Verizon EQUITY RESEARCH QUARTERLY UPDATE PERFORM. VZ 3Q16 Follow-Up: EPS Beat Despite Soft Wireless Subscriber Momentum.

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1 EQUITY RESEARCH QUARTERLY UPDATE October 20, 2016 Stock Rating: PERFORM mo. Price Target NA VZ - NYSE $ Yr. EPS Gr. Rate 12% 52-Wk Range $56.95-$43.79 Shares Outstanding 4,086.0M Float 4,076.0M Market Capitalization $205,364.1M Avg. Daily Trading Volume 12,078,381 Dividend/Div Yield $2.29/4.55% Book Value $5.52 Fiscal Year Ends Dec 2016E ROE 51.5 % LT Debt $106,591.0M Preferred NA Common Equity $22,563M Convertible Available No EPS Operating Q1 Q2 Q3 Q4 Year Mult. 2014A x 2015A x 2016E 1.06A 0.94A 1.01A x Prior (E) NM 2017E x 2018E x COMMUNICATION AND CLOUD VZ 3Q16 Follow-Up: EPS Beat Despite Soft Wireless Subscriber Momentum SUMMARY VZ reported a mixed quarter, missing on revenues and weak phone net adds (36K loss), but solid FCF. Guidance was largely positive, with organic revenue growth guide of 1%-2% in 2017 (GDP) maintained driven by a positive inflection in wireless service ARPU. We believe is focused on maintaining profitability by preserving its top line and slashing spending, while offering a high-quality network with possibly higher handset subsidies and higher data buckets with some free value-added services. Additionally, the company is redirecting cash flows from its mature wireless operations to new drivers of top-line growth such as Adtech, content, and IoT. This strategy is positive for TMUS and infrastructure providers. The dividend yield and payout look attractive. KEY POINTS Improved TMUS/Sprint Networks Gain Share: lost 36K postpaid phone customers, corroborating the success of T-Mobile and Sprint's strong subscriber additions following the iphone 7 launch. Management cited several factors including the recall of the Note 7, the launch of unlimited plans by TMUS/S coupled with the "free iphone 7" promotions, and the migration of postpaid feature customers to prepaid plans. Positive Inflection in Wireless Service Revenues: Management expects organic consolidated revenues to grow in line with real GDP in 2017, driven primarily by a return to positive wireless revenue growth in 2H17. Wireless revenue growth will be helped by mid-single-digit growth in equipment revenues as EIP penetration (currently ~40%) accelerates. "New Normal" for Wireline Margins? Wireline margins recovered to 21.2% following 2Q16 lows prompted by the strike and Frontier transaction. We believe the company can marginally expand wireline margins from current levels aided by reduced retiree and customer care expenses. Yahoo and Terremark Transactions: Management confirmed it is proceeding with the sale of its datacenter assets and is currently in negotiations with "one party." On Yahoo, 's legal team continues to assess the implications of the 2014 hack. The company reported strong growth from its nascent revenue streams with IoT revenues of $217M (+24% y/y) and AOL revenues of $486M (+10% y/y). Bottom Line: Management guidance indicating a return to top-line growth in 2017 and an improvement in wireline margins represent positive indicators. However, market share losses to T-Mobile and Sprint and the threat of increased regulatory scrutiny create uncertainty for investors. Maintain Perform. Timothy Horan, CFA Tim.Horan@opco.com Brajesh Mishra Brajesh.Mishra@opco.com Disseminated: October 20, :00 EDT; Produced: October 20, :19 EDT Stock Price Performance Company Description is the incumbent local telecom carrier in the Northeast and in several smaller regions, covering one-third of the US. 