VERIZON COMMUNICATIONS INC [VZ] Filings

10-Q 1 vz-20240930.htm 10-Q vz-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark one)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

			For the transition period from to

Commission file number: 1-8606

Verizon Communications Inc.

(Exact name of registrant as specified in its charter)


Delaware						23-2259884
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


1095 Avenue of the Americas		10036
New York,	New York
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 395-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $0.10

New York Stock Exchange

Common Stock, par value $0.10

The Nasdaq Global Select Market

0.875% Notes due 2025

VZ 25

New York Stock Exchange

3.25% Notes due 2026

VZ 26

New York Stock Exchange

1.375% Notes due 2026

VZ 26B

New York Stock Exchange

0.875% Notes due 2027

VZ 27E

New York Stock Exchange

1.375% Notes due 2028

VZ 28

New York Stock Exchange

1.125% Notes due 2028

VZ 28A

New York Stock Exchange

2.350% Fixed Rate Notes due 2028

VZ 28C

New York Stock Exchange

1.875% Notes due 2029

VZ 29B

New York Stock Exchange

0.375% Notes due 2029

VZ 29D

New York Stock Exchange

1.250% Notes due 2030

VZ 30

New York Stock Exchange

1.875% Notes due 2030

VZ 30A

New York Stock Exchange

4.250% Notes due 2030

VZ 30D

New York Stock Exchange

2.625% Notes due 2031

VZ 31

New York Stock Exchange

2.500% Notes due 2031

VZ 31A

New York Stock Exchange

3.000% Fixed Rate Notes due 2031

VZ 31D

New York Stock Exchange

0.875% Notes due 2032

VZ 32

New York Stock Exchange

0.750% Notes due 2032

VZ 32A

New York Stock Exchange

3.500% Notes due 2032

VZ 32B

New York Stock Exchange

1.300% Notes due 2033

VZ 33B

New York Stock Exchange

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Securities registered pursuant to Section 12(b) of the Act (continued):

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

4.75% Notes due 2034

VZ 34

New York Stock Exchange

4.750% Notes due 2034

VZ 34C

New York Stock Exchange

3.125% Notes due 2035

VZ 35

New York Stock Exchange

1.125% Notes due 2035

VZ 35A

New York Stock Exchange

3.375% Notes due 2036

VZ 36A

New York Stock Exchange

3.750% Notes due 2036

VZ 36B

New York Stock Exchange

2.875% Notes due 2038

VZ 38B

New York Stock Exchange

1.875% Notes due 2038

VZ 38C

New York Stock Exchange

1.500% Notes due 2039

VZ 39C

New York Stock Exchange

3.50% Fixed Rate Notes due 2039

VZ 39D

New York Stock Exchange

1.850% Notes due 2040

VZ 40

New York Stock Exchange

3.850% Fixed Rate Notes due 2041

VZ 41C

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

At September 30, 2024, 4,209,626,270 shares of the registrant’s common stock were outstanding, after deducting 81,807,376 shares held in treasury.

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TABLE OF CONTENTS


Item No.		Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income	4
	Three and nine months ended September 30, 2024 and 2023

	Condensed Consolidated Statements of Comprehensive Income	5
	Three and nine months ended September 30, 2024 and 2023

	Condensed Consolidated Balance Sheets	6
	At September 30, 2024 and December 31, 2023

	Condensed Consolidated Statements of Cash Flows	7
	Nine months ended September 30, 2024 and 2023

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58

Item 4.	Controls and Procedures	58

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	58

Item 1A.	Risk Factors	58

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 5.	Other Information	58

Item 6.	Exhibits	59

Signature		60

Certifications

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Part I - Financial Information


Item 1. Financial Statements (Unaudited)


Condensed Consolidated Statements of Income
Verizon Communications Inc. and Subsidiaries


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in millions, except per share amounts) (unaudited)	2024		2023		2024		2023

Operating Revenues
Service revenues and other	$	27,987	$	27,523	$	83,405	$	81,994
Wireless equipment revenues	5,343		5,813		15,702		16,850
Total Operating Revenues	33,330		33,336		99,107		98,844

Operating Expenses
Cost of services (exclusive of items shown below)	7,193		7,084		21,064		21,148
Cost of wireless equipment	6,047		6,353		17,519		18,557
Selling, general and administrative expense	9,706		7,995		25,873		23,754
Depreciation and amortization expense	4,458		4,431		13,386		13,108

Total Operating Expenses	27,404		25,863		77,842		76,567

Operating Income	5,926		7,473		21,265		22,277
Equity in losses of unconsolidated businesses	(24)		(18)		(47)		(42)
Other income, net	72		170		198		494
Interest expense	(1,672)		(1,433)		(5,005)		(3,925)
Income Before Provision For Income Taxes	4,302		6,192		16,411		18,804
Provision for income taxes	(891)		(1,308)		(3,576)		(4,136)
Net Income	$	3,411	$	4,884	$	12,835	$	14,668

Net income attributable to noncontrolling interests	$	105	$	122	$	334	$	349
Net income attributable to Verizon	3,306		4,762		12,501		14,319
Net Income	$	3,411	$	4,884	$	12,835	$	14,668

Basic Earnings Per Common Share
Net income attributable to Verizon	$	0.78	$	1.13	$	2.96	$	3.40
Weighted-average shares outstanding (in millions)	4,220		4,213		4,217		4,209

Diluted Earnings Per Common Share
Net income attributable to Verizon	$	0.78	$	1.13	$	2.96	$	3.40
Weighted-average shares outstanding (in millions)	4,225		4,216		4,221		4,214

See Notes to Condensed Consolidated Financial Statements

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Condensed Consolidated Statements of Comprehensive Income
Verizon Communications Inc. and Subsidiaries


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in millions) (unaudited)	2024		2023		2024		2023

Net Income	$	3,411	$	4,884	$	12,835	$	14,668
Other Comprehensive Income (Loss), Net of Tax (Expense) Benefit
Foreign currency translation adjustments, net of tax of $8, $(7), $2 and $(3)	59		(51)		9		(31)
Unrealized gain on cash flow hedges, net of tax of $(2), $(8), $(20) and $(23)	6		21		60		67
Unrealized gain (loss) on fair value hedges, net of tax of $149, $(198), $117 and $(195)	(446)		584		(350)		575
Unrealized gain (loss) on marketable securities, net of tax of $(2), $2, $(1) and $1	5		(5)		2		(3)
Defined benefit pension and postretirement plans, net of tax of $1, $19, $3 and $55	(2)		(56)		(6)		(171)
Other comprehensive income (loss) attributable to Verizon	(378)		493		(285)		437
Total Comprehensive Income	$	3,033	$	5,377	$	12,550	$	15,105

