Mgt615 verizon-sap case-carlos bardales

SAP CASE: VZ
by Carlos Bardales
Course: MGT615-F
Professor: Dr. Thomas Pittz
UNIVERSITY OF TAMPA
JOHN H. SYKES COLLEGE OF BUSINESS

TABLE OF CONTENTS
INTRODUCTION....................................................................................................... 8
1. PART1 – EXTERNAL INDUSTRY / ANALYSIS ................................................. 9
1.1 Economic characteristics of the industry....................................................... 12
 517110 Wired Telecommunications Carriers .................................................... 12
 517210 Wireless Telecommunications Carriers (except Satellite)..................... 13
 Market size (sales)............................................................................................ 13
 Sales growth rate.............................................................................................. 14
 Stage of the life cycle (of the industry) .............................................................. 14
 TYPE OF Products sold.................................................................................... 15
 Variations in sales............................................................................................. 15
 Profit margins.................................................................................................... 16
 Scope of rivalry................................................................................................. 17
 Key competitors in the industry......................................................................... 17
1.2 Key success factors (KSF) for the industry ................................................... 20
 Available capital for investment......................................................................... 20
 Ability to detect trends and implement new technologies .................................. 21
 Vertical integration and economies of scale ...................................................... 22
 Telecommunication assets................................................................................ 24
1.3 Porter’s 5 Forces analysis ............................................................................ 27
 Threat of New Entrants – HIGH ........................................................................ 27
 Bargaining Power of Buyers – HIGH................................................................. 28
 Threat of Substitute Products or Services - HIGH............................................. 28
 Bargaining Power of Suppliers - LOW............................................................... 28
1.4 Macro environmental trends ......................................................................... 29
1.5 Summary of resources.................................................................................. 30
2. PART2 – INTERNAL / COMPANY ANALYSIS................................................. 32
2.1 Assess Performance .................................................................................... 32
 Generic strategy ............................................................................................... 32
 How well does the company meet the key success factors............................... 32
 Available capital for investment......................................................................... 32
 Ability to detect trends and implement new technologies .................................. 32
 Economies of scale and Vertical Integration ..................................................... 33
 Telecom assets................................................................................................. 33
2.2 Brief description of the company................................................................... 34
 What the company does (what are its products or services) ............................. 34

 Who customers are........................................................................................... 35
 Where they operate .......................................................................................... 35
 Firm size (sales and number of employees)...................................................... 36
 Year Company founded & history growth.......................................................... 37
 History of growth............................................................................................... 37
 Summary of acquisitions................................................................................... 40
2.3 Mission of the company................................................................................ 40
 Financial analysis ............................................................................................. 41
 BENCHMAR WITH COMPETITORS ................................................................ 42
2.4 VRIO analysis............................................................................................... 50
 Subscribers database ....................................................................................... 50
 Coverage.......................................................................................................... 51
 Capital INVESTMENT....................................................................................... 51
 Human Resources............................................................................................ 52
 Assets............................................................................................................... 52
 Product Portfolio ............................................................................................... 52
3. PART3 - RECOMMENDATIONS ..................................................................... 53
3.1 CRITICAL STRATEGIC ISSUES FACING THE FIRM.................................. 53
 politics due to change of technology ................................................................. 53
 Problems with Yahoo purchase ........................................................................ 54
 low diversification of offered content ................................................................. 54
3.2 Recommendations........................................................................................ 54
3.2.1 Recommendation 1 ................................................................................... 56
 Implementation strategies................................................................................. 56
 Responsibilities................................................................................................. 56
 Period of implementation .................................................................................. 56
 Resources ........................................................................................................ 56
3.2.2 Recommendation 2 ................................................................................... 56
 Resources ........................................................................................................ 57
3.2.3 Recommendation 3 ................................................................................... 57
 Resources ........................................................................................................ 57

4. URLS............................................................................................................... 57
5. appendix.......................................................................................................... 59
 VZ - BALANCE SHEET .................................................................................... 59
 VZ – INCOME STATEMENT ............................................................................ 61
 VZ – STATEMENT OF CASH FLOW................................................................ 62
 AT&T – BALANCE SHEET ............................................................................... 63
 AT&T – INCOME STATEMENT........................................................................ 64
 AT&T – CASH FLOW ....................................................................................... 65
 T-MOBILE BALANCE SHEET .......................................................................... 66
 T-MOBILE – INCOME STATEMENT ................................................................ 67
 T-MOBILE – CASH FLOW................................................................................ 68
 SPRINT – BALANCE SHEET ........................................................................... 69
 SPRINT – INCOME STATEMENT.................................................................... 70
 SPRINT – CASH FLOW STATEMENT ............................................................. 71
 VERIZON FINANCIAL RATIOS ........................................................................ 72
 AT&T FINANCIAL RATIOS............................................................................... 75
 T-MOBILE FINANCIAL RATIOS ....................................................................... 79
 SPRINT FINANCIAL RATIOS........................................................................... 83
 VERIZON OPERATIONAL RESULTS (USD Millions)....................................... 87
 AT&T OPERATIONAL RESULTS (USD Millions) ............................................. 88
 T-MOBILE OPERATIONAL RESULTS (USD Millions)...................................... 88
 SPRINT OPERATIONAL RESULTS (USD Millions).......................................... 88
6. Bibliography..................................................................................................... 89

TABLES
Table 1-Telecom Industry - Revenues, Profits, EBIT, EBT and Net Income .................. 13
Table 2-TELECOM INDUSTRY - GLOBAL COMPETITORS......................................... 18
Table 3-Telecom Industry, USA Total Revenues in USD Millions .................................. 18
Table 4-Examples of MVNO's in USA............................................................................ 20
Table 5-Debt Categorization in the Industry................................................................... 21
Table 6 - Biggest Fiber Optic Providers in USA ............................................................. 25
Table 7-Telecom Industry, Numer of suscribers ............................................................ 27
Table 8-Summary of resources ..................................................................................... 31
Table 9-Telecom Revenue by Operator......................................................................... 42
Table 10-TELECOM INDUSTRY SALES GROWTH PERCENTAGE ............................ 43
Table 11-Telecom Industry – EBIT ................................................................................ 44
Table 12-Telecom Industry - Interests ........................................................................... 44
Table 13-Telecom Industry - Taxes ............................................................................... 45
Table 14-Telecom Industry - NOPAT(Net Income) ........................................................ 45
Table 15-Telecom Industry, Operating Cash ................................................................. 46
Table 16-Telecom Industry, Financing........................................................................... 47
Table 17-Service Revenues for Mobile Wireless Service............................................... 47
Table 18-Telecom Industry, ARPU ................................................................................ 48
Table 19-Telecom Industry, Number of Subscribers...................................................... 50
Table 20-Telecom Industry Investment.......................................................................... 51
Table 21-VRIO Analysis Verizon ................................................................................... 53
Table 22-Verizon Balance Sheet ................................................................................... 61
Table 23-Verizon Income Statement ............................................................................. 61
Table 24-Verizon Statement of Cash Flow .................................................................... 63
Table 25-AT&T Balance Sheet...................................................................................... 64
Table 26-AT&T Income Statement ................................................................................ 65
Table 27-AT&T Cash Flow ............................................................................................ 66
Table 28-T-Mobile Balance Sheet ................................................................................. 67
Table 29-T-Mobile Income Statement............................................................................ 67
Table 30-T-Mobile Cash Flow........................................................................................ 69
Table 31-Sprint Balance Sheet...................................................................................... 70
Table 32-Sprint Income Statement ................................................................................ 70
Table 33-Sprint Cash Flow Statement........................................................................... 71
Table 34-Verizon Financial Ratios................................................................................. 73

Table 35-AT&T Financial Ratios.................................................................................... 76
Table 36-T-Mobile Financial Ratios ............................................................................... 80
Table 37-Spring Financial Ratios................................................................................... 84
Table 38-Verizon Operational Results........................................................................... 88
Table 39-AT&T Operational Results.............................................................................. 88
Table 40-T-Mobile Operational Results ......................................................................... 88
Table 41-Sprint Operational Results.............................................................................. 89

FIGURES
Figure 1-Traffic patterns in Telecom Industry .................................................................. 9
Figure 2-Usage of Data in Telecom Industry ................................................................. 10
Figure 3-Smartphone use increase to access data........................................................ 10
Figure 4-Distribution of Wireless and Landlines in Households ..................................... 11
Figure 5-Reasons to use smartphones.......................................................................... 11
Figure 6-Trends in No of Wireless Subscribers and ARPU............................................ 12
Figure 7-Telecom Industry - Revenues, Profits, EBIT, EBT and Net Income ................. 14
Figure 8-Telecom Industry Sales Growth Rate (%)........................................................ 14
Figure 9-Telecom Industry Life Cycle Stage.................................................................. 15
Figure 10-Telecom Industry - Variation in Sales from year to year (USD Millions) ......... 16
Figure 11-Telecom Industry - Profit Margins (USD Millions) .......................................... 17
Figure 12-TELECOM INDUSTRY - GLOBAL COMPETITORS...................................... 18
Figure 13-USA National Competitors............................................................................. 19
Figure 14-Telecom Industry - Cash, Investment and Financing (USD Millions).............. 20
Figure 15-From 1G to 5G .............................................................................................. 22
Figure 16 - Submarine Fiber Optics connected to US.................................................... 24
Figure 17-Tower sites per County per density ............................................................... 26
Figure 18-Radio Spectrum distribution in the USA Industry ........................................... 26
Figure 19-Teleco Industry, Number of subscribes ......................................................... 27
Figure 20 - New services to be provided with 5G technology......................................... 28
Figure 21-Mobile phone radiation penetrates the brain.................................................. 29
Figure 22-Verizon Strike................................................................................................ 30
Figure 23-The Federal Communications Commission (FCC)......................................... 30
Figure 24-Wireless coverage non-rual and rural............................................................ 33
Figure 25-LTE Coverage non-rural and rural................................................................. 34
Figure 26-LTE Speed by service provider...................................................................... 34
Figure 27-Verizon offices in the world............................................................................ 35
Figure 28 – Comparison VZ with Sprint (S), AT&T (T) and T-Mobile (TMUS) – Source:
cnbc.com ............................................................................................................................ 42
Figure 29 – Comparison VZ with SP&500(SPX), NASDAQ Financial (IXF) and NASDAQ
Telecommunication (IXUT) – Source: cnbc.com ................................................................. 42
Figure 30-Telecom Revenue by Operator...................................................................... 43
Figure 31-TELECOM INDUSTRY SALES GROWTH PERCENTAGE ........................... 43
Figure 32-Telecom Industry - EBIT................................................................................ 44
Figure 33-Telecom Industry - Interests .......................................................................... 44

