ANNUAL REPORT 2019 - Verizon

1 ANNUALREPORT 2019 s 2 Financial and operational highlights as of December 31, 2019 Verizon strategically reorganized the business effective April 1, 2019. Under its new reporting structure, Verizon , there are two reportable segments that the company operates and manages as strategic business units: Consumer and Business. Verizon previously operated and managed the business under its historical Wireless and Wireline segments. For comparison purposes, highlights for both the current and previous operating structures are represented here. 2019 highlights $ adjusted earnings per share (non-GAAP) $ billion in cash dividend payments 13th consecutive year of ANNUAL dividend increases $ billion in cash flow from operations $ billion in consolidated revenue $ billion inconsumer revenues $ billion in business revenues $ billion in historical wireless revenues (non-GAAP) $ billion in historical wireline revenues (non-GAAP) Dividends declared per share 2019 $ Up year over year2017 $ 2018 $ 2019 $ See our investor website ( ) for reconciliations to generally accepted accounting principles (GAAP)

2 For the non-GAAP financial measures included in this ANNUAL REPORT . Forward-looking statements In this communication 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.

3 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: cyber attacks impacting our networks or systems and any resulting financial or reputational impact; natural disasters, terrorist attacks or acts of war or significant litigation and any resulting financial or reputational impact; disruption of our key suppliers or vendors' provisioning of products or services.

4 Material adverse changes in labor matters and any resulting financial or operational impact; the effects of competition in the markets in which we operate; failure to take advantage of developments in technology and address changes in consumer demand; performance issues or delays in the deployment of our 5G network resulting in significant costs or a reduction in the anticipated benefits of the enhancement to our networks; the inability to implement our business strategy; adverse conditions in the and international economies; changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks; 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; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or treaties, or in their interpretation.

5 And changes in accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings. Dear Shareholder, Hans Vestberg Chairman and Chief Executive Officer As we began 2019, Verizon had just launched the world's first commercial 5G network, and with it, a technology that would define the future of our company and our industry for years to come. Establishing the promise of what 5G can deliver for our customers, for our company, for our investors, and for society as a whole, was a key objective for Verizon in 2019, but so was continued strong performance in our core business.

6 We demonstrated that 5G Built Right the kind of network that only Verizon is in a position to deliver will generate not only a Fourth Industrial Revolution, but a new era of sustainable innovation and inclusive growth. This conviction guided our strategy for 2019 and shaped everything we accomplished over the course of a very exciting year. We ve long believed that 5G would be so much more than merely a next generation of wireless. In some ways, it s more like an entirely new technology. In order to ensure that the market fully appreciates both the transformative potential of 5G and Verizon s unique capacity for delivering on that potential, our company has reshaped itself to address the needs, expectations, and requirements of current and potential customers.

7 This was the impetus for our Verizon strategy, the implementation of which was a critical priority for 2019. Three imperatives guided us in the execution of this strategy: First, to preserve the immense advantages that this company has inherited from its proud past. These include a highly skilled workforce; a deeply trusted brand; and a network infrastructure that is second to none. Second, to strengthen these core assets in order to retain market leadership at a time of increased competition. Our skilled workforce would need new training; new tools; and new organizational structures that maximize openness and innovation.

8 Our brand would need new resonance in a market defined by ever-increasing consumer choice. Our network infrastructure would need an accelerating progress toward 5G. Third, and most important, to transform our operations wherever needed in order to not only keep pace with change, but to drive the change. Verizon Communications Inc. and Subsidiaries 2019 ANNUAL REPORT 3 The first major manifestation of Verizon was the reorganization of our entire company into three groups Verizon Consumer, Verizon Business, and Verizon Media which are defined by our customer-facing operations. This structure reflects our conviction that 5G and its related technologies require us to reimagine how we serve customers needs both now and in the future.

9 Each of these groups is led by an outstanding senior executive: Ronan Dunne, EVP and Group CEO - Verizon Consumer, Tami Erwin, EVP and Group CEO - Verizon Business, and Guru Gowrappan, EVP and Group CEO - Verizon Media. With the Verizon organizational structure in place, we focused on the technology that had necessitated the revamp in the first place 5G. In my start-of-year keynote at the Consumer Electronics Show in Las Vegas, I introduced the themes that would guide our thinking and our actions on 5G over the rest of 2019, including our devotion to the concept of 5G Built Right. In order to enable the full promise of 5G, a network needs to be built to deliver what we refer to as currencies specific capabilities of fifth-generation technology.

10 These include such qualities as a peak data rate at least 10 times (or more) greater than 4G, mobile data volumes 1,000 times higher than anything seen before, and latency (or signal lag) only about one-tenth that of 4G. Only a network built on millimeter wave spectrum, like Verizon s, will be able to fully take advantage of all of 5G s currencies. Thanks to our investment of capital and effort over the last several years, Verizon is positioned to bring together all of the components that a transformational 5G network requires the fiber, the real estate, the millimeter-wave spectrum, the small-cell infrastructure, and other key ingredients of a 5G network built right.