Verizon EQUITY RESEARCH COMPANY UPDATE PERFORM. Verizon 2Q16 Follow-up; Guidance Points to Improved 2017 Outlook. July 26, 2016

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1 EQUITY RESEARCH COMPANY UPDATE July 26, 2016 Stock Rating: PERFORM mo. Price Target NA VZ - NYSE $ Yr. EPS Gr. Rate 12% 52-Wk Range $56.95-$38.06 Shares Outstanding 4,085.0M Float 3,758.0M Market Capitalization $223,421.4M Avg. Daily Trading Volume 13,075,079 Dividend/Div Yield $2.28/4.16% Book Value $5.08 Fiscal Year Ends Dec 2016E ROE 67.5 % LT Debt $99,725.0M Preferred NA Common Equity $20,744M Convertible Available No EPS Operating Q1 Q2 Q3 Q4 Year Mult. 2014A x 2015A x 2016E 1.06A 0.94A x Prior (E) NM 2017E x Prior (E) NM Timothy Horan, CFA Tim.Horan@opco.com Brajesh Mishra Brajesh.Mishra@opco.com Disseminated: July 26, :00 EDT; Produced: July 26, :00 EDT Verizon Stock Price Performance COMMUNICATION AND CLOUD Verizon 2Q16 Follow-up; Guidance Points to Improved 2017 Outlook SUMMARY VZ reported a mixed quarter, missing on revenues but delivering an EPS beat. Guidance was largely positive, with organic revenue growth of 2% and a reduction in retiree obligations of ~$2B, which should help lower operating expenses by $700 million per year in wireline. As a result normalized wireline margins (post the FTR divestitures) appear healthy at 20%. Management provided more color on the rationale behind the Yahoo acquisition. VZ is looking to create a true advertising delivery platform, leveraging its wireless network to capture market share from the Google/Facebook duopoly. Wireless subs were weak and it appears that the company is temporarily redirecting cash from its wireless operations to create unique services in 5G/content/Adtech to drive long term growth. KEY POINTS Including Acquisitions in our Model: We expect the Yahoo purchase (expected to close in 4Q16/1Q17) to add ~$4.5B to 2017 revenues without being materially accretive to earnings. Similarly, we expect the XO transaction to contribute $1.5B and $200M to 2017 revenues and EBITDA, respectively. Verizon provided limited details on expected synergies from the Yahoo acquisition. Cost Reductions From New Labor Contracts. We expect reduced pension expenses from the new labor contracts to contribute ~$700M annually to the company's bottom line. These cost savings were fully reflected in corporate and wireline margins in the current quarter. Looking to 3Q16, we believe the discontinuation of advertising during the strike will create some headwinds for broadband and video net adds. Wireless Update: Service revenues fell 5.4% y/y as a result of lower than anticipated postpaid adds of +615K. The sequential decline in postpaid net adds was primarily due to a 5.4% upgrade rate (-180 bps y/y), despite improved postpaid churn of 0.94%. Next quarter, management expects some ARPU headwinds as a result of plan optimization with the new rate plans. Changes to Model: We are raising 2017 revenues and EBITDA by 576 bps and 257 bps respectively to account for the impact of acquisitions, stabilization of wireless revenues in 2H17, and improved wireline margins. Our 2017 EPS increases to $4.19 from $4.16. Bottom Line: Management guidance indicating a return to top-line growth in 2017, wireless service revenue stability in late 2017, and an improvement in wireline margins all represent positive indicators. However, dilution from investments in OTT offerings, the 600 MHz auction, and the threat of increased regulatory scrutiny create uncertainty for investors. Maintain Perform. Company Description Verizon is the incumbent local telecom carrier in the Northeast and in several smaller regions, covering one-third of the US. Verizon Wireless is the largest wireless carrier in the US in terms of subscribers. For analyst certification and important disclosures, see the Disclosure Appendix. Oppenheimer & Co Inc. 85 Broad Street, New York, NY Tel: Fax:

