Verizon Communications Inc.
05/01/2026 | Press release | Distributed by Public on 05/01/2026 08:06
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Overview
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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 streaming 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 delivering what customers want and need in the digital world by offering innovative products and services, delivering excellent customer experience, and leveraging the capabilities of our high-performing networks.
Highlights of Our Financial Results for the Three Months Ended March 31, 2026 and 2025
(dollars in millions)
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).
Revenue by Segment for the Three Months Ended March 31, 2026 and 2025
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Note: Excludes eliminations.
Verizon Consumer Group
Our Consumer segment provides consumer-focused wireless and wireline communication 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 5G or 4G LTE networks as an alternative to traditional landline internet access. Our wireline services are provided in 31 U.S. states and Washington D.C. over our 100% fiber-optic network through our fiber product portfolio, as well as over a traditional copper-based network.
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 wireless services and equipment for retail customers, 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 three months ended March 31, 2026 totaled $26.5 billion, representing an increase of 3.3% compared to the similar period in 2025. See "Segment Results of Operations" for additional information regarding our Consumer segment's operating performance.
Verizon Business Group
Our Business segment provides wireless and wireline communication services and products, including mobility communication services, FWA and wireline broadband, Internet of Things (IoT) connectivity solutions, advanced communication services, corporate networking solutions, local and long distance voice services, and security and managed network services. We provide these products and services to businesses, public sector 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 three months ended March 31, 2026 totaled $7.4 billion, representing an increase of 1.8% compared to the similar period in 2025. See "Segment Results of Operations" for additional information regarding our Business segment's operating performance.
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 are included in the chief operating decision maker's (CODM) assessment of segment performance. See "Consolidated Results of Operations" for additional information regarding Corporate and other results.
Capital Expenditures and Investments
Our strategy requires significant capital investments primarily to invest in and deploy fiber, acquire wireless spectrum, put the spectrum into service, provide additional capacity for growth in our networks, evolve and maintain our networks and develop and maintain significant advanced information technology systems and data system capabilities. During the three months ended March 31, 2026, these investments included $4.2 billion for capital expenditures. See "Cash Flows Used in Investing Activities" for additional information. Capital expenditures for 2026 are expected to be within the range of $16.0 billion to $16.5 billion.
Global Networks and Technology
We design, build and operate networks to provide connectivity and related services meeting the needs of our diverse customers, including consumers, businesses, government organizations, first responders, and educational institutions.
We have a portfolio of spectrum holdings, including C-Band and millimeter wave spectrum, and are constantly transforming our networks by leveraging innovation and new technologies to deliver improved network performance and efficiency. Our networks leverage advanced technologies, including 5G wireless, fiber-based transport, cloud infrastructures, artificial intelligence (AI) and automation, private networks and IP routing solutions. We are using the benefits of cloud computing and storage to virtualize aspects of our network infrastructure. We are densifying our networks by utilizing macro and small cell technology, in-building solutions and distributed antenna systems to increase coverage, improve quality of service and add capacity to accommodate an increasing number of users.
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Consolidated Results of Operations
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In this section, we discuss our overall results of operations and highlight special items, some of which 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 2026, Verizon revised its presentation of revenue reporting for its reportable segments - Consumer and Business. Accordingly, beginning in the first quarter of 2026, Verizon is reporting Consumer and Business revenue disaggregated by products and services as follows: Mobility and broadband service revenue, Wireless equipment revenue and Other revenue. In the first quarter of 2026, Verizon also made changes to the presentation of certain operating metrics, and going forward will only disclose operating metrics on a consolidated basis.
Consolidated Operating Revenues
| Three Months Ended | |||||||||||||||||||||||
| March 31, | Increase/(Decrease) | ||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Consumer | $ | 26,453 | $ | 25,618 | $ | 835 | 3.3 | % | |||||||||||||||
| Business | 7,419 | 7,286 | 133 | 1.8 | |||||||||||||||||||
| Corporate and other | 647 | 660 | (13) | (2.0) | |||||||||||||||||||
| Eliminations | (79) | (79) | - | - | |||||||||||||||||||
| Consolidated Operating Revenues | $ | 34,440 | $ | 33,485 | $ | 955 | 2.9 | ||||||||||||||||
Consolidated operating revenues increased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to revenue increases in our Consumer and Business segments.
Revenues for our segments are discussed separately below under the heading "Segment Results of Operations."
Consolidated Operating Expenses
| Three Months Ended | |||||||||||||||||||||||
| March 31, | Increase/(Decrease) | ||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Cost of services | $ | 7,167 | $ | 6,950 | $ | 217 | 3.1 | % | |||||||||||||||
| Cost of wireless equipment | 6,506 | 6,106 | 400 | 6.6 | |||||||||||||||||||
| Selling, general and administrative expense | 7,633 | 7,874 | (241) | (3.1) | |||||||||||||||||||
| Depreciation and amortization expense | 4,892 | 4,577 | 315 | 6.9 | |||||||||||||||||||
| Consolidated Operating Expenses | $ | 26,198 | $ | 25,507 | $ | 691 | 2.7 | ||||||||||||||||
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 increased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily as a result of:
•an increase of $174 million in personnel costs driven by an increase in employee headcount following the acquisition of Frontier Communications Parent, Inc. (Frontier);
•an increase of $114 million in building and facility costs primarily due to higher utility rates along with maintaining additional buildings and facilities due to the acquisition of Frontier in 2026; and
•a decrease of $83 million in access costs primarily related to cessation of certain third-party provider costs along with a decrease in circuit usage.
