505
2
1,014
394
(1,419)
—
(2,198)
(419)
(31)
545
726
—
821
(530)
(894)
(27)
332
(22)
289
(3,182)
—
(3,407)
(960)
—
(1,587)
Total
$
325 $ 1,260 $ (1,916) $
875 $ (3,313) $ (1,475)
The service cost component of net periodic benefit cost (income) is recorded in Cost of services and Selling, general and
administrative expense in the consolidated statements of income while the other components, including mark-to-market
adjustments, if any, are recorded in Other income (expense), net.
Verizon 2023 Annual Report on Form 10-K
90
Other pre-tax changes in plan assets and benefit obligations recognized in Other comprehensive (income) loss are as follows:
At December 31,
Reversal of amortization items
Prior service cost (benefit)
Total recognized in Other comprehensive loss (income)
(pre-tax)
Assumptions
2023
2022
Pension
2021
(dollars in millions)
Health Care and Life
2021
2022
2023
$
(112) $
(82) $
(61) $
419 $
530 $
894
$
(112) $
(82) $
(61) $
419 $
530 $
894
The weighted-average assumptions used in determining benefit obligations follow:
At December 31,
Discount Rate
Rate of compensation increases
N/A - not applicable
2023
5.00%
3.00%
Pension
2022
5.20%
3.00%
Health Care and Life
2022
2023
5.20%
5.00%
N/A
N/A
The weighted-average assumptions used in determining net periodic cost follow:
At December 31,
Discount rate in effect for determining service cost
Discount rate in effect for determining interest cost
Expected return on plan assets
Rate of compensation increases
N/A - not applicable
2023
5.30%
5.10
7.70
3.00
Pension
2021
3.20%
1.90
6.50
3.00
2022
3.80%
3.20
6.70
3.00
Health Care and Life
2021
3.00%
1.80
4.20
2022
3.20%
2.30
4.90
2023
5.30%
5.10
7.30
N/A
N/A
N/A
In determining our pension and other postretirement benefit obligations, we used a weighted-average discount rate of 5.0% in
2023. The rates were selected to approximate the composite interest rates available on a selection of high-quality bonds
available in the market at December 31, 2023. The bonds selected had maturities that coincided with the time periods during
which benefits payments are expected to occur, were non-callable (or callable with certain selection criteria met) and available in
sufficient quantities to ensure marketability (at least $300 million par outstanding).
In order to project the long-term target investment return for the total portfolio, estimates are prepared for the total return of each
major asset class over the subsequent 10-year period. Those estimates are based on a combination of factors including the
current market interest rates and valuation levels, consensus earnings expectations and historical long-term risk premiums. To
determine the aggregate return for the pension trust, the projected return of each individual asset class is then weighted
according to the allocation to that investment area in the trust’s long-term asset allocation policy.
The assumed health care cost trend rates are as follows:
At December 31,
Weighted-average healthcare cost trend rate assumed for next year
Rate to which cost trend rate gradually declines
Year the rate reaches the level it is assumed to remain thereafter
Plan Assets
Health Care and Life
2021
6.20 %
4.50
2022
6.60 %
4.50
2023
7.30 %
4.50
2032
2031
2029
The Company’s overall investment strategy is to achieve a mix of assets that allows us to meet projected benefit payments while
taking into consideration risk and return. While target allocation percentages will vary over time, the current target allocation for
plan assets is designed so that 34% to 44% of the assets have the objective of achieving a return in excess of the growth in
liabilities (comprised of public equities, private equities, real estate, hedge funds, high yield bonds and emerging market debt)
and 62% to 72% of the assets are invested as liability hedging assets (where interest rate sensitivity of the liability hedging
assets better match the interest rate sensitivity of the liability) and a maximum of 10% is in cash. This allocation will shift as
funded status improves to a higher allocation of liability hedging assets. Target policies will be revisited periodically to ensure
they are in line with fund objectives. Both active and passive management approaches are used depending on perceived market
efficiencies and various other factors. Due to our diversification and risk control processes, there are no significant
concentrations of risk, in terms of sector, industry, geography or company names.
Pension and healthcare and life plans assets do not include significant amounts of Verizon bonds or common stock.
91 Verizon 2023 Annual Report on Form 10-K
Pension Plans
The fair values for the pension plans by asset category at December 31, 2023 are as follows:
Asset Category
Cash and cash equivalents
Equity securities
Fixed income securities
U.S. Treasuries and agencies
Corporate bonds
International bonds
Other
Real estate
Other
Private equity
Hedge funds
Total investments at fair value
Investments measured at NAV
Total
$
Total
1,956 $
69
Level 1
1,771 $
55
Level 2
(dollars in millions)
Level 3
—
—
14
185 $
1,412
2,994
341
768
996
512
56
9,104
4,432
1,274
204
3
234
—
—
—
3,541
138
2,790
338
534
—
—
30
4,029
—
—
—
—
996
512
26
1,534
$
13,536 $
3,541 $
4,029 $
1,534
The fair values for the pension plans by asset category at December 31, 2022 are as follows:
Asset Category
Cash and cash equivalents
Equity securities
Fixed income securities
U.S. Treasuries and agencies
Corporate bonds
International bonds
Other
Real estate
Other
Private equity
Hedge funds
Total investments at fair value
Investments measured at NAV
Total
$
Total
Level 1
817 $
332
779 $
318
Level 2
(dollars in millions)
Level 3
—
—
38 $
14
1,541
2,413
528
711
1,002
569
88
8,001
5,738
1,312
13
10
4
—
—
—
2,436
229
2,400
518
707
—
—
36
3,942
—
—
—
—
1,002
569
52
1,623
$
13,739 $
2,436 $
3,942 $
1,623
The following is a reconciliation of the beginning and ending balance of pension plan assets that are measured at fair value using
significant unobservable inputs:
Balance at January 1, 2022
Actual gain on plan assets
Purchases (sales)
Transfers out
Balance at December 31, 2022
Actual gain (loss) on plan assets
Purchases (sales)
Transfers out
Balance at December 31, 2023
(dollars in millions)
Real
Estate
Private
Equity
Hedge
Funds
$
972 $
19
14
(3)
1,002
(54)
48
—
$
996 $
569 $
30
(11)
(19)
569
14
(67)
(4)
512 $
110 $
19
6
(83)
52
4
(1)
(29)
26 $
Total
1,651
68
9
(105)
1,623
(36)
(20)
(33)
1,534
Verizon 2023 Annual Report on Form 10-K
92
Health Care and Life Plans
The fair values for the other postretirement benefit plans by asset category at December 31, 2023 are as follows:
Asset Category
Cash and cash equivalents
Equity securities
Fixed income securities
U.S. Treasuries and agencies
Corporate bonds
International bonds
Other
Total investments at fair value
Investments measured at NAV
Total
Asset Category
Cash and cash equivalents
Equity securities
Fixed income securities
U.S. Treasuries and agencies
Corporate bonds
International bonds
Other
Total investments at fair value
Investments measured at NAV
Total
Total
Level 1
Level 2
(dollars in millions)
Level 3
—
—
27 $
—
$
$
27 $
229
138
41
12
14
461
5
466 $
$
$
30 $
252
101
35
12
11
441
9
450 $
— $
229
118
29
10
—
386
1 $
252
82
25
9
—
369
20
12
2
14
75
19
10
3
11
72
386 $
75 $
Total
Level 1
Level 2
(dollars in millions)
Level 3
—
—
29 $
—
—
—
—
—
—
—
—
—
—
—
—
—
369 $
72 $
The fair values for the other postretirement benefit plans by asset category at December 31, 2022 are as follows:
The following are general descriptions of asset categories, as well as the valuation methodologies and inputs used to determine
the fair value of each major category of assets.
Cash and cash equivalents include short-term investment funds (less than 90 days to maturity), primarily in diversified portfolios
of investment grade money market instruments and are valued using quoted market prices or other valuation methods. The
carrying value of cash equivalents approximates fair value due to the short-term nature of these investments.