2 Verizon VZ (PERFORM) - NA 5-YEAR PRICE PERFORMANCE INVESTMENT THESIS Source: Bloomberg VZ Verizon is the largest wireless carrier in the US (with the highest margins) and is second to AT&T in enterprise wireline market share. Verizon is benefiting from the explosion in the popularity of smartphones and mobile data usage growth of 50%-plus per year with the highest quality network in the industry due to consistently high CAPX spending. The company has done a good job of divesting non-core assets in order to focus on wireless and enterprise and on FiOS (its fiber voice/video/data offering) in its wireline segment. BASE CASE ASSUMPTION Wireless data growth of 50% YoY supports ARPU despite $/GB declines in the 20-30% range EPS growth slows to mid-single-digit range Positive phone net adds over 500K range per year CATALYSTS VZ leverages wireless network to attack rural broadband customers VZ acquires more spectrum (via auction or secondary transaction) to expand wireless network lead The Internet of Things (IoT) drives wireless revenue above consensus estimates UPSIDE SCENARIO Migration to SDN and NFV improves wireless cost structure. Verizon's wireless video service drives improved advertising revenue Cash flow constraints at TMUS and S force competitors to pull back on promotional activity DOWNSIDE SCENARIO Stronger wireless competitors (TMUS and S) place additional pressure on wireless ARPU and churn. Sale of CA, TX, and FL wireline operations will create tough comps in 2016 VZ continues to split cells (higher OPEX and CAPX) to support data volume growth 2 Timothy Horan, CFA:

3 VZ (PERFORM) - NA Verizon OTHER DETAILS OF NOTE Network Improvements Through Fiber Deployment: The company believes the balance has shifted away from building capacity exclusively through spectrum. VZ believes that 4G will be the base layer of its Wireless network for years to come. Moreover, the company believes it is structuring its network architecture to prepare for 5G. The One Fiber strategy for the city of Boston reflects this approach. Through the project, the company will create a single fiber-optic network platform capable of supporting wireless and wireline technologies and multiple products. The company's announcement to acquire XO Communications will also be a key part of this strategy, providing it with the deep fiber assets including 40 metro fiber rings in major cities and millimeter wave spectrum in a significant part of the country. Increasing Network Usage: The company noted that in 2Q16, network usage increased 44% y/y. VZ currently carries the same amount of traffic on its network in one hour today as it did 10-plus years ago in one week. Investments in OTT Applications/Platforms: The company reported 25% growth in revenue from the Internet of Things during the quarter, which amounted to approximately $205 million in 1Q16 and about $400 million in 1H16. Yahoo Acquisition: VZ is looking to pair Yahoo s one billion monthly active users with its own 113 million subscribers to create a new growing advertising revenue stream. Verizon s rationale for the Yahoo acquisition is to ultimately capture share from Facebook and Google as the market for digital media expands for both in-home and mobile consumption. This year, Google captured an estimated 31% of digital ad revenue share globally and Facebook 12%, according to emarketer. Yahoo and AOL combined have a market share of only 2.2%. Exhibit 1. Select Performance Data Verizon Selected Performance Data 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 YoY Change Actual vs. 2Q16E Estimates Consensus Recurring EPS $1.02 $1.04 $1.04 $0.89 $1.06 $ % $ % $0.92 Revenue Growth (%) 4.2% 2.8% 5.0% 3.2% 0.6% -5.3% % -4.7% 12.9% -4.3% Consolidated EBITDA Margin (%) 37.4% 36.6% 35.8% 31.9% 37.2% 36.3% -0.9% 35.7% 1.8% 35.6% Wireline Revenue Growth (%) -16.7% -16.8% -16.8% -15.6% -1.6% -2.3% -86.0% -2.6% -10.2% -1.9% Wireline EBITDA Margin (%) 17.7% 18.7% 18.9% 19.8% 19.0% 14.1% -24.6% 16.0% -12.1% 15.8% Access line growth rate (%) -23.3% -23.6% -23.7% -24.0% -7.0% -6.8% -71.0% -7.6% -9.7% NA Broadband Net Adds (000's) 45 (9) (83) 822.2% (110) -24.5% (134) FiOS TV Net Adds (000's) (41) % (30) 36.7% (47) Wireless Service Revenue Growth (%) -0.4% -2.2% -4.1% -5.6% -6.2% -5.4% 149.1% -5.1% 5.5% -5.5% Wireless EBITDA Service Margin (%) 55.8% 56.1% 56.4% 52.9% 60.5% 61.5% 9.7% 59.8% 3.0% 59.9% Wireless Postpaid Net Adds (000's) 565 1,134 1,289 1, % % 784 Wireless Postpaid ARPU ($) $54.03 $52.65 $51.83 $49.77 $48.44 $ % $ % $49.14 Wireless Postpaid Churn 1.0% 0.9% 0.9% 1.0% 1.0% 0.9% 4.4% 1.0% -6.0% 1.0% Source: Company reports; StreetAccount; Oppenheimer & Co. Inc. estimates. Exhibit 2. Old vs. New Estimates OLD NEW Percent OLD NEW Percent 2016E 2016E Change 2017E 2017E Change Revenues ($ bil) $ $ % $ $ % EBITDA ($ bil) $45.50 $ % $47.17 $ % EBITDA (%) 35.9% 36.0% 0.0% 37.1% 35.9% -1.1% Adj. EPS ($) $3.90 $ % $4.16 $ % Source: Company reports; Oppenheimer & Co. Inc estimates. 3

4 Verizon VZ (PERFORM) - NA Exhibit 3. Verizon Quarterly Consolidated Model ($ in millions, except per share) Last Updated: 07/26/2016 Consolidated Q16 2Q16 3Q16E 4Q16E 2016E 1Q16 2Q16 3Q16E 4Q16E Wireline 32,094 7,923 7,825 7,795 7,854 31,397 (1.6%) (2.3%) (2.2%) (2.6%) Wireless (1) 91,680 22,004 21,704 22,560 23,835 90,104 (1.5%) (4.0%) (1.9%) 0.4% Other/Eliminations 7,846 2,244 1,003 1,025 1,050 5,322 Total revenue 131,620 32,171 30,532 31,381 32, , % (5.3%) (5.4%) (4.4%) Cost of services and sales 49,738 11,584 11,735 12,122 12,976 48,417 (1.4%) (3.1%) (2.4%) (3.6%) Selling, general & administrative 29,061 6,661 6,394 6,600 7,251 26,906 (7.6%) (10.0%) (7.3%) (5.0%) Segment Opex 78,799 18,245 18,129 18,723 20,227 75,323 (3.7%) (5.6%) (4.2%) (4.1%) Non-recurring item (2,510) 23 2, ,566 Intersegment Eliminations 6,254 1,944 1,324 1,300 1,300 5,868 Adjusted EBITDA 46,567 11,982 11,079 11,358 11,213 45, % (6.1%) (4.4%) 2.6% EBITDA margin 35.4% 37.2% 36.3% 36.2% 34.2% 36.0% Depreciation & amortization 15,523 3,869 3,844 3,883 4,002 15, % (1.9%) 0.3% 2.7% Eliminations Depreciation & amortization 16,017 4,017 3,982 3,983 4,102 16, % 0.1% (0.7%) 1.6% ` Operating income 30,550 7,965 7,097 7,376 7,110 29, % (9.3%) (6.4%) 3.2% Operating margin 23.2% 24.8% 23.2% 23.5% 21.7% 23.3% Income from affiliates (86) (20) (20) (15) (15) (70) Other income (expense), net Interest expense (4,920) (1,188) (1,013) (1,072) (1,042) (4,315) (10.8%) (16.1%) (10.8%) (11.5%) Minority interest (496) (120) (129) (120) (120) (489) NM NM NM NM Income before taxes 25,234 6,669 5,935 6,168 5,933 24, % (8.8%) (6.2%) 5.9% Provision for income taxes (8,911) (2,336) (2,077) (2,159) (2,077) (8,649) 0.2% (8.7%) (7.2%) 5.0% Tax Rate 35.3% 35.0% 35.0% 35.0% 35.0% 35.0% Operating Net income 16,323 4,333 3,858 4,010 3,857 16, % (8.8%) (5.6%) 6.4% Earnings per share: Reported EPS $ 4.37 $ 1.06 $ 0.17 $ 0.98 $ 0.94 $ % (83.4%) (0.9%) (28.5%) Non-recurring gain (loss) $ 0.38 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Operating EPS $ 3.99 $ 1.06 $ 0.94 $ 0.98 $ 0.94 $ % (8.8%) (5.8%) 6.3% Average diluted shares 4,092 4,085 4,085 4,086 4,087 4,086 (0.9%) 0.0% 0.2% 0.1% Dividends per share $ 2.23 $ 0.57 $ 0.57 $ 0.59 $ 0.59 $ % 2.7% 2.7% 2.7% KEY METRICS Postpaid phone net adds 933 (74) EIP Uptake Rate 54.2% 68.0% 67.0% 68.0% 70.0% 68.4% Free cash flows analysis: Net income 16,323 4,333 3,858 4,010 3,857 16, % (8.8%) (5.6%) 6.4% plus: D&A 16,017 4,017 3,982 3,983 4,102 16, % 0.1% (0.7%) 1.6% minus: Capital expenditures 17,775 3,387 3,886 4,542 5,287 17,102 (7.6%) (13.4%) 3.5% 1.0% % of revenue 13.5% 10.5% 12.7% 14.5% 16.1% 13.5% minus: Spectrum Purchases 9,677 8,000 8,000 minus: Dividends 9,124 2,308 2,308 2,411 2,411 9, % 2.7% 4.6% 4.5% minus: