Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Verizon Communications Inc. is a holding company that, acting through its subsidiaries, 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 2025 Financial Results
(dollars in millions)
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Business Overview
We have two reportable segments that we operate and manage as strategic business units - Consumer and Business.
Revenue by Segment
Note: Excludes eliminations.
Verizon Consumer Group
Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless services are provided across one of the most extensive wireless networks in the U.S. under the Verizon family of brands and through wholesale and other arrangements. As of the date this report is being filed, 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. We also provide FWA broadband through our 5G or 4G LTE networks as an alternative to traditional landline internet access.
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 year ended December 31, 2025 totaled $106.8 billion, an increase of $3.9 billion, or 3.8%, compared to the year ended December 31, 2024. See "Segment Results of Operations" for additional information regarding our Consumer segment’s operating performance and selected operating statistics.
Verizon Business Group
Our Business segment provides wireless and wireline communications services and products, including 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.
The Business segment's operating revenues for the year ended December 31, 2025 totaled $29.1 billion, a decrease of $462 million, or 1.6%, compared to the year ended December 31, 2024. See "Segment Results of Operations" for additional information regarding our Business segment's operating performance and selected operating statistics.
Corporate and Other
Corporate and other 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
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segment results and therefore are included in the chief operating decision maker's 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 acquire wireless spectrum, put the spectrum into service, provide additional capacity for growth in our networks, invest in fiber, evolve and maintain our networks and develop and maintain significant advanced information technology systems and data system capabilities. During the year ended December 31, 2025, these investments included $17.0 billion for capital expenditures. See "Cash Flows Used in Investing Activities" and "Liquidity and Capital Resources" for additional information.
Global Networks and Technology
We design, build and operate networks to provide connectivity and related services meeting the needs of our diverse customers: 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, 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.
Recent Developments
Frontier
On January 20, 2026, we completed the acquisition of Frontier, a U.S. provider of broadband internet and other communication services. This transaction expanded our fiber broadband footprint to 31 U.S. states and Washington D.C., and provides opportunities for future growth.
Starry
On January 30, 2026, we completed the acquisition of Starry, a fixed wireless broadband provider serving multi-dwelling units in five markets across the U.S. This transaction is expected to provide additional FWA capabilities and enhance our ability to deliver high-speed internet to multi-dwelling units and urban communities.
Consolidated Results of Operations
In this section, we discuss our overall results of operations and highlight special items that 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 2025, Verizon reclassified recurring device protection and insurance related plan revenues from Other revenue into Wireless service revenue. In addition, beginning in the first quarter of 2025, Verizon no longer counts the impacts of the second number offering in calculating certain phone metrics, including wireless retail postpaid phone net additions and wireless retail postpaid phone churn. We have reclassified certain prior year amounts to conform to the current year presentation.
A discussion of the 2023 results of the Consumer and Business segments affected by these changes and related year-over-year comparisons between 2024 and 2023 have been included in "Segment Results of Operations" below. A discussion of the 2023 items and year-over-year comparisons between 2024 and 2023 for all other items that are not included in this Annual Report can be found in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Consolidated Operating Revenues
(dollars in millions)
Years Ended December 31,
Increase/(Decrease)
Consumer
Business
Corporate and other
Eliminations
Consolidated Operating Revenues
Consolidated operating revenues increased during 2025 compared to 2024 primarily due to revenue increases in our Consumer segment, partially offset by revenue decreases in our Business segment.
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Revenues for our segments are discussed separately below under the heading "Segment Results of Operations."
Consolidated Operating Expenses
(dollars in millions)
Years Ended December 31,
Increase/(Decrease)
Cost of services
Cost of wireless equipment
Selling, general and administrative expense
Depreciation and amortization expense
Consolidated Operating Expenses
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 decreased during 2025 compared to 2024 primarily as a result of:
• a decrease of $222 million in personnel costs due to prior year workforce reductions;
• a decrease of $169 million in access costs primarily related to changes in pricing and circuit usage;
• a decrease of $105 million related to device protection offerings;
• a decrease of $91 million in other direct costs primarily related to legacy wireline products and services;
• an increase of $198 million in regulatory fees primarily related to growth in our Federal Universal Service Fund (FUSF) assessable revenue base in addition to a higher net rate; and
• an increase of $145 million in rent and lease expense primarily related to the tower transaction with Vertical Bridge REIT, LLC (Vertical Bridge) along with new leases and lease modifications related to the continued deployment of the C-Band spectrum.
Cost of Wireless Equipment
Cost of wireless equipment increased during 2025 compared to 2024 primarily due to:
• an increase of $1.7 billion driven by a higher volume of wireless devices sold primarily related to an increase of 12% in upgrades; and
• an increase of $1.2 billion due to a shift to higher priced equipment in the mix of wireless devices sold.
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 2025 compared to 2024 primarily as a result of:
• a decrease of $241 million related to lower costs for device insurance programs primarily due to a decrease in claims;
• a decrease of $150 million in advertising costs;
• a decrease of $115 million in personnel costs primarily related to the impact of prior year workforce reductions partially offset by an increase in sales commission expense due to higher volumes; and
• an increase of $193 million r elated to an increase in asset and business rationalization charges in 2025 compared to 2024.
See "Special Items" for additional information on the asset and business rationalization charges.
Depreciation and Amortization Expense
Depreciation and amortization expense increased during 2025 compared to 2024, primarily due to the change in the mix of net depreciable and amortizable assets and the continued deployment of C-Band network assets.
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Other Consolidated Results
Other Income (Expense), Net
Additional information relating to Other income (expense), net is as follows:
(dollars in millions)
Years Ended December 31,
Increase/(Decrease)
Interest income
Other components of net periodic benefit income (cost)
Net debt extinguishment gains
Other, net
Other Income (Expense), Net
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Other income (expense), net reflects certain items not directly related to our core operations, including interest income, debt extinguishment gains, components of net periodic pension and postretirement benefit income and cost and certain foreign exchange gains and losses.
Other income (expense), net decreased during 2025 compared to 2024 primarily due to a net pension and postretirement benefits remeasurement loss of $453 million recorded during 2025, compared with a gain of $657 million recorded during 2024. The decrease was partially offset by an increase resulting from fair market value adjustments on certain investments.
See Note 11 to the consolidated financial statements for more information on the other components of net periodic benefit income (cost).
Interest Expense
(dollars in millions)
Years Ended December 31,
Increase/(Decrease)
Total interest costs on debt balances
Less capitalized interest costs
Interest Expense
Average debt outstanding (1)(3)
Effective interest rate (2)(3)
(1) The average debt outstanding is a financial measure and is calculated by applying a simple average of prior thirteen-month 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 2025 compared to 2024 primarily as a result of a decrease in capitalized interest due to additional C-Band spectrum licenses being placed into service, partially offset by a decrease in interest costs due to lower average debt balances and a lower interest rate.
Provision for Income Taxes
(dollars in millions)
Years Ended December 31,
Increase
Provision for income taxes
Effective income tax rate
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 effective income tax rate and provision for income taxes was primarily due to higher tax benefits resulting from the favorable resolution of various income tax matters and a reduction in deferred income taxes due to changes in state apportionment during the prior period.
A reconciliation of the statutory federal income tax rate to the effective income tax rate for each period is included in Note 12 to the consolidated financial statements.
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Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA
Consolidated earnings before interest, taxes, depreciation and amortization expense (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 that occurred in prior years, 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. We believe that this measure is useful 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.
(dollars in millions)
Years Ended December 31,
Consolidated Net Income
Add:
Provision for income taxes
Interest expense (1)
Depreciation and amortization expense (2)
Consolidated EBITDA
Add (Less):
Other income, net (3)
Equity in losses of unconsolidated businesses
Severance charges
Asset and business rationalization
Acquisition and integration related charges
Legacy legal matter
Consolidated Adjusted EBITDA
(1) The result for the year ended December 31, 2025 includes a portion of the Acquisition and integration related charges. See "Special Items" for additional information.
