Verizon Communications : Sellside Analyst Meeting Nov. 19

Sellside Analyst Meeting

November 19, 2019

"Safe Harbor" Statement

NOTE: In this presentation 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," "believes," "estimates," "expects," "hopes" 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 in our filings with the Securities and Exchange Commission (the "SEC"), could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: adverse conditions in the U.S. and international economies; the effects of competition in the markets in which we operate; material changes in technology or technology substitution; disruption of our key suppliers' provisioning of products or services; changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks; breaches of network or information technology security, natural disasters, terrorist attacks or acts of war or significant litigation and any resulting financial impact not covered by insurance; our high level of indebtedness; 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; material adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or treaties, or in their interpretation; 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; the inability to implement our business strategies; and the inability to realize the expected benefits of strategic transactions.

As required by SEC rules, we have provided a reconciliation of the non-GAAP financial measures included in this presentation

to the most directly comparable GAAP measures in materials on our website at www.verizon.com/about/investors.

© 2019 Verizon

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Verizon

Hans Vestberg

Chairman and Chief Executive Officer

Verizon strategy fundamentals

CUSTOMERS

FIRST

• Best network experiences
• Customer-centricmodels

PURPOSE-DRIVEN

CULTURE

• Responsible business
• Preferred place for talent

000

Network-as-a-

Service / Platform

$

INNOVATION DRIVING

NEW GROWTH

• 5G & edge compute
• New market opportunities

FINANCIAL

DISCIPLINE

• Balanced capital allocation
• Best-in-classcost models

Target GDP+ revenue growth driving strong earnings and cash flow

© 2019 Verizon

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Strategy execution - 2019 year-to-date accomplishments

1 LTE network leadership driving strong operational and financial performance

2		5G leadership with expansion of 5G Ultra Wideband (UWB) cities (mobile and home)
3		Customer centricity leading to greater choice & innovation across products and services
4		Process transformation allowing for increased flexibility to capture market opportunities

5 Purpose-driven strategy reflected in commitments to education, climate and other

Transformation from a position of strength

© 2019 Verizon

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5G creating value across existing and new businesses

1 5G Fixed Wireless Access (FWA)

2

5G Mobility

3 5G Multi-access Edge Computing (MEC)

4

Reduced

Cost / GB

CUSTOMERS /

MARKETS

Consumer

• Business
  All
  All
  All

TIME OF

LAUNCH

Initial launch - 2018

Launch on NR - 2H'19

1H'19

(30 cities by 2019E)

4Q'19

1H'19

FINANCIAL

OPPORTUNITY

Market expansion

Defend and grow

market share

New market

opportunities

Attractive $/GB

economics

© 2019 Verizon

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Verizon

Kyle Malady

Chief Technology Officer

Staying ahead of data usage growth

LTE Data Usage Growth Trend

New Technology Deployment

CAGR +36%

2016	2017	2018	2019*	2020*
		Busy Hours Usage		Total Usage

* Estimated Usage

4x4 MIMO

256-QAM

RF Innovation

CBRS / LAA

CarrierSpectrum

Aggregation Innovation

We continue to deploy new technologies and capacity to keep up with growth

© 2019 Verizon

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Continued industry leading performance

Root Metrics	Umlaut		Tutela
Overall Win Rate	Mobile Benchmarking		Download/Upload Speed Test*
Verizon				Verizon
				Competitor C
Competitor A				Competitor A
Competitor C
Competitor B				Competitor B
	Competitor A	Competitor B Competitor C	Verizon

Note: Umlaut data as of 06/2019; Tutela data as of 09/2019. * Not Including 5G Performance

Continued network leadership

© 2019 Verizon

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Critical technologies for the 5G future

FIBER

SPECTRUM

SOFTWARE DEFINED

NETWORKS

MULTI-ACCESS EDGE

COMPUTE

E2E	PeakPeak
Latency	DataDataRateRate
5ms	10Gb/s10Gb/s
Reliability	MobileDatata
Volume
99.999%
10Tb/s/km	2
	2
Service	Mobility
Deployment	500km/h
Time 90 mins
Energy
Efficiency	Connected
10% of Current	Devices
Consumption
	1M/km2

Full Potential of

built right

© 2019 Verizon

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Fiber densification: building the future

• Expanding the network nationally
• • Building more than 1,500 route miles per month on average in the 3rd quarter across 60+ markets
  • • Enabling our 4G/5G, Intelligent Edge Network architecture and Verizon 2.0 strategy
  • Establishing partnerships with tech-forward cities to serve our customers
• Scaling the infrastructure to support future innovation

© 2019 Verizon

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5G update: technology

Launched commercial networks with three vendors

• Currently deploying integrated radio hardware
• Testing integrated radio software in field
• Improvement in intelligent antenna capability