Cost of Wireless Equipment
Cost of wireless equipment increased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to:
•an increase of $315 million driven by a shift to higher priced equipment in the mix of wireless devices sold; and
•an increase of $85 million driven by a higher volume of wireless devices sold primarily related to an increase in upgrades.
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, rent and utilities for administrative space and device insurance program costs. Also included is a portion of the aggregate customer care costs as discussed above in "Cost of Services."
Selling, general and administrative expense decreased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily as a result of:
•a decrease of $282 million in advertising costs related to various marketing campaigns in the first quarter of 2025 that did not reoccur;
•a decrease of $121 million in personnel costs related to the impact of workforce reduction initiatives announced in the prior year; and
•an increase of $261 million related to acquisition and integration related charges recorded in 2026 associated with the acquisition of Frontier.
See "Special Items" for additional information on the acquisition and integration related charges.
Depreciation and Amortization Expense
Depreciation and amortization expense increased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to the change in the mix of net depreciable and amortizable assets, including the impact of depreciable assets acquired as part of the Frontier acquisition, and the continued deployment of C-Band network assets.
Consolidated Operating Statistics
To aid in the understanding of our performance, management uses the following operating statistics to evaluate the overall effectiveness of our business. 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 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. Wireless 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. Wireless 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 postpaid phone connections are retail postpaid customer phone connections as of the end of the period. Wireless retail postpaid phone connections under an account include those from smartphones and basic phones. Wireless retail postpaid phone connections are calculated by adding retail postpaid phone new connections in the period to prior period retail postpaid phone connections, and subtracting retail postpaid phone disconnects in the period.
Wireless retail core prepaid connections are wireless retail prepaid customer device connections, excluding our SafeLink brand, as of the end of the period. Wireless retail core prepaid connections may include those from phones, prepaid FWA, as well as tablets and other internet devices, and wearables. Wireless retail core prepaid connections are calculated by adding retail core prepaid new connections in the period to prior period retail core prepaid connections, and subtracting retail core prepaid disconnects in the period.
Fiber broadband connections are the total number of connections to the internet using fiber broadband services (which exclude solutions provided over a traditional copper-based network) as of the end of the period. Fiber broadband connections are calculated by adding fiber broadband new connections in the period to prior period fiber broadband connections, and subtracting fiber broadband disconnects in the period.
FWA broadband connections are the total number of postpaid and prepaid connections to the internet through our 5G or 4G LTE wireless networks as of the end of the period, including postpaid, prepaid and IoT FWA. FWA broadband connections are calculated by adding FWA broadband new connections in the period to prior period FWA broadband connections, and subtracting FWA broadband disconnects in the period.
Total broadband connections are the total number of connections to the internet using fiber broadband and FWA broadband services as of the end of the period. Total broadband connections are calculated by adding total broadband new connections in the period to prior period total broadband connections, and subtracting total broadband disconnects in the period.
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 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 from the retail postpaid 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 postpaid 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 from the retail postpaid phone new connections in the period.
Wireless retail core prepaid connections, net additions are the total number of additional retail customer device core prepaid connections, less the number of device disconnects in the period. Wireless retail core prepaid connections, net additions in each period presented are calculated by subtracting the retail core prepaid disconnects from the retail core prepaid new connections in the period.
Fiber broadband connections, net additions are the total number of additional fiber broadband connections, less the number of fiber broadband disconnects in the period. Fiber broadband connections, net additions are calculated by subtracting the fiber broadband disconnects from the fiber broadband new connections in the period.
FWA broadband connections, net additions are the total number of additional FWA broadband connections, less the number of FWA broadband disconnects in the period. FWA broadband connections, net additions in each period presented are calculated by subtracting the FWA broadband disconnects from the FWA broadband new connections in the period.
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 from the total broadband new connections in the period.
Wireless retail postpaid ARPA is the calculated average wireless retail postpaid service revenue per account (ARPA) from wireless 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, insurance premiums or regulatory fees. Wireless retail postpaid ARPA in each period presented is calculated by dividing wireless retail postpaid service revenue by the average wireless retail postpaid accounts in the period.
Wireless retail core prepaid ARPU is the calculated average wireless retail core prepaid service revenue, excluding our SafeLink brand, per unit (core prepaid connection) (ARPU) in the period. Wireless retail core prepaid ARPU in each period presented is
calculated by dividing wireless retail core prepaid service revenue by the average wireless retail core prepaid connections in the period.
Wireless retail postpaid phone churn is the rate at which service to retail postpaid phone connections is terminated on average in the period. The wireless retail postpaid phone churn rate in each period presented is calculated by dividing wireless retail postpaid phone disconnects by the average wireless retail postpaid phone connections in the period.
Wireless retail core prepaid churn is the rate at which service to core prepaid connections is terminated on average in the period. The wireless retail core prepaid churn rate in each period presented is calculated by dividing wireless core prepaid disconnects by the average wireless core prepaid connections in the period.
Wireless retail postpaid connections, upgrade rate is the rate at which retail postpaid connections upgrade retail postpaid devices (phones, tablets, and other devices) in the period. Wireless retail postpaid connections, upgrade rate is calculated by dividing the number of retail postpaid connections that have upgraded a retail postpaid device in the period by the average retail postpaid connections for the period.