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 VZ (PERFORM) - NA 5-YEAR PRICE PERFORMANCE INVESTMENT THESIS Source: Bloomberg VZ is the largest wireless carrier in the US (with the highest margins) and is second to AT&T in enterprise wireline market share. 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 EPS growth slows to mid-single-digit range CATALYSTS VZ leverages wireless network to attack the rural broadband market. 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. '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. VZ continues to split cells (higher OPEX and CAPX) to support data volume growth 2 Timothy Horan, CFA:

3 VZ (PERFORM) - NA Exhibit 1. Select Performance Data Selected Performance Data 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 YoY Change Recurring EPS $0.84 $0.91 $0.89 $0.71 $1.02 $1.04 $1.04 $0.89 $1.06 $0.94 $ % Revenue Growth (%) 5.0% 5.7% 4.9% 7.4% 4.2% 2.8% 5.0% 3.2% 0.6% -5.3% -6.7% % Consolidated EBITDA Margin (%) 36.8% 35.5% 35.0% 29.4% 37.4% 36.6% 35.8% 31.9% 37.2% 36.3% 36.5% 1.7% Wireline Revenue Growth (%) 0.1% 0.3% -0.8% -1.6% -16.7% -16.8% -16.8% -15.6% -1.6% -2.4% -2.3% -86.6% Wireline EBITDA Margin (%) 22.5% 23.4% 23.0% 23.9% 17.7% 18.7% 18.9% 19.8% 19.0% 14.0% 21.2% 12.7% Access line growth rate (%) -6.6% -6.6% -6.4% -6.1% -23.3% -23.6% -23.7% -24.0% -7.0% -6.8% -7.1% -70.1% Broadband Net Adds (000's) (9) (83) % FiOS TV Net Adds (000's) (41) % Wireless Service Revenue Growth (%) 7.5% 5.9% 4.8% 2.8% -0.4% -2.2% -4.1% -5.6% -6.2% -5.4% -5.2% 25.8% Wireless EBITDA Service Margin (%) 52.1% 50.3% 49.5% 42.0% 55.8% 56.1% 56.4% 52.9% 60.5% 61.5% 59.5% 5.5% Wireless Postpaid Net Adds (000's) 539 1,441 1,516 1, ,134 1,289 1, % Wireless Postpaid ARPU ($) $57.64 $57.05 $57.18 $55.34 $54.03 $52.65 $51.83 $49.77 $48.44 $47.97 $ % Wireless Postpaid Churn 1.1% 0.9% 1.0% 1.1% 1.0% 0.9% 0.9% 1.0% 1.0% 0.9% 1.0% 11.8% 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) $45.23 $ % $47.83 $ % EBITDA (%) 35.8% 36.0% 0.2% 35.6% 35.8% 0.2% Adj. EPS ($) $3.88 $ % $4.11 $ % Source: Company reports; Oppenheimer & Co. Inc estimates. 3

4 VZ (PERFORM) - NA Exhibit 3. Quarterly Consolidated Model ($ in millions, except per share) Last Updated: 10/20/2016 Consolidated Q15 2Q15 3Q15 4Q Q16 2Q16 3Q16 4Q16E 2016E 1Q16 2Q16 3Q16 4Q16E Wireline 38,429 8,050 8,013 7,967 8,064 32,094 7,923 7,823 7,787 7,854 31,387 (1.6%) (2.4%) (2.3%) (2.6%) Wireless (1) 87,646 22,328 22,613 23,005 23,734 91,680 22,004 21,704 22,101 23,080 88,889 (1.5%) (4.0%) (3.9%) (2.8%) Other/Eliminations 748 1,606 1,598 2,186 2,456 7,846 2,244 1,005 1,049 1,050 5,348 Total revenue 126,823 31,984 32,224 33,158 34, ,620 32,171 30,532 30,937 31, , % (5.3%) (6.7%) (6.6%) Cost of services and sales 50,157 11,744 12,107 12,421 13,466 49,738 11,584 11,735 11,686 12,727 