(2) Includes Amortization of acquisition-related intangible assets, which were $760 million and $817 million during the years ended December 31, 2025 and 2024, respectively.
(3) Includes Pension and benefits mark-to-market charges of $441 million during the year ended December 31, 2025 and credits of $532 million during the year ended December 31, 2024. See "Special Items" for additional information.
The changes in Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA in the table above during 2025 compared to 2024 were primarily a result of the factors described above in connection with consolidated operating revenues and consolidated operating expenses.
Segment Results of Operations
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 chief operating decision maker’s assessment of segment performance.
To aid in the understanding of segment performance as it relates to segment operating income, management uses the following operating statistics to evaluate the overall effectiveness of our segments. 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 segments’
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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. 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. 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 prepaid connections are retail prepaid customer device connections as of the end of the period. Retail prepaid connections may include those from phones, prepaid FWA, as well as tablets and other internet devices, and wearables. Wireless retail prepaid connections are calculated by adding retail prepaid new connections in the period to prior period retail prepaid connections, and subtracting retail prepaid disconnects in the period.
Fios internet connections are the total number of connections to the internet using Fios internet services as of the end of the period. Fios internet connections are calculated by adding Fios internet new connections in the period to prior period Fios internet connections, and subtracting Fios internet disconnects in the period.
Fios video connections are the total number of connections to traditional linear video programming using Fios video services as of the end of the period. Fios video connections are calculated by adding Fios video net additions in the period to prior period Fios video connections. Fios video net additions are calculated by subtracting the Fios video disconnects from the Fios video new connections.
Total broadband connections are the total number of connections to the internet using Fios internet services, Digital Subscriber Line (DSL), and postpaid, prepaid and IoT FWA as of the end of the period. Total broadband connections are calculated by adding total broadband connections, net additions in the period to prior period total broadband connections.
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. FWA broadband connections are calculated by adding FWA broadband connections, net additions in the period to prior period FWA broadband connections.
Wireline broadband connections are the total number of connections to the internet using DSL and Fios internet services as of the end of the period. Wireline broadband connections are calculated by adding wireline broadband connections, net additions in the period to prior period wireline broadband connections.
Wireless retail connections, net addition s 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, net of certain adjustments, 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, net of certain adjustments, from the retail postpaid new connections in the period.
Wireless retail prepaid connections, net additions are the total number of additional retail customer device prepaid connections, less the number of device disconnects in the period. Wireless retail prepaid connections, net additions in each period presented are calculated by subtracting the retail prepaid disconnects, net of certain adjustments, from the retail prepaid 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 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, net of certain adjustments, from the retail postpaid phone 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, net of certain adjustments, from the total 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
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by subtracting the FWA broadband disconnects, net of certain adjustments, from the FWA broadband new connections in the period.
Wireline broadband connections, net additions are the total number of additional wireline broadband connections, less the number of wireline broadband disconnects in the period. Wireline broadband connections, net additions in each period presented are calculated by subtracting the wireline broadband disconnects, net of certain adjustments, from the wireline broadband new connections in the period.
Wireless churn is the rate at which service to retail, retail postpaid, or retail postpaid phone connections is terminated on average in the period. The churn rate in each period presented is calculated by dividing retail disconnects, retail postpaid disconnects, or retail postpaid phone disconnects by the average retail connections, average retail postpaid connections, or average retail postpaid phone connections, respectively, in the period.
Wireless retail postpaid ARPA is the calculated average retail postpaid service revenue per account (ARPA) from 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, plan billings related to device warranty and insurance or regulatory fees. Wireless retail postpaid ARPA in each period presented is calculated by dividing retail postpaid service revenue by the average retail postpaid accounts in the period.
Wireless retail postpaid accounts are wireless retail customers that are directly served and managed under the Verizon brand and use its services as of the end of the period. Accounts include unlimited plans, shared data plans and corporate accounts, as well as legacy single connection plans and multi-connection family plans. A single account may include monthly wireless services for a variety of connected devices. Wireless retail postpaid accounts are calculated by adding retail postpaid new accounts to the prior period retail postpaid accounts.
Wireless retail postpaid connections per account is the calculated average number of retail postpaid connections per retail postpaid account as of the end of the period. Wireless retail postpaid connections per account is calculated by dividing the total number of retail postpaid connections by the number of retail postpaid accounts as of the end of the period.
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.
Segment earnings before interest, taxes, depreciation and amortization (Segment EBITDA) , which is presented below, is a non-GAAP measure and does not purport to be an alternative to operating income (loss) as a measure of operating performance. We believe this measure is useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as it excludes the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to our competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income (loss). Segment EBITDA margin is calculated by dividing Segment EBITDA by total segment operating revenues. See Note 13 to the consolidated financial statements for additional information.
Verizon Consumer Group
Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless services are provided across one of the most extensive wireless networks 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. As of the date this report is being filed, 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.
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Operating Revenues and Selected Operating Statistics
(dollars in millions, except ARPA)
Increase/(Decrease)
Years Ended December 31,
Service (1)
Wireless equipment
Other (1)
Total Operating Revenues
Revenue Statistics:
Wireless service revenue (1)
Fios revenue
Connections (‘000): (2)
Wireless retail
Wireless retail postpaid
Wireless retail core prepaid (3)
Fios internet
Fios video
FWA broadband
Wireline broadband
Total broadband
Net Additions in Period (‘000):
Total wireless retail
Wireless retail postpaid
Wireless retail postpaid phone
Wireless retail core prepaid (3)
FWA broadband
Wireline broadband
Total broadband
Churn Rate:
Wireless retail
Wireless retail postpaid
Wireless retail postpaid phone
Account Statistics:
Wireless retail postpaid ARPA (1)
Wireless retail postpaid accounts (‘000) (2)
Wireless retail postpaid connections per account (1)
(1) Reflects the reclassification of recurring device protection and insurance related plan revenues from Other revenue into Wireless service revenue in the first quarter of 2025.
(2) As of end of period.
(3) Represents total prepaid results excluding our SafeLink brand.
Where applicable, the operating results reflect certain adjustments, including those related to the reclassification of connections associated with Verizon’s second number offering, migration activity among different types of devices and plans, customer profile changes, and adjustments in connection with mergers, acquisitions and divestitures. Where applicable, historical results have been recast to conform to the current period presentation.
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Consumer's total operating revenues increased during 2025 compared to 2024 as a result of increases in Service, Wireless equipment and Other revenues.
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Consumer's total operating revenues increased during 2024 compared to 2023 as a result of increases in Service and Other revenues, partially offset by a decrease in Wireless equipment revenue.
Service Revenue
Service revenue increased during 2025 compared to 2024 primarily driven by an increase in Wireless service revenue.
Wireless service revenue increased during 2025 compared to 2024 primarily due to:
• an increase of $775 million in postpaid revenue primarily related to higher adoption of perks and premium MyPlan offerings, pricing actions, and a 26% increase in our FWA subscriber base, partially offset by the amortization of wireless equipment sales promotions; and
• an increase of $673 million related to growth in non-retail service revenue.
Service revenue increased during 2024 compared to 2023 primarily driven by an increase in Wireless service revenue.
Wireless service revenue increased during 2024 compared to 2023 primarily as a result of:
• an increase of $1.5 billion in postpaid revenues primarily related to pricing actions, an increase in subscriptions through MyPlan offerings and a 45% increase in our FWA subscriber base, partially offset by the amortization of wireless equipment sales promotions;
• an increase of $638 million related to growth in non-retail service revenue;
• an increase of $318 million in TravelPass revenue due to increased customer international travel; and
• a decrease of $625 million in prepaid revenue primarily due to a decrease in the prepaid subscriber base partially driven by the termination of the Affordable Connectivity Program in the second quarter of 2024.