Figure 34-Telecom Industry - Taxes.............................................................................. 45
Figure 35-Telecom Industry, NOPAT (Net Income) ....................................................... 46
Figure 36-Telecom Industry, Operating Cash ................................................................ 46
Figure 37-Telecom Industry, Financing.......................................................................... 47
Figure 38-Service Revenues for Mobile Wireless Service ............................................. 48
Figure 39-Telecom Industry, ARPU............................................................................... 48
Figure 40-Quarterly net adds (USD Millions) ................................................................. 49
Figure 41-Churn (average monthly)............................................................................... 50
Figure 42-Telecom Industry, Number of Subscribers..................................................... 51
Figure 43-Telecom Industry, Investment (USD Millions)................................................ 52
Figure 44-Verizon Liquidity Ratios................................................................................. 73
Figure 45-Verizon Profitability Ratios............................................................................. 73
Figure 46-Verizon Activity Ratios................................................................................... 74
Figure 47-Verizon Interest Coverage Ratios.................................................................. 74
Figure 48-Verizon Operating Return Ratios................................................................... 75
Figure 49-Verizon Leverage Ratios ............................................................................... 75
Figure 50-AT&T Liquidity Ratios.................................................................................... 77
Figure 51-AT&T Profitability Ratios................................................................................ 77
Figure 52-AT&T Activity Ratios...................................................................................... 78
Figure 53-AT&T Interest Coverage Ratios..................................................................... 78
Figure 54-AT&T Operating Return Ratios...................................................................... 79
Figure 55-AT&T Leverage Ratios .................................................................................. 79
Figure 56-T-Mobile Liquidity Ratios ............................................................................... 81
Figure 57-T-Mobile Profitability Ratios........................................................................... 81
Figure 58-T-Mobile Activity Ratios................................................................................. 82
Figure 59-T-Mobile Interest Coverage Ratio.................................................................. 82
Figure 60-T-Mobile Operating Return Ratios................................................................. 83
Figure 61-T-Mobile Leverage Ratios ............................................................................. 83
Figure 62-Spring Liquidity Ratios................................................................................... 85
Figure 63-Sprint Profitability Ratios ............................................................................... 85
Figure 64-Sprint Activity Ratios ..................................................................................... 86
Figure 65-Sprint Interest Coverage Ratios..................................................................... 86
Figure 66-Sprint Operating Return Ratios...................................................................... 87
Figure 67-Sprint Leverage Ratios.................................................................................. 87

INTRODUCTION
As part of MGT615 course, we have to make a SAP Case analysis of a company in
order to determine useful and realistic recommendations. I have chosen VERIZON since I am
a Telecom consultant and I am familiarized with the telecommunication industry. Dr. Pittz has
provided me with the tools in order to analyze the industry and the company. In the following
pages, I present the result of my research about this influencing industry.

1. PART1 – EXTERNAL INDUSTRY / ANALYSIS
Telecommunication industry is facing major challenges. Fierce competition for scarce
resources like radio spectrums and subscribers and necessity to implement new
technological advancements occur in short term periods. This in an industry that never
stops innovating. Capital needed to keep the pace is huge. Costs decrease is obtained
through vertical integration. Merges, acquisitions and sells are made every year none of
them are millions but billions of dollars. In spite of the fierce competition, still and industry
with considerable profit margins. Market value of the industry is comparable to software
companies and just surpassed by biotechnological companies. The reason could be in the
demand. US consumers look at their devices 150 times per day in average, that generates
a traffic over 30 billion times a day (assuming 200 million smartphones in American market)
and this metric continues to grow. Operators1
must identify creative ways to satisfy this
increasing demand. Maybe considering traffic patterns, usage, access trends and
behavioral cohorts.
Figure 1-Traffic patterns in Telecom Industry
1
Operators refer to telecommunication companies like Verizon, AT&T, T-Mobile and
Sprint.

Figure 2-Usage of Data in Telecom Industry
Figure 3-Smartphone use increase to access data

Figure 4-Distribution of Wireless and Landlines in Households
Figure 5-Reasons to use smartphones

Figure 6-Trends in No of Wireless Subscribers and ARPU2
1.1ECONOMIC CHARACTERISTICS OF THE INDUSTRY
Telecommunication Industry encompass a broad scope of technologies. It includes
wired, wireless, satellites, hosting, infrastructure construction, reselling, etc. In order to
give a focus to this report we are only considering wired and wireless services for the
industry analysis. According to the http://www.census.gov the wired and wireless services
have following NAICs: 517110 for Wired Telecommunications Carriers and 517210 for
Wireless Telecommunications Carriers (except Satellite). According to the same site,
these NAICs encompass following activities.
 517110 WIRED TELECOMMUNICATIONS CARRIERS
This industry comprises establishments primarily engaged in operating and/or
providing access to transmission facilities and infrastructure that they own and/or lease for
the transmission of voice, data, text, sound, and video using wired telecommunications
networks. Transmission facilities may be based on a single technology or a combination
of technologies. Establishments in this industry use the wired telecommunications network
facilities that they operate to provide a variety of services, such as wired telephony
services, including VoIP services; wired (cable) audio and video programming distribution;
and wired broadband Internet services. By exception, establishments providing satellite
television distribution services using facilities and infrastructure that they operate are
included in this industry. Illustrative
2
Average monthly Revenue per mobile User

Examples:
Broadband Internet service providers, wired (e.g. cable, DSL)
Local telephone carriers, wired
Cable television distribution services
Long-distance telephone carriers, wired
Closed circuit television (CCTV) services
VoIP service providers, using own operated wired telecommunications infrastructure
Direct-to-home satellite system (DTH) services
Telecommunications carriers, wired
Satellite television distribution systems
Multichannel multipoint distribution services (MMDS).
 517210 WIRELESS TELECOMMUNICATIONS CARRIERS (EXCEPT
SATELLITE)
This industry comprises establishments engaged in operating and maintaining
switching and transmission facilities to provide communications via the airwaves.
Establishments in this industry have spectrum licenses and provide services using that
spectrum, such as cellular phone services, paging services, wireless Internet access, and
wireless video services. Illustrative
Examples:
Cellular telephone services
Wireless Internet service providers, except satellite paging services, except satellite
Wireless telephone communications carriers, except satellite
 MARKET SIZE (SALES)
According to (http://www.telco2research.com, n.d.), there is an approximately amount
of 60 billion calls and data calls per quarter distributed between the major country
operators. Considering that the market is almost saturated, we can consider that there is
approximately a market of 250 to 300 billion calls and data calls to be distributed in the
market.
Telecom Industry - Revenues, Profits, EBIT and Net Income
2015 2014 2013 2012
REVENUE 345,006 324,590 290,613 262,999
PROFIT (EBITDA) 108441 88700 97886 73424
EBIT 60370 44294 56324 35634
EBT 44600 31735 45659 26300
NOPAT (Net Income) 28250 23646 30475 25012
Table 1-Telecom Industry - Revenues, Profits, EBIT, EBT and Net Income

Figure 7-Telecom Industry - Revenues, Profits, EBIT, EBT and Net Income
 SALES GROWTH RATE
The sales growth rate is approximately 5% by the end of 2015. After an extraordinary
performance of T-Mobile in 2013, this company has started to fall to peer rates. AT&T has
had an extraordinary performance in 2015. Sprint is the lowest growth rate in the industry.
Verizon did not have considerable growth rates changes.
Figure 8-Telecom Industry Sales Growth Rate (%)
 STAGE OF THE LIFE CYCLE (OF THE INDUSTRY)
According to (Blau, Gavan, 2016), the industry is in mature state. Indicators that
confirm this are: the growth rate less than GDP, the market has totally accepted the
product and the saturation of the market.
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2015201420132012
Telecom Industry - Sales, Profit and Net Income
(USD Millions)
REVENUE PROFIT (EBITDA) EBIT EBT NOPAT (NI)
6%
7%
8%
9%
10%
11%
12%
201520142013
Telecom Industry Sales Growth Rate (%)
SALES REVENUES

Figure 9-Telecom Industry Life Cycle Stage
 TYPE OF PRODUCTS SOLD
A variety of products is offered segmented by wireless, residential, businesses (small
and large) and government customers. Wireless service is composed of smartphones
sales and plan sales. Residential services consist of IP or ADSL Internet access, IP TV or
legacy TV, fixes lines and IoT3
. Business services is more solution oriented, like, cloud
warehouses4
, lease of lines and IT5
solutions. Solutions for government encompass
universities, federal and local governments and communities (smart cities, security, etc.).
 VARIATIONS IN SALES
Telecom Industry sells many products and services. However, their main sales are
3
Internet of Things, a technology that assigns an IP to any device in order to be
manipulated through internet.
4
Cloud warehouses are virtual spaces that can be rent.
5
Information Technology.

monthly subscriptions in order to have access to data and voice services. These sales are
not affected neither by business cycles nor by seasonality since humans want to be always
connected. Nevertheless, we can say that they are event oriented. There is an increase of
subscription sales during special events however, New Year, Christmas and Thanks Given
due to promotions offered. Another important information is the increase of data and voice
calls during events like earthquakes, tornados, natural disaster, strikes, riots, etc. This
represented profits before but with the trends toward flats rates, it is no more that
important.
Figure 10-Telecom Industry - Variation in Sales from year to year (USD Millions)
 PROFIT MARGINS
The average profit of the industry is 26.6%. This profit is after discounting COGS6
and
SGA and not taking in count Depreciation, Depletion and Amortization.
6
Cost of Goods Sold
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
201520142013
Telecom Industry - Variation in Sales from year
to year (USD Millions)

Figure 11-Telecom Industry - Profit Margins (USD Millions)
 SCOPE OF RIVALRY
This is an industry with high barriers of entrance and a necessity of economies of
scales. Low prices are provided mainly with vertical integration through merges,
acquisitions and sales. There are also FCC7
regulations that avoid distort of the market for
any national or foreign company. Due to this nature of business, Telecom Industry has a
global and national scope of rivalry who compete in the wired and wireless market. The
scope of this report is about telecom industry in USA in the wireless market.
 KEY COMPETITORS IN THE INDUSTRY
Verizon and AT&T are the only American operators that compete globally in the
telecom industry. These companies are continuously searching for opportunities to
synergize its strength overseas joining, buying or being partially owners of overseas
companies. The biggest telecom operators of the world are showed below.
TELECOM INDUSTRY - GLOBAL COMPETITORS
2015
Revenues Profits No of users
America Movil (AMX) 51.78 1.92 285.5
Orange (ORAN) 43.71 2.67 263
Telecom China 50.83 3.08 450
Telefonica (TEF) 51.29 3.11 246.9
Vodafone (VOD) 40.97 2 446
Deutsche Telekom (DTEGY) 62.69 3.69 156.4
China Mobile Limited (CHL) 102.9 16.66 826
7
Federal Communications Commission
0
20000
40000
60000
80000
100000
120000
2015201420132012
Telecom Industry - Profit Margins (USD Millions)