Comprehensive income attributable to noncontrolling interests	$	105	$	122	$	334	$	349
Comprehensive income attributable to Verizon	2,928		5,255		12,216		14,756
Total Comprehensive Income	$	3,033	$	5,377	$	12,550	$	15,105

See Notes to Condensed Consolidated Financial Statements

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Condensed Consolidated Balance Sheets
Verizon Communications Inc. and Subsidiaries



	At September 30,		At December 31,
(dollars in millions, except per share amounts) (unaudited)	2024		2023

Assets
Current assets
Cash and cash equivalents	$	4,987	$	2,065
Accounts receivable	27,040		26,102
Less Allowance for credit losses	1,086		1,017

Accounts receivable, net	25,954		25,085
Inventories	2,523		2,057
Prepaid expenses and other	7,177		7,607
Total current assets	40,641		36,814

Property, plant and equipment	327,555		320,108
Less Accumulated depreciation	220,027		211,798
Property, plant and equipment, net	107,528		108,310

Investments in unconsolidated businesses	867		953
Wireless licenses	156,481		155,667

Goodwill	22,844		22,843
Other intangible assets, net	10,674		11,057
Operating lease right-of-use assets	23,613		24,726
Other assets	18,516		19,885
Total assets	$	381,164	$	380,255

Liabilities and Equity
Current liabilities
Debt maturing within one year	$	21,763	$	12,973
Accounts payable and accrued liabilities	22,222		23,453
Current operating lease liabilities	4,312		4,266
Other current liabilities	13,519		12,531
Total current liabilities	61,816		53,223

Long-term debt	128,878		137,701
Employee benefit obligations	12,744		13,189
Deferred income taxes	45,865		45,781
Non-current operating lease liabilities	19,247		20,002
Other liabilities	14,946		16,560
Total long-term liabilities	221,680		233,233

Commitments and Contingencies (Note 12)

Equity
Series preferred stock ($0.10 par value; 250,000,000 shares authorized; none issued)	—		—
Common stock ($0.10 par value; 6,250,000,000 shares authorized in each period; 4,291,433,646 shares issued in each period)	429		429
Additional paid in capital	13,479		13,631
Retained earnings	86,958		82,915
Accumulated other comprehensive loss	(1,665)		(1,380)
Common stock in treasury, at cost (81,807,376 and 87,172,997 shares outstanding)	(3,585)		(3,821)
Deferred compensation – employee stock ownership plans (ESOPs) and other	710		656
Noncontrolling interests	1,342		1,369
Total equity	97,668		93,799
Total liabilities and equity	$	381,164	$	380,255

See Notes to Condensed Consolidated Financial Statements

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Condensed Consolidated Statements of Cash Flows
Verizon Communications Inc. and Subsidiaries


	Nine Months Ended
	September 30,
(dollars in millions) (unaudited)	2024		2023

Cash Flows from Operating Activities
Net Income	$	12,835	$	14,668
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	13,386		13,108
Employee retirement benefits	469		161
Deferred income taxes	247		822
Provision for expected credit losses	1,623		1,596
Equity in losses of unconsolidated businesses, inclusive of dividends received	62		69

Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses	(2,609)		972

Other, net	467		(2,598)
Net cash provided by operating activities	26,480		28,798

Cash Flows from Investing Activities
Capital expenditures (including capitalized software)	(12,019)		(14,164)

Acquisitions of wireless licenses	(768)		(1,859)
Collateral receipts (payments) related to derivative contracts, net	(332)		162

Other, net	6		253
Net cash used in investing activities	(13,113)		(15,608)

Cash Flows from Financing Activities
Proceeds from long-term borrowings	3,142		1,999
Proceeds from asset-backed long-term borrowings	8,229		4,656
Net proceeds from short-term commercial paper	—		333
Repayments of long-term borrowings and finance lease obligations	(6,623)		(5,568)
Repayments of asset-backed long-term borrowings	(6,158)		(3,729)
Dividends paid	(8,399)		(8,231)
Other, net	(1,668)		(1,101)
Net cash used in financing activities	(11,477)		(11,641)

Increase in cash, cash equivalents and restricted cash	1,890		1,549
Cash, cash equivalents and restricted cash, beginning of period	3,497		4,111
Cash, cash equivalents and restricted cash, end of period (Note 1)	$	5,387	$	5,660

See Notes to Condensed Consolidated Financial Statements

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Notes to Condensed Consolidated Financial Statements (Unaudited)
Verizon Communications Inc. and Subsidiaries


Note 1. Basis of Presentation

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 entertainment products and services to consumers, businesses and government entities. With a presence around the world, we offer data, video and voice services and solutions on our networks and platforms that are designed to meet customers’ demand for mobility, reliable network connectivity and security.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States (U.S.) and based upon Securities and Exchange Commission rules that permit reduced disclosure for interim periods. For a more complete discussion of significant accounting policies and certain other information, you should refer to the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. These financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of results of operations and financial condition for the interim periods shown. The results for the interim periods are not necessarily indicative of results for the full year.

The condensed consolidated financial statements include our controlled subsidiaries, as well as variable interest entities (VIE) where we are deemed to be the primary beneficiary. All significant intercompany accounts and transactions have been eliminated.

Certain amounts have been reclassified to conform to the current period's presentation.

Earnings Per Common Share

There were a total of approximately 4.6 million and 4.5 million outstanding dilutive securities, primarily consisting of performance stock units and restricted stock units, included in the computation of diluted earnings per common share for the three and nine months ended September 30, 2024, respectively. There were a total of approximately 3.4 million and 4.2 million outstanding dilutive securities, primarily consisting of performance stock units and restricted stock units, included in the computation of diluted earnings per common share for the three and nine months ended September 30, 2023, respectively.

Cash, Cash Equivalents and Restricted Cash

We consider all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximates quoted market value and includes amounts held in money market funds.

Cash collections on the receivables and on the underlying receivables related to the participation interest collateralizing our asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the segregated accounts are considered restricted cash.

