Verizon Communications Inc.

April 22, 2016 Verizon Communications Inc. VZ * - NYSE Rating: Neutral Price: (4/21/16) $50.03 Price Targets: 12-18 month: $53 5-year: $57 Industry: Telecommunications James G. Moorman, CFA 212.240.9863 jmoorman@dadco.com Q1 Earnings: Strike Pushes Out Cost-Cutting And Could Impact Q2 Results. Verizon reported revenues of $32,171 million, which increased 0.6% year-overyear (YoY) (down 1.5% excluding AOL), below consensus and our estimate. Wireless revenue declined 1.5% YoY to $22,004 million and wireline revenue declined 1.9% to $9,290 million. Verizon reported postpaid net additions of 463k, including a loss of 8k phone subscribers due to declines in basic and 3G phones. The company added 507k tablets in the quarter. Prepaid subscribers declined by 177k and we expect this subscriber base to continue to decline as it appears not to be a priority compared to postpaid subscribers. Postpaid churn of 0.96% was an improvement from 1.03% a year earlier. Adjusted EBITDA of $11,982 million was roughly in line with consensus and below our estimate. The company reported EPS of $1.06, which compares with the $1.06 consensus and our estimate of $1.07. Strike could delay cost-cuts. The company stated that ongoing union negotiations could delay cost-cutting measures. Due to the delay in cost-cutting, the company expects earnings pressure in Q2, but has maintained its full-year forecast. While we continue to believe the strike will have a minimal impact beyond some installation delays, cost-cutting was expected to help offset the loss of profits from the wireline properties sold to Frontier (FTR-BUY-$5.55) and as a result we have reduced our Q2 EPS estimate. Full speed ahead with Go90. The company appears to be very focused on building the Go90 platform. During Q1, Verizon announced a joint venture with Hearst to create new content and then recently announced VZ and Hearst will acquire Complex Media. We also believe VZ could purchase assets from Yahoo (YHOO-$37.67). We remain skeptical on the success of Go90 and the amount of investment VZ is putting into the Go90 project. Fixed wireless pilot for 5G. VZ remains committed to being the first carrier in the U.S. to deploy 5G. The company is currently testing 5G and plans to conduct a fixed wireless pilot in 2017. VZ continues to densify its wireless network with small cells, which will help position it for a 5G launch. It also plans to add to its fiber network to support 5G by acquiring XO Communications and a fiber expansion in Boston. The fiber expansion in Boston is expected to cost $300 million over 5-6 years and is already in wireline capital. Maintaining NEUTRAL rating. We value VZ at 6.6x our 2017 EBITDA estimate to arrive at a per share price target of $53. Our target EV/EBITDA multiple of 6.6x is above the average for our comparable analysis; we believe it deserves a premium, but feel that the current multiple is appropriate due to the coming divestiture. Our target multiple is roughly at the historic midpoint, we believe is an appropriate valuation. Valuation Data Long-term growth rate (E) 2% Total Debt/Cap (12/31/15) 86.1% Cash per share (12/31/15) $1.18 Book value per share (12/31/15) $4.38 Dividend (yield) $2.26 (4.4%) Return on Equity (T-T-M) 65.1% Trading Data Shares outstanding (M) 4,073.0 Market Capitalization ($M) $205,523.6 52-week range $38.06-$51.02 Average daily volume (3 mos.) (K) 15,608.9 Float 100% Index