Wireless Equipment Revenue
Wireless equipment revenue increased during 2025 compared to 2024 primarily due to:
• an increase of $1.3 billion driven by a higher volume of wireless devices sold primarily related to an increase of 16% in upgrades, partially offset by the impact of related promotions; and
• an increase of $916 million related to a shift to higher priced equipment in the mix of wireless devices sold.
Wireless equipment revenue decreased during 2024 compared to 2023 primarily as a result of:
• a decrease of $1.5 billion driven by a lower volume of wireless devices sold primarily related to a decrease of 10% in upgrades; and
• an increase of $474 million due to a shift to higher priced equipment in the mix of wireless devices sold, partially offset by the impact of related promotions.
Other Revenue
Other revenue 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 2025 compared to 2024 primarily due to an increase of $189 million driven by regulatory surcharges primarily related to growth in our FUSF assessable revenue base in addition to a higher net rate.
Other revenue increased during 2024 compared to 2023 primarily due to an increase of $193 million driven by regulatory surcharges primarily related to a higher net FUSF rate, along with an increase in other regulatory surcharges.
Operating Expenses
(dollars in millions)
Years Ended December 31,
Increase
Cost of services
Cost of wireless equipment
Selling, general and administrative expense
Depreciation and amortization expense
Total Operating Expenses
Cost of Services
Cost of services increased during 2025 compared to 2024 primarily as a result of:
• an increase of $172 million in regulatory fees primarily related to growth in our FUSF assessable revenue base in addition to a higher net rate;
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• an increase of $172 million in rent and lease expense primarily related to the tower transaction with Vertical Bridge along with new leases and lease modifications related to the continued deployment of the C-Band spectrum and Consumer's proportionate usage of shared leased assets;
• an increase of $129 million in digital content costs primarily associated with an increase in subscriptions through MyPlan offerings, partially offset by a decrease in traditional linear content costs due to a decline in Fios video subscribers; and
• a decrease of $95 million related to device protection offerings.
Cost of Wireless Equipment
Cost of wireless equipment increased during 2025 compared to 2024 primarily due to:
• an increase of $1.7 billion driven by a higher volume of wireless devices sold primarily related to an increase of 16% in upgrades; and
• an increase of $988 million due to a shift to higher priced equipment in the mix of wireless devices sold.
Selling, General and Administrative Expense
Selling, general and administrative expense increased during 2025 compared to 2024 primarily as a result of:
• an increase of $94 million in personnel costs mainly driven by an increase in commission expense due to higher volumes;
• an increase of $75 million in building and facility costs primarily due to higher utility rates; and
• a decrease of $68 million in advertising costs.
Depreciation and Amortization Expense
Depreciation and amortization expense increased during 2025 compared to 2024 driven by the change in the mix of total Verizon depreciable and amortizable assets and Consumer's usage of those assets.
Segment Operating Income and EBITDA
(dollars in millions)
Years Ended December 31,
Increase
Segment Operating Income
Add Depreciation and amortization expense
Segment EBITDA
Segment operating income margin
Segment EBITDA margin
The changes in the table above during the periods presented were primarily a result of the factors described above in connection with Consumer operating revenues and operating expenses.
Verizon Business Group
Our Business segment provides wireless and wireline communications 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. The Business segment is organized in three customer groups: Enterprise and Public Sector, Business Markets and Other, and Wholesale.
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Operating Revenues and Selected Operating Statistics
(dollars in millions)
Increase/(Decrease)
Years Ended December 31,
Enterprise and Public Sector
Business Markets and Other
Wholesale
Total Operating Revenues (1)
Revenue Statistics:
Wireless service revenue (2)
Fios revenue
Connections (‘000): (3)
Wireless retail postpaid
Fios internet
Fios video
FWA broadband
Wireline broadband
Total broadband
Net Additions in Period ('000):
Wireless retail postpaid
Wireless retail postpaid phone
FWA broadband
Wireline broadband
Total broadband
Churn Rate:
Wireless retail postpaid
Wireless retail postpaid phones
(1) Service and other revenues included in our Business segment were approximately $25.4 billion, $25.9 billion and $26.4 billion for the years ended December 31, 2025, 2024 and 2023, respectively. Wireless equipment revenues included in our Business segment were approximately $3.7 billion, $3.6 billion and $3.7 billion for the years ended December 31, 2025, 2024 and 2023, respectively.
(2) Reflects the reclassification of recurring device protection and insurance related plan revenues from Other revenue into Wireless service revenue in the first quarter of 2025.
(3) As of end of period
Where applicable, the operating results reflect certain adjustments, including those related to the reclassification of connections associated with Verizon’s second number offering, migration activity among different types of devices and plans, customer profile changes, and adjustments in connection with mergers, acquisitions and divestitures. Where applicable, historical results have been recast to conform to the current period presentation.
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Business's total operating revenues decreased during both 2025 compared to 2024 and 2024 compared to 2023 as a result of decreases in Enterprise and Public Sector and Wholesale revenues, partially offset by an increase in Business Markets and Other revenue.
Enterprise and Public Sector
Enterprise and Public Sector offers wireless products and services as well as wireline connectivity such as broadband and managed solutions to our large business and public sector customers. Public sector customers include U.S. federal, state and local governments and educational institutions. Our offerings to this customer group include plans with features and pricing designed to address their specific needs.
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Enterprise and Public Sector revenues decreased during 2025 compared to 2024 primarily due to:
• a decrease of $532 million in wireline revenue primarily driven by declines in networking, traditional data and voice communication services along with related professional services, due to secular market pressure and technology shifts, coupled with lower customer premise equipment sales volumes; and
• a decrease of $193 million in Wireless service revenue primarily driven by pressure in Public Sector in part from government efficiency efforts.
Enterprise and Public Sector revenues decreased during 2024 compared to 2023 primarily due to a decrease of $702 million in wireline revenue primarily driven by declines in networking, traditional data and voice communication services along with related professional services, due to secular market pressure and technology shifts, coupled with lower customer premise equipment sales volumes.
Business Markets and Other
Business Markets and Other offers wireless services (including FWA broadband), wireless equipment, advanced communication services, tailored voice and networking products, fiber broadband services, video services, advanced voice solutions and security services to businesses that ordinarily do not meet the requirements to be categorized as Enterprise and Public Sector, as described above. Business Markets and Other also includes solutions that support mobile resource management.
Business Markets and Other revenue increased during 2025 compared to 2024 primarily due to an increase of $392 million in Wireless service revenue driven by pricing actions and an increase in our FWA subscriber base, partially offset by the amortization of wireless equipment sales promotions.
Business Markets and Other revenue increased during 2024 compared to 2023 primarily as a result of:
• an increase of $486 million in Wireless service revenue primarily due to pricing actions and an increase in our FWA subscriber base; and
• a decrease of $89 million in connection with the shutdown of our BlueJeans business offering in 2023 and a decline in traditional voice communication revenues.
Wholesale
Wholesale offers wireline communications services including data, voice, local dial tone and broadband services primarily to local, long distance, and wireless carriers that use our facilities to provide services to their customers.
Wholesale revenues decreased during 2025 compared to 2024 primarily due to a decrease of $260 million related to declines in traditional data and voice communication services and network connectivity as a result of technology substitution.
Wholesale revenues decreased during 2024 compared to 2023 primarily due to a decrease of $117 million related to declines in traditional voice communication and network connectivity as a result of technology substitution, as well as a decrease in core data.
Operating Expenses
(dollars in millions)
Years Ended December 31,
Increase/(Decrease)
Cost of services
Cost of wireless equipment
Selling, general and administrative expense
Depreciation and amortization expense
Total Operating Expenses
Cost of Services
Cost of services decreased during 2025 compared to 2024 primarily due to:
• a decrease of $182 million in personnel costs related to the impact of prior year workforce reductions;
• a decrease of $172 million in access costs primarily related to changes in pricing and circuit usage;
• a decrease of $86 million in other direct costs primarily related to legacy wireline products and services; and
• a decrease of $73 million in customer premise equipment costs due to lower volumes sold.