Nippon Telegraph & Telephone (NTT) 102.68 5.2 66.6
Verizon Wireless (VZ) 131.62 46.5 140.1
AT&T (T) 146.8 49.5 128.64
Table 2-TELECOM INDUSTRY - GLOBAL COMPETITORS
Figure 12-TELECOM INDUSTRY - GLOBAL COMPETITORS
Verizon, AT&T, T-Mobile and Sprint are the only telecom companies competing in a
national level. Verizon and AT&T with national based capital. The other two competitors
have foreign capital owners: Sprint owned by Japanese Softbank and T-Mobile owned by
German Deutsche Telekom.
Between these competitors, it is almost impossible to have a merge or acquisition due
to FCC regulations (FCC already banned a purchase of T-Mobile by AT&T). Nevertheless,
is it possible a merge between the two smallest operators T-Mobile and Sprint.
Telecom Industry – USA Total Revenues (USD Millions)
2015 2014 2013 2012
REVENUE 345,006 324,590 290,613 262,999
Table 3-Telecom Industry, USA Total Revenues in USD Millions
0
100
200
300
400
500
600
700
800
900
Telecom Industry - Global Competitors (Revenues and No
of users in Millions)
2015 Revenues 2015 No of users

Figure 13-USA National Competitors
Additionally, it exists several resellers who neither deploy nor own telecom
infrastructure. They just lease infrastructure from one of the four operators (Verizon, AT&T,
T-Mobile or Sprint) and offer subscription in some specific niches. In some cases, they
belong to the operator like METROPCS who belongs to T-Mobile, and in others, they are
a completely separate company like VIRGIN who works with Sprint. These resellers are
known as MVNOs8
. They are considered ‘virtual’ companies due to their lack of
infrastructure.
We are not taking in consideration MVNOs in this report, since they do not contribute
significantly to the industry. Nevertheless, you can find a list of US resellers here:
https://en.wikipedia.org/wiki/List_of_United_States_mobile_virtual_network_operators
8
Mobile Virtual Network Operators
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2015 2014 2013 2012
Telecom Industry USA National Competitors (USD
Millions Sales Revenues)
Verizon AT&T T-Mobile Sprint

Table 4-Examples of MVNO's in USA
1.2KEY SUCCESS FACTORS (KSF) FOR THE INDUSTRY
 AVAILABLE CAPITAL FOR INVESTMENT
Companies should always be ready to make huge investment either in new
technologies, merge or acquisitions. Telecommunication business is capital intensive;
then, cash or access to funds must be available to renew or maintain assets, acquire
companies, radio spectrums or launch promotions. It is also important the quality of the
debt so they can arrange funds to a good rate.
Figure 14-Telecom Industry - Cash, Investment and Financing (USD Millions)
-100,000
-50,000
0
50,000
100,000
150,000
2015201420132012
Telecom Industry - Cash, Investment and
Financing (USD Millions)
CASH INVESTMENT FINANCING

Table 5-Debt Categorization in the Industry
 ABILITY TO DETECT TRENDS AND IMPLEMENT NEW TECHNOLOGIES
Companies must not only detect trends in advance, but also must have the ability to
implement those trends in the correct timing. This is an industry with frequent technology
turnover due to the increasing demand of services that require more bandwidth. This
turnover implies a change of technology every number of years. Telecom industry started
with fixed lines that transmitted only voice through copper networks. Copper cables laid in
poles. This have change radically since the discovery of wireless technology. From the
first telecom services with 1G, 2G, 2.5G and 3G9
technology, the industry is moving fast
to all-digital networks or what is technically known as all IP10
networks. They are still
providing fixed phone lines and internet access through landlines (which uses copper and
ADSL technology), and they are still providing mobile internet, SMS11
and voice with 2G,
2.5G and 3G networks. Nevertheless, that will end in the long-term. Companies like
Verizon, are selling or replacing all those assets that are not integrated with their future
all-IP network. That includes landlines, which for example have been sold to Frontier.
AT&T has not sold yet its landline assets, but surely will do in the future. Operators does
not want to spend cash and time in business that are not integrated with their digital
business. This is how technology shapes telecom industry. The industry is moving fast to
a fiber optic network platform in order to provide the bandwidth that new services need.
They need a huge amount of cash for these changes. Only some operators have the
capacity to do those investments without taking a high risk, and those operators are AT&T
and Verizon. Al the operators are moving fast to the implementation of the new standard:
9
1G, 2G, 2.5G, 3G, 4G and 5G are mobile standards defined in 3GPP and 3GPP2
10
Internet Protocol
11
Short Message Service

4G LTE12
. The older technologies, which are not all-IP, will be shut down most probably
by the end of the decade. They are also preparing the future to the 5G standards. In this
sense, the industry is investing tough to implement 4G LTE networks. Some of the
companies like AT&T and T-Mobile are branding 3G HSPA as 4G technology,
nevertheless, they are already moving to 4G LTE. Verizon and Sprint, which were using
3G-CDMA are also moving fast to 4G LTE. In this way, in the near future, it will be common
to buy an unlocked handset and use it with any of the four operators. There will have no
sense to attach a customer to a contract since, there is already an operator like T-Mobile
that does not do that and is taking many customers from rivals. Incomes from data calls
are already more critical than incomes for legacy calls and that is why operators will give
unlimited calls and SMS for any plan. In the future, who gives more bandwidth for less
price and a quality service will capture most of the market as it is happening already with
T-Mobile with the so-called uncarrier strategy. Operators must identify all these changes
and change their strategies accordingly in order to keep subscribers loyal and most
important keep themselves in the market.
Figure 15-From 1G to 5G
 VERTICAL INTEGRATION AND ECONOMIES OF SCALE
In order to be competitive in price, companies must have economies of scale. In
telecom industry, they get economies of scale merging with other companies, acquiring
companies that are aligned with the company strategy and selling those business units
that are not. They can also get economies of scales spreading costs in a big numbers of
subscribers, and in order to do that, they must make huge assets investments and
expenses in order to cover in not only metropolitan areas but also rural and suburban
12
4G LTE is the 4G Long-Term Evolution, the last standard deployed by 3GPP
association

areas.
Integrate other businesses aligned with the company strategy means to merge or
acquire another company that have some asset that is valuable for the strategy like
spectrum, anthems and subscribers. The company can acquire those assets, merge with
another company or sell some others that are obsolete or not aligned with company
strategy.
To sell business units means that company should not spend cash in growing or
keeping business units that do not give benefit to the company or are not aligned with the
company strategy. For example, Verizon is selling its landline business to frontier in places,
which are not geographically integrated with its fiber optic network.
Telecom wireless industry is in the maturity life cycle stage as we mention before,
consequently, the market is saturated. Operators must take subscribers from others
operators through pricing plan promotions and subsidized mobile promotions. A major
strategy that is working well is the “uncarrier” strategy launched by T-Mobile in 2013.

 TELECOMMUNICATION ASSETS
In order to implement offer services to clients, telecom operator must have a proper
platform to support those services. Those assets in telecom industry are fiber optic
network, tower stations, radio spectrum frequencies and equipment. Traditional copper
network with ADSL13
technology is not more important and is not considered in this report.
Companies like Verizon and AT&T co-own international submarine fiber optics assets,
and national fiber optic networks, this give them a huge advantage over competitors to
decrease costs. Old copper networks are still important in rural areas, but they are being
replaced or sold to third parties. A list of fiber optics co-owned by Verizon and AT&T can
be found here: http://www.submarinecablemap.com/#/
Figure 16 - Submarine Fiber Optics connected to US
13
asynchronous digital subscriber line

Table 6 - Biggest Fiber Optic Providers in USA
Tower stations (Anthems and BTSs14
) means coverage. The more coverage a
company can have the more subscribers they can serve. All competitors are making the
transition to 4G LTE technology. Meanwhile, they are still serving the market through a
mix of technologies of 2G, 3G and 4G LTE.
14
Base Transceiver Stations

Figure 17-Tower sites per County per density
The spectrum is another important resource in the wireless industry. This is a scarce
resource distributed through biddings by the FCC. Operators, assigned big part of their
investments to acquire spectrum. The low frequency spectrum is the more valuable due
to technical characteristics of interference support.
Figure 18-Radio Spectrum distribution in the USA Industry
The faster way to obtain any of the assets described above is through merge and
acquisitions. Merge and acquisitions need the approval of the FCC. However, if purchase

is not possible, the only way is to assign considerable budget for annual CAPEX15
expenses.
Subscribers is a scarce and valuable asset in the industry. This resource generates
the incomes of the company. Subscribers are lost to other companies for promotions in
other companies or bad service. More subscribers mean more sales.
Telecom Industry - Number of Subscribers
2013 2014 2015
No of subscribers 333.42 362.96 389.92
Table 7-Telecom Industry, Numer of suscribers
Figure 19-Teleco Industry, Number of subscribes
1.3PORTER’S 5 FORCES ANALYSIS
 THREAT OF NEW ENTRANTS – HIGH
It is very difficult to come into the telecom industry for several reasons. One of the main
reasons is the amount of investment to cope with actual infrastructure of existing operators.
Nevertheless, they are some content companies that are trying to go into this industry in
the following years like Google and Facebook. They are in their way to create their own
fiber optic network and Google is already offering a content service with its own network
in 18 cities.
15
Capital Expenses
300.
310.
320.
330.
340.
350.
360.
370.
380.
390.
400.
2013 2014 2015
Telecom Industry - Number of subscribers

 BARGAINING POWER OF BUYERS – HIGH
In this Industry, the bargaining power of buyers16
is high since they can switch easily
to other operators. Subscribers usually shift to another provider due to subsidized handset
promotions, unsatisfied service or prices plan promotions.
 THREAT OF SUBSTITUTE PRODUCTS OR SERVICES - HIGH
The threat of substitute for products or services in the telecom industry is high. Every
so often, new products challenge the existence of actual products and services. This is an
industry where a very profitable service can be replaced in a relative short period.
Operators are aware of this and are trying to offer diffentiated products and service every
so often. Most profitable business unit is being wireless. For instance, wireless networks
has been successively replaced by 2G, 2.5G, 3G and 4G LTE networks. In the near future,
they will be replaced by 5G, which will bring new services, and it will continue changing for
sure in the long-term.
Figure 20 - New services to be provided with 5G technology
 BARGAINING POWER OF SUPPLIERS - LOW
Telecom equipment vendors17
are responsible for supplying the appropriate and last
16
Buyers are referred here as the mobile subscribers being a person a company or
some governmental institution.
17
Telecom equipment vendors are responsible of providing the equipment, products
and services to telecom operators. Some known telecom vendors are Huawei, Cisco,

technology to the telecom Industry. Telecom vendors have economies of scale and
specialization since they sell the same products to any operator in the world. Providers
offer similar products to vendors, for that reason, they work on sale strategies like prices,
short-lists or large scale contracts in order to apply economies of scale. Short-lists by
product oblige vendors to price less. Additionally, vendors from China frequently sell
subsidized products, which make more difficult the bargain. Finally, telecom vendors join
together in order to design standards and features for the industry like 3G, WCDMA18
,
CDMA, 4G LTE and 5G. They are represented in organizations like 3GPP19
and 3GPP2,
which, with the agreement of telecom vendors decide how and when to deploy every
technology in the market. Since these standards are for the whole industry, that also make
possible an easy integration from different vendors making the power of suppliers low.
1.4MACRO ENVIRONMENTAL TRENDS
Legal and regulatory institutions influence the industry in order to avoid monopolies
and to generate radio spectrums biddings. Economic and Demographic growth increase
the number of subscribers bringing the necessity of more radio spectrum. Social trend
affect this industry in the sense that with every change of technology there is a number of
employees that are not more necessary and generate conflicts if they are not taken in
count in the future. Ecological trends affect this industry in the sense that there is still the
idea that frequency causes diseases like cancer.
Figure 21-Mobile phone radiation penetrates the brain
Nokia, ZTE, Ericsson, and Alcatel-Lucent.
18
Wideband Code Division Multiple Access
19
Technical Specifications for a 3rd
Generation Mobile System (www.3gpp.org)