Membership S&P 500 FY (Dec) 2015A 2016E Previous 2017E Previous Revenue ($M) Q1 (Mar) $31,984.0 $32,171.0A $32,673.7 $32,266.4 $32,513.3 Q2 (Jun) $32,224.0 $31,221.4E $32,021.4 $32,527.8 $32,727.3 Q3 (Sep) $33,158.0 $32,006.9E $32,169.0 $32,678.2 $32,719.8 Q4 (Dec) $34,254.0 $34,067.3E $34,097.4 $34,207.7 $34,252.0 $131,620.0 $129,466.5E $130,961.6 $131,680.1 $132,212.3 Price/Revenue 1.6x 1.6x 1.6x EPS Q1 (Mar) $1.02 $1.06 $1.07 $1.02 NC Q2 (Jun) $1.04 $0.95 $0.97 $1.00 $1.03 Q3 (Sep) $1.04 $0.97 NC $1.02 $0.99 Q4 (Dec) $0.89 $1.00 $0.99 $1.04 $1.01 $3.99 $3.98 $4.00 $4.09 $4.05 Price/EPS 12.6x 12.6x 12.5x EBITDA ($M) Q1 (Mar) $11,949.0 $11,982.0 $12,029.0 $11,713.9 $11,781.8 Q2 (Jun) $11,801.0 $11,279.7 $11,439.0 $11,564.6 $11,868.7 Q3 (Sep) $11,886.0 $11,279.8 $11,420.6 $11,749.0 $11,629.4 Q4 (Dec) $10,931.0 $11,521.6 $11,576.0 $11,874.9 $11,763.3 $46,567.0 $46,063.0 $46,464.7 $46,902.3 $47,043.3 EV/EBITDA 6.7x 6.7x 6.6x Please refer to pages 11-12 of this report for detailed disclosure and certification information. * D. A. Davidson & Co. makes a market in this security. D.A. Davidson & Co. Member SIPC

Price Chart Source: Capital IQ Company Description: New York, NY Verizon is a provider of wireline and wireless products and services to consumers, businesses, and government in the U.S. and around the world. Its wireless segment offers communications products and services including voice, data, and equipment sales to a mixture of postpaid, prepaid, and wholesale subscribers. The company currently ranks second among the top four wireless providers in terms of total subscribers and its 4G LTE network covers 308 million POPs. Its wireline segment provides voice, data, and video communications products and services, which include broadband video and data, corporate networking solutions, data center and cloud services, security and managed network services, and voice services. Potential Risks: Wireless industry is highly competitive. Verizon faces significant competition in the wireless industry where the top four largest carriers make up 99% of total subscribers. There are major wireless providers as well as regional providers and MVNOs (mobile virtual network operators) competing for a limited number of subscribers. Wireless is a capital intensive industry. Due to rapid growth in wireless data consumption and technological evolution, wireless is very capital intensive. The industry is in constant upgrade to meet increased network demands as well as purchasing additional spectrum. Competition in wireline. The company faces an increasingly competitive environment that includes cable companies, wireless service providers, other telecommunications providers, satellite television companies, Internet service providers, and other companies that offer network services. High debt levels. Verizon took on significant debt to acquire Vodafone s 45% stake in Verizon Wireless for $130 billion. As of March 31, 2015, the company had total debt of $109.9 billion and a net debt to adjusted EBITDA of 2.2x. 2