Cost of Wireless Equipment
Cost of wireless equipment increased during 2025 compared to 2024 primarily due to:
• an increase of $120 million driven by a higher volume of wireless devices sold; and
• an increase of $86 million related to a shift to higher priced equipment in the mix of wireless devices sold.
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Selling, General and Administrative Expense
Selling, general and administrative expense decreased during 2025 compared to 2024 primarily due to:
• a decrease of $283 million in personnel costs related to the impact of prior year workforce reductions primarily due to the voluntary separation program that was announced in June of 2024 and completed in March of 2025; and
• a decrease of $44 million in advertising costs.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased during 2025 compared to 2024 driven by the change in the mix of total Verizon depreciable and amortizable assets and Business's usage of those assets.
Segment Operating Income and EBITDA
(dollars in millions)
Years Ended December 31,
Increase/(Decrease)
Segment Operating Income
Add Depreciation and amortization expense
Segment EBITDA
Segment operating income margin
Segment EBITDA margin
The changes in the table above during the periods presented were primarily a result of the factors described above in connection with Business operating revenues and operating expenses.
Special Items
Special items included in Income Before Provision For Income Taxes were as follows:
(dollars in millions)
Years Ended December 31,
Amortization of acquisition-related intangible assets (1)
Depreciation and amortization expense
Severance, pension and benefits charges (credits)
Selling, general and administrative expense
Other (income) expense, net
Asset and business rationalization
Cost of services
Selling, general and administrative expense
Acquisition and integration related charges
Selling, general and administrative expense
Interest expense
Legacy legal matter
Selling, general and administrative expense
Total
(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.
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The income and expenses related to special items included in our consolidated results of operations were as follows:
(dollars in millions)
Years Ended December 31,
Within Total Operating Expenses
Within Other (income) expense, net
Within Interest expense
Total
Amortization of Acquisition-Related Intangible Assets
During 2025 and 2024, we recorded pre-tax amortization expense of $760 million and $817 million, respectively, related to acquired intangible assets.
Severance, Pension and Benefits Charges (Credits)
During 2025, we recorded pre-tax severance charges of $1.7 billion principally as a result of separations in connection with our workforce reduction initiatives. The severance charges were recorded in Selling, general and administrative expense in our consolidated statements of income.
During 2025, in accordance with our accounting policy to recognize actuarial gains and losses in the period in which they occur, we recorded a net pre-tax pension and benefits charge of $441 million in our pension and postretirement benefit plans. The net charge was recorded in Other income (expense), net in our consolidated statement of income and was primarily driven by:
• a charge of $345 million ($76 million for pension plans and $269 million for postretirement benefit plans) due to a decrease in our discount rate assumption used to determine the current year liabilities of our plans from a weighted-average of 5.8% for our pension plans and 5.6% post retirement plans at December 31, 2024 to a weighted-average of 5.7% for our pension plans and 5.4% for our postretirement plans at December 31, 2025; and
• a net charge of $96 million due to changes in other actuarial assumption adjustments, which includes the difference between our estimated and our actual return on plan assets.
During 2024, we recorded pre-tax severance charges of $1.7 billion related to separations under our voluntary separation program for select U.S.-based management employees as well as other headcount reduction initiatives. The severance charges were recorded in Selling, general and administrative expense in our consolidated statements of income.
During 2024, in accordance with our accounting policy to recognize actuarial gains and losses in the period in which they occur, we recorded a net pre-tax pension and benefits credit of $532 million in our pension and postretirement benefit plans. The net gain was recorded in Other income (expense), net in our consolidated statement of income and was primarily driven by:
• a credit of $1.3 billion ($635 million for pension plans and $656 million for postretirement benefit plans) due to an increase in our discount rate assumption used to determine the current year liabilities of our plans from a weighted-average of 5.0% for both our pension and post retirement plans at December 31, 2023 to a weighted-average of 5.8% for our pension plans and 5.6% for our postretirement benefit plans at December 31, 2024;
• a charge of $711 million due to the difference between our estimated and actual return on assets; and
• a net charge of $48 million primarily due to other actuarial assumption adjustments.
Due to the presentation of the other components of net periodic benefit cost, we recognize a portion of the pension and benefits charges (credits) in Other income (expense), net in our consolidated statements of income.
See Note 11 to the consolidated financial statements for additional information related to severance, pension and benefits charges (credits).
Asset and Business Rationalization
During 2025 and 2024, we recorded pre-tax asset and business rationalization charges of $583 million and $374 million, respectively, predominately related to the decision to cease use of certain real estate assets and exit non-strategic portions of certain businesses as part of our transformation initiatives.
Acquisition and Integration Related Charges
During 2025, we recorded charges of $110 million related to transaction and integration expenses associated with the acquisition of Frontier completed in January 2026.
Legacy Legal Matter
During 2024, we recorded a pre-tax charge of $106 million associated with a litigation matter related to a legacy contract for the production of telephone directories in Costa Rica by a subsidiary of the Company.
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Operating Environment and Trends
The telecommunications industry is highly competitive, and we expect competition to remain intense as traditional and non-traditional participants seek increased market share. We believe that our attractive offerings and value proposition as well as our high-quality networks and customer base support our competitive position and give us the ability to plan and manage through changing market conditions. We remain focused on executing on the fundamentals of the business: enhancing our networks, offering innovative services and products, growing and maintaining a high-quality customer base, and delivering strong financial and operating results. We are undertaking various business transformation initiatives and continue to focus on cost efficiencies in order to have flexibility to adjust to changes in the competitive and economic environments, streamline our operations, enhance customer experience and increase shareholder value.
The U.S. wireless market has achieved a high penetration of smartphones, which reduces the opportunity for new phone connection growth for the industry. We expect the wireless industry's customer growth rate to continue to moderate over time in comparison to historical growth rates, furthering competition for customers. Future revenue growth in the industry is expected to be driven by expanding existing customer relationships, increasing the number of ways customers can connect with wireless networks and services and increasing the penetration of FWA and connected devices including wearables, tablets and IoT devices.
Future service revenue growth opportunities will be dependent on increasing the number of wireless customers, expanding the penetration of our services, increasing the number of ways that our customers can connect with our networks and services and the development of new 5G use cases and ecosystems.
Pricing plays an important role in the wireless competitive landscape. Wireless service providers are offering a range of service plans and bundled services at competitive prices. In addition, aggressive device promotions and price lock guarantees have become more common in recent years in an effort to encourage customers to switch carriers, as well as retain existing customers. For further details on competitive environment and trends, refer to "Business — Competition and Related Trends" in Part I, Item 1 and "Risk Factors — Economic and Strategic Risks — We face significant competition that may negatively affect our operating results" in Part I, Item 1A of this Annual Report on Form 10-K.
Connection Trends
In our Consumer segment, we are focused on attracting new customers and maintaining our high-quality retail postpaid customer base by meeting demand for reliable high-speed connectivity and thoughtfully designed offerings and solutions. We believe the combination of our innovative service and product offerings, enhanced customer support and network quality represents an attractive value proposition and provides a compelling customer experience, supporting increased penetration of data services. While our Consumer segment has experienced lower wireless connection growth in recent years, we expect that future connection growth opportunities will be driven by the comparative value we provide to our customers, as well as our FWA broadband service. In addition, in recent years, we made meaningful improvements in our prepaid business and operations. While we expect to continue to operate in a highly competitive environment, we are focused on achieving long-term growth in our postpaid and prepaid business.
We expect to continue to grow our fiber internet connections as we seek to expand availability of fiber, increase our penetration rates, and experience continued strong demand for higher speed internet connections. On January 20, 2026, we completed the acquisition of Frontier, a U.S. provider of broadband internet and other communication services. This transaction expanded our fiber broadband footprint to 31 U.S. states and Washington D.C., and provides opportunities for future growth. At the same time, we expect continued growth of FWA connections to complement strong fiber results as demand for broadband services continues to grow. Our strong broadband footprint and offerings also provide us with convergence growth opportunities and related benefits for both our broadband and mobility businesses.