Cash, cash equivalents and restricted cash are included in the following line items in the condensed consolidated balance sheets:


	At September 30,		At December 31,		Increase / (Decrease)
(dollars in millions)	2024		2023
Cash and cash equivalents	$	4,987	$	2,065	$	2,922
Restricted cash:
Prepaid expenses and other	273		1,244		(971)
Other assets	127		188		(61)
Cash, cash equivalents and restricted cash	$	5,387	$	3,497	$	1,890

Vertical Bridge Transaction

On September 27, 2024, Verizon entered into an agreement with Vertical Bridge REIT, LLC (Vertical Bridge) pursuant to which Vertical Bridge will obtain the exclusive rights to lease, operate and manage over 6,000 wireless towers from subsidiaries of Verizon. The transaction is structured as a prepaid lease with an upfront payment of approximately $2.8 billion. Under the terms of the leases, Vertical Bridge will have exclusive rights to lease, operate and manage the towers over an average term of approximately 30 years, and will have an option to acquire the towers at the end of the lease terms. Verizon will lease back capacity on the towers from Vertical Bridge for an initial term of 10 years, with eight optional renewal terms of five years each, subject to certain early termination rights. This transaction is expected to close by the end of 2024, subject to customary closing conditions. Verizon plans to account for the upfront payment as a financing obligation and prepaid rent.

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Note 2. Revenues and Contract Costs

We earn revenue from contracts with customers, primarily through the provision of telecommunications and other services and through the sale of wireless equipment.

Revenue by Category

We have two reportable segments that we operate and manage as strategic business units, Consumer and Business. Revenue is disaggregated by products and services within Consumer, and customer groups (Enterprise and Public Sector, Business Markets and Other, and Wholesale) within Business. See Note 10 for additional information on revenue by segment, including Corporate and other.

We also earn revenues that are not accounted for under Topic 606 from leasing arrangements (such as those for towers and equipment), captive reinsurance arrangements primarily related to wireless device insurance and the interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement. We have elected the practical expedient within Topic 842, to combine the lease and non-lease components for those customer arrangements under Topic 606 that involve customer premise equipment where we are the lessor. During the three and nine months ended September 30, 2024 revenues from arrangements that were not accounted for under Topic 606 were approximately $809 million and $2.3 billion, respectively. During the three and nine months ended September 30, 2023, revenues from arrangements that were not accounted for under Topic 606 were approximately $693 million and $2.2 billion, respectively.

Remaining Performance Obligations

When allocating the total contract transaction price to identified performance obligations, a portion of the total transaction price may relate to service performance obligations which were not satisfied or were partially satisfied as of the end of the reporting period. Below we disclose information relating to these unsatisfied performance obligations. We apply the practical expedient available under Topic 606 that provides the option to exclude the expected revenues arising from unsatisfied performance obligations related to contracts that have an original expected duration of one year or less. This situation primarily arises with respect to certain month-to-month service contracts. At September 30, 2024, month-to-month service contracts represented approximately 95% of both our wireless postpaid contracts and our wireline Consumer and our Business Markets and Other contracts, compared to September 30, 2023, for which month-to-month service contracts represented approximately 94% of both our wireless postpaid contracts and our wireline Consumer and our Business Markets and Other contracts.

Additionally, certain contracts provide customers the option to purchase additional services. The fees related to these additional services are recognized when the customer exercises the option (typically on a month-to-month basis).

Contracts for wireless services, with or without promotional credits that require maintenance of service, are generally either month-to-month and cancellable at any time, or considered to contain terms ranging from greater than one month to up to thirty-six months (typically under a device payment plan or a fixed-term plan). Additionally, customers may incur charges based on usage or additional optional services purchased in conjunction with entering into a contract that can be cancelled at any time and therefore are not included in the transaction price. The transaction price allocated to service performance obligations, which are not satisfied or are partially satisfied as of the end of the reporting period, are generally related to contracts that are not accounted for as month-to-month contracts.

Our Consumer group customers also include traditional wholesale resellers that purchase and resell wireless service under their own brands to their respective customers. Reseller arrangements generally include a stated contract term, which typically extends longer than two years and, in some cases, include a periodic minimum revenue commitment over the contract term for which revenues will be recognized in future periods.

Consumer customer contracts for wireline services are generally month-to-month; however, they may have a service term of two years or shorter than twelve months. Certain contracts with Business customers for wireline services extend into future periods, contain fixed monthly fees and usage-based fees, and can include annual commitments in each year of the contract or commitments over the entire specified contract term; however, a significant number of contracts for wireline services with our Business customers have a contract term that is twelve months or less.

Additionally, there are certain contracts with Business customers for wireline services that have a contractual minimum fee over the total contract term. We cannot predict the time period when revenue will be recognized related to those contracts; thus, they are excluded from the time bands below. These contracts have varying terms spanning over approximately twenty-nine years ending in September 2053 and have aggregate contract minimum payments totaling $1.8 billion.

At September 30, 2024, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2024, 2025 and thereafter was $7.7 billion, $27.1 billion and $23.1 billion, respectively. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations and changes in the timing and scope of contracts, arising from contract modifications.

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Accounts Receivable and Contract Balances

The timing of revenue recognition may differ from the time of billing to our customers. Receivables presented in our condensed consolidated balance sheets represent an unconditional right to consideration. Contract balances represent amounts from an arrangement when either Verizon has performed, by transferring goods or services to the customer in advance of receiving all or partial consideration for such goods and services from the customer, or the customer has made payment to Verizon in advance of obtaining control of the goods and/or services promised to the customer in the contract.

The following table presents information about receivables from contracts with customers:


	At September 30,		At December 31,
(dollars in millions)	2024		2023
Accounts Receivable(1)	$	9,500	$	9,760
Device payment plan agreement receivables(2)	18,430		18,528

(1)Balances do not include receivables related to the following: activity associated with certain vendor agreements, leasing arrangements (such as those for towers and equipment), captive reinsurance arrangements primarily related to wireless device insurance and device payment plan agreement receivables presented separately.

(2)Included in device payment plan agreement receivables presented in Note 6. Receivables derived from the sale of equipment on a device payment plan through an authorized agent are excluded.

Contract assets primarily relate to our rights to consideration for goods or services provided to customers but for which we do not have an unconditional right at the reporting date. Under a fixed-term plan, total contract revenue is allocated between wireless service and equipment revenues. In conjunction with these arrangements, a contract asset is created, which represents the difference between the amount of equipment revenue recognized upon sale and the amount of consideration received from the customer when the performance obligation related to the transfer of control of the equipment is satisfied. The contract asset is reclassified to accounts receivable as wireless services are provided and billed. We have the right to bill the customer as service is provided over time, which results in our right to the payment being unconditional. The contract asset balances are presented in our condensed consolidated balance sheets as Prepaid expenses and other and Other assets. We recognize the allowance for credit losses at inception and reassess quarterly based on management’s expectation of the asset’s collectability.

