Verizon Reports Record Revenue Growth

• 201,000 FiOS Internet and 194,000 FiOS Video net additions, with increased sales penetration for both products; net increase of 98,000 broadband connections from 3Q 2011.
• 8.5 percent year-over-year increase in consumer ARPU; FiOS ARPU was more than $148 per month.

NEW YORK - Verizon Communications Inc. (NYSE, Nasdaq: VZ) posted the highest year-over-year quarterly revenue growth in the company's 11-year history in fourth-quarter 2011, fueled by continued strong demand for Verizon Wireless services and handsets, FiOS fiber-optic services, and strategic business products and services.

'Great Momentum for 2012'

"Verizon finished 2011 very strong, both in terms of revenue growth and by delivering an 18.2 percent total return to our shareholders for the full year, and the company has great momentum for 2012," said Lowell McAdam, Verizon chairman, president and chief executive officer.  "Verizon Wireless produced particularly strong growth in the fourth quarter.  While that diluted wireless margins in the short term, it is good news for revenue and margin growth over the long term, particularly given our leadership in the rapidly developing 4G LTE ecosystem."

McAdam added: "Wireline margins recovered from third-quarter pressures, and we expect wireline margin expansion in 2012.  With recent strategic moves and our investments in FiOS, LTE, and global IP and cloud-based strategic services, Verizon has set the stage for accelerated growth across our business units, and we look to continue to build significant value for shareholders in 2012."

Verizon's total shareholder return is a combination of stock-price appreciation and dividend payments.  Regarding recent strategic moves, Verizon last month strengthened its ability to provide fully integrated solutions by creating Verizon Enterprise Solutions, a sales and marketing organization, to harness all of Verizon's solutions for business and government customers globally.  In addition, Verizon Wireless announced agreements to purchase AWS (Advanced Wireless Spectrum) licenses, an important step toward meeting customers' needs for wireless data and broadband services.

4Q and Full-Year Earnings Results

Due primarily to the impact of previously announced non-cash pension items, Verizon reported a loss of 71 cents in EPS in fourth-quarter 2011, compared with earnings of 93 cents per share in fourth-quarter 2010.

Adjusted fourth-quarter 2011 earnings (non-GAAP) of 52 cents per share exclude $1.20 per share, or $3.4 billion after-tax, due to the actuarial valuation of Verizon's benefit plans, and 3 cents per share for the early extinguishment of debt.  This annual valuation adjustment, resulting from changes in actuarial assumptions, is in accordance with a Verizon accounting policy adopted last year.  Comparable adjusted fourth-quarter 2010 earnings were 54 cents per share, excluding the impact of non-operational items, the largest of which was a gain from benefit-plan valuation of 44 cents per share.

On an annual basis, Verizon reported 85 cents in 2011 EPS, compared with 90 cents per share in 2010.  Adjusted annual EPS (non-GAAP) was $2.15 in 2011, compared with $2.08 on a comparable basis (non-GAAP, excluding results from divested businesses) in 2010.

Consolidated Revenue Growth, Strong Cash Flows

In fourth-quarter 2011, Verizon's total operating revenues were $28.4 billion on a consolidated basis, an increase of 7.7 percent compared with fourth-quarter 2010.  For full-year 2011, revenues totaled $110.9 billion, a 4.0 percent increase compared with 2010, when results included revenues from operations that have since been divested.  On a comparable basis (non-GAAP), Verizon's 2011 full-year revenues increased 6.2 percent compared with 2010.

Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $29.4 billion in 2011.  On an adjusted basis (non-GAAP), EBITDA increased by more than $950 million in 2011 compared with 2010.

Cash flow from operating activities totaled $29.8 billion in 2011, and capital expenditures totaled $16.2 billion.  Free cash flow (non-GAAP, cash flow from operations less capex) was more than $13.5 billion in 2011.  From this total, Verizon returned $5.6 billion in quarterly dividends to shareholders in 2011, as the company's Board of Directors approved a fifth consecutive year of dividend increases.

Verizon Wireless Delivers Strong Customer and Revenue Growth

In fourth-quarter 2011, Verizon Wireless delivered the highest number of retail net additions in three years and strong growth in revenues, driven by increased smartphone penetration and increased retail postpaid ARPU (average monthly service revenue per user).

Wireless Financial Highlights

• Total revenues were $18.3 billion in fourth-quarter 2011, up 13.0 percent year over year.  Data revenues were $6.3 billion, up more than $1.0 billion or 19.2 percent year over year, and represented 41.6 percent of all service revenues.  Service revenues were $15.1 billion, up 6.4 percent year over year.  For full-year 2011, total revenues were $70.2 billion, up 10.6 percent over full-year 2010, and service revenues were $59.2 billion in 2011, up 6.3 percent year over year.
• Retail service ARPU grew 2.6 percent over fourth-quarter 2010, to $53.14.  Retail postpaid ARPU grew 2.5 percent, to $54.80.  Retail postpaid data ARPU increased to $22.76, up 14.3 percent year over year.
• In fourth-quarter 2011, wireless operating income margin was 23.7 percent, and wireless generated $6.4 billion of EBITDA.  Segment EBITDA margin on service revenues (non-GAAP) was 42.2 percent, down 530 basis points from fourth-quarter 2010.  For full-year 2011, operating income margin was 26.4 percent, down 310 basis points from full-year 2010; Segment EBITDA margin was 44.8 percent, down 210 basis points.