Changes To Estimates Strike Delays Cost-Cuts Full-Speed Ahead With Go90 Fios Drives Wireline Growth Fixed Wireless Pilot For 5G Net/Net We are reducing our Q2 estimates for the delay in cost-cutting, but are only taking our full-year estimate down by $0.01 due to Q1 actual being $0.01 below our estimate. We are reducing our 2017 revenue and EBITDA estimates on our expectations for lower wireline growth, but are increasing 2017 EPS due to lower debt levels from the FTR proceeds. The company stated that ongoing union negotiations could delay cost-cutting measures. Due to the delay in cost-cutting, the company expects earnings pressure in Q2, but has maintained its full-year forecast. The company has already started to cut costs by reducing overall headcount by 3% and in calling rates and store fronts, but we believe the third portion would include the northeast wireline properties and that is being held up by contract negotiations. While we continue to believe the strike will have a minimal impact beyond some installation delays, cost-cutting was expected to help offset the loss of profits from the wireline properties sold to Frontier and as a result we have reduced our Q2 EPS estimate. The company appears to be very focused on building the Go90 platform. During Q1, Verizon announced a joint venture with Hearst to create new content and then recently announced VZ and Hearst will acquire Complex Media. We also believe VZ could purchase assets from Yahoo. It was questioned on the call whether a NPRM on privacy at the FCC could reduce the ability to monetize AOL or Yahoo assets. We do not expect a major impact from the NPRM, but we remain skeptical on the success of Go90 and the amount of investment VZ is putting into the Go90 project. The company added 98,000 Fios broadband net adds, although total broadband subscribers declined by 10k while Fios video saw net adds of 36k. Total Fios revenue increased 5.0% YoY and consumer Fios increased 4.7% as demand for Quantum and higher data speeds drove the revenue increase. At the end of Q1, roughly 78% of Fios Internet subscribers had a plan with speeds of 50 Mbps or higher. On the video side, custom TV packages are seeing high demand and accounted for approximately 38% of Fios video sales in Q1. Custom video sales tend to generate less revenue than standard video packages, but result in higher EBITDA margins. Fixed wireless pilot for 5G. VZ remains committed to being the first carrier in the U.S. to deploy 5G. The company is currently testing 5G and plans to conduct a fixed wireless pilot in 2017. We believe fixed wireless will be a major component of 5G rollouts, although it remains to be seen what the cost will be and how it can be scaled. VZ continues to densify its wireless network with small cells, which will help position it for a 5G launch. It also plans to add to its fiber network to support 5G by acquiring XO Communications and a fiber expansion in Boston. The fiber expansion in Boston is expected to cost $300 million over five-six years and is already in wireline capital. For video in Boston, the local franchising authority (LFA) has to be negotiated with the City Council and will take roughly six months. We believe this upgrade makes a lot of sense given the infrastructure it had in the area and the need to densify for LTE and 5G. We do not believe the strike will have a material impact if it is concluded in the near-term and expect the full cost-cutting measures to be put into place. We do have concerns about the amount of capital that Verizon may put into its Go90 platform and how successful it will be over time. 3