Contract liabilities arise when we bill our customers and receive consideration in advance of providing the goods or services promised in the contract. We typically bill service one month in advance, which is the primary component of the contract liability balance. Contract liabilities are recognized as revenue when services are provided to the customer. The contract liability balances are presented in our condensed consolidated balance sheets as Other current liabilities and Other liabilities.

Revenues recognized related to contract liabilities existing at January 1, 2024 were $206 million and $4.9 billion for the three and nine months ended September 30, 2024, respectively. Revenues recognized related to contract liabilities existing at January 1, 2023 were $202 million and $4.8 billion for the three and nine months ended September 30, 2023, respectively.

The balances of contract assets and contract liabilities recorded in our condensed consolidated balance sheets were as follows:


	At September 30,		At December 31,
(dollars in millions)	2024		2023
Assets
Prepaid expenses and other	$	569	$	546
Other assets	297		268
Total Contract Assets	$	866	$	814

Liabilities
Other current liabilities	$	7,221	$	6,955
Other liabilities	1,882		1,947
Total Contract Liabilities	$	9,103	$	8,902

Contract Costs

Topic 606 requires the recognition of an asset for incremental costs to obtain a customer contract, which are then amortized to expense over the respective periods of expected benefit. We recognize an asset for incremental commission expenses paid to internal and external sales personnel and agents in conjunction with obtaining customer contracts. We only defer these costs when we have determined the commissions are incremental costs that would not have been incurred absent the customer contract and are expected to be recoverable. Costs to obtain a contract are amortized and recorded ratably as commission expense over the period representing the transfer of goods or services to which the assets relate. Costs to obtain wireless contracts are amortized over both of our Consumer and Business customers' estimated upgrade cycles, as such costs are typically incurred each time a customer upgrades. Costs to obtain wireline contracts are amortized as expense over the estimated customer relationship period for our Consumer customers. Incremental costs to obtain wireline contracts for our Business customers are insignificant. Costs to obtain contracts are recorded in Selling, general and administrative expense.

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We also defer costs incurred to fulfill contracts that: (1) relate directly to the contract; (2) are expected to generate resources that will be used to satisfy our performance obligation under the contract; and (3) are expected to be recovered through revenue generated under the contract. Contract fulfillment costs are expensed as we satisfy our performance obligations and recorded in Cost of services. These costs principally relate to direct costs that enhance our wireline business resources, such as costs incurred to install circuits.

We determine the amortization periods for our costs incurred to obtain or fulfill a customer contract at a portfolio level due to the similarities within these customer contract portfolios.

Other costs, such as general costs or costs related to past performance obligations, are expensed as incurred.

Collectively, costs to obtain a contract and costs to fulfill a contract are referred to as deferred contract costs, and amortized over a two-to-seven year period. Deferred contract costs are classified as current or non-current within Prepaid expenses and other and Other assets, respectively.

The balances of deferred contract costs included in our condensed consolidated balance sheets were as follows:


	At September 30,		At December 31,
(dollars in millions)	2024		2023
Assets
Prepaid expenses and other	$	2,830	$	2,756
Other assets	2,651		2,639
Total	$	5,481	$	5,395

For the three and nine months ended September 30, 2024, we recognized expense of $865 million and $2.5 billion, respectively, associated with the amortization of deferred contract costs, primarily within Selling, general and administrative expense in our condensed consolidated statements of income. For the three and nine months ended September 30, 2023, we recognized expense of $799 million and $2.4 billion, respectively, associated with the amortization of deferred contract costs, primarily within Selling, general and administrative expense in our condensed consolidated statements of income.

We assess our deferred contract costs for impairment on a quarterly basis. We recognize an impairment charge to the extent the carrying amount of a deferred cost exceeds the remaining amount of consideration we expect to receive in exchange for the goods and services related to the cost, less the expected costs related directly to providing those goods and services that have not yet been recognized as expenses. There were no impairment charges recognized for the three and nine months ended September 30, 2024. There were insignificant impairment charges recognized for the three and nine months ended September 30, 2023.


Note 3. Acquisitions and Divestitures

Spectrum License Transactions

In February 2021, the Federal Communications Commission (FCC) concluded Auction 107 for C-Band wireless spectrum. In accordance with the rules applicable to the auction, Verizon is required to make payments for our allocable share of clearing costs incurred by, and incentive payments due to, the incumbent license holders associated with the auction, which are estimated to be $7.5 billion. During the nine months ended September 30, 2024 and September 30, 2023, we made payments of $269 million and $578 million, respectively, for obligations related to clearing costs and accelerated clearing incentives. The carrying value of the wireless spectrum won in Auction 107 consists of all payments required to participate and purchase licenses in the auction, including Verizon's allocable share of clearing costs incurred by, and incentive payments due to, the incumbent license holders associated with the auction that we are obligated to pay in order to acquire the licenses, as well as capitalized interest to the extent qualifying activities have occurred.

On October 17, 2024, Verizon entered into a license purchase agreement to acquire select spectrum licenses of United States Cellular Corporation and certain of its subsidiaries (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 consummation of UScellular's proposed sale of its wireless operations and select spectrum assets to T-Mobile US, Inc., and the termination of certain post-closing arrangements with respect to that sale.

TracFone Wireless, Inc.

On November 23, 2021 (the Acquisition Date), we completed the acquisition of TracFone Wireless, Inc. (TracFone). Verizon acquired all of TracFone's outstanding stock in exchange for approximately $3.5 billion in cash, net of cash acquired and working capital and other adjustments, 57,596,544 shares of common stock of the Company valued at approximately $3.0 billion, and up to an additional $650 million in future cash contingent consideration related to the achievement of certain performance measures and other commercial arrangements. The fair value of the Verizon common stock was determined on the basis of its closing

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market price on the Acquisition Date. The estimated fair value of the contingent consideration as of the Acquisition Date was approximately $560 million and represented a Level 3 measurement as defined in ASC 820, Fair Value Measurements and Disclosures. See Note 7 for additional information. The contingent consideration payable was based on the achievement of certain revenue and operational targets, measured over a two-year earn out period. Contingent consideration payments were completed in January of 2024.

During the nine months ended September 30, 2024 and September 30, 2023, Verizon made payments of $52 million and $182 million, respectively, related to the contingent consideration, which are reflected in Cash flows from financing activities in our condensed consolidated statements of cash flows.

Frontier Communications Parent, Inc.