47,732 (1.4%) (3.1%) (5.9%) (5.5%) Selling, general & administrative 31,782 7,207 7,102 7,121 7,631 29,061 6,661 6,394 6,614 7,026 26,695 (7.6%) (10.0%) (7.1%) (7.9%) Segment Opex 81,939 18,951 19,209 19,542 21,097 78,799 18,245 18,129 18,300 19,752 74,426 (3.7%) (5.6%) (6.4%) (6.4%) Non-recurring item 7, (2,852) (2,510) 23 2, ,363 Intersegment Eliminations 1,630 1,084 1,214 1,730 2,226 6,254 1,944 1,324 1,358 1,300 5,926 Adjusted EBITDA 43,254 11,949 11,801 11,886 10,931 46,567 11,982 11,079 11,279 10,931 45, % (6.1%) (5.1%) 0.0% EBITDA margin 34.1% 37.4% 36.6% 35.8% 31.9% 35.4% 37.2% 36.3% 36.5% 34.2% 36.0% Depreciation & amortization 16,341 3,837 3,920 3,871 3,895 15,523 3,869 3,844 3,785 3,925 15, % (1.9%) (2.2%) 0.8% Eliminations Depreciation & amortization 16,533 3,989 3,980 4,009 4,039 16,017 4,017 3,982 3,942 4,055 15, % 0.1% (1.7%) 0.4% ` Operating income 26,721 7,960 7,821 7,877 6,892 30,550 7,965 7,097 7,337 6,876 29, % (9.3%) (6.9%) (0.2%) Operating margin 21.1% 24.9% 24.3% 23.8% 20.1% 23.2% 24.8% 23.2% 23.7% 21.5% 23.3% Income from affiliates 1,780 (34) (18) (18) (16) (86) (20) (20) (23) (20) (83) Other income (expense), net (1,709) Interest expense (4,915) (1,332) (1,208) (1,202) (1,178) (4,920) (1,188) (1,013) (1,038) (1,039) (4,278) (10.8%) (16.1%) (13.6%) (11.8%) Minority interest (2,331) (119) (122) (133) (122) (496) (120) (129) (127) (130) (506) NM NM NM NM Income before taxes 19,546 6,550 6,505 6,575 5,604 25,234 6,669 5,935 6,246 5,687 24, % (8.8%) (5.0%) 1.5% Provision for income taxes (6,234) (2,331) (2,274) (2,328) (1,978) (8,911) (2,336) (2,077) (2,124) (2,025) (8,561) 0.2% (8.7%) (8.8%) 2.3% Tax Rate 31.9% 35.6% 35.0% 35.4% 35.3% 35.3% 35.0% 35.0% 34.0% 35.6% 34.9% Operating Net income 13,312 4,219 4,231 4,247 3,626 16,323 4,333 3,858 4,122 3,662 15, % (8.8%) (2.9%) 1.0% Earnings per share: Reported EPS $ 2.52 $ 1.02 $ 1.04 $ 0.99 $ 1.32 $ 4.37 $ 1.06 $ 0.17 $ 0.89 $ 0.90 $ % (83.4%) (10.5%) (32.1%) Non-recurring gain (loss) ($ 0.83) $ 0.00 $ 0.00 ($ 0.05) $ 0.43 $ 0.38 $ 0.00 ($ 0.77) ($ 0.12) $ 0.00 ($ 0.90) Operating EPS $ 3.35 $ 1.02 $ 1.04 $ 1.04 $ 0.89 $ 3.99 $ 1.06 $ 0.94 $ 1.01 $ 0.90 $ % (8.8%) (3.1%) 0.9% Average diluted shares 3,975 4,121 4,085 4,078 4,083 4,092 4,085 4,085 4,086 4,087 4,086 (0.9%) 0.0% 0.2% 0.1% Dividends per share $ 2.16 $ 0.55 $ 0.55 $ 0.57 $ 0.57 $ 2.23 $ 0.57 $ 0.57 $ 0.58 $ 0.58 $ % 2.7% 2.2% 2.7% KEY METRICS Postpaid phone net adds 1,241 (337) (74) 86 (36) EIP Uptake Rate 17.5% 39.0% 49.0% 58.0% 67.0% 54.2% 68.0% 67.0% 70.0% 70.0% 68.9% Free cash flows analysis: Net income 13,312 4,219 4,231 4,247 3,626 16,323 4,333 3,858 4,122 3,662 15, % (8.8%) (2.9%) 1.0% plus: D&A 16,533 3,989 3,980 4,009 4,039 16,017 4,017 3,982 3,942 4,055 15, % 0.1% (1.7%) 0.4% minus: Capital expenditures 17,191 3,665 4,488 4,387 5,235 17,775 3,387 3,886 4,125 5,515 16,913 (7.6%) (13.4%) (6.0%) 5.4% % of revenue 13.6% 11.5% 13.9% 13.2% 15.3% 13.5% 10.5% 12.7% 13.3% 17.2% 13.5% minus: Spectrum Purchases 9,677 9, ,000 8,128 minus: Dividends 8,593 2,267 2,247 2,304 2,307 9,124 2,308 2,308 2,303 2,371 9, % 2.7% (0.0%) 2.8% minus: Share buybacks - 5, Plus: Asset Sales/Purchases/tax - 9,882 (3,000) 3,600 10,482 Free cash flows 4,061 (2,724) (8,275) 1, (4,236) 2,655 11,528 (1,492) (4,568) 8,123 Free Cash Flow Prior to Distributio 12,654 4,543 3,723 3,869 2,430 14,565 4,963 13, ,802 25, % 271.6% (75.7%) 138.8% Balance sheets data: Cash 10,598 4,386 3,008 3,875 4,470 4,470 5,846 2,857 6,441 6,441 6, % (5.0%) 66.2% 44.1% Total debt 113, , , , , , ,880 99, , , ,159 (3.1%) (12.3%) (5.1%) 0.9% Net debt 102, , , , , , ,034 96, , , ,718 (4.6%) (12.5%) (7.7%) (1.0%) Annual interest expense 4.8% 4.7% 4.3% 4.3% 4.3% 4.4% 4.3% 4.1% 3.9% 3.9% 3.9% Net PP&E 89,947 81,642 82,532 82,562 83,541 83,541 83,011 83,172 83,355 84,815 84, % 0.8% 1.0% 1.5% Implied useful life (PP&E) Total assets 232, , , , , , , , , , , % (3.7%) (4.1%) (4.5%) Shareowners equity 13,676 10,759 12,874 14,542 17,842 17,842 19,867 20,744 22,563 23,855 23, % 61.1% 55.2% 33.7% Net debt / Total capitalization 88.2% 91.0% 89.6% 88.2% 85.6% 85.6% 84.0% 82.4% 81.6% 81.4% 81.4% Source: Company Reports & Oppenheimer & Co. Inc. estimates. 4

5 VZ (PERFORM) - NA Exhibit 4. Quarterly Segment Model ($ in millions, except per share) Year over Year % Change Segment Q15 2Q15 3Q15 4Q Q16 2Q16 3Q16 4Q16E 2016E 1Q16 2Q16 3Q16 4Q16E Wireline: Telecom Mass Markets 18,047 3,573 3,615 3,602 3,650 14,440 3,602 3,573 3,585 3,650 14, % (1.2%) (0.5%) 0.0% Global Enterprise 13,649 3,047 3,007 2,988 3,008 12,050 2,956 2,907 2,886 2,858 11,607 (3.0%) (3.3%) (3.4%) (5.0%) Global Wholesale 6,190 1,339 1,310 1,289 1,325 5,263 1,283 1,256 1,239 1,265 5,043 (4.2%) (4.1%) (3.9%) (4.5%) Other (9.9%) 7.4% (12.5%) 0.0% Total wireline revenue 38,429 8,050 8,013 7,967 8,064 32,094 7,923 7,823 7,787 7,854 31,387 (1.6%) (2.4%) (2.3%) (2.6%) Cost of services and sales 21,332 4,785 4,704 4,695 4,632 18,816 4,644 5,107 4,440 4,602 18,793 (2.9%) 8.6% (5.4%) (0.6%) Selling, general & administrative 8,180 1,838 1,813 1,770 1,835 7,256 1,770 1,617 1,693 1,602 6,682 (3.7%) (10.8%) (4.4%) (12.7%) EBITDA 8,917 1,427 1,496 1,502 1,597 6,022 1,509 1,099 1,654 1,649 5, % (26.5%) 10.1% 3.3% EBITDA margin 23.2% 17.7% 18.7% 18.9% 19.8% 18.8% 19.0% 14.0% 21.2% 21.0% 18.8% Depreciation & amortization 7,882 1,647 1,695 1,611 1,590 6,543 1,576 1,562 1,498 1,571 6,207 (4.3%) (7.8%) (7.0%) (1.2%) Operating income 1,035 (220) (199) (109) 7 (521) (67) (463) (295) (69.5%) 132.7% (243.1%) NM Operating margin 2.7% (2.7%) (2.5%) (1.4%) 0.1% (1.6%) (0.8%) (5.9%) 2.0% 1.0% (0.9%) Wireline demand statistics: Total switched access lines (000) 19,795 15,897 15,586 15,324 15,035 15,035 14,781 14,520 14,236 14,129 14,129 (7.0%) (6.8%) (7.1%) (6.0%) Absolute decline (1,290) (3,898) (311) (262) (289) (4,760) (254) (261) (284) (108) (906) Sequential growth Broadband subs 7,024 7,069 7,060 7,074 7,085 7,085 7,097 7,014 7,038 7,048 7, % (0.7%) (0.5%) (0.5%) Broadband net-adds (9) (83) (37) NM NM NM NM Broadband subs as % of retail lines 38.0% 48.2% 49.2% 50.1% 51.2% 51.2% 52.0% 52.4% 53.7% 54.1% 54.1% Consumer ARPU Domestic Wireless (1) : Service 72,630 17,914 17,689 17,598 17,195 70,396 16,809 16,741 16,684 16,684 66,918 (6.2%) (5.4%) (5.2%) (3.0%) Equipment & other 15,016 4,414 4,924 5,407 6,539 21,284 5,195 4,963 5,417 6,396 21, % 0.8% 0.2% (2.2%) Total wireless revenue 87,646 22,328 22,613 23,005 23,734 91,680 