Company T-Mobile Sprint Verizon AT&T US Cellular Ticker TMUS* S* VZ* T* USM Rating BUY NEUTRAL NEUTRAL BUY NA 4/21/2016 $40.26 $3.64 $49.63 $37.98 $41.97 ($M, except per share values) # shares 824.7 3,971.2 4,080.0 6,200.0 84.4 Mkt. Cap $33,203 $14,455 $202,490 $235,476 $3,541 Total Debt $22,445 $33,753 $110,194 $126,151 $1,640 Enterprise Value $55,648 $45,992 $307,864 $356,506 $4,561 13A EBITDA Growth -16.9% 13.4% 10.9% -0.6% -24.9% 14A EBITDA Growth 6.0% 10.2% 2.9% -0.7% -43.1% 15A EBITDA Growth 31.2% 33.4% 7.7% 14.2% 81.1% 16E EBITDA Growth 20.4% 19.2% -1.1% 15.7% 21.0% 17E EBITDA Growth 10.7% 13.0% 1.8% 5.8% 12.5% EV/'14A EBITDA 9.9 7.7 7.1 8.6 13.1 EV/'15A EBITDA 7.5 5.7 6.6 7.6 7.2 EV/'16E EBITDA 6.3 4.8 6.7 6.5 6.0 EV/'17E EBITDA 5.7 4.3 6.6 6.2 5.3 14A Revenue Growth 13.1% -2.7% 5.4% 2.9% -0.9% 15A Revenue Growth 8.4% -7.0% 3.6% 10.8% 3.3% 16E Revenue Growth 8.3% 0.4% -1.6% 13.4% -0.9% 17E Revenue Growth 7.9% 3.6% 1.7% 2.3% 0.1% EV/'14A Revenue 1.9 1.3 2.4 2.7 1.2 EV/'15A Revenue 1.7 1.4 2.3 2.4 1.1 EV/'16E Revenue 1.6 1.4 2.4 2.1 1.1 EV/'17E Revenue 1.5 1.4 2.3 2.1 1.1 P/E - '14A n.m. n.m. 13.7 14.8 n.m. P/E - '15A 32.8 n.m. 12.4 14.0 n.m. P/E - '16E 35.0 n.m. 12.5 13.2 65.1 P/E - '17E 27.4 n.m. 12.1 12.4 45.8 CapEx as % of Rev - '14A 15% 17% 14% 16% 16% CapEx as % of Rev - '15A 15% 25% 14% 14% 15% CapEx as % of Rev - '16E 13% 29% 13% 13% 13% CapEx as % of Rev - '17E 11% 28% 13% 13% 13% EBITDA Margin - '14A 19% 17% 34% 31% 9% EBITDA Margin - '15A 23% 25% 35% 32% 16% EBITDA Margin - '16E 26% 30% 36% 33% 19% EBITDA Margin - '17E 26% 32% 36% 34% 22% Dividend Yield 0.0% 0.0% 4.6% 5.1% 0.0% Source: D.A. Davidson Estimates and Capital IQ Estimates *D.A. Davidson & Co. makes a market in this security T-Mobile EBITDA multiples exclude the non-cash benefit from leasing 4

Verizon Balance Sheet Est Est Est Est Est Est Est Est Est (millions, except per share data) 2014 2015 2016 2017 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Cash 11,153 4,820 3,266 9,534 3,544 6,424 7,853 11,153 4,933 3,317 4,181 4,820 5,846 3,834 1,013 3,266 4,335 5,960 7,423 9,534 A/R 13,993 13,457 13,736 13,496 12,131 12,966 13,283 13,993 12,698 13,444 13,105 13,457 12,485 12,588 12,905 13,736 12,730 12,833 12,892 13,496 Other C/A 4,477 4,003 5,284 5,284 7,597 3,497 3,637 4,477 5,205 4,741 4,482 4,003 5,284 5,284 5,284 5,284 5,284 5,284 5,284 5,284 Gross PPE 230,508 220,163 235,974 253,096 223,841 227,475 230,452 230,508 210,389 213,661 216,674 220,163 222,669 227,006 231,290 235,974 239,777 244,218 248,642 253,096 Less accumulated dep. (140,561) (136,622) (151,806) (168,123) (134,785) (137,763) (140,520) (140,561) (128,747) (131,129) (134,112) (136,622) (139,658) (143,702) (147,753) (151,806) (155,863) (159,937) (164,025) (168,123) Net PPE 89,947 83,541 84,168 84,972 89,056 89,712 89,932 89,947 81,642 82,532 82,562 83,541 83,011 83,305 83,537 84,168 83,914 84,280 84,617 84,972 Net Intangible Assets 105,708 120,244 116,410 116,410 103,199 105,714 105,658 105,708 104,775 119,733 119,777 120,244 120,410 111,410 116,410 116,410 116,410 116,410 116,410 116,410 Other Assets 7,430 18,575 17,551 17,551 6,035 6,114 5,930 7,430 26,537 16,986 17,966 18,575 17,551 17,551 17,551 17,551 17,551 17,551 17,551 17,551 Total Assets 232,708 244,640 240,414 247,247 221,562 224,427 226,293 232,708 235,790 240,753 242,073 244,640 244,587 233,972 236,700 240,414 240,224 242,319 244,177 247,247 S/T Debt 2,735 6,489 6,265 6,265 2,152 2,283 1,603 2,735 4,439 4,206 7,264 6,489 6,265 6,265 6,265 6,265 6,265 6,265 6,265 6,265 A/P 16,680 19,362 18,284 17,621 14,984 16,521 17,055 16,680 15,189 16,953 17,721 19,362 18,118 16,172 16,809 18,284 16,217 16,541 16,514 