Where applicable, our operating statistics discussed above and the operating results presented in the following table reflect certain adjustments, including those related to migration activity among different types of devices and plans, customer profile changes, product-related changes and adjustments in connection with mergers, acquisitions and divestitures.
| Three Months Ended | |||||||||||||||||||||||
| March 31, | Increase/(Decrease) | ||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
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Connections ('000):
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| Wireless retail | 146,798 | 145,974 | 824 | 0.6 | % | ||||||||||||||||||
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Wireless retail postpaid
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126,499 | 125,744 | 755 | 0.6 | |||||||||||||||||||
| Wireless retail postpaid phone | 93,920 | 93,214 | 706 | 0.8 | |||||||||||||||||||
| Wireless retail core prepaid | 19,279 | 18,977 | 302 | 1.6 | |||||||||||||||||||
| Fiber broadband | 10,757 | 7,581 | 3,176 | 41.9 | |||||||||||||||||||
| FWA broadband | 6,006 | 4,845 | 1,161 | 24.0 | |||||||||||||||||||
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Total broadband(1)
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16,763 | 12,426 | 4,337 | 34.9 | |||||||||||||||||||
| Net Additions ('000): | |||||||||||||||||||||||
| Wireless retail | (116) | (65) | (51) | (78.5) | |||||||||||||||||||
| Wireless retail postpaid | (196) | (159) | (37) | (23.3) | |||||||||||||||||||
| Wireless retail postpaid phone | 55 | (289) | 344 | nm | |||||||||||||||||||
| Wireless retail core prepaid | 115 | 137 | (22) | (16.1) | |||||||||||||||||||
| Fiber broadband | 127 | 45 | 82 | nm | |||||||||||||||||||
| FWA broadband | 214 | 308 | (94) | (30.5) | |||||||||||||||||||
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Total broadband(1)
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341 | 353 | (12) | (3.4) | |||||||||||||||||||
| Account Statistics: | |||||||||||||||||||||||
| Wireless retail postpaid ARPA | $ | 166.66 | $ | 169.81 | $ | (3.15) | (1.9) | ||||||||||||||||
| Wireless retail core prepaid ARPU | $ | 33.31 | $ | 31.92 | $ | 1.39 | 4.4 | ||||||||||||||||
| Churn Rate: | |||||||||||||||||||||||
| Wireless retail postpaid phone | 0.97 | % | 0.95 | % | |||||||||||||||||||
| Wireless retail core prepaid | 3.45 | % | 3.47 | % | |||||||||||||||||||
| Wireless Retail Postpaid Connection Statistics: | |||||||||||||||||||||||
| Upgrade rate | 3.0 | % | 2.8 | % | |||||||||||||||||||
(1) Total broadband excludes solutions provided over a traditional copper-based network.
Where applicable, historical results have been recast to conform to the current period presentation.
nm - not meaningful
Other Consolidated Results
Other Income, Net
| Three Months Ended | |||||||||||||||||||||||
| March 31, | Increase | ||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Interest income | $ | 147 | $ | 63 | $ | 84 | nm | ||||||||||||||||
| Other components of net periodic benefit income (cost) | 171 | (94) | 265 | nm | |||||||||||||||||||
| Net debt extinguishment gains | 95 | 90 | 5 | 5.6 | % | ||||||||||||||||||
| Other, net | 64 | 62 | 2 | 3.2 | |||||||||||||||||||
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Other Income, Net
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$ | 477 | $ | 121 | $ | 356 | nm | ||||||||||||||||
nm - not meaningful
Other income, net, reflects certain items not directly related to our core operations, including interest income, debt extinguishment gains and losses, components of net periodic pension and postretirement benefit income and cost and certain foreign exchange gains and losses.
Other income, net increased for the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to:
•a net pension and postretirement benefits remeasurement gain of $237 million in 2026; and
•an increase of $57 million in paid-in-kind interest earned on certain preferred investments.
See Note 8 to the condensed consolidated financial statements for more information on the other components of net periodic benefit income (cost).
Interest Expense
| Three Months Ended | |||||||||||||||||||||||
| March 31, | Increase/(Decrease) | ||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Total interest costs on debt balances | $ | 2,109 | $ | 1,829 | $ | 280 | 15.3 | % | |||||||||||||||
| Less capitalized interest costs | 169 | 197 | (28) | (14.2) | |||||||||||||||||||
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Interest Expense
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$ | 1,940 | $ | 1,632 | $ | 308 | 18.9 | ||||||||||||||||
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Average debt outstanding(1)(3)
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$ | 168,482 | $ | 144,024 | |||||||||||||||||||
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Effective interest rate(2)(3)
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5.0 | % | 5.1 | % | |||||||||||||||||||
(1)The average debt outstanding is a financial measure and is calculated by applying a simple average of prior months' 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 annualized 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 the three months ended March 31, 2026 compared to the similar period in 2025 primarily as a result of an increase in interest costs due to higher average debt balances.
Provision for Income Taxes
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| March 31, | Increase | ||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Provision for income taxes | $ | 1,638 | $ | 1,490 | $ | 148 | 9.9 | % | |||||||||||||||
| Effective income tax rate | 24.1 | % | 23.0 | % | |||||||||||||||||||
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 provision for income taxes during the three months ended March 31, 2026 compared to the similar period in 2025 was primarily due to the increase in income before income taxes in the current period. The increase in the effective income tax rate during the three months ended March 31, 2026 compared to the similar period in 2025 was primarily related to the one time impact of the Frontier acquisition.