Investments in securities traded on national and foreign securities exchanges are valued by the trustee at the last reported sale
prices on the last business day of the year or, if no sales were reported on that date, at the last reported bid prices. Government
obligations, corporate bonds, international bonds and asset-backed debt are valued using matrix prices with input from
independent third-party valuation sources. Over-the-counter securities are valued at the bid prices or the average of the bid and
ask prices on the last business day of the year from published sources or, if not available, from other sources considered reliable
such as multiple broker quotes.
Commingled funds not traded on national exchanges are priced by the custodian or fund's administrator at their net asset value
(NAV). Commingled funds held by third-party custodians appointed by the fund managers provide the fund managers with a NAV.
The fund managers have the responsibility for providing this information to the custodian of the respective plan.
The investment manager of the entity values venture capital, corporate finance and natural resource limited partnership
investments. Real estate investments are valued at amounts based upon appraisal reports prepared by either independent real
estate appraisers or the investment manager using discounted cash flows or market comparable data. Loans secured by
mortgages are carried at the lesser of the unpaid balance or appraised value of the underlying properties. The values assigned
to these investments are based upon available and current market information and do not necessarily represent amounts that
might ultimately be realized. Because of the inherent uncertainty of valuation, estimated fair values might differ significantly from
the values that would have been used had a ready market for the securities existed. These differences could be material.
Forward currency contracts, futures, and options are valued by the trustee at the exchange rates and market prices prevailing on
the last business day of the year. Both exchange rates and market prices are readily available from published sources. These
securities are classified by the asset class of the underlying holdings.
Hedge funds are valued by the custodian at NAV based on statements received from the investment manager. These funds are
valued in accordance with the terms of their corresponding offering or private placement memoranda.
93 Verizon 2023 Annual Report on Form 10-K
Commingled funds, hedge funds, venture capital, corporate finance, natural resource and real estate limited partnership
investments for which fair value is measured using the NAV per share as a practical expedient are not leveled within the fair
value hierarchy but are included in total investments.
Employer Contributions
In 2023, we made a $200 million discretionary contribution to one of our qualified pension plans, $52 million of contributions to
our nonqualified pension plans and $936 million of contributions to our other postretirement benefit plans. For 2024, we expect
no required qualified pension plan contributions and insignificant nonqualified pension plan contributions. Contributions to our
other postretirement benefit plans are estimated to be approximately $770 million in 2024.
Estimated Future Benefit Payments
The benefit payments to retirees are expected to be paid as follows:
(dollars in millions)
Year
2024
2025
2026
2027
2028
2029 to 2033
$
Pension Benefits Health Care and Life
812
824
829
836
843
4,294
1,401 $
1,681
1,639
977
974
4,734
Savings Plan and Employee Stock Ownership Plans
We maintain four leveraged employee stock ownership plans (ESOP). We match a certain percentage of eligible employee
contributions to certain savings plans with shares of our common stock from this ESOP. At December 31, 2023, the number of
allocated shares of common stock in this ESOP was 42 million. There were no unallocated shares of common stock in this ESOP
at December 31, 2023. All leveraged ESOP shares are included in earnings per share computations.
Total savings plan costs were $724 million in 2023, $620 million in 2022 and $690 million in 2021.
Severance Benefits
The following table provides an analysis of our severance liability:
Year
2021
2022
2023
Beginning
of Year
Charged to
Expense
Payments
$
602 $
548
653
233 $
319
531
(258) $
(214)
(617)
(dollars in millions)
Other End of Year
548
653
567
(29) $
—
—
Severance, Pension and Benefits (Credits) Charges
During 2023, in accordance with our accounting policy to recognize actuarial gains and losses in the period in which they occur,
we recorded net pre-tax pension and benefits charges of $992 million in our pension and postretirement benefit plans. The
charges were recorded in Other income (expense), net in our consolidated statement of income and were primarily driven by a
charge of $534 million due to an increase in our healthcare cost trend rate assumption used to determine the current year
liabilities of our postretirement benefit plans from a weighted-average of 6.6% at December 31, 2022 to a weighted-average of
7.3% at December 31, 2023; a charge of $503 million due to a decrease in our discount rate assumption used to determine the
current year liabilities of our pension plans ($288 million) and postretirement benefit plans ($215 million) from a weighted-
average of 5.2% at December 31, 2022 to a weighted-average of 5.0% at December 31, 2023; a net credit of $45 million
primarily due to changes in other actuarial adjustments, which includes the difference between our estimated and our actual
return on plan assets. During 2023, we also recorded net pre-tax severance charges of $531 million in Selling, general and
administrative expense in our consolidated statements of income.
During 2022, we recorded net pre-tax pension and benefits credits of $1.7 billion in our pension and postretirement benefit plans.
The credits were recorded in Other income (expense), net in our consolidated statement of income and were primarily driven by
a credit of $7.0 billion due to an increase in our discount rate assumption used to determine the current year liabilities of our
pension plans ($4.1 billion) and postretirement benefit plans ($2.9 billion) from a weighted-average of 2.9% at December 31,
2021 to a weighted-average of 5.2% at December 31, 2022, a charge of $5.5 billion due to the difference between our estimated
and our actual return on assets and a credit of $206 million due to other actuarial assumption adjustments. During 2022, we also
Verizon 2023 Annual Report on Form 10-K
94
recorded net pre-tax severance charges of $319 million in Selling, general and administrative expense in our consolidated
statements of income.
During 2021, we recorded net pre-tax pension and benefits credits of $2.4 billion in our pension and postretirement benefit plans.
The credits were recorded in Other income (expense), net in our consolidated statement of income and were primarily driven by
a credit of $1.1 billion due to an increase in our discount rate assumption used to determine the current year liabilities of our
pension plans and postretirement benefit plans from a weighted-average of 2.6% at December 31, 2020 to a weighted-average
of 2.9% at December 31, 2021, a credit of $847 million due to the difference between our estimated and our actual return on
assets and a credit of $453 million due to other actuarial assumption adjustments. During 2021, we also recorded net pre-tax
severance charges of $233 million in Selling, general and administrative expense in our consolidated statements of income.
Note 12. Taxes
The components of income before provision for income taxes are as follows:
Years Ended December 31,
Domestic
Foreign
Total
The components of the provision for income taxes are as follows:
Years Ended December 31,
Current
Federal
Foreign
State and Local
Total
Deferred
Federal
Foreign
State and Local
Total
Total income tax provision
2023
15,668 $
1,319
16,987 $
2023
2,070 $
219
215
2,504
1,799
28
561
2,388
4,892 $
$
$
$
$
2022
26,822 $
(dollars in millions)
2021
27,607
1,813
29,420
28,271 $
1,449
(dollars in millions)
2021
2022
2,411 $
201
938
3,550
2,529
(22)
466
2,973
6,523 $
1,876
248
414
2,538
3,354
(97)
1,007
4,264
6,802
The following table shows the principal reasons for the difference between the effective income tax rate and the statutory federal
income tax rate:
Years Ended December 31,
Statutory federal income tax rate
State and local income tax rate, net of federal tax benefits
Noncontrolling interest
Goodwill impairment
Divestitures
Tax credits
Other, net
Effective income tax rate
2021
21.0 %
3.8
(0.4)
—
(0.6)
(0.5)
(0.2)
23.1 %
2023
21.0 %
3.6
(0.6)
7.0
—
(0.8)
(1.4)
28.8 %
2022
21.0 %
3.9
(0.4)
—
—
(0.5)
(0.9)
23.1 %
The effective income tax rate for 2023 was 28.8% compared to 23.1% for 2022. The increase in the effective income tax rate was
primarily due to the Verizon Business Group goodwill impairment charge of $5.8 billion that substantially decreased income
before income taxes and is not deductible. The decrease in the provision for income taxes was primarily due to the decrease in
income before income taxes in the current period.