17,621 Other C/L 8,649 9,201 8,929 8,929 8,217 7,689 8,231 8,649 9,085 9,486 9,507 9,201 8,929 8,929 8,929 8,929 8,929 8,929 8,929 8,929 LT Debt 110,536 103,705 92,915 92,915 107,617 107,696 107,627 110,536 108,949 109,465 105,060 103,705 103,615 92,915 92,915 92,915 92,915 92,915 92,915 92,915 Equity unit notes (SDE) 0 0 0 0 Deferred Taxes 41,578 45,484 46,918 46,918 41,597 42,027 42,289 41,578 42,330 42,945 42,896 45,484 45,568 46,018 46,468 46,918 46,918 46,918 46,918 46,918 Other 38,854 42,557 41,989 41,989 33,144 32,199 31,520 38,854 45,039 44,824 45,083 42,557 41,989 41,989 41,989 41,989 41,989 41,989 41,989 41,989 Prfd Stock 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Equity 13,676 17,842 25,115 32,610 13,851 16,012 17,968 13,676 10,759 12,874 14,542 17,842 20,103 21,684 23,325 25,115 26,991 28,762 30,647 32,610 Liabilities + Equity 232,708 244,640 240,414 247,247 221,562 224,427 226,293 232,708 235,790 240,753 242,073 244,640 244,587 233,972 236,700 240,414 240,224 242,319 244,177 247,247 5

Verizon (figures in millions, except per share) Est Est Est Est Est Est Est Est Est Cash flow analysis 2014 2015 2016 2017 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Net income 14,364 16,333 16,269 16,761 3,941 3,784 3,695 2,944 4,219 4,231 4,260 3,623 4,333 3,889 3,949 4,098 4,193 4,087 4,202 4,279 D&A 16,533 16,017 16,165 16,317 4,137 4,161 4,167 4,068 3,989 3,980 4,009 4,039 4,017 4,044 4,051 4,053 4,057 4,075 4,087 4,099 Change in Working Capital (1,327) 3,218 (1,357) (422) (1,161) 702 217 (1,085) (196) 1,018 1,107 1,289 (272) (2,049) 320 644 (1,061) 221 (86) 504 Deferred Income Taxes (92) 3,516 1,517 0 (155) 408 661 (1,006) 823 3 64 2,626 167 450 450 450 Other operating 1,153 (154) (826) 0 377 (1,390) (387) 2,553 1,334 (495) 80 (1,073) (826) Net cash from operations 30,631 38,930 31,768 32,656 7,139 7,665 8,353 7,474 10,169 8,737 9,520 10,504 7,419 6,334 8,770 9,245 7,188 8,383 8,203 8,882 Capex (17,191) (17,775) (16,692) (17,121) (4,150) (4,344) (4,130) (4,567) (3,665) (4,488) (4,387) (5,235) (3,387) (4,337) (4,283) (4,684) (3,803) (4,441) (4,424) (4,454) Other investing 1,335 (12,268) 3,951 0 (381) 2,529 46 (859) (9,511) (2,507) (38) (212) (49) 9,000 (5,000) Net cash from investing (15,856) (30,043) (12,741) (17,121) (4,531) (1,815) (4,084) (5,426) (13,176) (6,995) (4,425) (5,447) (3,436) 4,663 (9,283) (4,684) (3,803) (4,441) (4,424) (4,454) Sale of stock 34 0 0 0 34 0 0 0 0 0 0 Change in debt, net 12,823 (3,017) (11,116) 0 9,253 (46) (652) 4,268 1,403 (809) (1,570) (2,041) (416) (10,700) 0 0 0 0 0 0 Dividends (7,803) (8,538) (9,226) (9,266) (1,517) (2,066) (2,070) (2,150) (2,153) (2,113) (2,107) (2,165) (2,302) (2,308) (2,308) (2,308) (2,317) (2,317) (2,317) (2,317) Other financing (62,759) (3,460) 111 0 (60,999) (869) (105) (786) (2,455) (198) (551) (256) 111 Net cash from financing (57,705) (15,015) (20,231) (9,266) (53,229) (2,981) (2,827) 1,332 (3,205) (3,120) (4,228) (4,462) (2,607) (13,008) (2,308) (2,308) (2,317) (2,317) (2,317) (2,317) Change in cash (42,930) (6,128) (1,204) 6,268 (50,621) 2,869 1,442 3,380 (6,212) (1,378) 867 595 1,376 (2,012) (2,822) 2,253 1,069 1,626 1,462 2,112 Cash at beginning 53,528 10,598 4,470 3,266 53,528 2,907 5,776 7,218 10,598 4,386 3,008 3,875 4,470 5,846 3,834 1,013 3,266 4,335 5,960 7,423 Cash at end 10,598 4,470 3,266 9,534 2,907 5,776 7,218 10,598 4,386 3,008 3,875 4,470 5,846 3,834 1,013 3,266 4,335 5,960 7,423 9,534 Source: Company data, D.A. Davidson Estimates 6