FiOS, Strategic Services Contribute to Revenue Growth

In fourth-quarter 2011, revenues and customers continued to increase for FiOS services, and sales of strategic services to business customers remained strong.  Segment EBITDA margins (non-GAAP) also increased both sequentially and year over year.

Wireline Financial Highlights

• Fourth-quarter 2011 operating revenues were $10.1 billion, a decline of 1.5 percent compared with fourth-quarter 2010.  Consumer revenues grew 1.3 percent compared with fourth-quarter 2010.
• In fourth-quarter 2011, wireline operating income was $300 million, up 18.6 percent from fourth-quarter 2010.  Segment EBITDA (non-GAAP) was $2.4 billion in fourth-quarter 2011, flat compared with fourth-quarter 2010 and an increase of $243 million from third-quarter 2011, when the Segment EBITDA was impacted by storm-related repair costs and a two-week strike.  Operating income margin was 3.0 percent in fourth-quarter 2011.  Segment EBITDA margin (non-GAAP) was 23.8 percent, compared with 23.5 percent in fourth-quarter 2010 and 21.4 percent in third-quarter 2011.
• Consumer ARPU for wireline services was $96.43 in fourth-quarter 2011, up 8.5 percent compared with fourth-quarter 2010.  ARPU for FiOS customers totaled more than $148 in fourth-quarter 2011, rising approximately $2 year over year.  FiOS services to consumer retail customers represented 61 percent of consumer wireline revenues in fourth-quarter 2011.
• Global enterprise revenues totaled $3.9 billion in the quarter, up 1.3 percent compared with fourth-quarter 2010.  Sales of strategic services - including Terremark cloud services, security and IT solutions, and strategic networking - increased 14.7 percent compared with fourth-quarter 2010 and represented 51 percent of global enterprise revenues in fourth-quarter 2011.

Wireline Operational Highlights

• Verizon added 201,000 net new FiOS Internet connections and 194,000 net new FiOS Video connections in fourth-quarter 2011.  Verizon had a total of 4.8 million FiOS Internet and 4.2 million FiOS Video connections at year-end.
• FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase.  FiOS Internet penetration was 35.5 percent at year-end 2011, compared with 31.9 percent at year-end 2010.  In the same periods, FiOS Video penetration was 31.5 percent, compared with 28.0 percent, respectively.  The FiOS network passed 16.5 million premises at year-end 2011, up more than 900,000 from year-end 2010.
• Broadband connections totaled 8.7 million at year-end 2011, a 3.3 percent year-over-year increase.  FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 98,000 broadband connections from third-quarter 2011.  Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.2 percent to 24.1 million - the smallest year-over-year decline since first-quarter 2006.
• Verizon continued to enhance its global portfolio of secure IT and advanced communications platforms and industry-focused solutions.  In fourth-quarter 2011, this included an expansion of the company's Voice-over-IP service within the Asia-Pacific region and the rollout of an automated healthcare fraud-detection platform for private health insurers and government agencies.
• Multinational corporations, leading businesses and government agencies - including Accenture plc; Chrysler Group LLC; the Commonwealth of Pennsylvania; GXS Inc.; MagnaCare Holdings Inc.; Tyson Foods Inc.; Consolidated Edison Company of New York Inc.; and Orange and Rockland Utilities Inc., a Con Edison subsidiary - completed new agreements or expanded their relationships with Verizon for a range of advanced communications and information technology solutions.  Verizon also announced that it had been named a prime contractor under the U.S. General Services Administration's CONNECTIONS II contract to provide professional and managed services and custom networking solutions at federal facilities.
• Verizon continued to broaden the scope and capabilities of its network infrastructure.  In fourth-quarter 2011, the company completed deployment of its next-generation 100 gigabit-per-second network route between New York City and Chicago and kicked off seven additional routes in the U.S.; expanded the Ethernet footprint to an additional 80 nodes supporting 23 areas in the Eastern part of the U.S.; expanded the global Private IP network into six additional countries in Africa and two more countries in the Middle East; and activated the first phase of the Europe India Gateway (EIG) submarine cable connecting Europe to the Middle East and Africa with 40G high-speed connections.

NOTE: Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results for the divestiture of overlapping wireless properties in 105 operating markets in 24 states during the first half of 2010; the wireless deferred revenue adjustment that was disclosed in Verizon's Form 10-Q for the period ended June 30, 2010; the spinoff to Frontier of local exchange and related landline assets in 14 states, effective on July 1, 2010; and other non-operational items.  See the accompanying schedules and www.verizon.com/investor  for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to consumer, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, with nearly 109 million total connections nationwide.  Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers integrated business solutions to customers in more than 150 countries, including all of the Fortune 500.  A Dow 30 company with $111 billion in 2011 revenues, Verizon employs a diverse workforce of nearly 194,000.  For more information, visit www.verizon.com.

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