The effective income tax rate for 2022 and 2021 was 23.1%. The effective income tax rate for the twelve months ended
December 31, 2022 was comparable to the similar period in 2021. The decrease in the provision for income taxes was primarily
due to the decrease in income before income taxes in the current period.
95 Verizon 2023 Annual Report on Form 10-K
The amounts of cash taxes paid by Verizon are as follows:
Years Ended December 31,
Income taxes, net of amounts refunded
Employment taxes
Property and other taxes
Total
Deferred Tax Assets and Liabilities
2023
2,343 $
1,016
2,007
5,366 $
$
$
(dollars in millions)
2021
3,040
1,225
1,756
6,021
2022
2,736 $
1,245
1,959
5,940 $
Deferred taxes arise because of differences in the book and tax bases of certain assets and liabilities. Significant components of
deferred tax assets and liabilities are as follows:
At December 31,
Deferred Tax Assets
Employee benefits
Tax loss, credit, and other carry forwards
Lease liabilities
Other - assets
Valuation allowances
Deferred tax assets
Deferred Tax Liabilities
Spectrum and other intangible amortization
Depreciation
Lease right-of-use assets
Other - liabilities
Deferred tax liabilities
Net deferred tax liability
(dollars in millions)
2022
2023
3,913 $
1,922
5,480
1,708
13,023
(1,341)
11,682
28,535
20,884
5,200
2,696
57,315
45,633 $
3,888
1,940
5,395
1,591
12,814
(1,347)
11,467
25,851
21,388
5,007
2,489
54,735
43,268
$
$
At December 31, 2023, undistributed earnings of our foreign subsidiaries indefinitely invested outside the U.S. amounted to
approximately $2.4 billion. The majority of Verizon's cash flow is generated from domestic operations and we are not dependent
on foreign cash or earnings to meet our funding requirements, nor do we intend to repatriate these undistributed foreign earnings
to fund U.S. operations. Furthermore, a portion of these undistributed earnings represents amounts that legally must be kept in
reserve in accordance with certain foreign jurisdictional requirements and are unavailable for distribution or repatriation. As a
result, we have not provided U.S. deferred taxes on these undistributed earnings because we intend that they will remain
indefinitely reinvested outside of the U.S. and, therefore unavailable for use in funding U.S. operations. Determination of the
amount of unrecognized deferred taxes related to these undistributed earnings is not practicable.
At December 31, 2023, we had net after-tax loss, credit, and other carry forwards for income tax purposes of approximately
$1.9 billion that relate to federal, state and foreign taxes. Of these net after-tax loss, credit, and other carry forwards,
approximately $1.0 billion will expire between 2024 and 2043 and approximately $911 million may be carried forward indefinitely.
During 2023, the valuation allowance decreased by an insignificant amount. The $1.3 billion valuation allowance at December
31, 2023 is primarily related to state and foreign taxes.
Unrecognized Tax Benefits
A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows:
Balance at January 1,
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Lapses of statutes of limitations
Balance at December 31,
Verizon 2023 Annual Report on Form 10-K
96
2023
2,812 $
114
185
(154)
(50)
(202)
2,705 $
$
$
(dollars in millions)
2021
2,944
150
621
(330)
(163)
(88)
3,134
2022
3,134 $
123
122
(419)
(92)
(56)
2,812 $
Included in the total unrecognized tax benefits at December 31, 2023, 2022 and 2021 is $2.3 billion, $2.5 billion and $2.8 billion,
respectively, that if recognized, would favorably affect the effective income tax rate.
We recognized the following net after-tax expenses (benefit) related to interest and penalties in the provision for income taxes:
Years Ended December 31,
2023
2022
2021
$
(dollars in millions)
86
35
(21)
The after-tax accruals for the payment of interest and penalties in the consolidated balance sheets are as follows:
At December 31,
2023
2022
$
(dollars in millions)
630
544
The decrease in unrecognized tax benefits in 2023 was primarily due to lapses of statutes of limitations in the current period. The
decrease in unrecognized tax benefits for 2022 was primarily related to the resolution of issues with the Internal Revenue
Service (IRS) involving tax years 2015-2016 as well as final purchase accounting adjustments made in connection with the 2021
acquisition of TracFone.
Verizon and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state, local and foreign
jurisdictions. As a large taxpayer, we are under audit by the IRS and multiple state and foreign jurisdictions for various open tax
years. The IRS is currently examining the Company’s U.S. income tax returns for tax years 2017 through 2019 and Cellco's U.S.
income tax return for tax years 2017 through 2020. Tax controversies are ongoing for tax years as early as 2011 in certain states
and as early as 2000 outside the U.S. The amount of the liability for unrecognized tax benefits will change in the next twelve
months due to the expiration of the statute of limitations in various jurisdictions and it is reasonably possible that various current
tax examinations will conclude or require reevaluations of the Company’s tax positions during this period. An estimate of the
range of the possible change cannot be made until these tax matters are further developed or resolved.
Note 13. Segment Information
Reportable Segments
We have two reportable segments that we operate and manage as strategic business units - Consumer and Business. We
measure and evaluate our reportable segments based on segment operating income, consistent with the chief operating decision
maker’s assessment of segment performance.
Our segments and their principal activities consist of the following:
Segment
Verizon
Consumer
Group
Description
Our Consumer segment provides consumer-focused wireless and wireline communications services and
products. Our wireless services are provided across one of the most extensive wireless networks in the
U.S. under the Verizon family of brands and through wholesale and other arrangements. We also provide
FWA broadband through our 5G or 4G LTE networks as an alternative to traditional landline internet
access. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well
as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and
over a traditional copper-based network to customers who are not served by Fios.
Verizon
Business
Group
Our Business segment provides wireless and wireline communications services and products, including
FWA broadband, data, video and conferencing services, corporate networking solutions, security and
managed network services, local and long distance voice services and network access to deliver various
IoT services and products. We provide these products and services to businesses, government customers
and wireless and wireline carriers across the U.S. and a subset of these products and services to
customers around the world.
Our Consumer segment's wireless and wireline products and services are available to our retail customers, as well as resellers
that purchase wireless network access from us on a wholesale basis.
Our Business segment’s wireless and wireline products and services are organized by the primary customer groups targeted by
these offerings. During the first quarter of 2023, Verizon reorganized the customer groups within its Business segment.
Previously, this segment was comprised of four customer groups: Small and Medium Business, Global Enterprise, Public Sector
and Other, and Wholesale. Following the reorganization, there are now three customer groups: Enterprise and Public Sector,
Business Markets and Other, and Wholesale. Enterprise and Public Sector combines the customers previously included in
Global Enterprise and Public Sector and Other (excluding BlueJeans and Connect customers) as well as the commercial wireline
customers previously included in Small and Medium Business. Business Markets and Other combines the customers previously
97 Verizon 2023 Annual Report on Form 10-K
included in Small and Medium Business (excluding commercial wireline customers), the BlueJeans customers previously
included in Global Enterprise and Public Sector and Other, and the Connect customers previously included in Public Sector and
Other. The Wholesale customer group remained unchanged. Prior period operating revenue results within the Business segment
have been recast for these reorganized customer groups. There was no change to the composition of our reportable segments
and total segment results, nor the determination of segment profit.
Corporate and other primarily includes device insurance programs, investments in unconsolidated businesses and development
stage businesses that support our strategic initiatives, as well as unallocated corporate expenses, certain pension and other
employee benefit related costs and interest and financing expenses. Corporate and other also includes the historical results of
divested businesses including Verizon Media, and other adjustments and gains and losses that are not allocated or used in
assessing segment performance due to their nature. Although such transactions are excluded from the business segment
results, they are included in reported consolidated earnings. Gains and losses from these transactions that are not individually
significant are included in segment results and therefore included in the chief operating decision maker’s assessment of segment
performance.