Unrecognized Tax Benefits
Unrecognized tax benefits were $2.7 billion and $2.6 billion at March 31, 2026 and December 31, 2025, respectively. Interest and penalties related to unrecognized tax benefits were $787 million (after-tax) and $751 million (after-tax) at March 31, 2026 and December 31, 2025, respectively.
Verizon Communications Inc. 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 Internal Revenue Service and multiple state and foreign jurisdictions for various open tax years.
Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA
Consolidated earnings before interest, taxes, depreciation and amortization (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, 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. Consolidated Adjusted EBITDA is a non-GAAP financial measure that we believe provides relevant and useful information to management, investors and other users of our financial information in evaluating the effectiveness of our operations and underlying business trends. 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.
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (dollars in millions) | 2026 | 2025 | ||||||||||||
| Consolidated Net Income | $ | 5,146 | $ | 4,983 | ||||||||||
| Add: | ||||||||||||||
| Provision for income taxes | 1,638 | 1,490 | ||||||||||||
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Interest expense
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1,940 | 1,632 | ||||||||||||
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Depreciation and amortization expense(1)
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4,892 | 4,577 | ||||||||||||
| Consolidated EBITDA | $ | 13,616 | $ | 12,682 | ||||||||||
| Add (Less): | ||||||||||||||
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Other income, net(2)
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$ | (477) | $ | (121) | ||||||||||
| Equity in earnings of unconsolidated businesses | (5) | (6) | ||||||||||||
| Acquisition and integration related charges | 261 | - | ||||||||||||
| Consolidated Adjusted EBITDA | $ | 13,395 | $ | 12,555 | ||||||||||
(1) Includes Amortization of acquisition-related intangible assets, which were $240 million and $190 million during the three months ended March 31, 2026 and 2025, respectively. See "Special Items" for additional information.
(2) Includes Pension and benefits remeasurement gain of $237 million during the three months ended March 31, 2026. See "Special Items" for additional information.
The changes in Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA in the table above during the three months ended March 31, 2026 compared to the similar period in 2025 were primarily a result of the factors described above in connection with consolidated operating revenues and consolidated operating expenses.
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Segment Results of Operations
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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 CODM's assessment of segment performance.
See Note 10 to the condensed consolidated financial statements for additional information.
Verizon Consumer Group
Our Consumer segment provides consumer-focused wireless and wireline communication 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 31 U.S. states and Washington D.C. over our 100% fiber-optic network through our fiber product portfolio, as well as over a traditional copper-based network.
Operating Revenues
| Three Months Ended | |||||||||||||||||||||||
| March 31 | Increase | ||||||||||||||||||||||
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(dollars in millions)
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2026 | 2025 | |||||||||||||||||||||
| Mobility and broadband service | $ | 19,180 | $ | 18,801 | $ | 379 | 2.0 | % | |||||||||||||||
| Wireless equipment | 4,824 | 4,532 | 292 | 6.4 | |||||||||||||||||||
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Other
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2,449 | 2,285 | 164 | 7.2 | |||||||||||||||||||
| Total Operating Revenues | $ | 26,453 | $ | 25,618 | $ | 835 | 3.3 | ||||||||||||||||
Consumer's total operating revenues increased during the three months ended March 31, 2026 compared to the similar period in 2025 due to increases in Mobility and broadband service revenue, Wireless equipment revenue and Other revenue.
Mobility and Broadband Service Revenue
Mobility and broadband service revenue primarily includes revenue from mobility communication services, FWA broadband, Fios internet and other fiber-based services.
Mobility and broadband service revenue increased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily as a result of:
•an increase of $508 million in fiber broadband revenue primarily due to the inclusion of Frontier results;
•an increase of $164 million related to growth in non-retail service revenue;
•an increase of $122 million in prepaid revenue primarily due to growth in the customer base; and
•a decrease of $414 million in postpaid revenue primarily related to the amortization of wireless equipment sales promotions, credits provided to customers in connection with the network outage in the first quarter of 2026 and acquisition related discounts, partially offset by higher adoption of perks and premium MyPlan offerings.
Wireless Equipment Revenue
Wireless equipment revenue includes revenue from a variety of smartphones and other handsets, wireless-enabled internet devices, such as tablets, and other wireless-enabled connected devices, such as smart watches.
Wireless equipment revenue increased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to:
•an increase of $204 million related to a shift to higher priced equipment in the mix of wireless devices sold; and
•an increase of $88 million driven by a higher volume of wireless devices sold primarily related to an increase in upgrades.
Other Revenue
Other revenue primarily includes revenue from wireline products that provide legacy voice, video and data solutions, as well as broadband solutions over a traditional copper-based network. Other revenue also includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, leasing and interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.
Other revenue increased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to an increase of $133 million in legacy wireline revenue related to the inclusion of Frontier results.