Figure 22-Verizon Strike
Figure 23-The Federal Communications Commission (FCC)
1.5SUMMARY OF RESOURCES
Opportunities
and threats for
the industry
VERIZON AT&T T-MOBILE SPRINT
Capital for
investments
18b profit.
39b cash for
investment.
30b invested
(18b capex,
4b acquisitions,
10b AWS-3
spectrum
13b profit. 36b
cash for
investment.
49b invested
(19b capex,
12b
acquisitions
18b AWS-3
678m profit.
5.4b for
investment.
10b
invested (3b
increase,
5b capex,
1.8b AWS-3
2b profit.
4b for
investment.
6b invested
(7b capex,
1b disposal
of fix assets)

license). spectrum
license).
spectrum
license)
Implementation
of new
technologies
312M persons
covered with 4G
LTE network.
111b invested in
4G LTE since
2000.
355M people
covered by 4G
LTE network.
312M
people
covered by
4G LTE
network.
300M
people
covered by
4G LTE
network.
Economies of
scale through
merges, joint
ventures,
acquisitions and
sales.
ACQUIRE
VODAFONE STAKE
IN VERIZON
WIRELESS IN
2014(130b),
ACQUIRE AOL in
2015(4.4b),
POSSIBLE YAHOO
EMAIL AND
FINANCE in
2017(4.8b), SOLD
landline to FRONTIER
2015(3b), and in
2016(8.6b)
ACQUIRE
CINGULAR
WIRELESS IN
2006 (86b),
ACQUIRE
DIRECTV 2014
(48.5b), ACQUIRE
TIME WARNER
2016 (85.4b)
Tried to buy T-
Mobile in
2014.
Potential
merge with T-
Mobile in
2017.
Subscribers
Database
143M 132M 68M 58M
Fiber optic asset 32M coverage in
USA. Co-owner of
international fiber
optic networks.
2.5M coverage
in USA. Co-
owner of
international
fiber optic
networks.
No coverage No
coverage
Mobile coverage 305M 306M 246M 280M
DSL networks 50M 122M No coverage No
coverage
Table 8-Summary of resources

2. PART2 – INTERNAL / COMPANY ANALYSIS
2.1ASSESS PERFORMANCE
 GENERIC STRATEGY
As stated in the letter from the CEO20
, regarding the balance of 2015-year end, the
strategy of the company is based in the following three tiers.
1. Deliver of wireless and wired services over their superior network infrastructure.
2. Develop new business models in platforms such as video and the Internet of
Things.
3. Create incremental revenue opportunities in applications and content.
 HOW WELL DOES THE COMPANY MEET THE KEY SUCCESS FACTORS
 AVAILABLE CAPITAL FOR INVESTMENT
Verizon is developing well in this tier with a clear strategy of improving its credit rating
(A++) and increasing the cash flow for investments. This payment was an urgent matter
to Verizon since after the re-purchase of the 45% actions from Vodafone its credit rating
was downgrading in the main agencies making expensive the fund access for new
investments. Verizon had an EBIT21
of 28 billion in 2015 end-year with and added to the
possible improve of rating for 2016 we can predict that they will have a huge capital
available for investment in the next year.
 ABILITY TO DETECT TRENDS AND IMPLEMENT NEW TECHNOLOGIES
Verizon is doing relative well in this tier. Verizon has implemented different ways to
detect industry trends. Its main strategies is being the implementation of platforms in order
to let developers make their own solutions, as they are the facilitators of the platform, they
can later use these solutions on its favor. The other strategy is to invest hard in video
solutions; since they have detected that access to video will be the trend in the future.
Another strong strategy is the investment in the Internet of Things, which is creating a new
niche of revenues. Last, they are pushing the use of their strong infrastructure All-IP (All
Internet) and Fiber Optic access. They have implemented FIoS22
service with this purpose.
Nevertheless, Verizon, must concern about low penetration of the FIoS service and the
fact that FIoS business unit is not being as profitable as wireless. Finally, Verizon should
contemplate if they invest more on content because their investments have been low
20
Chief Executive Officer
21
Earnings Before Interest and Taxes
22
Internet, TV and Fix Phone service through optical routers and fiber optical networks

compared with its peer AT&T.
 ECONOMIES OF SCALE AND VERTICAL INTEGRATION
Verizon has been doing well in the strategy of getting economies of scale and vertical
integration. Economies of scale through merges or acquisitions of peer companies like
AT&T, T-Mobile or Sprint are almost impossible due to FCC rules. It is expected that the
FCC will not authorize any merge between big operators. Verizon is trying to bring content
to its wireless infrastructure. Is in this direction that Verizon has acquire AOL Time Warner
in 2015 and is trying to buy Yahoo email and Yahoo finance from Yahoo this year or maybe
next year. In this direction is also oriented its strategy to develop new applications (mainly
for video content) and for the so-called Internet of Things. If this strategy proves to be right,
Verizon will continue with the purchase of content companies and developing of content
services.
 TELECOM ASSETS
Verizon is doing well in Telecom Assets. Verizon is the first in submarine fiber optics
and have the biggest coverage in terrestrial fiber optic network. Additionally, Verizon has
the second best wireless coverage in non-rural and rural areas after AT&T.
Figure 24-Wireless coverage non-rual and rural
Verizon also has the best 4G LTE coverage in rural areas and the second best
coverage in non-rural areas after AT&T.

Figure 25-LTE Coverage non-rural and rural
Verizon has the second download speed in 4G LTE after T-Mobile. 4G LTE will be the
only standard to be implemented in USA in the following years. All the operators are
planning to shut down the other technologies by the end of the decade.
Figure 26-LTE Speed by service provider
2.2BRIEF DESCRIPTION OF THE COMPANY
As describe in its website: “Verizon Communications Inc. is a holding company that,
acting through its subsidiaries, is one of the world’s leading providers of communications,
information and entertainment products and services to consumers, businesses and
governmental agencies with a presence in the United States and around the world”
 WHAT THE COMPANY DOES (WHAT ARE ITS PRODUCTS OR SERVICES)
As its report states: Verizon offers voice, data, video services and solutions on their
wireless and wireline networks that are designed to meet customers’ demand for mobility,
reliable network connectivity, security and control. They have two reportable segments,
Wireless and Wireline. Their wireless business operates as Verizon Wireless, provides

voice and data services and equipment sales across the United States (U.S.) using one of
the most extensive and reliable wireless networks. Their wireline business provides
consumer, business and government customers with communications products and
enhanced services, including broadband data, video, corporate networking solutions, data
center, cloud services, security, managed network services, local, and long distance voice
services. Verizon also owns and operates one of the most expansive end-to-end global
Internet Protocol (IP) networks in the world”.
For a more detailed list of services provided by the company (wireless and wireline),
please check the following page:
(http://www.reuters.com/finance/stocks/companyProfile?symbol=VZ, n.d.)
 WHO CUSTOMERS ARE
The customers of Verizon are normal persons, small businesses, large businesses and
government. Verizon has developed a portfolio of products for all of them.
 WHERE THEY OPERATE
Verizon operates in 150 locations around the globe.
Figure 27-Verizon offices in the world
A list of offices can be found in the following link:
http://www.verizon.com/about/careers/we-are-global

 FIRM SIZE (SALES AND NUMBER OF EMPLOYEES)
Verizon has a workforce of approximately 178,000 employees as of December 31, 2015.
The company is the biggest telecom operator in the world, with annual sales of 131 billion
as per 2015 year-end (http://data.cnbc.com/quotes/VZ/tab/7.2 ). The firm is valued in
203.5 billion as per 2016 3rd quarter end. See: http://data.cnbc.com/quotes/VZ/tab/4 for
more information.

 YEAR COMPANY FOUNDED & HISTORY GROWTH.
According to (https://en.wikipedia.org/wiki/Verizon_Communications, n.d.) : “Verizon was
founded as Bell Atlantic, which was one of the seven Baby Bells that were formed after AT&T
Corporation was forced to relinquish its control of the Bell System by order of the Justice
Department of the United States. Bell Atlantic came into existence in 1984 with a footprint
from New Jersey to Virginia, with each area having a separate operating company (consisting
of New Jersey Bell, Bell of Pennsylvania, Diamond State Telephone, and C&P Telephone).
As part of the rebranding that the Baby Bells took in the mid-1990s, all of the operating
companies assumed the Bell Atlantic name. In 1997, Bell Atlantic expanded into New York
and the New England states by merging with fellow Baby Bell NYNEX. In addition, Bell
Atlantic moved their headquarters from Philadelphia into the old NYNEX headquarters and
rebranded the entire company as Bell Atlantic.
In 2000, Bell Atlantic merged with GTE, which operated telecommunications companies
across most of the rest of the country that was not already in Bell Atlantic's footprint. Bell
Atlantic, the surviving company, changed its name to "Verizon", a portmanteau of VERITAS
(Latin for "truth") and horizon.
As of 2016, Verizon is one of three companies that had their roots in the former Baby
Bells. The other two, like Verizon, exist because of mergers among fellow former Baby Bell
members. One, SBC Communications, bought out its former parent AT&T Corporation and
assumed the AT&T name. The other, CenturyLink, was formed initially in 2011 by the
acquisition of Qwest (formerly named US West).”
 HISTORY OF GROWTH
I have prepared a summary based in the following article:
(https://en.wikipedia.org/wiki/Verizon_Communications, n.d.).
Formation (2000–2002)
Verizon Communications formed in June 2000 when the Federal Communications
Commission approved a US$64.7 billion merger of telephone companies Bell Atlantic and
GTE
2003–2005
In June 2003, Verizon Wireless backed an FCC-issued portability requirement that
permitted consumers to take their phone numbers with them across carriers. The company
gained 1.5 million new subscribers the following quarter, partially due to the rule change

Verizon launched its FiOS Internet service, which transmits data over fiber optic cables
in Keller, Texas. (Since divested Frontier) The company launched FiOS TV in September
2005, also in Keller, Texas. Twenty percent of qualified homes signed up by the end of the
year.
Verizon began negotiations to purchase long distance carrier MCI in 2005. MCI
accepted the company's initial $6.75 billion offer in February 2005, but then received a
higher offer from Qwest Communications. Verizon increased its bid to $7.6 billion (or
$23.50 a share), which MCI accepted on March 29, 2005. The acquisition gave the
company access to MCI's one million corporate clients and international holdings,
expanding Verizon's presence into global markets. As a result, Verizon Business was
established as a new division to serve the company's business and government
customers. The FCC approved the deal on November 5, 2005, valuing it at $8.5 billion.
Verizon's 2006 revenues rose by as much as 20% following the purchase.
2006-2010
Verizon won a lawsuit against Vonage in March 2007 for patent infringement. The three
patents named were filed by Verizon in 1997 and relate to the conversion of IP addresses
into phone numbers, a key technology of Vonage's business. The company was awarded
US$58 million in damages and future royalties. Vonage later lost an appeal and was
ordered to pay Verizon $120 million.
In November 2007, Verizon opened its networks for the first time to third party apps
and devices, a decision that allowed it to participate in the FCC's 2008 700 MHz auction
of "open access" spectrum. During that auction, the company bid $9.4 billion and won the
bulk of national and local licenses for airwaves reaching approximately 469 million people.
Verizon utilized the increased spectrum for its 4G service.
Verizon Wireless purchased wireless carrier Alltel for $28.1 billion in June 2008. The
acquisition included 13 million customers, which allowed Verizon Wireless to surpass
AT&T in number of customers and reach new markets in rural areas
Verizon introduced its 4G LTE network in 38 markets in December 2010, as well as in
airports in seven additional cities.
In 2009, the company spun off wire lines in 14 states into a company that then merged
with Frontier Communications in a deal valued at $8.6 billion.