On September 4, 2024, Verizon entered into an Agreement and Plan of Merger (the Merger Agreement) to acquire Frontier Communications Parent, Inc. (Frontier), a U.S. provider of broadband internet and other communication services. The transaction is structured as a merger of the Company's subsidiary with and into Frontier, as a result of which Frontier will become a wholly owned subsidiary of the Company and shares of Frontier common stock outstanding immediately prior to the effective time of merger (subject to certain limited exceptions) will be cancelled and converted into the right to receive a per share merger consideration of $38.50, in cash. Consummation of the transaction is subject to approval by Frontier shareholders, receipt of certain regulatory approvals and other customary closing conditions. Under certain circumstances, if the Merger Agreement is terminated, Frontier may be required to pay Verizon a termination fee of $320 million. Under certain other specified circumstances, Verizon may be required to pay Frontier a termination fee of $590 million.


Note 4. Wireless Licenses, Goodwill, and Other Intangible Assets

Wireless Licenses

The carrying amounts of our Wireless licenses are as follows:


	At September 30,		At December 31,
(dollars in millions)	2024		2023
Wireless licenses	$	156,481	$	155,667

During the nine months ended September 30, 2024 and September 30, 2023, we made payments of $269 million and $578 million, respectively, for obligations related to clearing costs and accelerated clearing incentives for wireless licenses in connection with Auction 107. See Note 3 for additional information.

At September 30, 2024 and 2023, approximately $11.3 billion and $22.1 billion, respectively, of wireless licenses were under development for commercial service for which we were capitalizing interest costs. We recorded $485 million and $1.2 billion of capitalized interest on wireless licenses for the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, we renewed various wireless licenses in accordance with FCC regulations. The average renewal period for these licenses was 10 years.

Goodwill

Changes in the carrying amount of Goodwill are as follows:


(dollars in millions)	Consumer		Business		Total
Balance at January 1, 2024(1)	$	21,177	$	1,666	$	22,843

Reclassifications, adjustments and other	—		1		1
Balance at September 30, 2024	$	21,177	$	1,667	$	22,844

(1) Goodwill is net of accumulated impairment charges of $5.8 billion related to our Business reporting unit.

Other Intangible Assets

The following table displays the composition of Other intangible assets, net as well as the respective amortization periods:


	At September 30, 2024						At December 31, 2023
(dollars in millions)	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Customer lists (5 to 13 years)	$	4,242	$	(2,503)	$	1,739	$	4,335	$	(2,193)	$	2,142
Non-network internal-use software (3 to 7 years)	26,989		(19,240)		7,749		25,524		(17,949)		7,575
Other (4 to 25 years)	2,663		(1,477)		1,186		2,656		(1,316)		1,340
Total	$	33,894	$	(23,220)	$	10,674	$	32,515	$	(21,458)	$	11,057

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The amortization expense for Other intangible assets was as follows:


	Three Months Ended		Nine Months Ended
(dollars in millions)	September 30,		September 30,
2024	$	676	$	2,080
2023	690		1,990

The estimated future amortization expense for Other intangible assets for the remainder of the current year and next 5 years is as follows:


Years	(dollars in millions)
Remainder of 2024	$	685
2025	2,606
2026	2,384
2027	1,815
2028	1,435
2029	769


Note 5. Debt

Significant Debt Transactions

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.

The following tables show the significant transactions involving the senior unsecured debt securities of the Company and its subsidiaries that occurred during the three and nine months ended September 30, 2024.

Exchange Offers


(dollars in millions)	Principal Amount Exchanged		Principal Amount Issued
Three Months Ended September 30, 2024
Verizon 0.850% - 4.329% notes and floating rate notes, due 2025 - 2028	$	2,256	$	—
Verizon 4.780% notes due 2035(1)	—		2,191

Three and Nine Months Ended September 30, 2024 total(2)	$	2,256	$	2,191

(1) The principal amount issued in exchange does not include either an insignificant amount of cash paid in lieu of the issuance of fractional new notes or accrued and unpaid interest paid on the old notes accepted for exchange to the date of exchange.

(2) The debt exchange offers above meet the criteria to be accounted for as a modification of debt. As a result, the excess of the principal amount of notes exchanged over the principal amount of new notes issued of $65 million was recorded as a premium to Long-term debt in the condensed consolidated balance sheets.

Tender Offers


(dollars in millions)	Principal Amount Purchased		Cash Consideration(1)
Three Months Ended March 31, 2024
Verizon 0.875% - 3.250% notes due 2025 - 2028	€	1,981	$	2,237
Three Months Ended March 31, 2024 total			2,237
Nine Months Ended September 30, 2024 total			$	2,237

(1) The total cash consideration includes the tender offer consideration, plus any accrued and unpaid interest to the date of purchase. In addition, for securities denominated in a currency other than the U.S. dollar, cash consideration is shown on a U.S. dollar equivalent basis and includes the amount payable per the derivatives entered into in connection with the transaction. See Note 7 for additional information on cross currency swap transactions related to the transaction.

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Repayments and Repurchases


(dollars in millions)	Principal Repaid/ Repurchased		Amount Paid(1)
Three Months Ended March 31, 2024
Verizon 1.625% notes due 2024	€	685	$	840
Verizon 0.750% notes due 2024	$	999	1,003
Verizon floating rate notes due 2024	95		96
Open market repurchases of various Verizon notes	117		89
Three Months Ended March 31, 2024 total			2,028

Three Months Ended June 30, 2024
Verizon 4.073% notes due 2024	£	413	$	582
Open market repurchases of various Verizon notes	$	306	214
Three Months Ended June 30, 2024 total			796

Three Months Ended September 30, 2024
Open market repurchases of various Verizon notes	$	450	$	362
Three Months Ended September 30, 2024 total			362
Nine Months Ended September 30, 2024 total			$	3,186

(1) Represents amount paid to repay or repurchase, including any accrued interest. In addition, for securities denominated in a currency other than the U.S. dollar, amount paid is shown on a U.S. dollar equivalent basis and includes the amount payable per the derivatives entered into in connection with the transaction. See Note 7 for additional information on cross currency swap transactions related to the transaction.

Issuances


(dollars in millions)	Principal Amount Issued		Net Proceeds(1)
Three Months Ended March 31, 2024
Verizon 3.500% notes due 2032	€	1,000	$	1,062
Verizon 3.750% notes due 2036	€	1,000	1,061
Verizon 5.500% notes due 2054(2)	$	1,000	980
Three Months Ended March 31, 2024 total			3,103
Nine Months Ended September 30, 2024 total			$	3,103

(1) Net proceeds were net of underwriting discounts and other issuance costs. In addition, for securities denominated in a currency other than the U.S. dollar, net proceeds are shown on a U.S. dollar equivalent basis. See Note 7 for additional information on cross currency swap transactions related to the issuances.