We completed the sale of Verizon Media on September 1, 2021. See Note 3 for additional information on the sale of Verizon
Media.
The following tables provide operating financial information for our two reportable segments:
2023
External Operating Revenues
Service
Wireless equipment
Other(1)
Enterprise and Public Sector
Business Markets and Other
Wholesale
Intersegment revenues
Total Operating Revenues(2)
Cost of services
Cost of wireless equipment
Selling, general and administrative expense
Depreciation and amortization expense
Total Operating Expenses
(dollars in millions)
Consumer
Business
Total
Reportable
Segments
$
74,874 $
20,645
5,898
—
—
—
209
101,626
— $
—
—
15,076
12,697
2,313
36
30,122
74,874
20,645
5,898
15,076
12,697
2,313
245
131,748
17,580
21,827
20,131
13,077
72,615
29,011 $
10,180
4,959
8,429
4,488
28,056
27,760
26,786
28,560
17,565
100,671
31,077
Operating Income
(1) Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry
obligations and programs, revenues associated with certain products included in our device protection offerings, leasing and
interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.
(2) Service and other revenues and Wireless equipment revenues included in our Business segment amounted to approximately
2,066 $
$
$26.4 billion and $3.7 billion, respectively, for the year ended December 31, 2023.
Verizon 2023 Annual Report on Form 10-K
98
Operating Income
(1) Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry
obligations and programs, revenues associated with certain products included in our device protection offerings, leasing and
interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.
(2) Service and other revenues and Wireless equipment revenues included in our Business segment amounted to approximately
2,631 $
$
$27.0 billion and $4.0 billion, respectively, for the year ended December 31, 2022.
2022
External Operating Revenues
Service
Wireless equipment
Other(1)
Enterprise and Public Sector
Business Markets and Other
Wholesale
Intersegment revenues
Total Operating Revenues(2)
Cost of services
Cost of wireless equipment
Selling, general and administrative expense
Depreciation and amortization expense
Total Operating Expenses
2021
External Operating Revenues
Service
Wireless equipment
Other(1)
Enterprise and Public Sector
Business Markets and Other
Wholesale
Intersegment revenues
Total Operating Revenues(2)
Cost of services
Cost of wireless equipment
Selling, general and administrative expense
Depreciation and amortization expense
Total Operating Expenses
(dollars in millions)
Consumer
Business
Total
Reportable
Segments
$
73,139 $
23,168
6,996
—
—
—
203
103,506
— $
—
—
15,692
12,753
2,584
43
31,072
73,139
23,168
6,996
15,692
12,753
2,584
246
134,578
17,746
25,134
19,064
12,716
74,660
28,846 $
10,483
5,362
8,284
4,312
28,441
28,229
30,496
27,348
17,028
103,101
31,477
(dollars in millions)
Consumer
Business
Total
Reportable
Segments
$
67,723 $
19,781
7,568
—
—
—
228
95,300
— $
—
—
16,387
11,906
2,680
69
31,042
67,723
19,781
7,568
16,387
11,906
2,680
297
126,342
16,581
20,523
16,562
11,679
65,345
29,955 $
10,653
4,544
8,324
4,084
27,605
27,234
25,067
24,886
15,763
92,950
33,392
Operating Income
(1) Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry
obligations and programs, revenues associated with certain products included in our device protection offerings, leasing and
interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.
(2) Service and other revenues and Wireless equipment revenues included in our Business segment amounted to approximately
3,437 $
$
$27.7 billion and $3.4 billion, respectively, for the year ended December 31, 2021.
The following table provides Fios revenues for our two reportable segments:
Years Ended December 31,
Consumer
Business
Total Fios revenue
2023
11,614 $
1,235
12,849 $
$
$
2022
11,622 $
(dollars in millions)
2021
11,558
1,136
12,694
12,823 $
1,201
99 Verizon 2023 Annual Report on Form 10-K
The following table provides Wireless service revenue for our reportable segments and includes intersegment activity:
Years Ended December 31,
Consumer
Business
Total Wireless service revenue
2023
63,358 $
13,372
76,730 $
$
$
(dollars in millions)
2021
56,103
12,366
68,469
2022
61,509 $
12,845
74,354 $
Reconciliation to Consolidated Financial Information
The reconciliation of segment operating revenues and operating income to consolidated operating revenues and operating
income below includes the effects of special items that the chief operating decision maker does not consider in assessing
segment performance, primarily because of their nature.
A reconciliation of the total reportable segments’ operating revenues to consolidated operating revenues is as follows:
Years Ended December 31,
Operating Revenues
Total reportable segments
Corporate and other
Reconciling items:
Eliminations
Consolidated Operating Revenues
2023
(dollars in millions)
2021
2022
$
$
131,748 $
2,479
134,578 $
2,510
126,342
7,722
(253)
133,974 $
(253)
136,835 $
(451)
133,613
A reconciliation of the total reportable segments’ operating income to consolidated income before provision for income taxes is as
follows:
Years Ended December 31,
Operating Income
Total reportable segments
Corporate and other
Reconciling items:
Severance charges
Other components of net periodic pension and benefit charges (Note 11)
Verizon Business Group goodwill impairment
Asset rationalization
Non-strategic business shutdown
Business transformation costs
Legal settlement
Loss on spectrum licenses
Net gain from disposition of business
Consolidated operating income
Equity in earnings (losses) of unconsolidated businesses
Other income (expense), net
Interest expense
Income Before Provision For Income Taxes
2023
(dollars in millions)
2021
2022
$
31,077 $
(643)
31,477 $
(319)
33,392
(449)
(533)
(248)
(5,841)
(480)
(179)
(176)
(100)
—
—
22,877
(53)
(313)
(5,524)
16,987 $
(304)
(387)
—
—
—
—
—
—
—
30,467
44
1,373
(3,613)
28,271 $
(209)
(769)
—
—
—
—
—
(223)
706
32,448
145
312
(3,485)
29,420
$
No single customer accounted for more than 10% of our total operating revenues during the years ended December 31, 2023,
2022 or 2021. International operating revenues were not significant during the years ended December 31, 2023, 2022 and 2021.
As of December 31, 2023 and 2022, international long-lived assets were not significant.
The chief operating decision maker does not review disaggregated assets on a segment basis; therefore, such information is not
presented. Depreciation and amortization included in the measure of segment profitability is primarily allocated based on
proportional usage, and is included within Total reportable segment operating income.
Note 14. Equity and Comprehensive Income (Loss)
Equity
Common Stock
In February 2020, the Board of Directors of the Company authorized a share buyback program to repurchase up to 100 million
shares of our common stock. The program will terminate when the aggregate number of shares purchased reaches 100 million
Verizon 2023 Annual Report on Form 10-K
100
or a new share repurchase plan superseding the current plan is authorized, whichever is sooner. During the years ended
December 31, 2023, 2022, and 2021, we did not repurchase any shares of our common stock under our authorized share
buyback program. At December 31, 2023, the maximum number of shares that could be purchased by or on behalf of Verizon
under our share buyback program was 100 million.
Common stock has been used from time to time to satisfy some of the funding requirements of employee and shareholder plans.
During the years ended December 31, 2023, 2022, and 2021, we issued 4.4 million, 2.1 million and 2.1 million shares of common
stock from treasury stock, which had aggregate values of $192 million, $91 million and $91 million, respectively.
In connection with our acquisition of TracFone in November 2021, we issued approximately 57.6 million shares of our common
stock from treasury stock valued at approximately $3.0 billion. See Note 3 for additional information.
Accumulated Other Comprehensive Income (Loss)
Comprehensive income consists of net income and other gains and losses affecting equity that, under U.S. GAAP, are excluded
from net income. Significant changes in the components of Other comprehensive income (loss), net of provision for income taxes
are described below.