22,004 21,704 22,101 23,080 88,889 (1.5%) (4.0%) (3.9%) (2.8%) Cost of services and sales 28,825 6,959 7,403 7,726 8,834 30,922 6,940 6,628 7,246 8,124 28,938 (0.3%) (10.5%) (6.2%) (8.0%) Selling, general & administrative 23,602 5,369 5,289 5,351 5,796 21,805 4,891 4,777 4,921 5,424 20,013 (8.9%) (9.7%) (8.0%) (6.4%) EBITDA 35,219 10,000 9,921 9,928 9,104 38,953 10,173 10,299 9,934 9,532 39, % 3.8% 0.1% 4.7% As % of total revenue 40.2% 44.8% 43.9% 43.2% 38.4% 42.5% 46.2% 47.5% 44.9% 41.3% 44.9% Depreciation & amortization 8,459 2,190 2,225 2,260 2,305 8,980 2,293 2,282 2,287 2,354 9, % 2.6% 1.2% 2.1% Operating income 26,760 7,810 7,696 7,668 6,799 29,973 7,880 8,017 7,647 7,178 30, % 4.2% (0.3%) 5.6% Operating margin 30.5% 35.0% 34.0% 33.3% 28.6% 32.7% 35.8% 36.9% 34.6% 31.1% 34.6% Source: Company Reports & Oppenheimer & Co. Inc. estimates. 5

6 VZ (PERFORM) - NA Exhibit 5. Annual Consolidated Model ($ in millions, except per share) Last Updated: 10/20/2016 Year over Year % Change CAGR Consolidated E 2017E E E 2017E 2018E '12-'18 Wireline 39,780 38,624 38,429 32,094 31,387 30,806 30,493 (2.2%) (2.9%) (0.5%) (16.5%) (2.2%) (1.9%) (1.0%) (5.2%) Wireless (1) 75,868 81,023 87,646 91,680 88,889 89,841 90, % 6.8% 8.2% 4.6% (3.0%) 1.1% 0.9% 3.6% Other/Eliminations ,846 5,348 12,000 12,500 Total revenue 115, , , , , , , % 3.5% 5.7% 3.8% (4.6%) 5.6% 0.7% 2.9% Cost of services and sales 46,584 45,044 50,157 49,738 47,732 47,700 47, % (3.3%) 11.4% (0.8%) (4.0%) (0.1%) (0.5%) 0.4% Selling, general & administrative 30,533 31,747 31,782 29,061 26,695 26,409 26, % 4.0% 0.1% (8.6%) (8.1%) (1.1%) (0.0%) (2.9%) Segment Opex 77,117 76,791 81,939 78,799 74,426 74,109 73, % (0.4%) 6.7% (3.8%) (5.5%) (0.4%) (0.3%) (0.9%) Non-recurring item 8,165 (6,553) 7,122 (2,510) 3, Intersegment Eliminations 944 1,122 1,630 6,254 5,926 11,000 11,900 Adjusted EBITDA 37,785 42,021 43,254 46,567 45,271 47,539 47, % 11.2% 2.9% 7.7% (2.8%) 5.0% 0.7% 4.8% EBITDA margin 32.6% 35.0% 34.1% 35.4% 36.0% 35.8% 35.8% Depreciation & amortization 16,384 16,529 16,341 15,523 15,423 15,261 15,191 (0.2%) 0.9% (1.1%) (5.0%) (0.6%) (1.1%) (0.5%) (1.5%) Eliminations Depreciation & amortization 16,460 16,606 16,533 16,017 15,996 16,161 16,091 (0.2%) 0.9% (0.4%) (3.1%) (0.1%) 1.0% (0.4%) (0.5%) ` Operating income 21,325 25,415 26,721 30,550 29,275 31,378 31, % 19.2% 5.1% 14.3% (4.2%) 7.2% 1.2% 8.3% Operating margin 18.4% 21.2% 21.1% 23.2% 23.3% 23.7% 23.8% Income from affiliates ,780 (86) (83) (100) (100) Other income (expense), net (1,709) Interest expense (2,571) (2,667) (4,915) (4,920) (4,278) (4,558) (4,297) (9.1%) 3.7% 84.3% 0.1% (13.0%) 6.5% (5.7%) NM Minority interest (9,682) (12,050) (2,331) (496) (506) (480) (520) 24.2% 24.5% (80.7%) (78.7%) 2.0% NM NM NM Income before taxes 9,459 11,539 19,546 25,234 24,537 26,240 26, % 22.0% 69.4% 29.1% (2.8%) 6.9% 2.3% 23.2% Provision for income taxes (2,822) (3,414) (6,234) (8,911) (8,561) (9,394) (9,532) 11.0% 21.0% 82.6% 42.9% (3.9%) 9.7% 1.5% NM Tax Rate 29.8% 29.6% 31.9% 35.3% 34.9% 35.8% 35.5% Operating Net income 6,637 8,125 13,312 16,323 15,976 16,846 17, % 22.4% 63.8% 22.6% (2.1%) 5.4% 2.8% 21.1% Earnings per share: Reported EPS $ 0.31 $ 4.00 $ 2.52 $ 4.37 $ 3.01 $ 4.11 $ 5.21 (63.6%) 1,197.4% (37.1%) 73.7% (31.0%) 36.4% 26.8% 76.0% Non-recurring gain (loss) ($ 2.01) $ 1.17 ($ 0.83) $ 0.38 ($ 0.90) $ 0.00 $ 1.00 Operating EPS $ 2.32 $ 2.83 $ 3.35 $ 3.99 $ 3.91 $ 4.11 $ % 21.9% 18.4% 19.1% (2.0%) 5.1% 2.5% 12.7% Average diluted shares 2,859 2,871 3,975 4,092 4,086 4,098 4, % 0.4% 38.4% 2.9% (0.1%) 0.3% 0.3% 7.5% Dividends per share $ 2.03 $ 2.09 $ 2.16 $ 2.23 $ 2.29 $ 2.34 $ % 3.0% 3.3% 3.2% 2.6% 2.3% 1.7% 3.2% KEY METRICS Postpaid phone net adds 3,673 2,413 1, EIP Uptake Rate 17.5% 54.2% 68.9% 72.0% 75.0% Free cash flows analysis: Net income 6,637 8,125 13,312 16,323 15,976 16,846 17, % 22.4% 63.8% 22.6% (2.1%) 5.4% 2.8% 21.1% plus: D&A 16,460 16,606 16,533 16,017 15,996 16,161 16,091 (0.2%) 0.9% (0.4%) (3.1%) (0.1%) 1.0% (0.4%) (0.5%) minus: Capital expenditures 16,175 16,604 17,191 17,775 16,913 17,052 17,198 (0.4%) 2.7% 3.5% 3.4% (4.8%) 0.8% 0.9% 1.2% % of revenue 14.0% 13.8% 13.6% 13.5% 13.5% 12.9% 12.9% minus: Spectrum Purchases 9,677 8, minus: Dividends 5,230 5,994 8,593 9,124 9,290 9,589 9,783 (5.9%) 14.6% 43.4% 6.2% 1.8% 3.2% 2.0% 13.3% minus: Share buybacks Plus: Asset Sales/Purchases/tax 10,482 Free cash flows 1,249 2,076 4,061 (4,236) 8,123 6,365 6,429 Free Cash Flow Prior to Distribution and spec 8,127 12,654 14,565 25,540 15,955 16, % 15.1% 75.4% (37.5%) 1.6% Balance sheets data: Cash 3,563 53,528 10,598 4,470 6,441 6,441 6,441 (74.5%) 1,402.3% (80.2%) (57.8%) 44.1% 0.0% 0.0% 12.6% Total debt 51,987 93, , , , ,794 98,365 (5.7%) 80.0% 21.0% (2.7%) 0.9% (5.7%) (6.1%) 13.6% Net debt 48,424 40, , , ,718 98,353 91, % (17.3%) 156.3% 3.0% (1.0%) (6.1%) (6.5%) 13.7% Annual interest expense 4.8% 3.7% 4.8% 4.4% 3.9% 4.1% 4.1% Net PP&E 88,642 88,956 89,947 83,541 84,815 85,707 86, % 0.4% 1.1% (7.1%) 1.5% 1.1% 1.3% (0.4%) Implied useful life (PP&E) Total assets 225, , , , , , ,511 (2.3%) 21.7% (15.1%) 5.1% (4.5%) 0.4% 0.5% 0.9% Shareowners equity 85,533 95,416 13,676 17,842 23,855 31,112 38,648 (0.4%) 11.6% (85.7%) 30.5% 33.7% 30.4% 24.2% (14.7%) Net debt / Total capitalization 36.1% 29.6% 88.2% 85.6% 81.4% 76.0% 70.4% Source: Company Reports & Oppenheimer & Co. Inc. estimates. 6

7 VZ (PERFORM) - NA Exhibit 6. Annual Segment Model ($ in millions, except per share) Year over Year % Change CAGR Segment E 2017E 2018E E 2017E 2018E '12-'18 Wireline: Telecom Mass Markets 16,702 17,383 18,047 14,440 14,410 14,122 14, % 4.1% 3.8% (20.0%) (0.2%) (2.0%) (0.2%) (3.3%) Global Enterprise 15,299 14,182 13,649 12,050 11,607 11,491 11,376 (2.1%) (7.3%) (3.8%) (11.7%) (3.7%) (1.0%) (1.0%) (5.8%) Global Wholesale 7,240 6,594 6,190 5,263 5,043 4,867 4,697 (9.2%) (8.9%) (6.1%) (15.0%) (4.2%) (3.5%) (3.5%) (8.3%) Other (28.1%) (13.7%) 16.8% (37.2%) (4.1%) 0.0% 0.0% (9.5%) Total wireline revenue 39,780 38,624 38,429 32,094 31,387 30,806 30,493 (2.2%) (2.9%) (0.5%) (16.5%) (2.2%) (1.9%) (1.0%) (5.2%) Cost of services and sales 22,094 21,396 21,332 18,816 18,793 18,052 17,564 (0.3%) (3.2%) (0.3%) (11.8%) (0.1%) (3.9%) (2.7%) (4.5%) Selling, general & administrative 8,883 8,571 8,180 7,256 6,682 6,284 6,190 (2.5%) (3.5%) (4.6%) (11.3%) (7.9%) (6.0%) (1.5%) (7.0%) EBITDA 8,803 8,657 8,917 6,022 5,911 6,469 6,739 (6.5%) (1.7%) 3.0% (32.5%) (1.8%) 