2011–present
In 2011, Verizon acquired Terremark, an information technology services company for
$1.4 billion.
In February 2011, Verizon Wireless began selling the iPhone 4
Ivan Seidenberg stepped down as Verizon's CEO on August 1, 2011. Lowell McAdam
succeeded him
In June 2012, as part of its strategy to expand into new growth areas in its wireless
business, Verizon purchased Hughes Telematics—a company that produces wireless
features for automobiles—for $612 million
In August 2012, the Department of Justice approved Verizon's purchase of Advanced
Wireless Services (AWS) spectrum from a consortium of cable companies, including
Comcast, Time Warner Cable and Bright House Networks, for $3.9 billion
In September 2013, Verizon purchased the 45% stake in Verizon Wireless owned by
Vodafone for $130 billion. The deal closed on February 21, 2014, becoming the third
largest corporate deal ever signed, giving Verizon Communications sole ownership of
Verizon Wireless.
On January 5, 2015, Verizon was said to have approached AOL about a possible
takeover or venture, and on May 12, 2015, Verizon announced they would purchase AOL
at $50 per share, for a deal valued around $4.4 billion
On April 13, 2016, the Verizon strike of 2016 began. Organized by trade unions
International Brotherhood of Electrical Workers and the Communications Workers of
America, this ongoing action involves 40,000 landline and cable workers who have been
without a contract since August 2015
On July 25, 2016 Verizon agreed to purchase Yahoo!'s operating business for $4.83
billion
On August 1, 2016, Verizon announced to buy Fleetmatics, a fleet telematics system

company in Dublin, Ireland, for $2.4 billion, to build products that it offers to enterprises for
logistics and mobile workforces.
On September 12, 2016, Verizon announced it was acquiring Sensity, a startup for
LED sensors, in an effort to bolster its IoT portfolio
In October 2016, Verizon was accused by Communications Workers of America of
deliberately refusing to maintain its copper telephone service. The organization released
internal memos and other documents stating that Verizon workers in Pennsylvania were
being instructed to, in areas with network problems, migrate voice-only customers to
VoiceLink—a system that delivers telephone service over the Verizon Wireless network,
and not to repair the copper lines.
 SUMMARY OF ACQUISITIONS
List from (http://listings.findthecompany.com/, n.d.)
9/12/2016 Acquisition Acquires Sensity Systems for an Undisclosed Amount
8/1/2016 Alert Verizon agrees to buy Fleetmatics in $2.4 billion deal
7/25/2016 Alert Verizon confirms $4.83 billion buyout of Yahoo
7/19/2016 Alert Yahoo reports lackluster earnings results as sale looms
6/22/2016 Acquisition Acquires Telogis for an Undisclosed Amount
6/7/2016 Alert Verizon plans to bid $3 billion for Yahoo's primary business
2/8/2016 Alert Verizon poised to make a bid for Yahoo
12/9/2013 Acquisition Acquires EdgeCast Networks for an Undisclosed Amount
8/25/2011 Acquisition Acquires CloudSwitch for an Undisclosed Amount
3/4/2011 Executive Mr. Lowell C. McAdam assumes the role of CEO
5/14/2007 Acquisition Acquires Cybertrust for an Undisclosed Amount
2.3MISSION OF THE COMPANY
According to their webpage (http://www.verizon.com/about/our-company/who-we-are,
n.d.), the mission of the company goes as follow: “Every day, we connect millions of
people, companies and communities with our powerful technology. We are using our
award-winning network to make breakthroughs in interactive entertainment, digital media,
and the Internet of Things and broadband services for customers. Whatever the future
looks like, whatever the digital world promises, we will deliver.”

 FINANCIAL ANALYSIS
As per their balance sheet 2015, they have an EBIT of 30 billion, which they can use
for re-investment in 2016. In their cash flow statement of 2015 also, there is a capital
expenditure of 18 billion. 9.9 billion Per licenses (spectrum auction of 65MHz for Advanced
Wireless Services), and the rest in CAPEX. They cancelled in 2014 the debt for the re-
acquisition of the 45% stock-repurchase from Vodafone paying a record amount 130
billion; this payment was done with 59 billion cash plus 62 billion of common stocks.
Notable aspect of statement of cash flow is the increase of cash flow in 2013, seems,
due to a retrieve from a depression in 2012.
Capital Expenditures is almost constant from 2012 (16 billions) to 2015 (17 billion
approximately). Verizon has been investing strong in fiber optics infrastructure and 4G LTE
to build a robust telecom infrastructure in the United States.
Additionally we can see that there were no important acquisitions in 2012 and 2013.
After the recuperation of 2013, there were acquisitions for 182 million in 2014 (one of the
forward vertical integration companies) and for 3.6 billion in 2015 (AOL acquisition).
Finally, we can see an addition of “other assets” for 9.9 billion in 2015 (the spectrum
auction of 65MHz for Advanced Wireless Services from FCC).
Liquidity of Verizon has decreased in 2015 due to expenses of cash in 2013. In spite
of the expenses in cash, Verizon gross profit has continue growing. Verizon debt to equity
relation has growth due to this huge payment made in 2013. In addition, the relation
EBITDA and EBIT to Interests paid has decreased, which means that Verizon has less
money to pay the interests. Additionally the ROE has increased significantly due to the
increase of the liabilities, which has decrease the equity of the company. Finally, Verizon
has had a constant increase and is now in 8.29%.See Appendix, VERIZON FINANCIAL
RATIOS.
Verizon Market capitalization has been doing well since 2010. Shares prices had a
growing trend and it should continue to be like that. T-Mobile, share price has go down
from 2016 Q3 but it is expected to retake its value by the near future when market stabilize.
The same with AT&T. Sprint has started to invest in order to catch up the rest of operators.

Figure 28 – Comparison VZ with Sprint (S), AT&T (T) and T-Mobile (TMUS) – Source: cnbc.com
Verizon market price has been performing better than SP&500, NASDAQ Financial
and NASDAQ Telecommunication indices.
Figure 29 – Comparison VZ with SP&500(SPX), NASDAQ Financial (IXF) and NASDAQ
Telecommunication (IXUT) – Source: cnbc.com
 BENCHMAR WITH COMPETITORS
With 131 billion of revenue, Verizon has the second greatest revenue in the industry.
This revenue encompass wireless and wired business. AT&T revenues are 146 billion also
with wireless and wired business. T-Mobile and Sprint fall a little behind since the revenues
are mostly for wireless business.
Telecom Revenue by Operator
2015 2014 2013 2012
Verizon 131,620 127,079 120,550 115,846
AT&T 146,801 132,447 128,752 127,434
T-Mobile 32,053 29,564 24,420 19,719
Sprint 34,532 35,500 16,891
TOTAL REVENUE 345,006 324,590 290,613 262,999
Table 9-Telecom Revenue by Operator

Figure 30-Telecom Revenue by Operator
Verizon and AT&T sales growth has decreased in 2015. T-Mobile sales growth has
increased in the same period.
TELECOM INDUSTRY SALES GROWTH PERCENTAGE
2015 2014 2013
Verizon 3.57% 5.42% 4.06%
AT&T 10.84% 2.87% 1.03%
T-Mobile 8.42% 21.06% 23.84%
Sprint -2.73%
AVERAGE 5.03% 9.78% 9.64%
Table 10-TELECOM INDUSTRY SALES GROWTH PERCENTAGE
Figure 31-TELECOM INDUSTRY SALES GROWTH PERCENTAGE
Verizon has the best EBIT23
followed by AT&T. T-Mobile and Sprint does not have
significant EBIT, they consume all the earnings paying interest and taxes.
Telecom Industry - EBIT
23
Earnings Before Interest and Taxes
0
50,000
100,000
150,000
200,000
2015201420132012
TELECOM INDUSTRY - REVENUE (USD
Millions)
-10.00%
0.00%
10.00%
20.00%
30.00%
201520142013
TELECOM INDUSTRY - SALES GROWTH
PERCENTAGE
Verizon AT&T T-Mobile Sprint AVERAGE

2015 2014 2013 2012
Verizon 30,550 26,706 25,458 21,006
AT&T 27,497 14,819 30,479 12,997
T-Mobile 1,672 581 1,048 1,631
Sprint 651 2,188 -661
Table 11-Telecom Industry – EBIT
Figure 32-Telecom Industry - EBIT
Verizon has the highest interest to be paid. AT&T has the second highest.
Nevertheless, in relation with the level of debt they have this is relative low. T-Mobile and
Sprint has a relative high interest to pay in relation with the debt acquire.
TELECOM INDUSTRY INTERESTS
2015 2014 2013 2012
Verizon 6,088 5,667 4,175 3,383
AT&T 5,714 4,081 4,508 3,970
T-Mobile 1,726 1,513 1,233 679
Sprint 2,051 2,064 918 0
Table 12-Telecom Industry - Interests
Figure 33-Telecom Industry - Interests
-5,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2015201420132012
TELECOM INDUSTRY - EBIT (USD Millions)
0
2,000
4,000
6,000
8,000
2015201420132012
TELECOM INDUSTRY - INTEREST (USD
Millions)