In video, the business continues to face ongoing pressure as observed throughout the linear television market. We have experienced continuing access line and DSL losses as customers have switched to alternative technologies such as wireless, VoIP, and cable for voice and data services, and we expect this trend to continue.
In our Business segment, we offer wireless and wireline products and services to businesses and public sector customers across the U.S and around the world. We continue to grow our connections while operating in a highly competitive environment. We expect that this connection growth, combined with our value proposition and network assets, will provide additional opportunities to grow our business.
Service Revenue Trends
In our Consumer segment, we expect our mobility and broadband revenue, to be driven by our plans to maintain and grow our customer base, migrations to higher priced plans, increased offering of perks, and increases in FWA connections and revenue, offset in part by higher promotion amortization impacts. Our wireless service revenue is expected to benefit from our growing prepaid business. We expect broadband revenue to benefit from our expanded fiber footprint and customer base following the closing of the Frontier acquisition, continued growth in our fiber and FWA connections, and an ongoing demand for higher speed internet access. We anticipate 2026 will be a transitional year for revenue as we work towards achieving sustainable volume based growth.
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In our Business segment, we expect mobility and broadband revenue to expand, driven by growth from an increase in wireless volumes, strong FWA revenue and increased penetration of fiber. We expect that legacy traditional wireline services will continue to face secular pressures.
Other Trends
In 2026, we expect to focus on our strategic growth areas - mobility and broadband, and plan to continue to rationalize our product portfolio, implement operational efficiencies and leverage the latest technological and digital capabilities. We are focused on achieving profitable growth as we continue to deliver strong revenues and undertake transformation initiatives to reduce costs and improve efficiencies, including through AI-driven technologies.
We expect that our ability to generate cash flows will benefit from our expected mobility and broadband service revenue growth and optimization of our cost structure. We are focused on a more efficient use of capital with the goal to achieve our capital investment priorities at lower cost. See "Liquidity and Capital Resources" for additional information on our capital program.
In the course of business, we make promotional equipment offers to attract and retain customers. In 2024 and 2025, the growth of our wireless service revenue was unfavorably impacted by the amortization of wireless equipment sales and promotions. We expect these pressures to continue in 2026.
Liquidity and Capital Resources
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 balance is $19.0 billion as of December 31, 2025. 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 "Quantitative and Qualitative Disclosures About 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.
Capital Expenditures
Our 2026 capital program includes capital to fund advanced networks and services, including expanding and adding capacity and density to our core networks, completing the deployment of C-Band spectrum, and advancing our network architecture, while reducing the cost to deliver services to our customers, and pursuing other opportunities to drive operating efficiencies. It will also support our broadband investment plans and the expansion of our fiber broadband footprint. We anticipate cash requirements for our 2026 capital program to be between $16.0 billion and $16.5 billion.
Contractual Obligations and Commitments
We have various contractual obligations and commitments. The following represent our anticipated material cash requirements from known contractual and other obligations as of December 31, 2025:
• Pursuant to the Agreement and Plan of Merger, dated as of September 4, 2024, Verizon agreed to acquire Frontier for a per share merger consideration of $38.50. On January 20, 2026, Verizon completed the acquisition and paid approximately $9.4 billion in cash, net of cash acquired, and assumed approximately $12.9 billion of Frontier's debt, resulting in a total aggregate consideration of approximately $22.3 billion. See Note 3 to the consolidated financial statements for additional information.
• Long-term debt, including current maturities, commitments of $155.8 billion, of which $17.3 billion (including $1.4 billion of unsecured debt) are expected to be due within the next twelve months. Related interest payments are $79.1 billion, of which $6.3 billion, are expected to be due within the next twelve months. Items included in long-term debt with variable coupon rates exclude unamortized debt issuance costs, and are described in Note 7 to the consolidated financial statements.
• Operating lease obligations of $28.2 billion and Finance lease obligations of $2.7 billion, of which $5.3 billion and $994 million, respectively, are expected to be due within the next twelve months. In addition, Verizon has an obligation of $3.2 billion representing future minimum payments under the leaseback and sublease arrangements for our cell towers, of which $496 million is expected to be due within the next twelve months. See Note 6 to the consolidated financial statements for additional information.
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• Unconditional purchase obligations, with terms in excess of one year, amount to $15.0 billion, of which $5.8 billion is expected to be due within the next twelve months. Items included in unconditional purchase obligations are primarily commitments to purchase content, network equipment, software and services, marketing services and other items which will be used or sold in the ordinary course of business. These amounts do not represent our entire anticipated purchases in the future, but represent only those items that are the subject of contractual obligations. We also purchase products and services as needed with no firm commitment. See Note 16 to the consolidated financial statements for additional information.
• Other long-term liabilities, including current maturities, of $3.8 billion, of which approximately $686 million is expected to be due within the next twelve months. Other long-term liabilities represent estimated postretirement benefit and qualified pension plan contributions. Qualified pension plan contributions include estimated minimum funding contributions. We expect that there will be no required pension funding through the end of 2030, subject to changes in market conditions. Postretirement benefit payments include future postretirement benefit payments. These estimated amounts: (1) are subject to change based on changes to assumptions and future plan performance, which could impact the timing and/or amounts of these payments; and (2) exclude expectations beyond 5 years due to uncertainty of the timing and amounts.
• We are not able to make a reasonable estimate of when the unrecognized tax benefits balance of $2.6 billion and related interest and penalties will be settled with the respective taxing authorities until the related tax audits are further developed or resolved.
Consolidated Financial Condition
(dollars in millions)
Years Ended December 31,
Cash Flows Provided By (Used In)
Operating activities
Investing activities
Financing activities
Increase in cash, cash equivalents and restricted cash
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 $225 million during 2025 compared to 2024. The increase is primarily attributable to a reduction in cash tax payments as a result of the One Big Beautiful Bill legislation, partially offset by a decrease in earnings and a decrease in Other, net cash flow from operating activities. Other, net cash flow from operating activities during 2024 included $2.0 billion of proceeds related to the transaction with Vertical Bridge. As a result of the prior year discretionary contributions to our qualified pension plans of $365 million and the additional non-cash contributions made in 2025 in the aggregate principal amount of $1.3 billion, we expect that there will be no required pension funding through the end of 2030, subject to changes in market conditions.
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, were $17.0 billion and $17.1 billion for 2025 and 2024, respectively. Capital expenditures decreased $79 million during 2025, compared to 2024, primarily due to efficiencies in our fiber and wireless network infrastructure investments.
Acquisitions of Wireless Licenses
During 2025 and 2024, we recorded capitalized interest related to wireless licenses of $428 million and $616 million, respectively.
During 2024, we made payments of $269 million for obligations related to clearing costs and accelerated clearing incentives associated with Auction 107 for C-Band wireless spectrum .
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 2025 and 2024, net cash used in financing activities was $5.6 billion and $17.1 billion, respectively.
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During 2025, our net cash used in financing activities of $5.6 billion was primarily driven by $27.6 billion provided by proceeds from long-term borrowings, which included $9.3 billion of proceeds from our asset-backed debt transactions partially offset by $19.8 billion used for repayments and repurchases of long-term borrowings (secured and unsecured) as well as finance lease obligations, $11.5 billion used for dividend payments, and $1.9 billion used for other financing activities.
Proceeds from and Repayments and Repurchases of Long-Term Borrowings
At December 31, 2025, our total debt increased to $158.2 billion compared to $144.0 billion at December 31, 2024. Our effective interest rate was 5.0% and 5.1% during the years ended December 31, 2025 and 2024, respectively. We have entered into interest rate swaps to achieve a targeted mix of fixed and variable rate debt, managing our exposure to changes in interest rates. See "Quantitative and Qualitative Disclosures About Market Risk" and Note 7 to the consolidated financial statements for additional information.