(2) An amount equal to the net proceeds from these notes is expected to be used to fund certain renewable energy projects, including new and existing investments made by us during the period from May 1, 2023 through the maturity date of the notes.

Commercial Paper Program

During the nine months ended September 30, 2024, we issued $23.6 billion in net proceeds and made $23.6 billion in principal repayments of commercial paper. These transactions are reflected within Cash flows from financing activities in our condensed consolidated statements of cash flows on a net basis. As of September 30, 2024, we had no commercial paper outstanding.

Asset-Backed Debt

As of September 30, 2024, the carrying value of our asset-backed debt was $24.3 billion. Our asset-backed debt includes Asset-Backed Notes (ABS Notes) issued to third-party investors (Investors) and loans (ABS Financing Facilities) received from banks and their conduit facilities (collectively, the Banks). Our consolidated asset-backed debt bankruptcy remote legal entities (each, an ABS Entity, or collectively, the ABS Entities) issue the debt or are otherwise party to the transaction documentation in connection with our asset-backed debt transactions. Under the terms of our asset-backed debt, Cellco Partnership (Cellco), a wholly-owned subsidiary of the Company, and certain other Company affiliates (collectively, the Originators) transfer device payment plan agreement receivables and certain other receivables (collectively referred to as certain receivables) or a participation interest in certain other receivables to one of the ABS Entities, which in turn transfers such receivables and participation interest to another ABS Entity that issues the debt. Verizon entities retain the equity interests and residual interests, as applicable, in the ABS Entities, which represent the rights to all funds not needed to make required payments on the asset-backed debt and other related payments and expenses.

Our asset-backed debt is secured by the transferred receivables and participation interest, and future collections on such receivables and underlying receivables related to such participation interest. These receivables and participation interest transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of

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asset-backed debt and expenses related thereto, payments to the Originators in respect of additional transfers of certain receivables and participation interest, and other obligations arising from our asset-backed debt transactions, and will not be available to pay other obligations or claims of Verizon’s creditors until the associated asset-backed debt and other obligations are satisfied. The Investors or Banks, as applicable, which hold our asset-backed debt have legal recourse to the assets securing the debt, but do not have any recourse to Verizon with respect to the payment of principal and interest on the debt. Under a parent support agreement, the Company has agreed to guarantee certain of the payment obligations of Cellco and the Originators to the ABS Entities.

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.

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ABS Notes

During the nine months ended September 30, 2024, we completed the following ABS Notes transactions:


(dollars in millions)	Interest Rates %	Expected Weighted-average Life to Maturity (in years)	Principal Amount Issued
January 2024
Series 2024-1
A-1a Senior class notes	5.000	1.92	$	835
A-1b Senior class notes	Compounded SOFR + 0.650(1)	1.92	279
B Junior class notes	5.240	1.92	—
C Junior class notes	5.490	1.92	51

Series 2024-2
A Senior class notes	4.830	4.92	668
B Junior class notes	5.080	4.92	51
C Junior class notes	5.320	4.92	31
January 2024 total			1,915

April 2024
Series 2024-3
A-1a Senior class notes	5.340	2.99	605
A-1b Senior class notes	Compounded SOFR + 0.580(1)	2.99	175
B Junior class notes	5.540	2.99	59
C Junior class notes	5.730	2.99	36
April 2024 total			875

June 2024
Series 2024-4
A-1a Senior class notes	5.210	1.98	289
A-1b Senior class notes	Compounded SOFR + 0.550(1)	1.98	246
B Junior class notes	5.400	1.98	41
C Junior class notes	5.600	1.98	25

Series 2024-5
A Senior class notes	5.000	4.98	512
B Junior class notes	5.250	4.98	39
C Junior class notes	5.490	4.98	24
June 2024 total			1,176

September 2024
Series 2024-6
A-1a Senior class notes	4.170	2.92	1,069
A-1b Senior class notes	Compounded SOFR + 0.670(1)	2.92	267
B Junior class notes	4.420	2.92	—
C Junior class notes	4.670	2.92	61

Series 2024-7
A Senior class notes	4.350	4.92	535
B Junior class notes	4.600	4.92	—
C Junior class notes	4.840	4.92	25
September 2024 total			1,957
Total			$	5,923

(1) Compounded Secured Overnight Financing Rate (SOFR) is calculated using SOFR as published by the Federal Reserve Bank of New York in accordance with the terms of such notes. Compounded SOFR for the interest payment made in September 2024 was 5.342%.

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Under the terms of each series of ABS Notes outstanding as of September 30, 2024, there is a revolving period of up to two years, three years, or five years, as applicable, during which we may transfer additional receivables to the ABS Entity. During the nine months ended September 30, 2024, we made aggregate principal repayments of $2.2 billion in connection with anticipated redemptions of ABS Notes and notes that have entered the amortization period, including payments in connection with any note redemptions.

In October 2024, in connection with an anticipated redemption of ABS Notes, we made a principal repayment, in whole, for $1.4 billion.

ABS Financing Facilities

Under the two loan agreements outstanding in connection with the ABS Financing Facility originally entered into in 2021 and most recently renewed in 2023 (2021 ABS Financing Facility), we prepaid an aggregate of $900 million in January 2024, borrowed an additional $600 million in March 2024, prepaid an aggregate of $900 million in April 2024, borrowed an additional $225 million in June 2024, prepaid an aggregate of $1.2 billion in August 2024, prepaid an aggregate of $950 million and borrowed an additional $450 million in September 2024. The aggregate outstanding balance under the 2021 ABS Financing Facility was $5.8 billion as of September 30, 2024.

Under the loan agreement outstanding in connection with the ABS Financing Facility originally entered into in 2022 and most recently renewed in 2023 (2022 ABS Financing Facility), we borrowed an additional $1.1 billion in June 2024. The aggregate outstanding balance under the 2022 ABS Financing Facility was $4.0 billion as of September 30, 2024.

Variable Interest Entities

The ABS Entities meet the definition of a VIE for which we have determined that we are the primary beneficiary as we have both the power to direct the activities of the entity that most significantly impact the entity's performance and the obligation to absorb losses or the right to receive benefits of the entity. Therefore, the assets, liabilities and activities of the ABS Entities are consolidated in our financial results and are included in amounts presented on the face of our condensed consolidated balance sheets.