The changes in the balances of Accumulated other comprehensive income (loss) by component are as follows:
(dollars in millions)
Balance at January 1, 2021
Other comprehensive loss
Amounts reclassified to net
income
Net other comprehensive
income (loss)
Balance at December 31, 2021
Excluded components
recognized in other
comprehensive income
Other comprehensive loss
Amounts reclassified to net
income
Net other comprehensive
income (loss)
Balance at December 31, 2022
Excluded components
recognized in other
comprehensive income
Other comprehensive
income
Amounts reclassified to net
income
Net other comprehensive
income (loss)
Balance at December 31,
2023
Foreign
currency
translation
adjustments
$
Unrealized
gain (loss)
on cash flow
hedges
Unrealized
gain (loss)
on fair value
hedges
Unrealized
gain (loss)
on
marketable
securities
(404) $
(141)
(1,387) $
(1,318)
— $
—
25 $
(8)
Defined
benefit
pension and
postretirement
plans
1,695 $
—
Total
(71)
(1,467)
—
1,233
(141)
(545)
—
(153)
—
(153)
(698)
—
62
—
62
(85)
(1,472)
—
(174)
496
322
(1,150)
—
3
85
88
—
—
—
(371)
—
(60)
(431)
(431)
617
—
(81)
536
(1)
(9)
16
—
(25)
—
(25)
(9)
—
5
2
7
(621)
611
(621)
1,074
—
(317)
(334)
(651)
423
—
—
(856)
(927)
(371)
(669)
102
(938)
(1,865)
617
70
(208)
(202)
(208)
485
$
(636) $
(1,062) $
105 $
(2) $
215 $
(1,380)
The amounts presented above in Net other comprehensive income (loss) are net of taxes. The amounts reclassified to net
income related to unrealized gain (loss) on cash flow hedges and unrealized gain (loss) on fair value hedges in the table above
are included in Other income (expense), net and Interest expense in our consolidated statements of income. See Note 9 for
additional information. The amounts reclassified to net income related to unrealized gain (loss) on marketable securities in the
table above are included in Other income (expense), net in our consolidated statements of income. The amounts reclassified to
net income related to defined benefit pension and postretirement plans in the table above are included in Other income
(expense), net in our consolidated statements of income. See Note 11 for additional information.
101 Verizon 2023 Annual Report on Form 10-K
Note 15. Additional Financial Information
The following tables provide additional financial information related to our consolidated financial statements:
Income Statement Information
Years Ended December 31,
Depreciation expense
Interest costs on debt balances
Net amortization of debt discount
Capitalized interest costs
Advertising expense
Years Ended December 31,
Other income (expense), net
Interest income
Other components of net periodic benefit (cost) income
Net debt extinguishment gains (losses)
Other, net
Balance Sheet Information
At December 31,
Prepaid expenses and other
Prepaid taxes
Deferred contract costs
Collateral payments related to derivative contracts
Restricted cash
Other prepaid expense and other
Accounts payable and accrued liabilities
Accounts payable
Accrued expenses
Accrued vacation, salaries and wages
Interest payable
Taxes payable
Other current liabilities
Dividends payable
Contract liability
Other
2023
14,937 $
$
7,123
219
(1,818)
3,847
2022
14,592 $
(dollars in millions)
2021
14,119
5,148
178
(1,841)
3,394
5,429
214
(2,030)
3,556
2023
354 $
(938)
308
(37)
(313) $
(dollars in millions)
2021
2022
146 $
2,386
(1,077)
(82)
1,373 $
48
3,785
(3,541)
20
312
$
$
(dollars in millions)
2022
2023
$
$
550 $
2,756
1,406
1,244
1,651
7,607 $
$
10,021 $
5,190
4,060
1,570
2,612
$
23,453 $
$
$
2,821
6,955
2,755
12,531
$
$
167
2,629
2,286
1,343
1,933
8,358
8,750
7,824
3,950
1,577
1,876
23,977
2,764
6,583
2,750
12,097
As of December 31, 2023 and 2022, Property, plant and equipment includes approximately $3.8 billion and $6.0 billion of
additions that have not yet been paid.
Verizon 2023 Annual Report on Form 10-K 102
Cash Flow Information
Years Ended December 31,
Cash Paid
Interest, net of amounts capitalized
Income taxes, net of amounts refunded
Other, net Cash Flows from Operating Activities
Changes in device payment plan agreement non-current receivables
Net debt extinguishment (gains) losses
Loss on spectrum licenses
Gain on disposition of Media business
Other, net
2023
(dollars in millions)
2021
2022
4,384 $
2,343
3,316 $
2,736
3,435
3,040
(2,975) $
(308)
—
—
(427)
(3,710) $
(4,919) $
1,077
—
—
64
(3,778) $
(2,438)
3,541
223
(1,051)
(368)
(93)
$
$
$
Other, net Cash Flows from Financing Activities
Net debt related costs(1)
Other, net
(2,309)
(1,523)
(3,832)
(1) These costs include the premiums paid for the early extinguishment of debt, fees paid in connection with exchange and
tender offers, and settlements of associated instruments.
(1,397)
(1,470) $
(1,706)
(2,072) $
(366) $
(73) $
$
$
Supplier Finance Program
We maintain a voluntary supplier finance program (SFP) with a financial institution which provides certain suppliers the option, at
their sole discretion, to participate in the program and sell their receivables due from Verizon to the financial institution on a non-
recourse basis. The eligible suppliers negotiate the terms directly with the financial institution and we have no involvement in
establishing those terms nor are we a party to these agreements.
Our payments associated with the invoices from the suppliers participating in the SFP are made to the financial institution
according to the original invoice terms generally at 90 days from the invoice date and for the original invoice amount. No
additional payments are exchanged between Verizon and the financial institution related to the SFP. Verizon does not pledge any
assets nor provide any guarantees to the financial institution in connection with the SFP. The SFP can be terminated by Verizon
or the financial institution with a 60-day notice period.
Confirmed obligations outstanding related to suppliers participating in the SFP are recorded within Accounts payable and
accrued liabilities in our consolidated balance sheets and the associated payments are reflected in the operating activities
section of our consolidated statements of cash flows. As of December 31, 2023 and 2022, $817 million and $1.0 billion,
respectively, remained as confirmed obligations outstanding related to suppliers participating in the SFP.
Note 16. Commitments and Contingencies
In the ordinary course of business, Verizon is involved in various litigation and regulatory proceedings at the state and federal
level. Where it is determined, in consultation with counsel based on litigation and settlement risks, that a loss is probable and
estimable in a given matter, Verizon establishes an accrual. In none of the currently pending matters is the amount of accrual
material. An estimate of the reasonably possible loss or range of loss in excess of the amounts already accrued cannot be made
at this time due to various factors typical in contested proceedings, including: (1) uncertain damage theories and demands; (2) a
less than complete factual record; (3) uncertainty concerning legal theories and their resolution by courts or regulators; and (4)
the unpredictable nature of the opposing party and its demands. We continuously monitor these proceedings as they develop
and adjust any accrual or disclosure as needed. We do not expect that the ultimate resolution of any pending regulatory or legal
matter in future periods will have a material effect on our financial condition, but it could have a material effect on our results of
operations for a given reporting period.
Verizon is currently involved in approximately 25 federal district court actions alleging that Verizon is infringing various patents.
Most of these cases are brought by non-practicing entities and effectively seek only monetary damages; a small number are
brought by companies that have sold products and could seek injunctive relief as well. These cases have progressed to various
stages and a small number may go to trial in the coming 12 months if they are not otherwise resolved.
In connection with the execution of agreements for the sales of businesses and investments, Verizon ordinarily provides
representations and warranties to the purchasers pertaining to a variety of nonfinancial matters, such as ownership of the
securities being sold, as well as indemnity from certain financial losses. From time to time, counterparties may make claims
under these provisions, and Verizon will seek to defend against those claims and resolve them in the ordinary course of
business.