Operating Expenses
| Three Months Ended | |||||||||||||||||||||||
| March 31, | Increase/(Decrease) | ||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Cost of services | $ | 4,820 | $ | 4,574 | $ | 246 | 5.4 | % | |||||||||||||||
| Cost of wireless equipment | 5,303 | 4,912 | 391 | 8.0 | |||||||||||||||||||
| Selling, general and administrative expense | 4,886 | 5,165 | (279) | (5.4) | |||||||||||||||||||
| Depreciation and amortization expense | 3,730 | 3,543 | 187 | 5.3 | |||||||||||||||||||
| Total Operating Expenses | $ | 18,739 | $ | 18,194 | $ | 545 | 3.0 | ||||||||||||||||
Cost of Services
Cost of services increased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to:
•an increase of $114 million in personnel costs mainly driven by an increase in employee headcount following the acquisition of Frontier; and
•an increase of $71 million in building and facility costs primarily due to higher utility rates along with maintaining additional buildings and facilities due to the acquisition of Frontier in 2026.
Cost of Wireless Equipment
Cost of wireless equipment increased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to:
•an increase of $270 million due to a shift to higher priced equipment in the mix of wireless devices sold; and
•an increase of $121 million driven by a higher volume of wireless devices sold primarily related to an increase in upgrades.
Selling, General and Administrative Expense
Selling, general and administrative expense decreased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to a decrease of $257 million in advertising costs related to various marketing campaigns in the first quarter of 2025 that did not reoccur.
Depreciation and Amortization Expense
Depreciation and amortization expense increased during the three months ended March 31, 2026 compared to the similar period in 2025 driven by the change in the mix of total Verizon depreciable and amortizable assets, including the impact of depreciable assets acquired as part of the Frontier acquisition, and Consumer's usage of those assets.
Segment Operating Income and Segment EBITDA
Segment earnings before interest, taxes, depreciation and amortization (Segment EBITDA) and Segment EBITDA margin are non-GAAP financial measures. We believe these measures 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, as well as because they are widely accepted financial measures used in evaluating the profitability of a company and its operating performance in relation to its competitors.
Segment EBITDA is calculated by adding back segment depreciation and amortization expense to segment operating income. Segment EBITDA margin is calculated by dividing Segment EBITDA by total segment operating revenues.
| Three Months Ended | |||||||||||||||||||||||
| March 31, | Increase | ||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Segment Operating Income | $ | 7,714 | $ | 7,424 | $ | 290 | 3.9 | % | |||||||||||||||
| Add Depreciation and amortization expense | 3,730 | 3,543 | 187 | 5.3 | |||||||||||||||||||
| Segment EBITDA | $ | 11,444 | $ | 10,967 | $ | 477 | 4.3 | ||||||||||||||||
|
Segment operating income margin(1)
|
29.2 | % | 29.0 | % | |||||||||||||||||||
| Segment EBITDA margin | 43.3 | % | 42.8 | % | |||||||||||||||||||
(1) 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.
The changes in the table above during the three months ended March 31, 2026 compared to the similar period in 2025 were primarily a result of the factors described in connection with Consumer operating revenues and operating expenses.
Verizon Business Group
Our Business segment provides wireless and wireline communication services and products, including mobility communication services, FWA and wireline broadband, IoT connectivity solutions, advanced communication services, corporate networking solutions, local and long distance voice services, and security and managed network services. We provide these products and services to businesses, public sector customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world.
Operating Revenues
| Three Months Ended | |||||||||||||||||||||||
| March 31, | Increase/(Decrease) | ||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Mobility and broadband service | $ | 3,688 | $ | 3,717 | $ | (29) | (0.8) | % | |||||||||||||||
|
Wireless equipment
|
857 | 866 | (9) | (1.0) | |||||||||||||||||||
|
Other
|
2,874 | 2,703 | 171 | 6.3 | |||||||||||||||||||
|
Total Operating Revenues
|
$ | 7,419 | $ | 7,286 | $ | 133 | 1.8 | ||||||||||||||||
Business's total operating revenues increased during the three months ended March 31, 2026 compared to the similar period in 2025 as a result of an increase in Other revenue, partially offset by decreases in Mobility and broadband service revenue and Wireless equipment revenue.
Mobility and Broadband Service Revenue
Mobility and broadband service revenue primarily includes revenue from mobility communication services, FWA broadband, Fios internet and other fiber-based services.
Mobility and broadband service revenue remained relatively flat during the three months ended March 31, 2026 compared to the similar period in 2025.
Wireless Equipment Revenue
Wireless equipment revenue includes revenue from a variety of smartphones and other handsets, wireless-enabled internet devices, such as tablets, and other wireless-enabled connected devices, such as smart watches.
Wireless equipment revenue remained relatively flat during the three months ended March 31, 2026 compared to the similar period in 2025.
Other Revenue
Other revenue primarily includes revenue from wireline products that provide legacy voice, video and data solutions, as well as broadband solutions over a traditional copper-based network. Other revenue also includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, leasing and interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.
Other revenue increased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to an increase of $221 million in legacy wireline revenue related to the inclusion of Frontier results.
Operating Expenses
| Three Months Ended | |||||||||||||||||||||||
| March 31, | Increase/(Decrease) | ||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Cost of services | $ | 2,341 | $ | 2,376 | $ | (35) | (1.5) | % | |||||||||||||||
| Cost of wireless equipment | 1,202 | 1,194 | 8 | 0.7 | |||||||||||||||||||
| Selling, general and administrative expense | 1,911 | 2,032 | (121) | (6.0) | |||||||||||||||||||
| Depreciation and amortization expense | 1,081 | 1,020 | 61 | 6.0 | |||||||||||||||||||
| Total Operating Expenses | $ | 6,535 | $ | 6,622 | $ | (87) | (1.3) | ||||||||||||||||
Cost of Services
Cost of services decreased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily as a result of:
•a decrease of $91 million in access costs primarily related to cessation of certain third-party provider costs along with a decrease in circuit usage; and
•an increase of $51 million in personnel costs associated with third-party contracted resources.