Share buybacks Plus: Asset Sales/Purchases/tax 9,882 (3,000) (6,600) 282 Free cash flows (4,236) 2,655 11,528 (1,961) (14,340) (2,118) Free Cash Flow Prior to Distributio 14,565 4,963 13, (3,929) 15, % 271.6% (88.4%) (261.7%) Balance sheets data: Cash 4,470 5,846 2,857 2,857 2,857 2, % (5.0%) (26.3%) (36.1%) Total debt 110, ,880 99, , , ,026 (3.1%) (12.3%) (9.5%) 5.3% Net debt 105, ,034 96,868 98, , ,169 (4.6%) (12.5%) (8.9%) 7.0% Annual interest expense 4.4% 4.3% 4.1% 4.3% 4.1% 3.8% Net PP&E 83,541 83,011 83,172 83,731 84,917 84, % 0.8% 1.4% 1.6% Implied useful life (PP&E) Total assets 244, , , , , , % (3.7%) (4.0%) (4.5%) Shareowners equity 17,842 19,867 20,744 22,343 23,788 23, % 61.1% 53.6% 33.3% Net debt / Total capitalization 85.6% 84.0% 82.4% 81.6% 82.6% 82.6% Source: Company Reports & Oppenheimer & Co. Inc. estimates. 4

5 VZ (PERFORM) - NA Verizon Exhibit 4. Verizon Quarterly Segment Model ($ in millions, except per share) Year over Year % Change Segment Q16 2Q16 3Q16E 4Q16E 2016E 1Q16 2Q16 3Q16E 4Q16E Wireline: Verizon Telecom Mass Markets 14,440 3,602 3,573 3,602 3,650 14, % (1.2%) 0.0% 0.0% Global Enterprise 12,050 2,956 2,907 2,874 2,858 11,595 (3.0%) (3.3%) (3.8%) (5.0%) Global Wholesale 5,263 1,283 1,258 1,231 1,265 5,037 (4.2%) (4.0%) (4.5%) (4.5%) Other (9.9%) 7.4% 0.0% 0.0% Total wireline revenue 32,094 7,923 7,825 7,795 7,854 31,397 (1.6%) (2.3%) (2.2%) (2.6%) Cost of services and sales 18,816 4,644 5,107 4,677 4,634 19,062 (2.9%) 8.6% (0.4%) 0.0% Selling, general & administrative 7,256 1,770 1,617 1,637 1,649 6,673 (3.7%) (10.8%) (7.5%) (10.1%) EBITDA 6,022 1,509 1,600 1,481 1,571 5, % 7.0% (1.4%) (1.6%) EBITDA margin 18.8% 19.0% 20.4% 19.0% 20.0% 18.0% Depreciation & amortization 6,543 1,576 1,562 1,559 1,571 6,268 (4.3%) (7.8%) (3.2%) (1.2%) Operating income (521) (67) 38 (78) - (606) (69.5%) (119.1%) (28.5%) (100.0%) Operating margin (1.6%) (0.8%) 0.5% (1.0%) 0.0% (1.9%) Wireline demand statistics: Total switched access lines (000) 15,035 14,781 14,520 14,247 14,129 14,129 (7.0%) (6.8%) (7.0%) (6.0%) Absolute decline (4,760) (254) (261) (272) (119) (906) Sequential growth Resale & UNE-P lines 1,188 1,136 1,134 1,119 1,093 1,093 (8.0%) (8.0%) (8.0%) (8.0%) Wholesale % of total lines 7.9% 7.7% 7.8% 7.9% 7.7% 7.7% Broadband subs 9,266 9,278 9,195 9,175 9,185 9, % (0.5%) (0.9%) (0.9%) Broadband net-adds (83) (20) 10 (81) NM NM NM NM Broadband subs as % of retail lines 66.9% 68.0% 68.7% 69.9% 70.5% 70.5% Consumer ARPU Domestic Wireless (1) : Service 70,396 16,809 16,741 16,700 16,673 66,923 (6.2%) (5.4%) (5.1%) (3.0%) Equipment & other 21,284 5,195 4,963 5,860 7,163 23, % 0.8% 8.4% 9.5% Total wireless revenue 91,680 22,004 21,704 22,560 23,835 90,104 (1.5%) (4.0%) (1.9%) 0.4% Cost of services and sales 30,922 6,940 6,628 7,445 8,342 29,355 (0.3%) (10.5%) (3.6%) (5.6%) Selling, general & administrative 21,805 4,891 4,777 4,963 5,601 20,233 (8.9%) (9.7%) (7.2%) (3.4%) EBITDA 38,953 10,173 10,299 10,152 9,892 40, % 3.8% 2.3% 8.7% As % of total revenue 42.5% 46.2% 47.5% 45.0% 41.5% 45.0% Depreciation & amortization 8,980 2,293 2,282 2,324 2,431 9, % 2.6% 2.8% 5.5% Operating income 29,973 7,880 8,017 7,828 7,460 31, % 4.2% 2.1% 9.7% Operating margin 32.7% 35.8% 36.9% 34.7% 31.3% 34.6% Wireless demand statistics: Postpaid Postpaid subscribers 106, , , , , , % 3.9% 3.4% 2.9% Postpaid net-adds (000) 4, ,000 3, % (45.8%) (37.9%) (34.2%) Postpaid gross adds (000) 16,414 3,717 3,646 4,045 4,272 15,681 (0.3%) (7.0%) (3.7%) (6.4%) Postpaid churn 1.0% 1.0% 0.9% 1.0% 1.0% 1.0% Postpaid ARPU $ $ $ $ $ $ (15.4%) (15.8%) (16.3%) (18.4%) Postpaid Accounts 35,736 35,720 35,637 35,637 35,637 35, % 0.2% (0.1%) (0.3%) Postpaid Net Account adds 120 (16) (83) - - (99) Postpaid ARPA $ $ $ $ $ $ (6.9%) (5.6%) (5.0%) (2.5%) Source: Company Reports & Oppenheimer & Co. Inc. estimates. 5