Verizon and AT&T has paid the higher taxes to pay. Taxes of T-Mobile are low, and
Sprint had more deferred taxes than paid taxes in 2015.
TELECOM INDUSTRY TAXES
2015 2014 2013 2012
Verizon -9,865 -3,314 -5,730 660
AT&T -7,005 -3,619 -9,224 -2,900
T-Mobile -245 -166 -16 -350
Sprint 574 -224 -45 0
Table 13-Telecom Industry - Taxes
Figure 34-Telecom Industry - Taxes
After paying Interest and Taxes, Verizon and AT&T still keep 14.6 and 14.8 billion
respectively. On the other side, after paying Interest and Taxes, no money is left for T-
Mobile and Sprint.
TELECOM INDUSTRY NOPAT24
2015 2014 2013 2012
Verizon 14,597 17,725 15,553 18,283
AT&T 14,778 7,119 16,747 6,127
T-Mobile -299 -1,098 -201 602
Sprint -826 -100 -1,624 0
Table 14-Telecom Industry - NOPAT(Net Income)
24
Net Operation Profits After Taxes, equivalent to Net Income
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
2015201420132012
TELECOM INDUSTRY - TAXES (USD Millions)

Figure 35-Telecom Industry, NOPAT (Net Income)
Verizon has the highest has the highest operating cash of the industry together with
AT&T. This cash is mainly spent in CAPEX operations and acquisitions. T-Mobile and
Sprint does not have enough operating cash for CAPEX and acquisitions.
TELECOM INDUSTRY OPERATING CASH
2015 2014 2013 2012
Verizon 38,930 30,631 38,818 31,486
AT&T 35,880 31,338 34,796 39,176
T-Mobile 5,414 4,146 3,545 3,862
Sprint 2,450 522 -61 0
Table 15-Telecom Industry, Operating Cash
Figure 36-Telecom Industry, Operating Cash
Verizon has paid a big amount of its debt acquired when they bought the 45% stake of
Vodafone over Verizon Wireless. They were worried about the categorization of the debt.
The payment has been bigger than the investment in 2015 that is why it appears as a
-5,000
0
5,000
10,000
15,000
20,000
2015201420132012
TELECOM INDUSTRY - NOPAT/Net Income
(USD Millions)
-10,000
0
10,000
20,000
30,000
40,000
50,000
2015201420132012
TELECOM INDUSTRY - OPERATING CASH (USD
Millions)

negative financing. On the other side, AT&T, T-Mobile and Sprint have recurred to a
financing of 9.7, 3.4 and 1.3 billion respectively.
TELECOM INDUSTRY FINANCING
2015 2014 2013 2012
Verizon -15,015 -57,705 26,450 -21,253
AT&T 9,782 -7,737 -13,201 -17,673
T-Mobile 3,413 2,524 4,044 57
Sprint 1,304 -160 24,528 0
Table 16-Telecom Industry, Financing
Figure 37-Telecom Industry, Financing
In the table below, we can see the revenues corresponding exclusively to wireless
services. These values are useful to calculate the ARPU25
of the companies.
Service Revenues for Mobile Wireless Service
2011 2012 2013 2014 2015
Verizon Wireless 59,157 63,733 69,033 72,630 70,396
AT&T 56,726 59,186 61,552 61,032 59,837
Sprint 27,390 29,086 29,263 27,959 25,845
T-Mobile 18,481 17,213 20,535 22,375 24,821
Table 17-Service Revenues for Mobile Wireless Service
25
Average Revenue per User. The average monthly payment of a subscriber for
services rendered.
-70,000
-60,000
-50,000
-40,000
-30,000
-20,000
-10,000
0
10,000
20,000
30,000
40,000
2015201420132012
TELECOM INDUSTRY - FINANCING (USD Millions)

Figure 38-Service Revenues for Mobile Wireless Service
Verizon has the highest ARPU in the industry. T-Mobile has the smallest ARPU in the
industry. Verizon, still has margin to decrease prices in order to keep customer price
satisfaction, although, this major value could be because of the higher quality coverage of
the company.
TELECOM INDUSTRY - ARPU (monthly)
2013 2014 2015
Verizon Wireless 47 46 42
AT&T 46 42 39
Sprint 44 42 37
T-Mobile 37 34 33
Average 43.71 40.99 37.63
Table 18-Telecom Industry, ARPU
Figure 39-Telecom Industry, ARPU
Verizon, AT&T and T-Mobile were the leaders in addition of new subscribers in 2015.
0
20,000
40,000
60,000
80,000
2007 2008 2009 2010 2011 2012 2013 2014 2015
Service Revenues for Mobile Wireless Service
Providers ($ millions), 2007–2015
Verizon Wireless AT&T Sprint T-Mobile
30
32
34
36
38
40
42
44
46
48
50
2013 2014 2015
Telecom Industry - ARPU (Monthly)
Verizon Wireless AT&T Sprint T-Mobile Average

In the last quarter of 2015, Verizon was the only operator that grew in this number.
Figure 40-Quarterly net adds (USD Millions)
Verizon and AT&T has the lowest Churn26
in the industry. T-Mobile has the highest
churn; most probably due to coverage are problems. Sprint has the second worst churn
rate in the industry.
26
Percentage of subscribers to a service who discontinue their subscriptions per month

Figure 41-Churn (average monthly)
2.4VRIO ANALYSIS
Resources available in Verizon for VRIO analysis.
 SUBSCRIBERS DATABASE
Verizon has the biggest database in the market in terms of post-paid and pre-paid
subscribers. The coverage and reliability of the services offered by Verizon are very
important, in that sense; they have a high loyalty rate, which can only break due to
aggressive promotions, discounts or subsidized mobiles offered by competitors. Verizon
database will increase in 500 million subscribers in case the purchase of Yahoo is finally
due. With such a base subscription database, Verizon will be ready to take better decision
about its clients, since; they will have enough information to offered adequate services to
their subscribers.
Verizon Wireless AT&T Sprint Nextel T-Mobile USA TOTAL
2013 121.31 110.38 55.05 46.68 333.42
2014 131.89 120.55 55.5 55.02 362.96
2015 140.1 128.64 57.9 63.28 389.92
Table 19-Telecom Industry, Number of Subscribers

Figure 42-Telecom Industry, Number of Subscribers
 COVERAGE
Verizon has one of the biggest coverage in the US together with AT&T and Sprint. This
puts the company in a privileged situation in order to exploit their resources with new
subscribers or even leasing the access to other companies to obtain extra-revenues.
 CAPITAL INVESTMENT
Verizon had the second capital investment in 2015. Investment is due in CAPEX27
(maintenance and equipment) and acquisition of companies and radio spectrum. The
biggest investor has been AT&T with 49 billion, also invested in CAPEX, acquisitions and
radio spectrum. Most of the investment of T-Mobile and Sprint are only for CAPEX.
TELECOM INDUSTRY INVESTMENT
2015 2014 2013 2012
Verizon 30,043 15,856 14,833 20,502
AT&T 49,144 18,337 23,124 19,680
T-Mobile 9,560 7,246 2,092 3,915
Sprint 4,714 1,756 18,108 0
Table 20-Telecom Industry Investment
27
Capital Expenditure
0.
20.
40.
60.
80.
100.
120.
140.
160.
2013 2014 2015
Verizon Wireless AT&T Sprint T-Mobile

Figure 43-Telecom Industry, Investment (USD Millions)
 HUMAN RESOURCES
Verizon hast more than 170,000 employees, this allows them to create a great synergy
for the projects they have to implement. They spend more than 300 million of dollars in
training every year, which create a very specialized workforce. More than that, the actual
CEO comes from the mobile world and that is a strong message of what directions the
company will take. Wireless services is a very dynamic market with constant promotions
and discounts, loyalty programs has to be implemented every so often. This goes through
processes in Marketing, Design, Quality and implantation that has to work to deliver the
services on time. This work force is very valuable in order to keep the company
competitive.
 ASSETS
Verizon of assets are very strong. They have a fiber optic network through not only the
US but also the world. They have a huge installation of anthems already with the 4G LTE
technology and in the coming years to be upgraded to 5G. Their assets are so strong that
they lease to some other small operators under agreement with the FCC.
 PRODUCT PORTFOLIO
Verizon has a strong portfolio with products developed for themselves or owned
through acquisitions. Their product portfolio includes services for medium, large
companies and government.
SUMMARY OF VRIO ANALYSIS
0
10,000
20,000
30,000
40,000
50,000
60,000
2015201420132012
TELECOM INDUSTRY - INVESTMENT (USD
Millions)

Resource Valuable Rare Costly to
imitate
Exploited Competitive
implications
Fiber optic network Y Y Y N Sustained Competitive
advantage
3G CDMA EVDO
assets
Y N N Y Temporary
Competitive Parity
4G assets Y N Y Y Competitive parity
Network coverage Y N Y Y Sustained Competitive
advantage
Radio spectrum Y Y Y N Sustained Competitive
advantage
Product portfolio Y N N Y Competitive parity
Capital expenditure
capacity
Y Y Y N Sustained competitive
advantage
Subscribers
database
Y Y Y N Sustained competitive
advantage
Table 21-VRIO Analysis Verizon
3. PART3 - RECOMMENDATIONS
After a complete analysis of the industry and the company, following issues are
found: political problems due to change of technologies, problems with yahoo
purchase and low diversification of offered content.
3.1CRITICAL STRATEGIC ISSUES FACING THE FIRM
 POLITICS DUE TO CHANGE OF TECHNOLOGY
As we mention before, Economies of Scale is one of the Key Factors for a
company in the Telecom Industry. Cyclically, companies in the sector have to
implement new technologies in order to improve the quality of the service and
decrease costs. The staff of the company do not frequently understand these
changes. Most of them would like to continue working with the same technologies
in which they have skills. Unhappily, there is a point where it is impossible to
continue working with the same technologies. Verizon has been switching is
technologies from ADSL to Fiber Optic and from 2G and 3G to 4G LTE. This has
created conflicts between unionized workers and the heads of the company. The
employees of Verizon resist switching wired solutions to wireless solutions as

stated by managers. This creates strikes and political problems that decrease
revenues due to the stop of the service for some days. Skills of some workers
become obsolete in the strategy the company is following. Some of them receive
training in the new technology and some do not. Verizon is investing hard in new
technologies and they have to push the use of this new technology. There have
been explicit directives to change from copper to fiber optic or from landline to 4G
LTE when some subscriber get a problem. Worker have denounced that as a
strategy of Verizon to lay off the old technologies. (Raymond).
 PROBLEMS WITH YAHOO PURCHASE
There are problems to complete the planned purchase of yahoo email and
yahoo finance. Yahoo has confirmed that 500 million of account where breach and
this has had an impact on the transaction. It is still expected that Verizon complete
the purchase of yahoo assets at some discount. Nevertheless, the time is passing
and Verizon has not confirmed the purchase. In addition, Yahoo has already
communicated that the confirmation has not been done. This will stop the plan of
Verizon to grow the number of database subscribers.
 LOW DIVERSIFICATION OF OFFERED CONTENT
The content portfolio offered by Verizon is not as diversified as it could be.
Verizon needs to acquire companies that enlarge the offer of the company. For
instance, it could be possible to make an offer for Netflix and offer films to be
watched in mobile phones. Other possibilities can be analyzed in case of not
having enough cash, but, the close competitor AT&T has already showed that
invest in content companies has to be done in order to be ready to fight coming
operators like google and facebook.
3.2RECOMMENDATIONS
Operators’ focus is to increase revenues for their holders. Traditional strategies
implemented are through promotions, discounts and mobile subsidizing in order to
increase subscribers database. Another common strategy is through merges, acquisitions
and joint ventures (to spread the cost of marketing, administrative and general costs).
Verizon has not been an exception in using those strategies. Nevertheless, this strategy
is not feasible anymore to implement. FCC has already banned some tries for merging,
like the intention of AT&T to buy T-Mobile, although most probably they would allow a
merge between T-Mobile and Sprint. Verizon has been growing until 2010 date in which it