Cost of Wireless Equipment
Cost of wireless equipment remained relatively flat during the three months ended March 31, 2026 compared to the similar period in 2025.
Selling, General and Administrative Expense
Selling, general and administrative expense decreased during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to a decrease of $167 million in personnel costs related to workforce reduction initiatives announced in the prior year.
Depreciation and Amortization Expense
Depreciation and amortization expense increased during the three months ended March 31, 2026 compared to the similar period in 2025 driven by the change in the mix of total Verizon depreciable and amortizable assets, including the impact of depreciable assets acquired as part of the Frontier acquisition, and Business's usage of those assets.
Segment Operating Income and Segment EBITDA
Segment EBITDA and Segment EBITDA margin are non-GAAP financial measures. See "Segment Results of Operations - Verizon Consumer Group - Segment Operating Income and Segment EBITDA" for additional details.
| Three Months Ended | |||||||||||||||||||||||
| March 31, | Increase | ||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Segment Operating Income | $ | 884 | $ | 664 | $ | 220 | 33.1 | % | |||||||||||||||
| Add Depreciation and amortization expense | 1,081 | 1,020 | 61 | 6.0 | |||||||||||||||||||
| Segment EBITDA | $ | 1,965 | $ | 1,684 | $ | 281 | 16.7 | ||||||||||||||||
|
Segment operating income margin(1)
|
11.9 | % | 9.1 | % | |||||||||||||||||||
| Segment EBITDA margin | 26.5 | % | 23.1 | % | |||||||||||||||||||
(1) 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.
The changes in the table above during the three months ended March 31, 2026 compared to the similar period in 2025 were primarily a result of the factors described in connection with Business operating revenues and operating expenses.
|
Special Items
|
||
Special items included in Income Before Provision For Income Taxes were as follows:
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||
|
Amortization of acquisition-related intangible assets(1)
|
|||||||||||
| Depreciation and amortization expense | $ | 240 | $ | 190 | |||||||
| Acquisition and integration related charges | |||||||||||
|
Selling, general and administrative expense
|
261 | - | |||||||||
|
Pension and benefits credits
|
|||||||||||
| Other income, net | (237) | - | |||||||||
| Total | $ | 264 | $ | 190 | |||||||
(1) Amounts are included in segment results of operations.
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 condensed consolidated results of operations were as follows:
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||
| Within Total Operating Expenses | $ | 501 | $ | 190 | |||||||
| Within Other income, net | (237) | - | |||||||||
| Total | $ | 264 | $ | 190 | |||||||
Amortization of Acquisition-Related Intangible Assets
During the three months ended March 31, 2026, and 2025 we recorded pre-tax amortization expense of $240 million and $190 million, respectively, related to acquired intangible assets.
Acquisition and Integration Related Charges
During the three months ended March 31, 2026, we recorded charges of $261 million related to transaction and integration expenses associated with the acquisition of Frontier.
Pension and Benefits Credits
During the three months ended March 31, 2026, we recorded a net pre-tax pension and benefits remeasurement gain of $237 million in certain pension and postretirement benefit plans resulting from amendments to our collective bargaining agreements. This was primarily driven by a gain of $412 million due to an increase in our discount rate assumption used to determine the current year liabilities of certain pension and postretirement benefit plans, partially offset by a loss of $175 million primarily resulting from the difference between our estimated and our actual return on certain pension plan assets.
|
Consolidated Financial Condition
|
||
| Three Months Ended | |||||||||||||||||
| March 31, | |||||||||||||||||
| (dollars in millions) | 2026 | 2025 | Change | ||||||||||||||
| Cash Flows Provided By (Used In) | |||||||||||||||||
|
Operating activities
|
$ | 7,984 | $ | 7,782 | $ | 202 | |||||||||||
|
Investing activities
|
(13,573) | (3,752) | (9,821) | ||||||||||||||
|
Financing activities
|
(5,278) | (5,893) | 615 | ||||||||||||||
| Decrease in cash, cash equivalents and restricted cash | $ | (10,867) | $ | (1,863) | $ | (9,004) | |||||||||||
We use the net cash generated from our operations to invest in new businesses and spectrum, fund expansion and modernization of our networks, pay dividends, service and repay external financing 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 are held both domestically and internationally, and are invested to maintain principal and provide liquidity. See "Change In Cash, Cash Equivalents and Restricted Cash" for additional information regarding the changes in our cash balances. 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.
Cash Flows Provided By Operating Activities
Our primary source of funds continues to be cash generated from operations. Net cash provided by operating activities increased $202 million during the three months ended March 31, 2026 compared to the similar period in 2025 primarily due to an increase in earnings. In April 2026, we made an insignificant required contribution to our recently acquired Frontier Communications pension plan. We expect that there will be an additional insignificant required pension contribution through December 31, 2026.
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, for the three months ended March 31, 2026 and 2025 were $4.2 billion and $4.1 billion, respectively. Capital expenditures increased $56 million during the three months ended March 31, 2026 compared to the similar period in 2025.
Acquisitions of Businesses, Net of Cash Acquired
During the three months ended March 31, 2026, we invested $9.5 billion in acquisitions of businesses, net of cash acquired.