6 Verizon VZ (PERFORM) - NA Exhibit 5. Verizon Annual Consolidated Model ($ in millions, except per share) Last Updated: 07/26/2016 CAGR Consolidated E 2017E E 2017E '12-'17 Wireline 38,429 32,094 31,397 31,394 (0.5%) (16.5%) (2.2%) (0.0%) (4.6%) Wireless (1) 87,646 91,680 90,104 91, % 4.6% (1.7%) 1.2% 3.8% Other/Eliminations 748 7,846 5,322 12,000 Total revenue 126, , , , % 3.8% (3.6%) 6.1% 3.0% Cost of services and sales 50,157 49,738 48,417 48, % (0.8%) (2.7%) (0.5%) 0.7% Selling, general & administrative 31,782 29,061 26,906 26, % (8.6%) (7.4%) (0.9%) (2.7%) Segment Opex 81,939 78,799 75,323 74, % (3.8%) (4.4%) (0.7%) (0.6%) Non-recurring item 7,122 (2,510) 2,566 - Intersegment Eliminations 1,630 6,254 5,868 11,400 Adjusted EBITDA 43,254 46,567 45,632 48, % 7.7% (2.0%) 6.0% 5.1% EBITDA margin 34.1% 35.4% 36.0% 35.9% Depreciation & amortization 16,341 15,523 15,598 15,516 (1.1%) (5.0%) 0.5% (0.5%) (1.1%) Eliminations Depreciation & amortization 16,533 16,017 16,084 16,416 (0.4%) (3.1%) 0.4% 2.1% (0.1%) ` Operating income 26,721 30,550 29,548 31, % 14.3% (3.3%) 8.2% 8.4% Operating margin 21.1% 23.2% 23.3% 23.7% Income from affiliates 1,780 (86) (70) (50) Other income (expense), net (1,709) Interest expense (4,915) (4,920) (4,315) (4,989) 84.3% 0.1% (12.3%) 15.6% NM Minority interest (2,331) (496) (489) (480) (80.7%) (78.7%) (1.4%) NM NM Income before taxes 19,546 25,234 24,706 26, % 29.1% (2.1%) 7.0% 22.8% Provision for income taxes (6,234) (8,911) (8,649) (9,255) 82.6% 42.9% (2.9%) 7.0% NM Tax Rate 31.9% 35.3% 35.0% 35.0% Operating Net income 13,312 16,323 16,057 17, % 22.6% (1.6%) 7.0% 21.0% Earnings per share: Reported EPS $ 2.52 $ 4.37 $ 3.93 $ 4.19 (37.1%) 73.7% (10.1%) 6.7% 68.5% Non-recurring gain (loss) ($ 0.83) $ 0.38 $ 0.00 $ 0.00 Operating EPS $ 3.35 $ 3.99 $ 3.93 $ % 19.1% (1.5%) 6.7% 12.6% Average diluted shares 3,975 4,092 4,086 4, % 2.9% (0.1%) 0.3% 7.5% Dividends per share $ 2.16 $ 2.23 $ 2.31 $ % 3.2% 3.6% 4.0% 3.4% KEY METRICS Postpaid phone net adds 1, EIP Uptake Rate 17.5% 54.2% 68.4% 75.0% Free cash flows analysis: Net income 13,312 16,323 16,057 17, % 22.6% (1.6%) 7.0% 21.0% plus: D&A 16,533 16,017 16,084 16,416 (0.4%) (3.1%) 0.4% 2.1% (0.1%) minus: Capital expenditures 17,191 17,775 17,102 17, % 3.4% (3.8%) 0.8% 1.3% % of revenue 13.6% 13.5% 13.5% 12.8% minus: Spectrum Purchases 9,677 8,000 - minus: Dividends 8,593 9,124 9,438 9, % 6.2% 3.4% 4.3% 13.5% minus: Share buybacks Plus: Asset Sales/Purchases/tax 282 Free cash flows 4,061 (4,236) (2,118) 6,513 Free Cash Flow Prior to Distributio 12,654 14,565 15,320 16, % 15.1% 5.2% 6.8% Balance sheets data: Cash 10,598 4,470 2,857 2,857 (80.2%) (57.8%) (36.1%) 0.0% (4.3%) Total debt 113, , , , % (2.7%) 5.3% (5.6%) 16.1% Net debt 102, , , , % 3.0% 7.0% (5.8%) 17.1% Annual interest expense 4.8% 4.4% 3.8% 4.3% Net PP&E 89,947 83,541 84,917 85, % (7.1%) 1.6% 1.0% (0.7%) Implied useful life (PP&E) Total assets 232, , , ,443 (15.1%) 5.1% (4.5%) 0.4% 0.8% Shareowners equity 13,676 17,842 23,788 31,130 (85.7%) 30.5% 33.3% 30.9% (18.3%) Net debt / Total capitalization 88.2% 85.6% 82.6% 77.4% Source: Company Reports & Oppenheimer & Co. Inc. estimates. 6

7 VZ (PERFORM) - NA Verizon Exhibit 6. Verizon Annual Segment Model ($ in millions, except per share) CAGR Segment E 2017E E 2017E '12-'17 Wireline: Verizon Telecom Mass Markets 18,047 14,440 14,427 14, % (20.0%) (0.1%) 2.0% (2.5%) Global Enterprise 13,649 12,050 11,595 11,479 (3.8%) (11.7%) (3.8%) (1.0%) (5.6%) Global Wholesale 6,190 5,263 5,037 4,861 (6.1%) (15.0%) (4.3%) (3.5%) (7.7%) Other % (37.2%) (0.9%) 0.0% (8.9%) Total wireline revenue 38,429 32,094 31,397 31,394 (0.5%) (16.5%) (2.2%) (0.0%) (4.6%) Cost of services and sales 21,332 18,816 19,062 18,522 (0.3%) (11.8%) 1.3% (2.8%) (3.5%) Selling, general & administrative 8,180 7,256 6,673 6,593 (4.6%) (11.3%) (8.0%) (1.2%) (5.8%) EBITDA 8,917 6,022 5,662 6, % (32.5%) (6.0%) 10.9% (6.5%) EBITDA margin 