The assets and liabilities related to our asset-backed debt arrangements included in our condensed consolidated balance sheets were as follows:


	At September 30,		At December 31,
(dollars in millions)	2024		2023
Assets
Accounts receivable, net	$	17,169	$	14,550
Prepaid expenses and other	290		1,288
Other assets	10,697		11,682

Liabilities
Accounts payable and accrued liabilities	33		29
Debt maturing within one year	15,281		7,483
Long-term debt	8,991		14,700

The Accounts receivable, net amounts above does not include underlying receivables for which a participation interest has been transferred to the ABS Entities. See Note 6 for additional information on certain receivables and participation interest used to secure asset-backed debt.

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Long-Term Credit Facilities


				At September 30, 2024
(dollars in millions)	Maturities	Facility Capacity		Unused Capacity		Principal Amount Outstanding
Verizon revolving credit facility(1)	2028	$	12,000	$	11,962	$	—
Various export credit facilities(2)	2024 - 2031	11,000		—		5,706
Total		$	23,000	$	11,962	$	5,706

(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 September 30, 2024, there have been no drawings against the revolving credit facility since its inception.

(2) During the nine months ended September 30, 2024, there were no drawings from these facilities. During the nine months ended September 30, 2023, we drew down $1.0 billion 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.

In March 2024, we amended our $9.5 billion revolving credit facility to increase the capacity to $12.0 billion and extended its maturity to 2028.

Non-Cash Transactions

During the nine months ended September 30, 2024 and 2023, we financed, primarily through alternative financing arrangements, the purchase of approximately $1.2 billion and $942 million, respectively, of long-lived assets consisting primarily of network equipment. As of September 30, 2024 and December 31, 2023, $2.4 billion and $2.2 billion, respectively, relating to these financing arrangements, including those entered into in prior years and liabilities assumed through acquisitions, remained outstanding. These purchases are non-cash financing activities and therefore are not reflected within Capital expenditures in our condensed consolidated statements of cash flows.

Net Debt Extinguishment Gains

During the three months ended September 30, 2024 and 2023, we recorded net debt extinguishment gains of $90 million and $85 million, respectively. During the nine months ended September 30, 2024 and 2023, we recorded net debt extinguishment gains of $289 million and $224 million, respectively. The net gains are recorded in Other income, net in our condensed consolidated statements of income. The total non-cash debt extinguishment gains are reflected within Other, net cash flow from operating activities, and the cash payments to extinguish the debt are reflected within Other, net cash flow from financing activities in our condensed consolidated statements of cash flows.

Guarantees

We guarantee the debentures of our operating telephone company subsidiaries. As of September 30, 2024, $614 million aggregate principal amount of these obligations remained outstanding. Each guarantee will remain in place for the life of the obligation unless terminated pursuant to its terms, including the operating telephone company no longer being a wholly-owned subsidiary of the Company.

Debt Covenants

We and our consolidated subsidiaries are in compliance with all of our restrictive covenants in our debt agreements.


Note 6. Device Payment Plan Agreement and Wireless Service Receivables

The following table presents information about accounts receivable, net of allowances, recorded in our condensed consolidated balance sheet:


	At September 30, 2024
(dollars in millions)	Device payment plan agreement		Wireless service		Other receivables(1)		Total
Accounts receivable	$	15,121	$	6,057	$	5,862	$	27,040
Less Allowance for credit losses	603		237		246		1,086
Accounts receivable, net of allowance	$	14,518	$	5,820	$	5,616	$	25,954

(1) Other receivables primarily include wireline and other receivables, of which the allowances are individually insignificant.

Included in Other assets and Accounts receivable, net at September 30, 2024, are net device payment plan agreement receivables, net wireless service receivables and net other receivables of $27.8 billion, which have been transferred to ABS Entities and continue to be reported in our condensed consolidated balance sheet. Included in Other assets and Accounts

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receivable, net at December 31, 2023, are net device payment plan agreement receivables and net wireless service receivables of $26.1 billion, which have been transferred to ABS Entities and continue to be reported in our condensed consolidated balance sheet. Included in Accounts receivable, net at September 30, 2024 and December 31, 2023, are net other receivables of $840 million and $911 million, respectively, on which a participation interest has been transferred to ABS Entities and continue to be reported in our condensed consolidated balance sheets. See Note 5 for additional information. We believe the carrying value of these receivables approximate their fair value using a Level 3 expected cash flow model.

Under the Verizon device payment program, our eligible wireless customers purchase wireless devices under a device payment plan agreement. Customers that activate service on devices purchased under the device payment program pay lower service fees as compared to those under our fixed-term service plans, and their device payment plan charge is included on their wireless monthly bill. While we no longer offer Consumer customers fixed-term subsidized service plans for devices, we continue to offer subsidized plans to our Business customers. We also continue to service existing plans for customers who have not yet purchased and activated devices under the Verizon device payment program.

Wireless Device Payment Plan Agreement Receivables

The following table displays both the current and non-current portions of device payment plan agreement receivables, net, recognized in our condensed consolidated balance sheets:


	At September 30,		At December 31,
(dollars in millions)	2024		2023
Device payment plan agreement receivables, gross	$	29,202	$	29,206
Unamortized imputed interest	(883)		(758)
Device payment plan agreement receivables, at amortized cost	28,319		28,448
Allowance(1)	(1,130)		(1,151)
Device payment plan agreement receivables, net	$	27,189	$	27,297

Classified in our condensed consolidated balance sheets:
Accounts receivable, net	$	14,518	$	13,173
Other assets	12,671		14,124
Device payment plan agreement receivables, net	$	27,189	$	27,297

(1) Includes allowance for both short-term and long-term device payment plan agreement receivables.

For indirect channel wireless contracts with customers, we impute risk adjusted interest on the device payment plan agreement receivables. We record the imputed interest as a reduction to the related accounts receivable. The associated interest income, which is included within Service revenues and other in our condensed consolidated statements of income, is recognized over the financed device payment term.

Promotions

In connection with certain device payment plan agreements, we may offer a promotion to allow our customers to upgrade to a new device after paying down a certain specified portion of the required device payment plan agreement amount as well as trading in their device in good working order. When a customer enters into a device payment plan agreement with the right to upgrade to a new device, we account for this trade-in right as a guarantee obligation.

We may offer certain promotions that allow a customer to trade in their owned device in connection with the purchase of a new device. Under these types of promotions, the customer receives a credit for the value of the trade-in device. At September 30, 2024 and December 31, 2023, the amount of trade-in liability was $341 million and $566 million, respectively.