In January 2026, we completed the acquisition of Frontier, a U.S. provider of broadband internet and other communication services. The aggregate cash consideration paid by Verizon at the closing of the transaction was approximately $9.4 billion, net of cash acquired.
See "Acquisitions and Divestitures" for information on our acquisitions.
Acquisitions of Wireless Licenses
During the three months ended March 31, 2026 and 2025, we recorded capitalized interest related to wireless licenses of $82 million and $122 million, respectively.
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 the three months ended March 31, 2026, net cash used in financing activities was $5.3 billion. During the three months ended March 31, 2025, net cash used in financing activities was $5.9 billion.
During the three months ended March 31, 2026, our net cash used in financing activities was primarily driven by repayments of asset-backed long-term borrowings of $6.8 billion, repayments and repurchases of long-term borrowings and finance lease obligations of $4.3 billion, cash dividends paid of $2.9 billion and payments to purchase shares of our common stock of $2.5 billion. The repayments during the three months ended March 31, 2026 included approximately $6.4 billion for the principal amount of debt assumed as a part of the acquisition of Frontier. We expect to continue to repay the assumed debt from the Frontier acquisition throughout 2026. These payments were partially offset by proceeds from asset-backed long-term borrowings of $6.2 billion and proceeds from long-term borrowings of $6.0 billion.
At March 31, 2026, our total debt of $172.5 billion included unsecured debt of $142.5 billion and secured debt of $30.0 billion. At December 31, 2025, our total debt of $158.2 billion included unsecured debt of $131.1 billion and secured debt of $27.1 billion. During the three months ended March 31, 2026 and 2025, our effective interest rate was 5.0% and 5.1%, respectively. See Note 5 to the condensed consolidated financial statements for additional information regarding our debt activity, which excludes the impact from mark-to-market adjustments on foreign currency denominated debt.
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.
Asset-Backed Debt
Cash collections on the receivables and on the underlying receivables related to the participation interest collateralizing our asset-backed notes issued to third-party investors and loans received from banks and their conduit facilities 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 condensed consolidated balance sheets.
Proceeds from our asset-backed debt transactions are reflected in Cash flows from financing activities in our condensed consolidated statements of cash flows. The asset-backed debt issued is included in Debt maturing within one year and Long-term debt in our condensed consolidated balance sheets.
See Note 5 to the condensed consolidated financial statements for additional information.
Long-Term Credit Facilities
|
At March 31, 2026
|
|||||||||||||||||||||||
| (dollars in millions) | Maturities | Facility Capacity | Unused Capacity | Principal Amount Outstanding | |||||||||||||||||||
|
Verizon revolving credit facility(1)
|
2028 | $ | 12,000 | $ | 11,976 | $ | - | ||||||||||||||||
|
Various export credit facilities(2)
|
2026 - 2033 | 11,950 | 85 | 5,924 | |||||||||||||||||||
| Total | $ | 23,950 | $ | 12,061 | $ | 5,924 | |||||||||||||||||
(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 March 31, 2026, there have been no drawings against the revolving credit facility since its inception.
(2) During the three months ended March 31, 2026, we drew down approximately $1.6 billion. During the three months ended March 31, 2025, there were no drawings from these facilities. Borrowings under certain of these facilities are repaid 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.
Other, Net
Other, net cash flow from financing activities during the three months ended March 31, 2026 includes $450 million in payments related to vendor financing arrangements, $264 million in payments related to tax withholding of employee share based arrangements and $126 million in payments made under the sublease arrangement for our cell towers.
Dividends
As in prior periods, dividend payments were a significant use of capital resources. We paid $2.9 billion in cash dividends during both the three months ended March 31, 2026 and 2025.
Common Stock
On January 30, 2026, the Board of Directors of the Company authorized a share repurchase program for up to $25 billion of our common stock. The program will terminate when the aggregate consideration paid to purchase shares of our common stock reaches $25 billion, exclusive of any fees, commissions or other expenses, 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 or Rule 10b-18 under the Exchange Act. The timing and number of shares purchased under the program, if any, will depend on prevailing stock prices, general economic and market conditions, and other considerations. The share repurchase program does not obligate us to acquire any particular amount of common stock, and the program may be suspended or discontinued at any time at our discretion.
In February 2026, we entered into accelerated share repurchase (ASR) agreements with certain financial institution counterparties to repurchase shares of our common stock in exchange for an upfront payment of $2.5 billion and received an initial delivery of 45,116,772 shares of common stock using a reference price of $47.10. In March 2026, the ASR transactions were completed, and we received an additional 5,641,251 shares. This resulted in a total of 50,758,023 shares repurchased under the ASR agreements at an average repurchase price of $49.25, not including related excise tax. The initial and additional shares received under the ASR agreements were excluded from the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share from the date the respective shares were received by the Company and classified as treasury shares. At March 31, 2026, the maximum remaining aggregate consideration that could be paid by or on behalf of Verizon under our share repurchase program was $22.5 billion.
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 March 31, 2026 totaled $8.4 billion, a $10.7 billion decrease compared to December 31, 2025, primarily as a result of the factors discussed above.
Restricted cash totaled $266 million and $451 million as of March 31, 2026 and December 31, 2025, respectively, 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 condensed consolidated statements of cash flows.