23.2% 18.8% 18.0% 20.0% Depreciation & amortization 7,882 6,543 6,268 6,122 (5.3%) (17.0%) (4.2%) (2.3%) (6.2%) Operating income 1,035 (521) (606) % (150.3%) 16.3% (125.9%) (16.2%) Operating margin 2.7% (1.6%) (1.9%) 0.5% Wireline demand statistics: Total switched access lines (000) 19,795 15,035 14,129 13,418 (6.1%) (24.0%) (6.0%) (5.0%) (9.8%) Absolute decline (1,290) (4,760) (906) (711) Sequential growth Resale & UNE-P lines 1,291 1,188 1,093 1,006 (8.0%) (8.0%) (8.0%) (8.0%) (8.0%) Wholesale % of total lines 6.5% 7.9% 7.7% 7.5% Broadband subs 9,205 9,266 9,185 9, % 0.7% (0.9%) 2.2% 1.3% Broadband net-adds (81) 200 NM NM NM NM 9.9% Broadband subs as % of retail lines 49.7% 66.9% 70.5% 75.6% Consumer ARPU Domestic Wireless (1) : Service 72,630 70,396 66,923 66, % (3.1%) (4.9%) (0.9%) 0.8% Equipment & other 15,016 21,284 23,181 24, % 41.7% 8.9% 7.2% 15.4% Total wireless revenue 87,646 91,680 90,104 91, % 4.6% (1.7%) 1.2% 3.8% Cost of services and sales 28,825 30,922 29,355 29, % 7.3% (5.1%) 1.0% 3.9% Selling, general & administrative 23,602 21,805 20,233 20, % (7.6%) (7.2%) (0.8%) (1.5%) EBITDA 35,219 38,953 40,516 41, % 10.6% 4.0% 2.4% 6.9% As % of total revenue 40.2% 42.5% 45.0% 45.5% Depreciation & amortization 8,459 8,980 9,330 9, % 6.2% 3.9% 0.7% 3.4% Operating income 26,760 29,973 31,186 32, % 12.0% 4.0% 2.9% 8.1% Operating margin 30.5% 32.7% 34.6% 35.2% Wireless demand statistics: Postpaid Postpaid subscribers 102, , , , % 4.4% 2.9% 2.3% 3.9% Postpaid net-adds (000) 5,482 4,507 3,055 2, % (17.8%) (32.2%) (18.2%) (13.0%) Postpaid gross adds (000) 17,796 16,414 15,681 15, % (7.8%) (4.5%) 0.8% 1.3% Postpaid churn 1.0% 1.0% 1.0% 1.0% Postpaid ARPU $ $ $ $ % (8.3%) (8.3%) (4.9%) (4.0%) Postpaid Accounts 35,616 35,736 35,637 35, % 0.3% (0.3%) 0.0% 0.3% Postpaid Net Account adds (99) - Postpaid ARPA $ $ $ $ % (4.5%) (5.0%) (1.5%) (0.2%) Source: Company Reports & Oppenheimer & Co. Inc. estimates. 7

8 Verizon VZ (PERFORM) - NA Exhibit 7. Verizon Wireless Detail Model ($ in millions, except per share) Q16 2Q16 3Q16E 4Q16E 2016E 2017E Postpaid Detail (includes home phone connect) Postpaid Total Phone Subs 87,825 88,758 88,683 92,199 88,677 88,966 88,966 89,030 Postpaid Smart Subs 69,030 74,290 75,115 78,830 78,036 79,180 79,180 81,017 % of Total Phone Subs 78.6% 83.7% 84.7% 85.5% 88.0% 89.0% 89.0% 91.0% Postpaid Feature Subs 18,794 14,468 13,569 13,369 10,641 9,786 9,786 8,013 Postpaid Internet Device Subs 14,254 17,770 18,485 15,584 19,906 20,617 20,617 23,053 % of Total Postpaid Base 14.1% 16.8% 17.3% 14.5% 18.4% 18.9% 18.9% 20.8% Phone Net Adds 1, (74) 3, , Smartphone Net Adds 8,480 5, ,715 (794) 1,144 4,890 1,837 Feature Net Adds (7,156) (4,327) (899) (200) (2,728) (855) (4,681) (1,774) Internet Device Net Adds 4,134 3, (2,901) 4, ,846 2,437 Phone Gross Adds 12,048 11,016 2,481 6,066 2,813 2,954 14,314 10,743 Smart Gross Adds 11,633 8,128 1,587 4, ,040 8,181 5,682 Feature Gross Adds (external net 415 2, ,612 2, ,133 5,061 Internet Device Gross Adds 5,748 5,398 1,236 (2,420) 1,232 1,319 1,367 5,057 Churned Feature Subs 7,571 7,215 1,793 1,812 5,441 1,769 10,814 6,835 Churned Smart Subs 3,153 2, ,291 3,845 Total Churned Subs 12,314 11,907 3,077 3,031 3,245 3,272 12,626 13,300 Churned Phone subs 10,807 10,083 2,555 2,550 2,713 2,665 10,483 10,680 Phones Upgraded 28,470 27,735 5,550 1,777 6,381 8,288 21,996 27,852 Smart Upgrades 25,443 27,566 5,842 2,769 8,818 8,865 26,294 31,755 Internet Device Upgrades Revenue per Device Sale $227.8 $362.5 $398.8 $392.0 $410.3 $429.4 $409.7 $415.0 Revenue per Phone Sale $270.5 $436.7 $492.4 $472.3 $494.3 $517.4 $496.3 $494.1 Cost per Device Sale $440.0 $490.0 $504.1 $491.5 $500.0 $500.0 $490.0 $500.0 Equipment Cost $21,625 $23,119 $4,998 $4,644 $5,539 $6,772 $21,953 $22,973 Smarphone % of Total Phone Sal 91.5% 92.1% 92.5% 92.1% 97.0% 97.0% 94.9% 97.0% Smart Sales 37,076 35,694 7,428 7,223 