103 Verizon 2023 Annual Report on Form 10-K
As of December 31, 2023, letters of credit totaling approximately $803 million, which were executed in the normal course of
business and support several financing arrangements and payment obligations to third parties, were outstanding.
As of December 31, 2023, Verizon had 26 renewable energy purchase agreements (REPAs) with third parties. Each of the
REPAs is based on the expected operation of a renewable energy-generating facility and has a fixed price term of 12 to 20 years
from the commencement of the facility's entry into commercial operation. Thirteen of the facilities have entered into commercial
operation, and the remainder are under development. The REPAs generally are expected to be financially settled based on the
prevailing market price as energy is generated by the facilities.
We have various unconditional purchase obligations, which represent agreements to purchase goods or services that are
enforceable and legally binding. We estimate that these unconditional purchase obligations, for contracts with terms in excess of
one year, total $21.7 billion, and primarily represent commitments to purchase network equipment, software and services,
content, marketing services and other items which will be used or sold in the ordinary course of business from a variety of
suppliers. Of this total amount, $8.9 billion is attributable to 2024, $8.2 billion is attributable to 2025, $2.5 billion is attributable to
2026, $1.1 billion is attributable to 2027, $408 million is attributable to 2028 and $603 million is attributable to years thereafter.
These amounts do not represent our entire anticipated purchases in the future, but represent only those items that are the
subject of contractual obligations. Our commitments are generally determined based on the noncancelable quantities to which
we are contractually obliged. Since the commitments to purchase programming services from television networks and broadcast
stations have no minimum volume requirement, we estimated our obligation based on number of subscribers at December 31,
2023, and applicable rates stipulated in the contracts in effect at that time. We also purchase products and services as needed
with no firm commitment.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the registrant’s disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934), as of the end of the
period covered by this Annual Report, that ensure that information relating to the registrant which is required to be disclosed in
this report is recorded, processed, summarized and reported within required time periods using the criteria for effective internal
control established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission in 2013. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded
that the registrant’s disclosure controls and procedures were effective as of December 31, 2023.
Changes in Internal Control over Financial Reporting
In the ordinary course of business, we routinely review our system of internal control over financial reporting and make changes
to our systems and processes that are intended to ensure an effective internal control environment. In the third quarter of 2020,
we began a multi-year implementation of a new global enterprise resource planning (ERP) system, which will replace many of
our existing core financial systems. The new ERP system is designed to enhance the flow of financial information, facilitate data
analysis and accelerate information reporting. The implementation is expected to occur in phases over the next several years.
As the phased implementation of the new ERP system continues, we could have changes to our processes and procedures
which, in turn, could result in changes to our internal controls over financial reporting. As such changes occur, we will evaluate
quarterly whether such changes materially affect our internal control over financial reporting.
There were no changes in Verizon's internal control over financial reporting during the fourth quarter of 2023 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management's Annual Report on Internal Control over Financial Reporting
The management of Verizon Communications Inc. is responsible for establishing and maintaining adequate internal control over
financial reporting of Verizon. Management has evaluated internal control over financial reporting of Verizon using the criteria for
effective internal control established in Internal Control–Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission in 2013.
Management has assessed the effectiveness of Verizon’s internal control over financial reporting as of December 31, 2023.
Based on this assessment, management believes that the internal control over financial reporting of Verizon is effective as of
December 31, 2023. In connection with this assessment, there were no material weaknesses in Verizon’s internal control over
Verizon 2023 Annual Report on Form 10-K 104
financial reporting identified by management. The Company’s independent registered public accounting firm, Ernst & Young LLP,
has provided an attestation report on Verizon’s internal control over financial reporting and is included in Item 8 of this Annual
Report.
Item 9B. Other Information
During the three months ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) under the
Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each
term is defined in Item 408 of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Set forth below is information with respect to our current executive officers.
Name
Hans Vestberg
Samantha Hammock
Kyle Malady
Joseph Russo
Sowmyanarayan Sampath
Craig Silliman
Anthony Skiadas
Mary-Lee Stillwell
Vandana Venkatesh
Age Office
58 Chairman and Chief Executive Officer
45 Executive Vice President and Chief Human Resources Officer
56 Executive Vice President and Group CEO - Verizon Business
50 Executive Vice President and President - Global Networks and Technology
47 Executive Vice President and Group CEO - Verizon Consumer
56 Executive Vice President and President - Verizon Global Services
55 Executive Vice President and Chief Financial Officer
50 Senior Vice President and Controller
52 Executive Vice President and Chief Legal Officer
Held Since
2019
2021
2023
2023
2023
2023
2023
2023
2022
Each of the above officers has held the indicated office or other high-level managerial positions with the Company or one of its
subsidiaries for at least five years, with the exception of Samantha Hammock and Mary-Lee Stillwell, who have both been with
Verizon since 2020. Officers are not elected for a fixed term of office and may be removed from office at any time at the
discretion of the Board of Directors.
Samantha Hammock is the Executive Vice President and Chief Human Resources Officer of the Company. Ms. Hammock joined
Verizon in December 2020 as Senior Vice President of Global Talent and began serving in her current role in December 2021.
Prior to joining Verizon, Ms. Hammock spent 14 years at the American Express Company, a globally integrated payments
company and provider of credit and charge cards to consumers and businesses around the world, where she served as Head of
Talent and Learning from April 2020 to December 2020, Chief Learning Officer from 2017 to April 2020, and Vice President,
Leadership Strategy, from 2016 to April 2020.
Mary-Lee Stillwell is the Senior Vice President and Controller of the Company. Ms. Stillwell joined Verizon in August 2020 as Vice
President - Accounting & External Reporting and began serving in her current role in May 2023. Prior to joining Verizon, Ms.
Stillwell spent 17 years in senior leadership roles in the energy industry, including Chief Accounting Officer of Clearway Energy,
Inc. from 2018 until 2020, and, prior to that, Vice President and Assistant Controller for NRG Energy, Inc.
For other information required by this item, see the sections entitled "Governance — Item 1: Election of Directors — Nominees
for election and — Election process, — Our governance framework — Where to find more information, — Board committees —
Audit Committee and — Other risk-related matters — Business conduct and ethics" in our definitive Proxy Statement to be filed
with the Securities and Exchange Commission and delivered to shareholders in connection with our 2024 Annual Meeting of
Shareholders, which are incorporated herein by reference.
Item 11. Executive Compensation
For information with respect to executive compensation, see the sections entitled "Governance — Non-employee Director
compensation" and "Executive compensation — Compensation discussion and analysis, — Compensation Committee Report
and — Compensation tables" (excluding information under "— Pay versus performance") in our definitive Proxy Statement to be
filed with the Securities and Exchange Commission and delivered to shareholders in connection with our 2024 Annual Meeting of
Shareholders, which are incorporated by reference herein. There were no relationships to be disclosed under paragraph (e)(4) of
Item 407 of Regulation S-K.
105 Verizon 2023 Annual Report on Form 10-K
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
For information with respect to the security ownership of certain beneficial owners, the directors and executive officers, see the
section entitled "Stock ownership — Security ownership of certain beneficial owners and management" in our definitive Proxy
Statement to be filed with the Securities and Exchange Commission and delivered to shareholders in connection with our 2024
Annual Meeting of Shareholders, which is incorporated herein by reference.
The following table provides information as of December 31, 2023 for (i) all equity compensation plans previously approved by
the Company’s shareholders, and (ii) all equity compensation plans not previously approved by the Company’s shareholders.
Since May 4, 2017, the Company has only issued awards under the 2017 Verizon Communications. Inc. Long-Term Incentive
Plan (2017 LTIP), which provides for awards of stock options, restricted stock, restricted stock units, performance stock units and
other equity-based hypothetical stock units to employees of Verizon. No new awards are permitted to be issued under any other
equity compensation plan. In accordance with SEC rules, the table does not include outstanding awards that are payable solely
in cash by the terms of the award, and such awards do not reduce the number of shares remaining for issuance under the 2017
LTIP.