The following table reconciles net cash provided by operating activities to free cash flow:
| Three Months Ended | |||||||||||||||||
| March 31, | |||||||||||||||||
| (dollars in millions) | 2026 | 2025 | Change | ||||||||||||||
| Net cash provided by operating activities | $ | 7,984 | $ | 7,782 | $ | 202 | |||||||||||
| Less Capital expenditures (including capitalized software) | 4,201 | 4,145 | 56 | ||||||||||||||
| Free cash flow | $ | 3,783 | $ | 3,637 | $ | 146 | |||||||||||
The increase in free cash flow during the three months ended March 31, 2026 compared to the similar period in 2025 is a reflection of the increase in operating cash flows, partially offset by the increase in capital expenditures, both of which are discussed above.
|
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 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 (International Swaps and Derivatives Association 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 March 31, 2026 and December 31, 2025, we did not hold any collateral. At both March 31, 2026 and December 31, 2025, we posted $1.1 billion of collateral related to derivative contracts under collateral exchange agreements, which were recorded as Prepaid expenses and other in our condensed 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 7 to the condensed 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 March 31, 2026, approximately 79% 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 $380 million. The interest rates on our existing long-term debt obligations are unaffected by changes to our credit ratings.
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. At March 31, 2026 and December 31, 2025, the fair value of the liability of these contracts was $5.0 billion and $5.1 billion, respectively. At both March 31, 2026 and December 31, 2025, the total notional amount of the interest rate swaps was $23.7 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 condensed consolidated balance sheets. Gains and losses on foreign currency transactions are recorded in the condensed consolidated statements of income. At March 31, 2026, 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. At March 31, 2026 and December 31, 2025, the fair value of the asset of these contracts was $1.0 billion and $1.4 billion, respectively. At March 31, 2026 and December 31, 2025, the fair value of the liability of these contracts was $1.6 billion and $1.2 billion, respectively. At March 31, 2026 and December 31, 2025, the total notional amount of the cross currency swaps was $40.5 billion and $36.1 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 entered into 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 March 31, 2026 and December 31, 2025, the fair value of the asset and liability of these contracts was insignificant. At March 31, 2026 and December 31, 2025, the total notional amount of the foreign exchange forwards was $590 million and $570 million, respectively.
|
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.
On October 17, 2024, Verizon entered into a license purchase agreement to acquire select spectrum licenses of United States Cellular Corporation (currently known as Array Digital Infrastructure, Inc.) and certain of its subsidiaries (collectively, UScellular) for total consideration of $1.0 billion, subject to certain potential adjustments. The closing of this transaction is subject to the receipt of regulatory approvals and other closing conditions, including the sale of UScellular's wireless operations and select spectrum assets to T-Mobile US, Inc., which concluded in August 2025, and the termination of certain post-closing arrangements with respect to that sale.
Frontier Communications Parent, Inc.
On January 20, 2026 (the Acquisition Date), we completed the acquisition of Frontier, a U.S. provider of broadband internet and other communication services, expanding our fiber broadband footprint to 31 U.S. states and Washington D.C. Pursuant to the Agreement and Plan of Merger, dated September 4, 2024, the Company's subsidiary merged with and into Frontier, with Frontier surviving such merger as a wholly owned subsidiary of the Company. At the effective time of the merger, each share of Frontier common stock issued and outstanding immediately prior to such time (subject to certain limited exceptions) was cancelled and converted into the right to receive an amount in cash equal to $38.50 per share, without interest. At the Acquisition Date, Verizon paid approximately $9.8 billion in cash, inclusive of cash acquired of $335 million, and assumed approximately $12.9 billion of Frontier's debt measured at fair value.
Other
On January 30, 2026, Verizon completed the acquisition of Starry Group Holdings, Inc. (Starry), a fixed wireless broadband provider serving multi-dwelling units in five markets across the U.S. The aggregate cash consideration paid by Verizon at the closing of the transaction and the related assets acquired and liabilities assumed were immaterial.
Business Acquisitions
The financial results of Frontier and Starry are included in the Company's consolidated results from January 20, 2026 and January 30, 2026, respectively. The aggregate operating revenues arising from these acquisitions and included in our condensed
consolidated statements of income amounted to less than 5% of total operating revenues for the three months ended March 31, 2026.
See Note 3 to the condensed consolidated financial statements for additional information.
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Cautionary Statement Concerning Forward-Looking Statements
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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," "will" 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 Securities and Exchange Commission (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, network performance and quality, and evolving consumer preferences;
•failure to take advantage of, or respond to competitors' use of, developments in technology, including artificial intelligence, and address changes in consumer demand;
•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;
•changes to international trade and tariff policies and related economic and other impacts;
•cyberattacks impacting our networks or systems and any resulting financial or reputational impact;
•our ability to implement business transformation initiatives and achieve their anticipated benefits;
•system failures and disruptions to our networks and operations and any resulting financial, reputational or business impact;
•disruption of our key suppliers' or vendors' provisioning of products or services, including as a result of geopolitical factors, public health crises, natural disasters or extreme weather conditions;
•material adverse changes in labor matters and any resulting financial or operational impact;
•damage to our reputation or brands;
•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;
•significant amount of outstanding debt;
•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;
•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;
•our ability to return capital to shareholders, including the amount, timing, and effect of share repurchases and dividends; and
•risks associated with mergers, acquisitions, divestitures and other strategic transactions, including our ability to obtain cost savings and other synergies and anticipated benefits of completed transactions within the expected time period or at all.
Verizon Communications Inc. published this content on May 01, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 01, 2026 at 14:06 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]