At December 31, 2025, approximately $38.2 billion, or 23.6%, of the aggregate principal amount of our total debt portfolio consisted of foreign denominated debt, primarily Euro and British Pound Sterling. We have entered into cross currency swaps on our foreign denominated debt in order to fix our future interest and principal payments in U.S. dollars and mitigate the impact of foreign currency transaction gains or losses. See "Quantitative and Qualitative Disclosures About Market Risk" for additional information.
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.
Other, Net
Other, net cash flow from financing activities during 2025 includes $650 million in payments related to vendor financing arrangements, $485 million in payments made under the sublease arrangement for our cell towers, $496 million in equity distribution payments made for controlled entities and $185 million in payments related to tax withholding of employee share based arrangements. See Note 14 to the consolidated financial statements for additional information on noncontrolling interests.
Dividends
The Board of Directors of the Company assesses the level of our dividend payments on a periodic basis taking into account such factors as long-term growth opportunities, internal cash requirements and the expectations of our shareholders. During the third quarter of 2025, our Board of Directors increased our quarterly dividend payment by 1.8% to $0.6900 from $0.6775 per share in the preceding quarter. This is the nineteenth consecutive year that Company’s Board of Directors has approved a quarterly dividend increase.
As in prior periods, dividend payments were a significant use of capital resources. During 2025, we paid $11.5 billion in dividends.
During 2024, our net cash used in financing activities of $17.1 billion was primarily driven by $20.3 billion used for repayments and repurchases of long-term borrowings (secured and unsecured) as well as finance lease obligations, $11.2 billion used for dividend payments and $1.1 billion used for other financing activities. These cash flows used in financing activities were partially offset by $15.6 billion provided by proceeds from long-term borrowings, which included $12.4 billion of proceeds from our asset-backed debt transactions.
Proceeds from and Repayments and Repurchases of Long-Term Borrowings
At December 31, 2024, our total debt was $144.0 billion. During the year ended December 31, 2024, our effective interest rate was 5.1%. We have entered into interest rate swaps to achieve a targeted mix of fixed and variable rate debt, managing our exposure to changes in interest rates. See "Quantitative and Qualitative Disclosures About Market Risk" and Note 7 to the consolidated financial statements for additional information.
At December 31, 2024, approximately $30.5 billion, or 20.6%, of the aggregate principal amount of our total debt portfolio consisted of foreign denominated debt, primarily Euro and British Pound Sterling. We have entered into cross currency swaps on our foreign denominated debt in order to fix our future interest and principal payments in U.S. dollars and mitigate the impact of foreign currency transaction gains or losses. See "Quantitative and Qualitative Disclosures About Market Risk" for additional information.
Other, Net
Other, net cash flow from financing activities during 2024 includes $830 million in proceeds related to financing obligations for the cell towers transaction with Vertical Bridge. These proceeds were partially offset by $431 million in payments related to vendor financing arrangements, $425 million in equity distribution payments made for controlled entities, $313 million in payments made
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under the sublease arrangement for our cell towers, $280 million in cash consideration payments to acquire additional interest in certain controlled entities and $243 million in payments for settlement of cross currency swaps. See Note 6 to the consolidated financial statements for additional information on the Vertical Bridge transaction. See Note 14 to the consolidated financial statements for additional information on noncontrolling interests.
Dividends
During the third quarter of 2024, our Board of Directors increased our quarterly dividend payment by 1.9% to $0.6775 per share.
During 2024, we paid $11.2 billion in dividends.
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 consolidated balance sheets.
Proceeds from our asset-backed debt transactions are reflected in Cash flows from financing activities in our consolidated statements of cash flows. The asset-backed debt issued is included in Debt maturing within one year and Long-term debt in our consolidated balance sheets.
See Note 7 to the consolidated financial statements for additional information.
Long-Term Credit Facilities
At December 31, 2025
(dollars in millions)
Maturities
Facility Capacity
Unused Capacity
Principal Amount Outstanding
Verizon revolving credit facility (1)
Various export credit facilities (2)
Total
(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 December 31, 2025, there have been no drawings against the revolving credit facility since its inception.
(2) During 2025, we drew down $270 million . During 2024, there were no drawings from these facilities. Borrowings under certain of these facilities are amortized 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.
Common Stock
Common stock has been used from time to time to satisfy some of the funding requirements of employee and shareholder plans. During the years ended December 31, 2025 and 2024, we issued 7.5 million and 5.4 million shares of common stock from treasury stock, which had aggregate values of $328 million and $238 million, respectively.
In February 2020, the Board of Directors of the Company authorized a share buyback program to repurchase up to 100 million shares of our common stock. There were no repurchases of common stock during 2025 and 2024 under our share buyback program. The share buyback program authorized by the Board in February 2020 terminated upon the authorization of the new share repurchase program discussed below.
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.
Credit Ratings
Verizon’s credit ratings did not change in 2025 or 2024.
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Securities ratings assigned by rating organizations are expressions of opinion and are not recommendations to buy, sell or hold securities. A securities rating is subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating.
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 December 31, 2025 totaled $19.0 billion, a $14.9 billion increase compared to December 31, 2024, primarily as a result of the factors discussed above. Our cash balance at December 31, 2025 included net cash proceeds from notes issued in 2025 to fund the acquisition of Frontier, which closed in January 2026.
Restricted cash at December 31, 2025 and 2024 totaled $451 million and $441 million, 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 consolidated statements of cash flows.
The following table reconciles net cash provided by operating activities to free cash flow:
(dollars in millions)
Years Ended December 31,
Net cash provided by operating activities
Less Capital expenditures (including capitalized software)
Free cash flow
The increase in free cash flow during 2025 is a reflection of the increase in operating cash flows, as well as the decrease in capital expenditures, both of which are discussed above.
Employee Benefit Plans Funded Status and Contributions
Employer Contributions
We operate numerous qualified and nonqualified pension plans and other postretirement benefit plans. These plans primarily relate to our domestic business units. During 2025, we made discretionary non-cash contributions in the aggregate principal amount of $1.3 billion to our qualified pension plans. During 2024, we made discretionary contributions in the aggregate amount of $365 million to our qualified pension plans. During 2025 and 2024, we made contributions of $54 million and $56 million to our nonqualified pension plans, respectively.
Our overall investment strategy is to achieve a mix of assets that allows us to meet projected benefit payments while taking into consideration risk and return. In an effort to reduce the risk of our portfolio strategy and better align assets with liabilities, we have adopted a liability driven pension strategy that seeks to better match the interest rate sensitivity of the liability hedging assets with the interest rate sensitivity of the liability. We expect that the strategy will reduce the likelihood that assets will decline at a time when liabilities increase (referred to as liability hedging), with the goal to reduce the risk of underfunding to the plan and its participants and beneficiaries. Over time, as the asset allocation shifts to more liability hedging assets, this strategy will generally result in lower expected asset returns. For 2026, we expect no required qualified pension plan contributions and insignificant nonqualified pension plan contributions.
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Contributions to our other postretirement benefit plans generally relate to payments for benefits on an as-incurred basis since these other postretirement benefit plans do not have funding requirements similar to the pension plans. We contributed $762 million and $935 million to our other postretirement benefit plans in 2025 and 2024, respectively. Contributions to our other postretirement benefit plans are estimated to be approximately $700 million in 2026.
Leasing Arrangements
See Note 6 to the consolidated financial statements for additional information related to leasing arrangements.
Guarantees
We guarantee the debentures of our operating telephone company subsidiaries. See Note 7 to the consolidated financial statements for additional information.
In connection with the execution of agreements for the sale of businesses and investments, Verizon ordinarily provides representations and warranties to the purchasers pertaining to a variety of nonfinancial matters, such as ownership of the securities being sold, as well as financial losses. See Note 16 to the consolidated financial statements for additional information.
As of December 31, 2025, letters of credit totaling approximately $783 million, which were executed in the normal course of business and support several financing arrangements and payment obligations to third parties, were outstanding. See Note 16 to the consolidated financial statements for additional information.