Plan category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
Weighted-
average
exercise
price of
outstanding
options,
warrants and
rights (b)
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights (a)
28,026,577 (1) $
77,793 (4)
28,104,370
$
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a)) (c)
— (2)
—
—
57,162,076 (3)
—
57,162,076
(1) This amount includes: 28,026,577 shares of common stock subject to outstanding restricted stock units and performance stock
units, including dividend equivalents accrued on such awards through December 31, 2023. This does not include performance
stock units, deferred stock units and deferred share equivalents payable solely in cash.
(2) The Company's outstanding restricted stock units, performance stock units and deferred stock units do not have exercise
prices associated with the settlement of these awards.
(3) This number reflects the number of shares of common stock that remained available for future issuance under the 2017 LTIP.
(4) This number reflects shares subject to deferred stock units credited to the Verizon Income Deferral Plan, which were awarded
in 2002 under the Verizon Communications Broad-Based Incentive Plan. No new awards are permitted to be issued under this
plan.
Item 13. Certain Relationships and Related Transactions, and Director Independence
For information with respect to certain relationships and related transactions and director independence, see the sections entitled
"Governance — Our governance framework — Other risk-related matters — Related person transactions and — Item 1: Election
of Directors — Our Board's independence" in our definitive Proxy Statement to be filed with the Securities and Exchange
Commission and delivered to shareholders in connection with our 2024 Annual Meeting of Shareholders, which are incorporated
herein by reference.
Item 14. Principal Accounting Fees and Services
Our independent registered public accounting firm is Ernst & Young LLP, New York, NY, Auditor Firm ID: 42.
For information with respect to principal accounting fees and services, see the section entitled "Audit matters — Item 3:
Ratification of appointment of independent registered public accounting firm" in our definitive Proxy Statement to be filed with the
Securities and Exchange Commission and delivered to shareholders in connection with our 2024 Annual Meeting of
Shareholders, which is incorporated herein by reference.
Verizon 2023 Annual Report on Form 10-K 106
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) Documents filed as part of this report:
(1) Financial Statements
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm on Financial Statements
Financial Statements covered by Report of Independent Registered Public Accounting Firm:
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
(2) Financial Statement Schedule
II – Valuation and Qualifying Accounts
(3) Exhibits
Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as
exhibits hereto. Unless otherwise indicated, all exhibits so incorporated are from File No. 1-8606.
Pursuant to Regulation S-K, Item 601(b)(4)(iii)(A), certain instruments which define the rights of holders of
long-term debt of Verizon Communications Inc. and its consolidated subsidiaries are not filed herewith,
and the Company hereby agrees to furnish a copy of any such instrument to the SEC upon request.
Page
50
51
53
54
55
56
57
58
110
107 Verizon 2023 Annual Report on Form 10-K
Exhibit
Number Description
3a
3b
4a
4b
4c
4d
4e
4f
4g
10a
10b
10c
Restated Certificate of Incorporation of Verizon Communications Inc. (filed as Exhibit 3a to Form 10-Q for the period
ended June 30, 2014 and incorporated herein by reference).
Bylaws of Verizon Communications Inc., as amended and restated, effective as of September 30, 2022 (filed as
Exhibit 3b to Form 8-K filed on September 30, 2022 and incorporated herein by reference).
Indenture between Verizon Communications Inc., both individually and as successor in interest to Verizon Global
Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association,
formerly known as First Union National Bank, as Trustee, dated as of December 1, 2000 (filed as Exhibit 4.1 to
Verizon Global Funding Corp.’s Registration Statement on Form S-4, Registration No. 333-64792, and incorporated
herein by reference).
First Supplemental Indenture between Verizon Communications Inc., both individually and as successor in interest
to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank,
National Association, formerly known as First Union National Bank, as Trustee, dated as of May 15, 2001 (filed as
Exhibit 4.2 to Verizon Global Funding Corp.’s Registration Statement on Form S-3, Registration No. 333-67412, and
incorporated herein by reference).
Second Supplemental Indenture between Verizon Communications Inc., both individually and as successor in
interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia
Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of September 29,
2004 (filed as Exhibit 4.1 to Form 8-K filed on February 9, 2006, and incorporated herein by reference).
Third Supplemental Indenture between Verizon Communications Inc., both individually and as successor in interest
to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank,
National Association, formerly known as First Union National Bank, as Trustee, dated as of February 1, 2006 (filed
as Exhibit 4.2 to Form 8-K filed on February 9, 2006, and incorporated herein by reference).
Fourth Supplemental Indenture between Verizon Communications Inc., both individually and as successor in
interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia
Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of April 4, 2016 (filed
as Exhibit 4.5 to Verizon Communications Inc.’s Registration Statement on Form S-4, Registration No. 333-212307,
and incorporated herein by reference).
Fifth Supplemental Indenture between Verizon Communications Inc., both individually and as successor in interest
to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank,
National Association, formerly known as First Union National Bank, as Trustee, dated as of May 15, 2020 (filed as
Exhibit 4.1 to Form 8-K filed on May 15, 2020, and incorporated herein by reference).
Description of Verizon's Securities Registered Pursuant to Section 12 of the Securities and Exchange Act of 1934,
filed herewith.
2017 Verizon Communications Inc. Long-Term Incentive Plan (incorporated by reference to Appendix B of the
Registrant’s Proxy Statement included in Schedule 14A filed on March 20, 2017).**
10a(i)
Form of 2021 Performance Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc.
Long-Term Incentive Plan (filed as Exhibit 10a to Form 10-Q for the period ended March 31, 2021 and
incorporated herein by reference).**
10a(ii)
Form of 2021 Restricted Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-
Term Incentive Plan (filed as Exhibit 10b to Form 10-Q for the period ended March 31, 2021 and
incorporated herein by reference).**
10a(iii)
Form of 2022 Performance Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc.
Long-Term Incentive Plan (filed as Exhibit 10a to Form 10-Q for the period ended March 31, 2022 and
incorporated herein by reference).**
10a(iv)
10a(v)
10a(vi)
Form of 2022 Restricted Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-
Term Incentive Plan (filed as Exhibit 10b to Form 10-Q for the period ended March 31, 2022 and
incorporated herein by reference).**
Form of 2023 Performance Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc.
Long-Term Incentive Plan (filed as Exhibit 10a to Form 10-Q for the period ended March 31, 2023 and
incorporated herein by reference).**
Form of 2023 Restricted Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-
Term Incentive Plan (filed as Exhibit 10b to Form 10-Q for the period ended March 31, 2023 and
incorporated herein by reference).**
Verizon Communications Inc. Short-Term Incentive Plan (filed as Exhibit 10a to Form 10-Q for the period ended
March 31, 2019 and incorporated herein by reference).**
Verizon Executive Deferral Plan (filed as Exhibit 10e to Form 10-K for the period ended December 31, 2017 and
incorporated herein by reference).**
Verizon 2023 Annual Report on Form 10-K
108
10d
Verizon Communications Inc. Income Deferral Plan (filed as Exhibit 10f to Form 10-Q for the period ended June 30,
2002 and incorporated herein by reference).**
10d(i)
Description of Amendment to Verizon Communications Inc. Income Deferral Plan (filed as Exhibit 10o(i)
to Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).**
10e
Verizon Excess Pension Plan (filed as Exhibit 10p to Form 10-K for the year ended December 31, 2004 and
incorporated herein by reference).**
10e(i)
First Amendment to Verizon Excess Pension Plan (filed as Exhibit 10p(i) to Form 10-K for the year ended
December 31, 2004 and incorporated herein by reference).**
Bell Atlantic Senior Management Long-Term Disability and Survivor Protection Plan, as amended (filed as Exhibit
10h to Form SE filed on March 27, 1986 and Exhibit 10b(ii) to Form 10-K for the year ended December 31, 1997
and incorporated herein by reference).**
Verizon Executive Life Insurance Plan, As Amended and Restated September 2009 (filed as Exhibit 10s to Form 10-
K for the year ended December 31, 2010 and incorporated herein by reference).**
Form of Aircraft Time Sharing Agreement (filed as Exhibit 10i to Form 10-K for the year ended December 31, 2020
and incorporated herein by reference).**
Verizon Senior Manager Severance Plan (filed as Exhibit 10d to Form 10-Q for the period ended March 31, 2010
and incorporated herein by reference).**
List of principal subsidiaries of Verizon Communications Inc., filed herewith.