has stopped doing it significantly. This is normal since penetration of wireless technology
is already 81% and there is not too much room to grow in subscribers. We should remark
that we are talking about mobile wireless service and not landline (wired) service
subscribers, which Verizon is trying to switch to wireless. More than that, Verizon is trying
to finish with landline services switching the clients to wireless or selling some of the assets
to other companies.
There are strong reasons to shift wired subscriber to wireless subscribers. First, they
want to push the use of the infrastructure already installed. Additionally, they will increase
this will allow the centralization of data subscribers in order to offer new services to a broad
number of clients.
Since there is almost no room to grow in number of subscribers Verizon is trying to
increase the number of subscribers offering new content. That is the reason why they
bought AOL Time Warner in 2015. AOL Time Warner already had a sophisticated
advertisement platform through the content offered. Is the same case of Yahoo email and
Yahoo finance. They want to have the content integrated to the wireless service offered.
Additionally they are offering new services like the Internet of Things (IoT). They have
developed sophisticate gadgets that can be controlled through the mobile cell. They think
IoT will help to increase the revenue of the company as soon as it becomes massive.
Other supplementary services offered to businesses are cloud storage; IT customized
solutions and solution for federal government and cities. With all the capacity already
installed, they are flexible to provide almost any technological service to any company or
governmental entity.
Therefore, our recommendation is to increase the forward vertical integration acquiring
more content to attract more subscribers. Verizon has been already doing so. Last year
they bought AOL for approximately 4 billion dollars, but this investment is not enough when
we compare with its peer company AT&T. AT&T has made huge investment buying AT&T
and Time Warner spending around 130 billion in content. That is a lot compared with the
5 billion of Verizon. The company acquire by Verizon, AOL Time Warner has come with
different contents like the “Hufftington Post” (http://www.huffingtonpost.com/ ) digital
newspaper, Engadget (http://engadget.com/) and TechCrunch (https://techcrunch.com/) a
magazine of technical news. As specialist states (Fitchard, 2015): “Verizon has also has
put together a sophisticated suite of advertising technologies for online and traditional
media that no other company (aside from Google and Facebook) can match” and “AOL’s
platform is particularly strong in video advertising—, which ComScore says reaches more
than 50% of the U.S. population”. The Internet Company’s successful digital platform will
also coincidentally assist Verizon’s plans to launch its own Internet TV service, which it
announced this year after buying Intel’s media assets in 2014 and video delivery network

EdgeCast in 2013 (https://techcrunch.com/2013/12/07/verizon-edgecast/)”.
In summary, Verizon is moving to become a content company but in our opinion not
with the speed required. Verizon needs to increase the investment in content for mobile
users. Content to mobile users through acquisition of content companies (AOL Time
Warner, Hufftingtonpost, TechCrunch, Go90, etc.), are okay but not enough. Verizon has
also been trying to generate some cash selling some landline business to Frontier for 14
billion. We think that is an important step in order to become a wireless and content
company.
The second recommendation is related to the content offered. Verizon must keep some
level of independence in front of political issues like current presidential election. It is clear
that for example the Huntington post have a favourable opinion toward the democrat
candidate, though, there is a risk that users with republican opinion will stop accessing
that content or have a negative opinion about this content. We recommend showing a
more variety in point of views or neutrality.
3.2.1 RECOMMENDATION 1
 IMPLEMENTATION STRATEGIES.
Complete the acquisition of Yahoo Finance and Yahoo email. Integrate this 500 million
database with the actual database of Verizon.
 RESPONSIBILITIES
CEO, CFO
 PERIOD OF IMPLEMENTATION
First quarter 2017
 RESOURCES
We recommend negotiating a 1 billion discount for the breach, meaning 3.8 billion as
final value.
Be more aggressive in the purchase of content companies. For instance, to buy Netflix,
in order to deliver Netflix on mobiles and laptops.
CEO, CFO.

Fiscal year 2017.
 RESOURCES
Invest at least 50 USD billion in the purchase.
Continue selling landline operations (copper or FiOS) to operators like Frontier. This
will provide cash for new investments and to improve debt ratios. In order to avoid political
problems, create a company to absorb the unnecessary workers and sell the assets
together with the workers as a whole. In this way, they will avoid strikes from the union as
it is happening right now. Discontinue operation and maintenance of ADSL technology or
replace with new all IP technology: 4G LTE or FiOS.
CEO, CFO.
Fiscal year 2017.
 RESOURCES
4. URLS
Facts mobile industry
http://ctia.org/facts-infographics
http://ctia.org/your-wireless-life/how-wireless-works/wireless-quick-facts
Industry news and analysis
https://www.zacks.com/commentary/80596/us-telecom-industry-stock-outlook---may-
2016
http://www.marketwatch.com/industries/telecommunication
https://www.bloomberg.com/professional/blog/global-telecommunications-2016-
outlook/
https://www2.deloitte.com/us/en/pages/technology-media-and-
telecommunications/articles/telecommunications-industry-outlook.html
http://www.nasdaq.com/article/us-telecom-industry-stock-outlook-may-2016-
cm619279
http://www.telco2research.com/articles/EB_US-Market-Performance-Analysis-2016

http://www.pcmag.com/article/345123/fastest-mobile-networks-2016/3
Citations
2016
http://siccode.com/en/naicscodes/517210/wireless-telecommunications-carriers-
except-satellites
http://www.telco2research.com/articles/EB_US-Market-Performance-Analysis-2016
http://www.slideshare.net/JanDawson2/us-wireless-market-trends-q2-2015/9-
Revenue_growth_year_on_year9Source
https://witchersummerengl4000.files.wordpress.com/2016/04/51721-wireless-
telecommunications-carriers-in-the-us-industry-report.pdf
http://www.slideshare.net/noorec786/generations-of-network-1-g-2g-3g-4g-5g
AOL
http://fortune.com/2015/06/24/verizon-gains-aol/
Mobile Content
http://www.huffingtonpost.com/
http://www.huffingtonpost.com/entry/donald-trump-racist-
examples_us_56d47177e4b03260bf777e83
https://techcrunch.com/
https://www.engadget.com/
http://www.mediapost.com/publications/article/257917/?utm_source=feedburner&utm
_medium=feed&utm_campaign=Feed%3A+social-media-marketing-
daily+%28MediaPost+%7C+Social+Media+Marketing+Daily%29
https://www.beyond.com/news/verizon-starts-go90-mobile-first-video-and-social-
platform-123238784
Verizon to buy yahoo
https://techcrunch.com/2016/10/20/verizon-earnings/
https://www.youtube.com/watch?v=NEEug_1XEcc
2016
FiOS Content

https://www.verizonwireless.com/home-services/twc/
http://arstechnica.com/business/2015/01/verizon-nears-the-end-of-fios-builds/
http://arstechnica.com/business/2016/04/verizons-fiber-is-the-only-fix-program-
upgrades-old-copper-lines/
http://www.verizon.com/home/fios/
Internet of Things
https://www.hum.com/
https://www.youtube.com/watch?v=BxxvgnCAOLU
https://www.youtube.com/watch?v=QaTIt1C5R-M
The past
http://www.digitaltrends.com/mobile/best-family-plan-us-carriers/2/
The future
2016
Largest Telecom companies in the world
http://www.investopedia.com/articles/markets/030216/worlds-top-10-
telecommunications-companies.asp
T-Mobile strategy
http://www.digitaltrends.com/mobile/t-mobile-disruptive-mike-sievert/
file:///C:/Users/Carlos/Downloads/NEWImpactReport.pdf
AT&T strategy
http://www.123helpme.com/att-business-strategy-view.asp?id=158342
Sprint strategy
http://marketrealist.com/2016/05/sprints-customer-growth-strategy-us-wireless-space/
5. APPENDIX
 VZ - BALANCE SHEET
2,015 2,014 2,013 2,012

12/31/2015 12/31/2014 12/31/2013 12/31/2012
Cash 4,470 10,598 53,528 3,093
Short Term Investments 350 555 601 470
ASSETS
Cash & Short Term Investments 4,820 11,153 54,129 3,563
Receivables - Net 13,457 13,993 12,439 12,576
Inventories - Total 1,252 1,153 1,020 1,075
Prepaid Expenses -- -- -- --
Other Current Assets 2,751 3,200 3,406 4,021
CURRENT ASSETS - TOTAL 22,280 29,499 70,994 21,235
Land 709 763 819 859
Buildings 25,587 25,209 23,857 22,909
Machinery & Equipment 173,491 184,416 176,834 167,023
Other Property, Plant & Equipment 15,469 15,540 15,179 14,658
Property, Plant, & Equipment under Capitalized Leases -- -- -- 358
Property, Plant and Equipment - Gross 220,163 230,508 220,865 209,575
Accumulated Depreciation -136,622 -140,561 -131,909 -120,933
Property, Plant and Equipment - Net 83,541 89,947 88,956 88,642
Investments in Associated Companies 796 802 3,432 3,401
Other Tangible Assets 17,779 6,660 4,535 4,128
Total Intangible Other Assets - Net 120,244 105,708 106,181 107,816
Other Assets - Total 138,023 112,368 110,716 111,944
TOTAL ASSETS 244,640 232,616 274,098 225,222
LIABILITIES
Accounts Payable 6,391 5,598 4,954 4,454
Short Term Debt & Current Portion of Long Term Debt 6,489 2,735 3,933 4,369
Accrued Payroll 4,107 4,131 4,790 5,006
Income Taxes Payable 2,054 1,457 1,556 1,561
Dividends Payable 2,323 2,307 1,539 1,494
Other Current Liabilities 13,688 11,759 10,278 11,566
CURRENT LIABILITIES - TOTAL 35,052 27,987 27,050 26,956
Capitalized Lease Obligations -- -- -- 234
Long Term Debt 103,705 110,536 89,658 47,618
Provision for Risks and Charges 29,957 33,280 27,682 34,346
Deferred Taxes - Credit 45,484 41,563 28,639 24,677
DEFERRED TAXES 45,484 41,563 28,639 24,677
Other Liabilities 12,600 5,574 5,653 6,092
TOTAL LIABILITIES 226,798 218,940 178,682 139,689
EQUITY
Non-Equity Reserves 0 0 0 0
Minority Interest 1,414 1,378 56,580 52,376
Preferred Stock 0 0 0 0
Common Stock 424 424 297 297
Capital Surplus 11,196 11,155 37,939 37,990
Other Appropriated Reserves 1,281 1,429 1,275 1,253