9.4% 4.2% (5.2%) EBITDA margin 22.1% 22.4% 23.2% 18.8% 18.8% 21.0% 22.1% Depreciation & amortization 8,424 8,327 7,882 6,543 6,207 6,007 5,855 (0.4%) (1.2%) (5.3%) (17.0%) (5.1%) (3.2%) (2.5%) (7.0%) Operating income ,035 (521) (295) (60.5%) (12.9%) 213.6% (150.3%) (43.3%) (256.4%) 91.4% 18.5% Operating margin 1.0% 0.9% 2.7% (1.6%) (0.9%) 1.5% 2.9% Wireline demand statistics: Total switched access lines (000) 22,503 21,085 19,795 15,035 14,129 13,418 12,744 (6.8%) (6.3%) (6.1%) (24.0%) (6.0%) (5.0%) (5.0%) (10.7%) Absolute decline (1,634) (1,418) (1,290) (4,760) (906) (711) (674) Sequential growth Resale & UNE-P lines 1,526 1,404 1,291 1,188 1,093 1, (8.0%) (8.0%) (8.0%) (8.0%) (8.0%) (8.0%) (8.0%) (9.5%) Wholesale % of total lines 6.8% 6.7% 6.5% 7.9% 7.7% 7.5% 7.3% Broadband subs 8,795 9,015 7,024 7,085 7,048 7,248 7, % 2.5% (22.1%) 0.9% (0.5%) 2.8% 2.8% (3.3%) Broadband net-adds (37) NM NM NM NM NM NM NM 9.9% Broadband subs as % of retail lines 41.9% 45.8% 38.0% 51.2% 54.1% 58.4% 63.0% Consumer ARPU Domestic Wireless (1) : Service 63,733 69,033 72,630 70,396 66,918 66,135 66, % 8.3% 5.2% (3.1%) (4.9%) (1.2%) 0.7% 0.9% Equipment & other 12,135 11,990 15,016 21,284 21,971 23,706 24, % (1.2%) 25.2% 41.7% 3.2% 7.9% 1.3% 14.6% Total wireless revenue 75,868 81,023 87,646 91,680 88,889 89,841 90, % 6.8% 8.2% 4.6% (3.0%) 1.1% 0.9% 3.6% Cost of services and sales 24,490 23,648 28,825 30,922 28,938 29,648 29, % (3.4%) 21.9% 7.3% (6.4%) 2.5% 0.9% 4.1% Selling, general & administrative 21,650 23,176 23,602 21,805 20,013 20,124 20, % 7.0% 1.8% (7.6%) (8.2%) 0.6% 0.4% (1.4%) EBITDA 29,728 34,199 35,219 38,953 39,938 40,069 40, % 15.0% 3.0% 10.6% 2.5% 0.3% 1.1% 6.4% As % of total revenue 39.2% 42.2% 40.2% 42.5% 44.9% 44.6% 44.7% Depreciation & amortization 7,960 8,202 8,459 8,980 9,216 9,254 9,337 (0.0%) 3.0% 3.1% 6.2% 2.6% 0.4% 0.9% 3.2% Operating income 21,768 25,997 26,760 29,973 30,722 30,816 31, % 19.4% 2.9% 12.0% 2.5% 0.3% 1.2% 7.5% Operating margin 28.7% 32.1% 30.5% 32.7% 34.6% 34.3% 34.4% Source: Company Reports & Oppenheimer & Co. Inc. estimates. 7

8 VZ (PERFORM) - NA Exhibit 7. Wireless Detail Model ($ in millions, except per share) Q16 2Q16 3Q16 4Q16E 2016E 2017E 2018E Postpaid Detail (includes home phone connect) Postpaid Total Phone Subs 84,026 86,501 87,825 88,758 88,683 92,199 93,428 93,717 93,717 93,929 94,036 Postpaid Smart Subs 48,819 60,550 69,030 74,290 75,115 78,830 80,629 83,408 83,408 85,475 85,573 % of Total Phone Subs 58.1% 70.0% 78.6% 83.7% 84.7% 85.5% 86.3% 89.0% 89.0% 91.0% 91.0% Postpaid Feature Subs 35,207 25,950 18,794 14,468 13,569 13,369 12,800 10,309 10,309 8,454 8,463 Postpaid Internet Device Subs 8,504 10,270 14,254 17,770 18,485 15,584 14,797 15,258 15,258 17,046 18,739 % of Total Postpaid Base 9.3% 10.7% 14.1% 16.8% 17.3% 14.5% 13.7% 14.1% 14.1% 15.5% 16.8% Phone Net Adds 3,673 2,413 1, (74) 86 (36) Smartphone Net Adds 13,866 11,731 8,480 5, ,799 2,779 5,552 2, Feature Net Adds (10,193) (9,257) (7,156) (4,327) (899) (200) (569) (2,491) (4,159) (1,855) 10 Internet Device Net Adds 1,475 1,766 4,134 3, (2,901) (787) 462 (2,512) 1,788 1,693 Phone Gross Adds 12,639 12,282 12,048 11,016 2,481 2,636 2,860 3,095 11,072 11,246 11,047 Smart