8,918 10,905 34,475 37,437 Feature Sales 3,441 3, ,835 1,158 Total Phone Sales 40,518 38,751 8,031 7,843 9,194 11,242 36,310 38,595 Phone % of Total Device Sales 84.2% 83.0% 81.0% 83.0% 83.0% 83.0% 84.0% 84.0% Total Device Sales 48,116 46,688 9,914 9,449 11,077 13,545 43,986 45,947 Internet Device Sales 7,599 7,937 1,884 1,606 1,883 2,303 7,676 7,351 % of Postpaid Sub Base Upgrade 7.7% 7.3% 5.8% 5.4% 6.5% 8.5% 6.6% 6.8% Upgrades 30,320 30,274 6,197 5,804 7,032 9,272 28,305 30, % EDGE Program % of phone activations 17.5% 54.2% 68.0% 67.0% 68.0% 70.0% 68.4% 75.0% EDGE Phone Sales 7,107 20,996 5,461 5,255 6,252 7,869 24,837 28,946 Equipment Revenue Lift 2,842,887 8,398,249 2,184,342 2,101,944 2,500,830 3,147,752 9,934,868 11,578,527 % Postpaid phone base on EDGE 29.0% 48.0% 53.0% 56.3% 57.4% 57.4% 60.1% EDGE phone base 7,026 25,740 42,568 48,865 49,925 51,076 51,076 53,521 EDGE net adds 18,714 16,828 6,298 1,059 1,152 25,337 2,445 EDGE ARPU delta $15.0 $15.0 $15.0 $15.0 $15.0 $15.0 $15.0 $14.0 ARPU Shortfall $1,264,676 $4,633,153 $1,915,559 $2,198,947 $2,246,612 $2,298,431 $9,193,724 $8,991,605 EBITDA benefit $1,578,211 $3,765,096 $268,783 -$97,004 $254,219 $849,321 $741,145 $2,586,922 Source: Company Reports & Oppenheimer & Co. Inc. estimates. 8

9 VZ (PERFORM) - NA Verizon Stock Prices of other companies mentioned in this report (7/26/16) Yahoo (YHOO-NASDAQ, $38.76, Not Covered) Disclosure Appendix Oppenheimer & Co. Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Analyst Certification - The author certifies that this research report accurately states his/her personal views about the subject securities, which are reflected in the ratings as well as in the substance of this report. The author certifies that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. Potential Conflicts of Interest: Equity research analysts employed by Oppenheimer & Co. Inc. are compensated from revenues generated by the firm including the Oppenheimer & Co. Inc. Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. Oppenheimer & Co. Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, Oppenheimer & Co. Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers. In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, Oppenheimer & Co. Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest. Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by Oppenheimer & Co. Inc: Stock Prices as of July 26, 2016 Facebook, Inc. (FB - NASDAQ, $121.22, OUTPERFORM) Google, Inc. (GOOG - NASDAQ, $738.42, OUTPERFORM) Sprint Nextel (S - NYSE, $6.25, PERFORM) AT&T, Inc. (T - NYSE, $42.38, OUTPERFORM) T-Mobile (TMUS - NYSE, $44.98, OUTPERFORM) 9

10 Verizon VZ (PERFORM) - NA All price targets displayed in the chart above are for a 12- to- 18-month period. Prior to March 30, 2004, Oppenheimer & Co. Inc. used 6-, 12-, 12- to 18-, and 12- to 24-month price targets and ranges. For more information about target price histories, please write to Oppenheimer & Co. Inc., 85 Broad Street, New York, NY 10004, Attention: Equity Research Department, Business Manager. Oppenheimer & Co. Inc. Rating System as of January 14th, 2008: Outperform(O) - Stock expected to outperform the S&P 500 within the next months. Perform (P) - Stock expected to perform in line with the S&P 500 within the next months. Underperform (U) - Stock expected to underperform the S&P 500 within the next months. Not Rated (NR) - Oppenheimer & Co. Inc. does not maintain coverage of the stock or is restricted from doing so due to a potential conflict of interest. Oppenheimer & Co. Inc. Rating System prior to January 14th, 2008: Buy - anticipates appreciation of 10% or more within the next 12 months, and/or a total return of 10% including dividend payments, and/or the ability of the shares to perform better than the leading stock market averages or stocks within its particular industry sector. Neutral - anticipates that