Consent of Ernst & Young LLP, filed herewith.
Powers of Attorney, filed herewith.
10f
10g
10h
10i
21
23
24
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
97
Verizon Communications Inc. Policy for the Recovery of Erroneously Awarded Compensation, filed herewith.
101.INS XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL
tags are embedded within the inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document.
101.PRE XBRL Taxonomy Presentation Linkbase Document.
101.CAL XBRL Taxonomy Calculation Linkbase Document.
101.LAB XBRL Taxonomy Label Linkbase Document.
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.
104
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information
contained in Exhibits 101).
**
Indicates management contract or compensatory plan or arrangement.
109 Verizon 2023 Annual Report on Form 10-K
Schedule II - Valuation and Qualifying Accounts
Verizon Communications Inc. and Subsidiaries
For the Years Ended December 31, 2023, 2022 and 2021
Description
Balance at
Beginning of
Period
Charged to
Expenses
Charged to
Other Accounts(a)
Deductions(b)
Balance at
End of
Period(c)
Additions
(dollars in millions)
Allowance for credit losses deducted from accounts receivable:
$
Year 2023
Year 2022
Year 2021
1,261
1,151
1,507
$
2,146 $
1,531
743
38 $
69
139
1,836 $
1,490
1,238
1,609
1,261
1,151
Additions
Description
Balance at
Beginning of
Period
Charged to
Expenses
Charged to
Other Accounts(d)
Deductions(e)
Balance at
End of
Period
Valuation allowance for deferred tax
Year 2023
Year 2022
Year 2021
(a) Charged to Other Accounts primarily includes amounts previously written off which were credited directly to this account
68 $
41
339
13 $
—
—
1,341
1,347
1,574
1,347
1,574
2,183
268
948
87 $
$
$
when recovered.
(b) Deductions primarily include amounts written off as uncollectible or transferred to other accounts or utilized.
(c) Allowance for credit losses includes approximately $592 million, $436 million, and $255 million at December 31, 2023, 2022,
and 2021, respectively, related to long-term device payment receivables.
(d) Charged to Other Accounts includes current year increase to valuation allowance charged to equity and reclassifications
from other balance sheet accounts.
(e) Reductions to valuation allowances related to deferred tax assets.
Verizon 2023 Annual Report on Form 10-K 110
Item 16. Form 10-K Summary
None.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
VERIZON COMMUNICATIONS INC.
By:
/s/ Mary-Lee Stillwell
Mary-Lee Stillwell
Senior Vice President and Controller
Date: February 9, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Principal Executive Officer:
/s/ Hans E. Vestberg
Hans E. Vestberg
Chairman and Chief Executive Officer
Principal Financial Officer:
/s/ Anthony T. Skiadas
Anthony T. Skiadas
Executive Vice President and Chief Financial Officer
Principal Accounting Officer:
/s/ Mary-Lee Stillwell
Mary-Lee Stillwell
Senior Vice President and Controller
February 9, 2024
February 9, 2024
February 9, 2024
111 Verizon 2023 Annual Report on Form 10-K
February 9, 2024
February 9, 2024
February 9, 2024
February 9, 2024
February 9, 2024
February 9, 2024
February 9, 2024
February 9, 2024
February 9, 2024
February 9, 2024
February 9, 2024
February 9, 2024
*
Hans E. Vestberg
*
Shellye L. Archambeau
*
Roxanne S. Austin
Mark T. Bertolini
*
*
Vittorio Colao
*
Melanie L. Healey
*
Laxman Narasimhan
*
Clarence Otis, Jr.
*
Daniel H. Schulman
*
Rodney E. Slater
Carol B. Tomé
*
*
Gregory G. Weaver
* By: /s/ Mary-Lee Stillwell
Mary-Lee Stillwell
(as attorney-in-fact)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Verizon 2023 Annual Report on Form 10-K 112
Consent of Independent Registered Public Accounting Firm
EXHIBIT 23
We consent to the incorporation by reference in the following Registration Statements:
Form S-4, No. 333-11573; Form S-8, No. 333-41593; Form S-8, No. 333-50146; Form S-4, No. 333-76171; Form S-8,
No. 333-76171; Form S-8, No. 333-53830; Form S-8, No. 333-82690; Form S-4, No. 333-124008; Form S-8, No. 333-124008;
Form S-4, No. 333-132651; Form S-8, No. 333-172501; Form S-8, No. 333-172999; Form S-8, No. 333-200398; Form S-8, No.
333-217717; Form S-8, No. 333-223523; Form S-8, No. 333-238959; Form S-3, No. 333-261336; and Form S-3, No.
333-267245, all of Verizon Communications Inc. ("Verizon");
of our reports dated February 9, 2024, with respect to the consolidated financial statements of Verizon and the effectiveness of
internal control over financial reporting of Verizon, included in this Annual Report (Form 10-K) for the year ended December 31,
2023.
/s/ Ernst & Young LLP
Ernst & Young LLP
New York, New York
February 9, 2024
Verizon 2023 Annual Report on Form 10-K
EXHIBIT 31.1
I, Hans E. Vestberg, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Verizon Communications Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 9, 2024
/s/ Hans E. Vestberg
Hans E. Vestberg
Chairman and Chief Executive Officer
Verizon 2023 Annual Report on Form 10-K
EXHIBIT 31.2
I, Anthony T. Skiadas, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Verizon Communications Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 9, 2024
/s/ Anthony T. Skiadas
Anthony T. Skiadas
Executive Vice President and Chief Financial Officer
Verizon 2023 Annual Report on Form 10-K
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002, PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE
I, Hans E. Vestberg, Chairman and Chief Executive Officer of Verizon Communications Inc. (the Company), certify that:
(1)
(2)
the report of the Company on Form 10-K for the annual period ending December 31, 2023 (the Report) fully complies
with the requirements of section 13(a) of the Securities Exchange Act of 1934 (the Exchange Act); and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company as of the dates and for the periods referred to in the Report.
Date: February 9, 2024
/s/ Hans E. Vestberg
Hans E. Vestberg
Chairman and Chief Executive Officer
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or
otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by
Section 906, has been provided to Verizon Communications Inc. and will be retained by Verizon Communications Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.
Verizon 2023 Annual Report on Form 10-K
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002,
PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE
I, Anthony T. Skiadas, Executive Vice President and Chief Financial Officer of Verizon Communications Inc. (the Company),
certify that:
(1)
(2)
the report of the Company on Form 10-K for the annual period ending December 31, 2023 (the Report) fully complies
with the requirements of section 13(a) of the Securities Exchange Act of 1934 (the Exchange Act); and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company as of the dates and for the periods referred to in the Report.
Date: February 9, 2024
/s/ Anthony T. Skiadas
Anthony T. Skiadas
Executive Vice President and Chief Financial Officer
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or
otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by
Section 906, has been provided to Verizon Communications Inc. and will be retained by Verizon Communications Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.
Verizon 2023 Annual Report on Form 10-K
(This page intentionally left blank.)
(This page intentionally left blank.)
Verizon Communications Inc.
1095 Avenue of the Americas
New York, NY 10036
212.395.1000
verizon.com/about/investors
© 2024.Verizon. All Rights Reserved.
3.EPC05610112500.105
002CSNE6E2