Four 5G-capable device OEMs

Link budget improvements

Improvements in carrier aggregation

• 8CC (carrier component) downlink /4CC uplink development Dynamic spectrum sharing (DSS)

© 2019 Verizon

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5G update: deployment status

		30+ Mobility Cities Targeted in 2019
		28 Announced
		Atlanta	Columbus	Kansas City	Phoenix
		Boston	Dallas	Little Rock	Providence
		Boise	Des Moines	Memphis	San Diego
		Charlotte	Denver	Minneapolis	Salt Lake City
		Chicago	Detroit	New York	Sioux Falls
		Cincinnati	Houston	Omaha	St. Paul
		Cleveland	Indianapolis	Panama City	Washington DC
					* Bold - Launched
1st 5G Mobility		5G NR Home - Chicago Launched
in the World

© 2019 Verizon

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5G Home

Wi-Fi Extender Mini

Router

Receiver

Wi-Fi Extender Home Phone Base

© 2019 Verizon

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Fixed Wireless Access (FWA) technical roadmap

	2018	Current	1Q20	2H20
Network	5GTF	GEN1 NR	GEN2 NR	GEN2 NR
Device	5GTF	GEN1 NR	GEN1 NR	GEN2 NR
Self Setup

© 2019 Verizon

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What is edge computing?

Multi-access edge computing (MEC) enables cloud servers to run closer to endpoints, reducing latency and speeding local processing.

Traditional cloud

MEC

Cloud compute

Cloud compute

Edge compute

Heavy processing,	Access	Heavy processing if low	Heavy processing,	Access	Light processing,
high latency	network	latency is needed,	high latency	network	less bulkiness,
		bulkiness, short			long battery life
		battery life

© 2019 Verizon

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Verizon

Matt Ellis

Chief Financial Officer

Strong business trends

Total Wireless Service Revenue YoY%

2.5% 2.6% 1.9% 4.4% 3.1%* 2.7%* 3-3.5%*,**

0.0%

	(2.9%)	0.8% 0.8% 0.1%
(6.1%)	(5.1%)	(2.4%)
(6.7%)

1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19E

with impact of 606 without impact of 606

Total Postpaid Phone Net Adds (K)

								653
				431				131			444
		358
		274	152			295			245	205
		168	(24)	199	522
	(289)	166	279	183	(44)	172
	190	182		239
Business	108	129	112		119
90					73
Consumer					(153)	17			(163)
(379)

1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19

• Non-GAAPmeasure.
• 4Q'19 Total Wireless Service Revenue growth of 3.0%-3.5% reflects guidance per 3Q'19 earnings call.

Wireless Service revenue momentum

• Strong wireless service revenue growth and customer retention in Business and Consumer
• Mix and Match resonating with customers
• Increasing average connections per account

Capturing market momentum

• Diversification and personalization of unlimited offerings
• Enhancing consumer value proposition with Apple Music and Disney+
• Highest 3Q phone gross adds in 5 years

© 2019 Verizon

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Operational performance driving EPS growth

3Q 2019 YTD

$0.22	($0.13)	$3.68
$3.59

2.5% Y/Y

growth

• Consolidated revenue growth led by strong Consumer segment and wireless products
• Business Excellence initiatives and cost reductions
• Rigorous financial discipline to strengthen balance sheet

3Q'18 YTD	Operational	Commission Expense	3Q'19 YTD
Adjusted EPS*	Performance	Deferral/ASC 842	Adjusted EPS*
		Lease Standard**

• Non-GAAPmeasure.
• ASC 606 - Revenue Recognition Standard adopted on January 1, 2018. ASC 842 - Lease Accounting Standard adopted on January 1, 2019.

EPS growth driven by strong underlying performance

© 2019 Verizon

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5G opportunity

Opportunity

2018

2019

2020

2021+

Extend Defend

New

1			• Launched in 4
	FWA Share gain		• Launched in
			cities		Chicago in Oct
					with NR CPE
2
Mobility	Share gain	• Prepositioned		• Launched 18
and ARPA	the network		markets, expect
					30+ cities by YE
3
MEC marketGreenfield		• Platform launch
			expected in 4Q'19

Deployment Considerations

• Expand network availability
• Enhanced device lineup

Expected Revenue Timing

• Begins to scale in 2020
• Contribute to growth in 2021

• Partnering with	B2B revenue begins
customers	in 2021 and builds in
	2022

© 2019 Verizon

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Finishing 2019 with strong momentum

TOP LINE	Healthy wireless service revenue trend driven by postpaid phone
volumes in Consumer and Business
EARNINGS	Strong YTD operational EPS performance
	Revenue from 5G growth opportunities begins to scale in 2020 and
	builds thereafter
CAPITAL	Disciplined capital allocation policy
ALLOCATION	Strong balance sheet provides flexibility

© 2019 Verizon

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