Verizon Wireless (figures in millions, except per share) Est Est Est Est Est Est Est Est Est Subscriber analysis 2014 2015 2016 2017 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Total Postpaid Subscribers 102.079 106.528 110.696 114.521 97.273 98.593 100.103 102.079 102.637 103.731 105.023 106.528 107.171 108.146 109.321 110.696 111.196 112.171 113.246 114.521 Average 99.416 104.304 108.612 112.609 97.013 97.933 99.348 101.091 102.358 103.184 104.377 105.776 106.850 107.659 108.734 110.009 110.946 111.684 112.709 113.884 Net 5.482 4.507 4.165 3.825 0.539 1.441 1.516 1.986 0.565 1.134 1.289 1.519 0.640 0.975 1.175 1.375 0.500 0.975 1.075 1.275 Gross 17.796 16.414 16.774 16.965 3.653 4.203 4.496 5.443 3.728 3.920 4.201 4.565 3.717 4.108 4.274 4.675 3.762 4.225 4.287 4.692 Acquisition (divestiture) -0.155-0.058 0.003 0.000-0.018-0.121-0.006-0.010-0.007-0.040 0.003-0.014 0.003 Churn 12.314 11.907 12.609 13.140 3.114 2.762 2.980 3.457 3.163 2.786 2.912 3.046 3.077 3.133 3.099 3.300 3.262 3.250 3.212 3.417 Churn rate 1.03% 0.95% 0.97% 0.97% 1.1% 0.9% 1.0% 1.1% 1.0% 0.9% 0.9% 1.0% 1.0% 0.97% 0.95% 1.00% 0.98% 0.97% 0.95% 1.00% Retail postpaid accounts 35.616 35.736 36.175 36.472 35.061 35.186 35.435 35.616 35.516 35.560 35.677 35.736 35.720 35.810 35.961 36.175 36.103 36.184 36.297 36.472 Average 35.350 35.676 35.956 36.323 35.072 35.124 35.311 35.526 35.566 35.538 35.619 35.707 35.728 35.765 35.885 36.068 36.139 36.143 36.240 36.384 Retail postpaid connections per account 2.870 2.980 3.060 3.140 2.77 2.80 2.82 2.87 2.89 2.92 2.94 2.98 3.00 3.02 3.04 3.06 3.08 3.10 3.12 3.14 Average 2.815 2.925 3.020 3.100 2.765 2.785 2.81 2.845 2.88 2.905 2.93 2.96 2.99 3.01 3.03 3.05 3.07 3.09 3.11 3.13 Retail postpaid ARPA $ 159.45 $ 152.34 $ 145.94 $ 148.11 $ 159.67 $ 159.73 $ 161.24 $ 158.82 $ 156.14 $ 153.73 $ 152.38 $ 148.30 $ 145.00 $ 145.00 $ 147.00 $ 148.25 $ 148.25 $ 148.50 $ 148.50 $ 148.75 Postpaid service revenue $67,638 $65,218 $62,966 $64,556 16,800 16,831 17,080 16,926 16,660 16,390 16,283 15,886 15,542 15,558 15,825 16,041 16,073 16,102 16,145 16,236-0.07135 Monthly post-paid yield $58.26 $53.61 $49.63 $48.96 $57.72 $57.29 $57.31 $55.81 $54.25 $52.95 $52.00 $50.06 $48.48 $48.17 $48.51 $48.61 $48.29 $48.06 $47.75 $47.52 Reported Monthly post-paid yield (ARPU) $56.64 $52.08 $48.32 $47.78 $57.75 $57.35 $57.38 $55.82 $54.22 $52.92 $52.01 $50.10 $48.49 $48.17 $48.51 $48.61 $48.29 $48.06 $47.75 $47.52 Total Postpaid Revenue $67,638 $65,218 $62,966 $64,556 16,800 16,831 17,080 16,926 16,660 16,390 16,283 15,886 15,542 15,558 15,825 16,041 16,073 16,102 16,145 16,236 2.93% Retail Prepaid Subscribers 6.132 5.580 5.010 4.488 6.057 6.044 6.053 6.132 5.945 5.817 5.737 5.580 5.402 5.267 5.182 5.010 4.875 4.750 4.675 4.488 Average Prepaid subs 6.090 5.856 5.295 4.749 6.052 6.051 6.049 6.093 6.039 5.881 5.777 5.659 5.491 5.335 5.225 5.096 4.943 4.813 4.713 4.582 Prepaid Net Adds 0.086-0.551-0.570-0.522 0.010-0.014 0.009 0.081-0.188-0.126-0.080-0.157-0.178-0.135-0.085-0.172-0.135-0.125-0.075-0.187 Prepaid Gross Adds 4.456 3.838 3.457 3.078 1.132 1.124 1.107 1.093 0.974 0.949 1.006 0.909 0.890 0.873 0.902 0.791 0.799 0.785 0.816 0.679 Acquisition (divestiture) -0.001-0.001 0.000 0.000 0.000 0.001 0.000-0.002 0.001-0.002 0.000 Churn 4.370 4.389 4.027 3.600 1.122 1.138 1.098 1.012 1.162 1.075 1.086 1.066 1.068 1.008 0.987 0.963 0.934 0.910 0.891 0.866 Prepaid Churn Rate 