Gross Adds 14,860 13,930 11,633 8,128 1, ,803 3,714 8,993 5,918 3,895 Feature Gross Adds (external net (2,221) (1,648) 415 2, , (619) 2,080 5,328 7,152 Internet Device Gross Adds 2,190 2,786 5,748 5,398 1,236 1, ,110 3,687 3,776 Churned Feature Subs 7,972 7,608 7,571 7,215 1,793 1, ,872 6,238 7,183 7,142 Churned Smart Subs 994 2,199 3,153 2, , ,441 3,851 3,797 Total Churned Subs 9,805 10,950 12,314 11,907 3,077 3,031 3,370 3,258 12,736 12,933 13,022 Churned Phone subs 8,966 9,869 10,807 10,083 2,555 2,550 2,896 2,807 10,809 11,034 10,940 Phones Upgraded 24,158 24,017 28,470 27,735 5,550 5,207 5,718 7,348 23,823 25,977 25,398 Smart Upgrades 13,987 17,106 25,443 27,566 5,842 6,335 5,183 6,416 23,775 30,188 31,457 Internet Device Upgrades Revenue per Device Sale $189.4 $195.5 $227.8 $362.5 $398.8 $392.0 $388.5 $387.8 $391.4 $400.3 $400.3 Revenue per Phone Sale $218.0 $223.4 $270.5 $436.7 $492.4 $472.3 $480.8 $483.5 $482.4 $482.2 $482.2 Cost per Device Sale $400.0 $440.0 $490.0 $504.1 $491.5 $437.5 $500.0 $490.0 $500.0 $501.0 Equipment Cost $21,625 $23,119 $4,998 $4,644 $4,644 $6,511 $20,797 $22,423 $21,999 Smarphone % of Total Phone Sal 78.4% 85.5% 91.5% 92.1% 92.5% 92.1% 93.1% 97.0% 93.9% 97.0% 97.0% Smart Sales 28,847 31,037 37,076 35,694 7,428 7,223 7,986 10,130 32,768 36,106 35,352 Feature Sales 7,950 5,263 3,441 3, ,127 1,117 1,093 Total Phone Sales 36,797 36,299 40,518 38,751 8,031 7,843 8,578 10,443 34,895 37,222 36,445 Phone % of Total Device Sales 86.9% 87.5% 84.2% 83.0% 81.0% 83.0% 80.8% 80.2% 84.0% 83.0% 83.0% Total Device Sales 42,353 41,490 48,116 46,688 9,914 9,449 10,616 13,022 43,002 44,846 43,910 Internet Device Sales 5,556 5,190 7,599 7,937 1,884 1,606 2,038 2,578 8,107 7,624 7,465 % of Postpaid Sub Base Upgrade 7.7% 7.0% 7.7% 7.3% 5.8% 5.4% 6.3% 8.3% 6.5% 6.8% 6.5% Upgrades 27,524 26,422 30,320 30,274 6,197 5,804 6,804 9,014 27,819 29,913 29, % EDGE Program % of phone activations 17.5% 54.2% 68.0% 67.0% 70.0% 70.0% 68.9% 72.0% 75.0% EDGE Phone Sales 7,107 20,996 5,461 5,255 6,004 7,310 24,031 26,800 27,334 Equipment Revenue Lift 2,842,887 8,398,249 2,184,342 2,101,944 2,401,759 2,924,175 9,612,220 10,720,050 10,933,528 % Postpaid phone base on EDGE 29.0% 48.0% 53.0% 53.3% 54.2% 54.2% 55.6% 57.4% EDGE phone base 7,026 25,740 42,568 48,865 49,798 50,810 50,810 52,246 53,996 EDGE net adds 18,714 16,828 6, ,012 25,070 1,437 1,750 EDGE ARPU delta $15.0 $15.0 $15.0 $15.0 $15.0 $15.0 $15.0 $14.0 $15.0 ARPU Shortfall $1,264,676 $4,633,153 $1,915,559 $2,198,947 $2,240,895 $2,286,441 $9,145,764 $8,777,380 $9,719,347 EBITDA benefit $1,578,211 $3,765,096 $268,783 -$97,004 $160,863 $637,734 $466,456 $1,942,670 $1,214,180 Source: Company Reports & Oppenheimer & Co. Inc. estimates. 8

9 VZ (PERFORM) - NA 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 October 20, 2016 Facebook, Inc. (FB - NASDAQ, $130.11, OUTPERFORM) Google, Inc. (GOOG - NASDAQ, $801.56, OUTPERFORM) Sprint (S - NYSE, $6.88, PERFORM) AT&T, Inc. (T - NYSE, $39.38, OUTPERFORM) T-Mobile (TMUS - NYSE, $47.32, OUTPERFORM) 9

10 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. 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. 10

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