the shares will trade at or near their current price and generally in line with the leading market averages due to a perceived absence of strong dynamics that would cause volatility either to the upside or downside, and/or will perform less well than higher rated companies within its peer group. Our readers should be aware that when a rating change occurs to Neutral from Buy, aggressive trading accounts might decide to liquidate their positions to employ the funds elsewhere. Sell - anticipates that the shares will depreciate 10% or more in price within the next 12 months, due to fundamental weakness perceived in the company or for valuation reasons, or are expected to perform significantly worse than equities within the peer group. 10

11 VZ (PERFORM) - NA Verizon Distribution of Ratings/IB Services Firmwide IB Serv/Past 12 Mos. Rating Count Percent Count Percent OUTPERFORM [O] PERFORM [P] UNDERPERFORM [U] Although the investment recommendations within the three-tiered, relative stock rating system utilized by Oppenheimer & Co. Inc. do not correlate to buy, hold and sell recommendations, for the purposes of complying with FINRA rules, Oppenheimer & Co. Inc. has assigned buy ratings to securities rated Outperform, hold ratings to securities rated Perform, and sell ratings to securities rated Underperform. Company Specific Disclosures Oppenheimer & Co. Inc. makes a market in the securities of FB, GOOG, T and TMUS. Oppenheimer & Co. Inc. expects to receive or intends to seek compensation for investment banking services in the next 3 months from FB. Additional Information Available Please log on to or write to Oppenheimer & Co. Inc., 85 Broad Street, New York, NY 10004, Attention: Equity Research Department, Business Manager. Other Disclosures This report is issued and approved for distribution by Oppenheimer & Co. Inc. Oppenheimer & Co. Inc. transacts business on all principal exchanges and is a member of SIPC. This report is provided, for informational purposes only, to institutional and retail investor clients of Oppenheimer & Co. Inc. and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of Oppenheimer & Co. Inc. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The analyst writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security recommended in this report, the recipient should consider whether such recommendation is appropriate given the recipient's particular investment needs, objectives and financial circumstances. We recommend that investors independently evaluate particular investments and strategies, and encourage investors to seek the advice of a financial advisor. Oppenheimer & Co. Inc. will not treat non-client recipients as its clients solely by virtue of their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal. Oppenheimer & Co. Inc. accepts no liability for any loss arising from the use of information contained in this report, except to the extent that liability may arise under specific statutes or regulations applicable to Oppenheimer & Co. Inc. All information, opinions and statistical data contained in this report were obtained or derived from public sources believed to be reliable, but Oppenheimer & Co. Inc. does not represent that any such information, opinion or statistical data is accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by Oppenheimer & Co. Inc. or individual research analysts), and they should not be relied upon as such. All estimates, opinions and recommendations expressed herein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications, clients should consult with their own independent tax adviser. This report may provide addresses of, or contain hyperlinks to, Internet web sites. Oppenheimer & Co. Inc. has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and information, and the content of linked third 11

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