6% 6.3% 6.3% 6.3% 6.2% 6.3% 6.1% 5.5% 6.4% 6.1% 6.3% 6.3% 6.5% 6.3% 6.3% 6.3% 6.3% 6.3% 6.3% 6.3% Prepaid ARPU $25.50 $26.80 $27.10 $28.02 $24.57 $25.19 $26.21 $26.51 $26.67 $26.62 $26.97 $27.29 $26.85 $27.05 $27.25 $27.45 $27.65 $27.85 $28.05 $28.25 Prepaid Service Revenue $1,863 $1,883 $1,722 $1,597 $446 $457 $476 $485 $483 $470 $467 $463 $442 $433 $427 $420 $410 $402 $397 $388 Total Retail Connections 108.211 112.108 115.706 119.009 103.330 104.637 106.156 108.211 108.582 109.548 110.760 112.108 112.573 113.413 114.503 115.706 116.071 116.921 117.921 119.009 Total Average Retail Connections 105.505 110.160 113.907 117.358 103.065 103.984 105.397 107.184 108.397 109.065 110.154 111.434 112.341 112.993 113.958 115.105 115.889 116.496 117.421 118.465 Total Net 5.568 3.956 3.595 3.303 0.549 1.427 1.525 2.067 0.377 1.008 1.209 1.362 0.462 0.840 1.090 1.203 0.365 0.850 1.000 1.088 Gross 22.252 20.252 20.231 20.044 4.785 5.326 5.604 6.537 4.702 4.869 5.208 5.474 4.607 4.981 5.176 5.466 4.561 5.010 5.103 5.370 Churn 16.684 16.296 16.636 16.741 4.236 3.899 4.079 4.470 4.325 3.861 3.999 4.112 4.145 4.141 4.086 4.263 4.196 4.160 4.103 4.282 Churn rate 1.33% 1.24% 1.22% 1.19% 1.37% 1.25% 1.29% 1.39% 1.33% 1.18% 1.21% 1.23% 1.23% 1.22% 1.20% 1.23% 1.21% 1.19% 1.16% 1.20% Source: Company data, D.A. Davidson Estimates 7

Verizon - Wireless (figures in millions, except per share) Est Est Est Est Est Est Est Est Est Income statement 2014 2015 2016 2017 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Retail Service Revenue 69,501 67,102 64,688 66,153 17,246 17,288 17,556 17,411 17,143 16,860 16,750 16,349 15,984 15,991 16,253 16,461 16,483 16,504 16,542 16,625 Other Service Revenue 3,129 3,295 3,525 3,807 741 790 800 798 771 830 848 846 825 888 907 905 891 959 980 978 Total Service revenue $72,630 $70,396 $68,213 $69,960 $17,987 $18,078 $18,356 $18,209 $17,914 $17,689 $17,598 $17,195 $16,809 $16,878 $17,160 $17,366 $17,374 $17,463 $17,522 $17,602 Equipment revenue 10,959 16,924 19,198 20,163 1,870 2,387 2,480 4,222 3,373 3,861 4,292 5,398 3,954 4,235 4,838 6,170 4,612 4,765 4,948 5,838 Other Revenue 4,057 4,360 4,958 5,454 1,022 1,018 999 1,018 1,041 1,063 1,115 1,141 1,241 1,191 1,249 1,278 1,365 1,310 1,374 1,406 Total Revenue $87,646 $91,680 $92,369 $95,578 $20,879 $21,483 $21,835 $23,449 $22,328 $22,613 $23,005 $23,734 $22,004 $22,304 $23,247 $24,815 $23,351 $23,537 $23,843 $24,846 Cost of equipment 21,625 23,119 23,902 25,227 4,099 4,993 5,206 7,327 5,108 5,455 5,716 6,840 4,998 5,294 6,061 7,549 5,873 6,020 6,192 7,142 Cost of services 7,200 7,803 7,631 7,906 1,757 1,749 1,837 1,857 1,851 1,948 2,010 1,994 1,942 1,857 1,888 1,945 1,963 1,973 1,980 1,989 G&A 11,982 9,990 10,232 10,115 2,739 2,744 2,793 3,706 2,464 2,384 2,446 2,696 2,591 2,580 2,575 2,486 2,503 2,516 2,536 2,559 S&M 11,620 11,815 10,594 11,298 2,905 2,905 2,905 2,905 2,905 2,905 2,905 3,100 2,300 2,491 2,769 3,034 2,691 2,886 2,735 2,986 Adjusted EBITDA $35,219 $38,953 $40,011 $41,033 $9,379 $9,092 $9,094 $7,654 $10,000 $9,921 $9,928 $9,104 $10,173 $10,083 $9,954 $9,801 $10,321 $10,142 $10,400 $10,170 Depreciation and amortization 8,459 8,980 9,217 9,301 2,061 2,107 2,139 2,152 2,190 2,225 2,260 2,305 2,293 2,305 2,309 2,310 2,312 2,323 2,330 2,336 Adjusted Operating income $26,760 $29,973 $30,793 $31,732 $7,318 $6,985 $6,955 $5,502 $7,810 $7,696 $7,668 $6,799 $7,880 $7,778 $7,644 $7,490 $8,009 $7,819 $8,070 $7,834 Depr as a % of total 51.2% 56.1% 57.0% 57.0% 49.8% 50.6% 51.3% 52.9% 54.9% 55.9% 56.4% 57.1% 57.0% 57.0% 57.0% 57.0% 57.0% 57.0% 57.0% 57.0% Source: Company data, D.A. Davidson Estimates 8