Retained Earnings 11,246 2,447 1,782 -3,734
ESOP Guarantees -428 -424 -421 -440
Unrealized Foreign Exchange Gain/Loss -554 -346 853 793
Unrealized Gain/Loss on Marketable Securities -177 28 230 189
Treasury Stock -7,416 -3,263 -3,961 -4,071
COMMON EQUITY 16,428 12,298 38,836 33,157
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY 244,640 232,616 274,098 225,222
SHARE INFORMATION
Common Shares Outstanding 4,073 4,155 2,862 2,859
Table 22-Verizon Balance Sheet
 VZ – INCOME STATEMENT
2,015 2,014 2,013 2,012
12/31/2015 12/31/2014 12/31/2013 12/31/2012
NET SALES OR REVENUES 131,620 127,079 120,550 115,846
Cost of Goods Sold (Excl Depreciation) 52,557 49,931 44,887 46,235
Depreciation, Depletion And Amortization 16,017 16,533 16,606 16,460
Depreciation 14,323 14,966 15,019 14,920
Amortization of Intangibles 1,694 1,567 1,587 1,540
GROSS INCOME 63,046 60,615 59,057 53,151
Selling, General & Admin Expenses 32,496 33,909 33,599 32,145
OPERATING INCOME 30,550 26,706 25,458 21,006
Extraordinary Credit - Pretax 2,510 707 6,510 0
Extraordinary Charge - Pretax 0 -7,814 0 -7,846
Non-Operating Interest Income 115 108 64 57
Other Income/Expenses - Net 71 -1,302 -230 -1,073
Interest Expense On Debt 5,504 5,291 3,421 2,977
Interest Capitalized 584 376 754 406
PRETAX INCOME 28,326 13,490 29,135 9,573
Income Taxes -9,865 -3,314 -5,730 660
Current Domestic Income Tax 6,279 3,325 4 337
Current Foreign Income Tax 70 81 -59 -45
Deferred Domestic Income Tax 3,507 -83 5,777 -956
Deferred Foreign Income Tax 9 -9 8 10
Income Tax Credits -- -- -- 6
Minority Interest 496 2,331 12,050 9,682
Equity in Earnings -86 1,780 142 324
NET INCOME BEFORE EXTRA ITEMS/PREFERRED
DIVIDENDS 17,879 9,625 11,497 875
NET INCOME USED TO CALCULATE BASIC
EARNINGS PER SHARE 17,879 9,625 11,497 875
Shares used in computing earnings per share - Fully
Diluted 4,093 3,981 2,874 2,862
Earning per Common Share - Basic 4.38 2.42 4.01 0.31
Earning per Common Share - Fully Diluted 4.37 2.42 4 0.31
Table 23-Verizon Income Statement

 VZ – STATEMENT OF CASH FLOW
2,015 2,014 2,013 2,012
12/31/2015 12/31/2014 12/31/2013 12/31/2012
OPERATING ACTIVITIES
Net Income / Starting Line 18,375 11,956 23,547 875
Depreciation and Depletion 14,323 14,966 15,019 14,920
Amoritization of Intangible Assets 1,694 1,567 1,587 1,540
Depreciation, Depletion and Amortization 16,017 16,533 16,606 16,460
Deferred Income Taxes 3,516 -92 5,785 -952
Deferred Income Taxes & Investment Tax Credit 3,516 -92 5,785 -952
Total Other Cash Flow -1,421 4,394 -7,115 15,506
Funds From Operations 36,487 32,791 38,823 17,335
Extraordinary Items 0 0 0 0
Decrease/Increase In Receivables -945 -2,745 -843 -1,717
Decrease/Increase In Inventories -99 -132 56 -136
Increase/Decrease In Accounts Payable 2,545 1,412 925 1,144
Decrease/Increase In Other Assets/Liability 942 -695 -143 306
Funds From/For Other Operating Activities 2,443 -2,160 -5 -403
NET CASH FLOW - OPERATING ACTIVITIES 38,930 30,631 38,818 31,486
INVESTING
Decrease In Investments 0 0 63 27
Capital Expenditures (Additions To Fixed Assets) -17,775 -17,191 -16,604 -16,175
Disposal Of Fixed Assets 48 120 0 --
Net Assets From Acquisitions -3,545 -182 0 0
Other Uses - Investing 0 -616 0 --
Other Sources - Investing 1,171 2,367 2,782 494
Other Sources(Uses) - Investing 1,171 1,751 2,782 494
Additions To Other Assets -9,942 -354 -1,074 -4,848
NET CASH FLOW - INVESTING -30,043 -15,856 -14,833 -20,502
FINANCING
Increase/Decrease In Short Term Borrowings -344 -475 -142 -1,437
Long Term Borrowings 6,667 30,967 49,166 4,489
Reduction In Long Term Debt -9,340 -17,669 -8,163 -6,403
Other Proceeds From Sale/Issuance of Stock 40 34 85 315
Net Proceeds from Sale/Issue of Common & Preferred 40 34 85 315
Common/Preferred Redeemed, Retired, Converted, Etc. -5,134 0 -153 0
Common Dividends (Cash) -8,538 -7,803 -5,936 -5,230
Cash Dividends Paid - Total -8,538 -7,803 -5,936 -5,230
Other Sources - Financing 1,634 0 0 --
Other Uses - Financing 0 -62,759 -8,407 -12,987
Other Sources(Uses) - Financing 1,634 -62,759 -8,407 -12,987
NET CASH FLOW - FINANCING -15,015 -57,705 26,450 -21,253
INCREASE/DECREASE IN CASH AND SHORT TERM
INVESTMENTS -6,128 -42,930 50,435 -10,269
Taxes Paid 5,293 4,093 422 351

Interest Paid 4,491 4,429 2,122 1,971
Table 24-Verizon Statement of Cash Flow
 AT&T – BALANCE SHEET
2,015 2,014 2,013 2,012
12/31/2015 12/31/2014 12/31/2013 12/31/2012
Cash 5,121 8,603 3,339 4,868
Short Term Investments -- -- -- 4,759
ASSETS
Cash & Short Term Investments 5,121 8,603 3,339 4,868
Receivables - Net 16,532 14,527 12,918 12,657
Inventories - Total 4,033 1,933 0 0
Prepaid Expenses 1,072 831 960 1,035
Other Current Assets 9,234 7,712 5,979 4,146
CURRENT ASSETS - TOTAL 35,992 33,606 23,196 22,706
Land 1,638 1,567 1,523 1,689
Buildings 33,784 32,204 31,485 28,939
Machinery & Equipment 253,487 236,867 230,364 80,338
Other Property, Plant & Equipment 306,227 -- -- 147,572
Property, Plant and Equipment - Gross 306,227 282,295 274,798 270,907
Accumulated Depreciation -181,777 -169,397 -163,830 -161,140
Property, Plant and Equipment - Net 124,450 112,898 110,968 109,767
Investments in Associated Companies 1,606 250 3,860 4,581
Other Tangible Assets 15,346 13,425 8,278 6,713
Total Intangible Other Assets - Net 225,278 136,655 131,485 128,548
Other Assets - Total 240,624 150,080 139,763 135,261
TOTAL ASSETS 402,672 296,834 277,787 272,315
LIABILITIES
Accounts Payable 21,047 14,984 11,561 20,494
Short Term Debt & Current Portion of Long Term Debt 7,636 6,056 5,498 3,486
Accrued Payroll 2,629 1,967 1,985 4,448
Income Taxes Payable -- -- -- 1,026
Dividends Payable 2,950 2,438 2,404 2,556
Other Current Liabilities 13,554 11,837 13,547 5,251
CURRENT LIABILITIES - TOTAL 47,816 37,282 34,995 31,787
Capitalized Lease Obligations 884 430 0 0
Long Term Debt 118,515 75,778 69,290 66,358
Provision for Risks and Charges 34,262 37,079 29,946 41,392
Deferred Taxes - Credit 56,181 38,436 36,308 28,491
DEFERRED TAXES 56,181 38,436 36,308 28,491
Other Liabilities 22,259 17,989 15,766 11,592
TOTAL LIABILITIES 279,032 206,564 186,305 179,620
EQUITY
Non-Equity Reserves 0 0 0 0
Minority Interest 969 554 494 333

Preferred Stock 0 0 0 0
Common Stock 6,495 6,495 6,495 6,495
Capital Surplus 89,763 91,108 91,091 91,038
Other Appropriated Reserves 6,032 6,847 7,352 5,236
Retained Earnings 33,671 31,081 31,141 22,481
Unrealized Foreign Exchange Gain/Loss -1,182 715 78 0
Unrealized Gain/Loss on Marketable Securities 484 499 450 0
Treasury Stock -12,592 -47,029 -45,619 -32,888
COMMON EQUITY 122,671 89,716 90,988 92,362
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY 402,672 296,834 277,787 272,315
SHARE INFORMATION
Common Shares Outstanding 6,145 5,187 5,226 5,581
Table 25-AT&T Balance Sheet
 AT&T – INCOME STATEMENT
2,015 2,014 2,013 2,012
12/31/2015 12/31/2014 12/31/2013 12/31/2012
NET SALES OR REVENUES 146,801 132,447 128,752 127,434
Cost of Goods Sold (Excl Depreciation) 64,333 59,658 51,464 55,228
Depreciation, Depletion And Amortization 22,017 18,273 18,395 18,143
Depreciation 19,289 17,773 17,722 16,933
Amortization of Intangibles 2,728 500 672 1,210
Amortization of Deferred Charges 0 0 1 --
GROSS INCOME 60,451 54,516 58,893 54,063
Selling, General & Admin Expenses 32,954 39,697 28,414 41,066
Research and Development Expense 1,693 1,730 1,488 1,278
OPERATING INCOME 27,497 14,819 30,479 12,997
Extraordinary Credit - Pretax 16 29 113 179
Extraordinary Charge - Pretax -2,813 -2,636 -113 -179
Non-Operating Interest Income -- -- -- 61
Other Income/Expenses - Net 33 1,581 596 134
Interest Expense On Debt 4,917 3,847 4,224 3,707
Interest Capitalized 797 234 284 263
PRETAX INCOME 20,613 10,180 27,135 9,687
Income Taxes -7,005 -3,619 -9,224 -2,900
Current Domestic Income Tax 2,568 1,508 2,982 1,153
Current Foreign Income Tax 320 163 -- --
Deferred Domestic Income Tax 4,499 1,987 6,242 1,747
Deferred Foreign Income Tax -382 -39 -- --
Minority Interest 342 294 304 275
Equity in Earnings 79 175 642 752
NET INCOME BEFORE EXTRA ITEMS/PREFERRED
DIVIDENDS 13,345 6,442 18,249 7,264
NET INCOME USED TO CALCULATE BASIC
EARNINGS PER SHARE 13,345 6,442 18,249 7,264
Shares used in computing earnings per share - Fully
Diluted 5,646 5,221 5,385 5,821

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