VERIZON COMMUNICATIONS Overview
Verizon Communications Inc. (Verizon or the Company) 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, security and control. 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 new digital world. In 2021, we are focused on leveraging our network leadership; retaining and growing our high-quality customer base while balancing profitability; enhancing ecosystems in growth businesses; and driving monetization of our networks, platforms and solutions. We are creating business value by earning customers', employees' and shareholders' trust, limiting our environmental impact and continuing our customer base growth while creating social benefit through our products and services. 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 steady and consistent investments in our networks and platforms will drive innovative products and services and fuel our growth. We are consistently deploying new network architecture and technologies to secure our leadership in both fourth-generation (4G) and fifth-generation (5G) wireless networks. We expect that our next-generation multi-use platform, which we call the Intelligent Edge Network, 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. Our network leadership is the hallmark of our brand and the foundation for the connectivity, platforms and solutions upon which we build our competitive advantage. Highlights of Our Financial Results for the Three Months EndedJune 30, 2021 and 2020 (dollars in millions)
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Highlights of Our Financial Results for the Six Months EndedJune 30, 2021 and 2020 (dollars in millions)
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Business Overview We have two reportable segments that we operate and manage as strategic business units -Verizon Consumer Group (Consumer) andVerizon Business Group (Business).
Revenue by Segment for the Three Months Ended
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Note: Excludes eliminations.
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Revenue by Segment for the Six Months Ended
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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 inthe United States (U.S. ) under the Verizon brand and through wholesale and other arrangements. Fixed wireless access (FWA) is also provided to consumers for broadband access through our wireless networks. Our wireline services are provided in nine states in the Mid-Atlantic andNortheastern U.S. , as well asWashington 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, Consumer 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 three and six months endedJune 30, 2021 totaled$23.5 billion and$46.3 billion , respectively, representing an increase of 11.2% and 7.9%, respectively, compared to the similar periods in 2020. 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 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, including solutions that support fleet tracking management, compliance management, field service management, asset tracking and other types of mobile resource management. FWA is also provided to business customers for broadband access through our wireless networks. We provide these products and services to businesses, government customers and wireless and wireline carriers across theU.S. and select products and services to customers around the world. The Business segment's operating revenues for the three and six months endedJune 30, 2021 totaled$7.8 billion and$15.5 billion , respectively, representing an increase of 3.7% and 2.5%, respectively, compared to the similar periods in 2020. 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 includes the results of our media business,Verizon Media , and other businesses, investments in unconsolidated businesses, insurance captives, 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 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 transactions that are not individually significant are included in segment results as these items are included in the chief operating decision maker's assessment of segment performance.Verizon Media includes diverse media and technology brands that serve both consumers and businesses.Verizon Media provides consumers with owned and operated and third-party search properties as well as mail, news, finance, sports and entertainment content, e-commerce and subscription offerings, and provides other businesses and partners access to consumers through digital advertising, content delivery and video streaming platforms.Verizon Media's total operating revenues were$2.1 billion and$3.9 billion , respectively, for the three and six months endedJune 30, 2021 , which represents an increase of 49.7% and 28.1%, respectively, compared to the similar periods in 2020. OnMay 2 , 35
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2021, Verizon entered into a definitive agreement with an affiliate of Apollo Global Management Inc. pursuant to which we agreed to sellVerizon Media to the affiliate. The sale is subject to customary regulatory approvals and closing conditions and is expected to close in the second half of 2021. See Note 3 to the condensed consolidated financial statements for additional information. 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 six months endedJune 30, 2021 , these investments included$8.7 billion for capital expenditures. See "Cash Flows Used in Investing Activities" for additional information. Capital expenditures for 2021 are currently expected to be in the range of$17.5 billion to$18.5 billion , including the further expansion of our 5G network in new and existing markets, the densification of our 4G Long-Term Evolution (LTE) wireless network to manage future traffic demands, and the continued deployment of our fiber infrastructure. Expenditures related to the deployment of our C-Band spectrum will be in addition to this amount, and are expected to be approximately$10 billion over three years, with$2 billion to$3 billion expected in 2021. As ofJune 30, 2021 , our capital expenditures include$164 million related to our C-Band deployment. We believe that our investments aimed at expanding our portfolio of products and services will provide our customers with an efficient, reliable infrastructure for competing in the information economy. Global Network and Technology We are focusing our capital spending on adding capacity and density to our 4G LTE network, while also building our next generation 5G network. We are densifying our networks by utilizing 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. 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. We expect that 5G technology will provide higher throughput and lower latency than the current 4G LTE technology and enable our networks to handle more traffic as the number of internet-connected devices grows. As ofJune 30, 2021 , 5G Ultra Wideband is available in parts of 75 U.S. cities and 5G Home is available in parts of 40 U.S. cities. 5G Nationwide is available in over 2,700U.S. markets. 5G Nationwide uses low and mid-band spectrum and dynamic spectrum sharing (DSS) technology, which allows 5G service to run simultaneously with 4G LTE on multiple spectrum bands. With DSS, whenever customers move outside Verizon's high-band Ultra Wideband coverage area, their 5G-enabled devices will remain on 5G technology using the lower spectrum bands where the 5G Nationwide network is available. This allows us to more fully and effectively utilize our current spectrum resources to serve both 4G and 5G customers. 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. We are evolving the architecture of our networks to our Intelligent Edge Network, providing improved efficiency and virtualization, increased automation and opportunities for edge computing services that will support both our fiber-based and radio access network technologies. 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. Impact of the Novel Coronavirus (COVID-19) Pandemic For a discussion of the impacts on and the risks to our business from COVID-19, refer to Item 1A Risk Factors and "Impacts of the Novel Coronavirus (COVID-19) Pandemic" in Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . The impacts from the COVID-19 Pandemic on our operations were most significant during the second quarter of 2020, which also significantly impact the comparability of the results from the second quarter of 2021 to the second quarter of 2020.Recent Development OnJuly 23, 2021 Verizon received the wireless licenses from theFederal Communications Commission (FCC ) in connection with C-Band wireless spectrum Auction 107. Following the receipt of the corresponding wireless licenses, the purchase cost for these licenses inclusive of related capitalized interest was reclassified from Deposits for wireless licenses to Wireless licenses in our condensed consolidated balance sheet. 36
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