In addition, we may provide the customer with additional future billing credits that will be applied against the customer’s monthly bill as long as service is maintained. These future billing credits are accounted for as consideration payable to a customer and are included in the determination of total transaction price, resulting in a contract liability.

Device payment plan agreement receivables, net, disclosed in the table above, does not reflect the trade-in liability, additional future credits or the guarantee liability.

Origination of Device Payment Plan Agreements

When originating device payment plan agreements, we use internal and external data sources to create a credit risk score to measure the credit quality of a customer and to determine eligibility for the device payment program. Verizon's experience has been that the payment attributes of longer tenured customers are highly predictive for estimating their reliability to make future payments. Customers with longer tenures tend to exhibit similar risk characteristics to other customers with longer tenures, and receivables due from customers with longer tenures tend to perform better than receivables from customers that have not previously been Verizon customers. As a result of this experience, we make initial lending decisions based upon whether the customers are "established customers" or "short-tenured customers." If a Consumer customer has been a customer for 45 days or more, or if a Business customer has been a customer for 12 months or more, the customer is considered an "established

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customer." For established customers, the credit decision and ongoing credit monitoring processes rely on a combination of internal and external data sources. If a Consumer customer has been a customer less than 45 days, or a Business customer has been a customer for less than 12 months, the customer is considered a "short-tenured customer." For short-tenured customers, the credit decision and credit monitoring processes rely more heavily on external data sources.

Available external credit data from credit reporting agencies along with internal data are used to create custom credit risk scores for Consumer customers. The custom credit risk score is generated automatically from the applicant's credit data using proprietary custom credit models. The credit risk score measures the likelihood that the potential customer will become severely delinquent and be disconnected for non-payment. For a small portion of short-tenured customer applications, a traditional credit report is not available from one of the national credit reporting agencies because the potential customer does not have sufficient credit history. In those instances, alternative credit data is used for the risk assessment. For Business customers, we also verify the existence of the business with external data sources.

Based on the custom credit risk score, we assign each customer a credit class, each of which has specified offers of credit. This includes an account level spending limit and a maximum amount of credit allowed per device for Consumer customers or a required down payment percentage for Business customers.

Credit Quality Information

Subsequent to origination, we assess indicators for the quality of our wireless device payment plan agreement portfolio using two models, one for new customers and one for existing customers. The model for new customers pools all Consumer and Business wireless customers based on less than 210 days as "new customers." The model for existing customers pools all Consumer and Business wireless customers based on 210 days or more as "existing customers."

The following table presents device payment plan agreement receivables, at amortized cost, and gross write-offs recorded, as of and for the nine months ended September 30, 2024, by credit quality indicator and year of origination:


	Year of Origination(1)
(dollars in millions)	2024		2023		2022 and prior		Total
Device payment plan agreement receivables, at amortized cost
New customers	$	2,253	$	1,901	$	601	$	4,755
Existing customers	9,615		9,621		4,328		23,564
Total	$	11,868	$	11,522	$	4,929	$	28,319
Gross write-offs
New customers	$	205	$	490	$	95	$	790
Existing customers	18		152		130		300
Total	$	223	$	642	$	225	$	1,090

(1) Includes accounts that have been suspended at a point in time.

The data presented in the table above was last updated on September 30, 2024.

We assess indicators for the quality of our wireless service receivables portfolio as one overall pool. The following table presents wireless service receivables, at amortized cost, and gross write-offs recorded, as of and for the nine months ended September 30, 2024, by year of origination:


	Year of Origination
(dollars in millions)	2024		2023 and prior		Total

Wireless service receivables, at amortized cost	$	5,995	$	62	$	6,057
Gross write-offs	226		182		408

The data presented in the table above was last updated on September 30, 2024.

Allowance for Credit Losses

The credit quality indicators are used in determining the estimated amount and the timing of expected credit losses for the device payment plan agreement and wireless service receivables portfolios.

For device payment plan agreement receivables, we record bad debt expense based on a default and loss calculation using our proprietary loss model. The expected loss rate is determined based on customer credit scores and other qualitative factors as noted above. The loss rate is assigned individually on a customer by customer basis and the custom credit scores are then aggregated by vintage and used in our proprietary loss model to calculate the weighted-average loss rate used for determining the allowance balance.

We monitor the collectability of our wireless service receivables as one overall pool. Wireline service receivables are disaggregated and pooled by the following types of customers and related contracts: consumer, small and medium business,

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enterprise, public sector and wholesale. For wireless service receivables and wireline consumer and small and medium business receivables, the allowance is calculated based on a 12 month rolling average write-off balance multiplied by the average life-cycle of an account from billing to write-off. The risk of loss is assessed over the contractual life of the receivables and is adjusted based on the historical loss amounts for current and future conditions based on management's qualitative considerations. For enterprise, public sector and wholesale wireline receivables, the allowance for credit losses is based on historical write-off experience and individual customer credit risk, if applicable.

Activity in the allowance for credit losses by portfolio segment of receivables was as follows:


(dollars in millions)	Device Payment Plan Agreement Receivables(1)		Wireless Service Plan Receivables
Balance at January 1, 2024	$	1,151	$	213


Current period provision for expected credit losses	1,041		400
Write-offs charged against the allowance	(1,090)		(408)
Recoveries collected	28		32
Balance at September 30, 2024	$	1,130	$	237

(1) Includes allowance for both short-term and long-term device payment plan agreement receivables.

We monitor delinquency and write-off experience based on the quality of our device payment plan agreement and wireless service receivables portfolios. The extent of our collection efforts with respect to a particular customer are based on the results of our proprietary custom internal scoring models that analyze the customer's past performance to predict the likelihood of the customer falling further delinquent. These custom scoring models assess a number of variables, including origination characteristics, customer account history and payment patterns. Since our customers’ behaviors may be impacted by general economic conditions, we analyzed whether changes in macroeconomic conditions impact our credit loss experience and have concluded that our credit loss estimates are generally not materially impacted by reasonable and supportable forecasts of future economic conditions. Based on the score derived from these models, accounts are grouped by risk category to determine the collection strategy to be applied to such accounts. For device payment plan agreement receivables and wireless service receivables, we consider an account to be delinquent and in default status if there are unpaid charges remaining on the account on the day after the bill’s due date. The risk class determines the speed and severity of the collections effort including initiatives taken to facilitate customer payment.

The balance and aging of the device payment plan agreement receivables, at amortized cost, were as follows:


	At September 30,
(dollars in millions)	2024
Unbilled	$	26,977
Billed:
Current