Other Future Obligations
As of December 31, 2025, Verizon had 29 renewable energy purchase agreements with third parties for a total of approximately 3.9 gigawatts of anticipated renewable energy capacity across multiple states. See Note 16 to the consolidated financial statements for additional information.
Critical Accounting Estimates
A summary of the critical accounting estimates used in preparing our financial statements are as follows:
Wireless Licenses and Goodwill
Wireless licenses and goodwill are a significant component of our consolidated assets. Both our wireless licenses and goodwill are treated as indefinite-lived intangible assets and, therefore are not amortized, but rather are tested for impairment annually in the fourth fiscal quarter, unless there are events requiring an earlier assessment or changes in circumstances during an interim period suggesting impairment indicators are present. We believe our estimates and assumptions are reasonable and represent appropriate marketplace considerations as of the valuation date. Although we use consistent methodologies in developing the assumptions and estimates underlying the fair value calculations used in our impairment tests, these estimates and assumptions are uncertain by nature, may change over time and can vary from actual results. It is possible that in the future there may be changes in our estimates and assumptions, including the timing and amount of future cash flows, margins, growth rates, market participant assumptions, comparable benchmark companies and related multiples and discount rates, which could result in different fair value estimates. Significant and adverse changes to any one or more of the above-noted estimates and assumptions could result in an impairment to our wireless licenses and goodwill impairment for one or more of our reporting units.
Wireless Licenses
The carrying value of our wireless licenses was approximately $157.0 billion as of December 31, 2025. We aggregate our wireless licenses into one single unit of accounting, as we utilize our wireless licenses on an integrated basis as part of our nationwide wireless network. Our wireless licenses provide us with the exclusive right to utilize certain radio frequency spectrum to provide wireless communication services. There are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of our wireless licenses.
We test our wireless licenses for potential impairment annually or more frequently if impairment indicators are present. We have the option to first perform a qualitative assessment to determine whether it is necessary to perform a quantitative impairment test. However, we may elect to bypass the qualitative assessment in any period and proceed directly to performing the quantitative impairment test. It is our policy to perform a quantitative impairment assessment at least every three years.
During the fourth quarter of 2024, we performed a quantitative impairment assessment in accordance with our policy. The quantitative impairment assessment we performed during the fourth quarter of 2024 indicated that the fair value of our wireless licenses is substantially in excess of their carrying value and, therefore, did not result in an impairment. Our quantitative impairment assessment consisted of comparing the estimated fair value of our aggregate wireless licenses to the aggregated carrying amount as of the test date. Under our quantitative assessment, we estimated the fair value of our wireless licenses using the Greenfield approach. The Greenfield approach is an income based valuation approach that values the wireless licenses by calculating the cash flow generating potential of a hypothetical start-up company that goes into business with no
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assets except the wireless licenses to be valued. A discounted cash flow analysis is used to estimate what a marketplace participant would be willing to pay to purchase the aggregated wireless licenses as of the valuation date. As a result, we were required to make significant estimates about future cash flows and profitability specifically associated with our wireless licenses, an appropriate discount rate based on the risk associated with those estimated cash flows and assumed terminal value and growth rates. We considered current and expected future economic conditions, current and expected availability of wireless network technology and infrastructure and related equipment and the costs thereof as well as other relevant factors in estimating future cash flows and profitability. The discount rate represented our estimate of the weighted-average cost of capital (WACC), or expected return, that a marketplace participant would have required as of the valuation date and includes a risk premium associated with the current and expected economic conditions as of the valuation date. We developed the discount rate based on our consideration of the cost of debt and equity of a group of guideline companies as of the valuation date. The terminal value growth rate represented our estimate of the marketplace's long-term growth rate.
During the fourth quarter of 2025, we performed a qualitative impairment assessment as our annual impairment test to determine whether it is more likely than not that the fair value of our wireless licenses was less than the carrying amount. As part of our qualitative assessment we considered several factors including the enterprise value of our combined wireless business, macroeconomic conditions (including changes in interest rates and discount rates), industry and market considerations (including industry revenue and subscriber growth, as well as recent merger and acquisition activity), the recent and projected financial performance of our combined wireless business as a whole, as well as other factors including the result of our last quantitative assessment performed in 2024. Our qualitative assessment in 2025 indicated that it is more likely than not that the fair value of our wireless licenses remained above their carrying value and, therefore, did not result in an impairment.
Goodwill
At both December 31, 2025 and 2024, the balance of our goodwill was approximately $22.8 billion, of which $21.2 billion was in our Consumer reporting unit and $1.7 billion was in our Business reporting unit.
To determine if goodwill is potentially impaired, we have the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If we elect not to conduct the qualitative assessment or if indications of a potential impairment exist, the determination of whether an impairment has occurred requires the fair value of each reporting unit to be assessed. It is our policy to perform quantitative impairment assessments at least every three years.
Under the qualitative assessment, we consider several factors, including the enterprise value of the reporting unit from the last quantitative test and the excess of fair value over carrying value from this test, macroeconomic conditions (including changes in interest rates and discount rates), industry and market considerations (including industry revenue and EBITDA margin, projections and recent merger and acquisition activity), the recent and projected financial performance of the reporting unit, as well as other factors.
Under the quantitative assessment, the fair value of the reporting unit is calculated using an average of the market approach and a discounted cash flow method, as a form of the income approach. The market approach includes the use of comparative multiples to complement discounted cash flow results. The discounted cash flow method is based on the present value of two components-projected cash flows and a terminal value. The terminal value represents the expected normalized future cash flows of the reporting unit beyond the cash flows from the discrete projection period. The fair value of the reporting unit using the income approach is calculated based on the sum of the present value of the cash flows from the discrete period and the present value of the terminal value. The discount rate represents our estimate of the WACC, or expected return, that a marketplace participant would have required as of the valuation date. The application of our goodwill impairment test requires key assumptions underlying our valuation model. The discounted cash flow analysis factors in assumptions on discount rates and terminal growth rates to reflect risk profiles of key strategic revenue and cost initiatives, as well as revenue and EBITDA growth relative to history and market trends and expectations. The market multiples approach reflects significant judgment involved in the selection of comparable public company multiples and benchmarks. The selection of companies and multiples is influenced by differences in growth, profitability, and in market prices of peer companies. These valuation inputs are inherently judgmental, and an change in one or a combination of these inputs could result in a goodwill .
During the fourth quarter of 2024, we performed a quantitative impairment assessment for our Consumer reporting unit in accordance with our policy. We applied a combination of a market approach and a discounted cash flow method reflecting current assumptions and inputs, including our revised projections, discount rate and expected growth rates. Our assessment indicated that the fair value of our Consumer reporting unit substantially exceeded its carrying value and, therefore, did not result in an impairment.
During the fourth quarter of 2025, we performed a qualitative impairment assessment for our Consumer reporting unit. Our qualitative assessment indicated that it was more likely than not that the fair value of our Consumer reporting unit exceeded its carrying value and, therefore, did not result in an impairment.
During the fourth quarters of both 2024 and 2025, we performed quantitative impairment assessments for our Business reporting unit. We performed a quantitative impairment assessment in 2024 as a result of the goodwill impairment recorded in 2023 and the competitive and market pressures experienced throughout 2024. We elected to perform a quantitative impairment
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assessment in 2025 given that the 2024 impairment assessment resulted in a fair value that was marginally in excess of the carrying value, as well as the sustained competitive pressures and market conditions that continued throughout 2025. In both years, we applied a combination of a market approach and a discounted cash flow method reflecting current assumptions and inputs, including our revised projections, discount rates and expected growth rates. These analyses both indicated that the fair value of our Business reporting unit exceeded its carrying value and, therefore, did not result in an impairment in either 2024 or 2025.
At the goodwill impairment measurement date of October 31, 2025, our Business reporting unit had a fair value that exceeded its carrying amount by approximately 9% and remains susceptible to future impairment risk. We do not anticipate reasonable changes in significant assumptions to change the outcome of the quantitative impairment assessment. For instance, if either the terminal value growth rate declined by 50 basis points, or if the discount rate increased by 50 basis points, or if the EBITDA margin decreased by 100 basis points, the fair value of our Business reporting unit would still exceed its carrying value. However, management believes there is a continued risk that our Business reporting unit may be required to recognize an impairment charge in the future.
A projected sustained decline in the reporting unit's revenues and earnings could have a significant negative impact on its fair value and could result in future impairment charges. Such a decline could be driven by, among other things: (1) decreases in sales volumes or long-term growth rate as a result of competitive pressures or other factors; or (2) the reporting unit's inability to achieve or delays in achieving its goals or strategic initiatives including, but not limited to, cost savings efforts. Adverse changes to macroeconomic factors, such as increases in long-term interest rates, would also negatively impact the fair value of the reporting unit.
See Note 4 to the consolidated financial statements for additional information.
Pension and Other Postretirement Benefit Plans
We maintain benefit plans for most of our employees, including, for certain employees, pension and other postretirement benefit plans. Benefit plan assumptions, including the discount rate used, the long-term rate of return on plan assets, the determination of the substantive plan and health care trend rates are periodically updated and impact the amount of benefit plan income, expense, assets and obligations. Changes to one or more of these assumptions could significantly impact our accounting for pension and other postretirement benefits.
In determining pension and other postretirement obligations, the weighted-average discount rate was selected to approximate the composite interest rates available on a selection of high-quality bonds available in the market at December 31, 2025. The bonds selected had maturities that coincided with the time periods during which benefit payments are expected to occur, were non-callable (or callable with certain selection criteria met) and available in sufficient quantities to ensure marketability (at least $300 million par outstanding). Bond yields are subject to uncertainty for a number of reasons including corporate performance, credit rating downgrades and upgrades, government fiscal policy decisions, and general market volatility. The expected long-term rates of return on plan assets used in determining Verizon’s pension and other postretirement obligations are based on expectations for future investment returns for the plans’ asset allocation. The rates are subject to uncertainty for a number of reasons including corporate performance, credit ratings, monetary policy, inflation, exchange rates, investor behavior and general market volatility.
A sensitivity analysis of the impact of changes in the discount rate and the long-term rate of return on plan assets on the benefit obligations and expense (income) recorded, as well as an increase or a decrease in the actual versus expected return on plan assets as of December 31, 2025 and for the year then ended pertaining to Verizon’s pension and postretirement benefit plans, is provided in the table below. The amounts in the table below related to discount rate changes are gross impacts on benefit obligations and expense, and do not reflect changes in asset values as a result of interest rate changes, for which our pension plan is highly hedged.
(dollars in millions)
Percentage point
change
Increase/(Decrease) at December 31, 2025
Pension plans discount rate
Rate of return on pension plan assets
Postretirement plans discount rate
Rate of return on postretirement plan assets
In addition to our liability hedging assets, we also employ an interest rate hedging strategy to further minimize the impact of discount rate changes on the funded ratio of the pension plan. While the target hedge ratio varies depending on the funded status of the plan and the level of interest rates, the target hedge ratio was 80% at December 31, 2025, limiting volatility.
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The annual measurement date for both our pension and other postretirement benefits is December 31. We use the full yield curve approach to estimate the interest cost component of net periodic benefit cost for pension and other postretirement benefits. The full yield curve approach refines our estimate of interest cost by applying the individual spot rates from a yield curve composed of the rates of return on several hundred high-quality fixed income corporate bonds available at the measurement date. These individual spot rates align with the timing of each future cash outflow for benefit payments and therefore provide a more precise estimate of interest cost.
See Note 11 to the consolidated financial statements for additional information.
Income Taxes
Our current and deferred income taxes and associated valuation allowances are impacted by events and transactions arising in the normal course of business as well as in connection with the adoption of new accounting standards, changes in tax laws and rates, acquisitions and dispositions of businesses and non-recurring items. As a global commercial enterprise, our income tax rate and the classification of income taxes can be affected by many factors, including estimates of the timing and realization of deferred income tax assets and the timing and amount of income tax payments. We account for tax benefits taken or expected to be taken in our tax returns in accordance with the accounting standard relating to the uncertainty in income taxes, which requires the use of a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. We review and adjust our liability for unrecognized tax benefits based on our best judgment given the facts, circumstances and information available at each reporting date. To the extent that the final outcome of these tax positions is different than the amounts recorded, such differences may impact income tax expense and actual tax payments. We recognize any interest and penalties accrued related to unrecognized tax benefits in income tax expense. Actual tax payments may materially differ from estimated liabilities as a result of changes in tax laws as well as unanticipated transactions impacting related income tax balances. See Note 12 to the consolidated financial statements for additional information.
Property, Plant and Equipment
Our Property, plant and equipment balance represents a significant component of our consolidated assets. We record property, plant and equipment at cost. We depreciate property, plant and equipment on a straight-line basis over the estimated useful life of the assets. The estimated useful life is subject to change due to a variety of factors such as change in asset capacity or performance, technical obsolescence, market expectations and competitive impacts. In connection with our ongoing review of the estimated useful lives of property, plant and equipment during 2025, we determined that the estimated useful life of our property, plant and equipment would remain unchanged. We expect that a one year increase in estimated useful lives of our property, plant and equipment would result in a decrease to our 2025 depreciation expense of $2.5 billion and that a one year decrease would result in an increase of approximately $3.8 billion in our 2025 depreciation expense.
Accounts Receivable
Accounts receivable are recorded at amortized cost less an allowance for credit losses that are not expected to be recovered. The gross amount of accounts receivable and corresponding allowance for credit losses are presented separately in the consolidated balance sheets. We maintain allowances for credit losses resulting from the expected failure or inability of our customers to make required payments. We recognize the allowance for credit losses at inception and reassess quarterly based on management’s expectation of the asset’s collectability. The allowance is based on multiple factors including historical experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic conditions, as well as management’s expectations of conditions in the future, as applicable. The impact of these factors on the allowance involves significant level of estimation and is subject to uncertainty. Our allowance for credit losses is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics.
We record an allowance to reduce the receivables to the amount that is expected to be collectible. 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. The weighted-average expected loss r ate increased 0.51% at December 31, 2025 as compared to the rate at December 31, 2024. We expect that an increase or decrease of 0.25% in the weighted-average loss rate would result in a chan ge of $167 million in bad debt expense.
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, 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. We consider multiple factors in determining the allowance as discussed above.
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If there is a deterioration of our customers’ financial condition or if expected default rates differ from actual default rates on receivables, we may have to adjust our allowance for credit losses, which would affect earnings in the period the adjustments are made. See Note 8 to the consolidated financial statements for additional information.
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.
In February 2021, the FCC concluded Auction 107 for C-Band wireless spectrum. In accordance with the rules applicable to the auction, Verizon was 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 were approximately $7.5 billion. During 2024, we made payments of $269 million 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 were 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 (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.
See Note 3 to the consolidated financial statements for additional information regarding our spectrum license transactions.
Frontier Communications Parent, Inc.
On September 4, 2024, Verizon entered into an Agreement and Plan of Merger (the Merger Agreement) to acquire Frontier, a U.S. provider of broadband internet and other communication services. The transaction closed on January 20, 2026. Pursuant to the Merger Agreement, 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 closing, Verizon paid approximately $9.4 billion in cash, net of cash acquired, and assumed approximately $12.9 billion of Frontier's debt, resulting in a total aggregate consideration of approximately $22.3 billion.
The financial results of Frontier will be included in the Company's consolidated results beginning on January 20, 2026, the date of the closing of the acquisition. In January 2026, we repaid approximately $5.7 billion of the debt assumed as part of the Frontier acquisition.
See Note 3 to the consolidated financial statements for additional information.
Other
On January 30, 2026, Verizon completed the acquisition of 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 was insignificant.