Verizon Wireline Est Est Est Est Est Est Est Est Est (millions, except per share data) 2014 2015 2016 2017 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Consumer retail 15,583 16,123 13,673 13,121 3,840 3,864 3,902 3,977 3,992 4,037 4,012 4,082 4,022 3,199 3,190 3,262 3,200 3,289 3,279 3,353 Small Business 2,464 2,350 1,062 628 624 621 613 606 600 593 585 572 568 174 166 154 150 169 161 149 Mass Markets 18,047 18,473 14,735 13,749 4,464 4,485 4,515 4,583 4,592 4,630 4,597 4,654 4,590 3,373 3,356 3,415 3,350 3,457 3,440 3,502 Strategic services 8,324 8,165 8,011 8,091 2,071 2,075 2,067 2,111 2,048 2,030 2,012 2,075 2,015 2,010 1,911 2,075 2,035 2,030 1,931 2,096 Core 5,325 4,778 4,519 4,338 1,400 1,369 1,308 1,248 1,215 1,195 1,196 1,172 1,146 1,123 1,136 1,113 1,100 1,078 1,091 1,069 Global Enterprise 13,649 12,943 12,530 12,429 3,471 3,444 3,375 3,359 3,263 3,225 3,208 3,247 3,161 3,133 3,048 3,188 3,135 3,108 3,021 3,165 Global Wholesale 6,190 5,979 5,740 5,510 1,583 1,562 1,544 1,501 1,524 1,491 1,466 1,498 1,463 1,431 1,407 1,438 1,404 1,374 1,351 1,380 Other 543 325 295 236 144 140 142 117 90 77 84 74 76 89 71 59 61 71 57 47 Total Revenue 38,429 37,720 33,300 31,925 $9,662 $9,631 $9,576 $9,560 $9,469 $9,423 $9,355 $9,473 $9,290 $8,027 $7,882 $8,101 $7,950 $8,011 $7,869 $8,094 Cost Of Services And Products 21,332 20,878 18,568 17,479 5,339 5,342 5,325 5,326 5,287 5,206 5,203 5,182 5,163 4,575 4,374 4,456 4,353 4,386 4,308 4,432 Selling, General & Administration 8,180 7,989 7,231 6,704 2,149 2,031 2,048 1,952 2,031 2,007 1,952 1,999 1,950 1,846 1,734 1,701 1,670 1,682 1,653 1,700 EBITDA 8,917 8,853 7,500 7,742 $2,174 $2,258 $2,203 $2,282 $2,151 $2,210 $2,200 $2,292 $2,177 $1,605 $1,773 $1,944 $1,928 $1,943 $1,908 $1,963 Depreciation and amortization 7,882 6,678 6,812 7,016 2,033 2,005 1,978 1,866 1,746 1,706 1,623 1,603 1,588 1,739 1,742 1,743 1,744 1,752 1,758 1,762 EBIT (excluding restructuring) 1,035 2,175 688 725 141 253 225 416 405 504 577 689 589 (133) 31 201 184 191 151 201 Mass Markets Consumer retail 5.4% 3.5% -15% -4% 7.0% 6.1% 4.5% 4.1% 4.0% 4.5% 2.8% 2.6% 0.8% 2.4% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% Small Business -4.0% -4.6% -54.8% -41% -7.5% -5.3% -4.5% -4.7% -6.0% -6.4% -4.9% -3.3% -3.1% -3.1% -3.1% -3.1% -3.1% -3.1% -3.1% -3.1% Mass Markets Total 4.0% 2.4% -20.2% -7% 5.3% 4.5% 3.2% 3.0% 2.9% 3.2% 1.8% 1.5% 0.0% -27.1% -27.0% -26.6% -27.0% 2.5% 2.5% 2.5% Strategic services 0.3% -1.9% -1.9% 1.0% -0.8% -0.2% 0.9% 1.4% -1.1% -2.2% -2.7% -1.7% -1.6% -1.0% -5.0% 0.0% 1.0% 1.0% 1.0% 1.0% Core -13.5% -10.3% -5.4% -4.0% -16.0% -12.1% -11.9% -13.6% -13.2% -12.7% -8.6% -6.1% -5.7% -6.0% -5.0% -5.0% -4.0% -4.0% -4.0% -4.0% Global Enterprise -5.5% -5.2% -3.2% -0.8% -7.5% -5.3% -4.5% -4.7% -6.0% -6.4% -4.9% -3.3% -3.1% -2.9% -5.0% -1.8% -0.8% -0.8% -0.9% -0.7% Global Wholesale -6.6% -3.4% -4.0% -4.0% -8.3% -7.4% -4.9% -5.8% -3.7% -4.5% -5.1% -0.2% -4.0% -4.0% -4.0% -4.0% -4.0% -4.0% -4.0% -4.0% Other 8.6% -40.1% -9.2% -20.0% 30.9% 15.7% 11.8% -17.6% -37.5% -45.0% -40.8% -36.8% -15.6% 15.6% -15.6% -20.0% -20.0% -20.0% -20.0% -20.0% Total Revenue -1.3% -1.8% -11.7% -4.1% -1.7% -1.1% -0.8% -1.6% -2.0% -2.2% -2.3% -0.9% -1.9% -14.8% -15.7% -14.5% -14.4% -0.2% -0.2% -0.1% Profitability Analysis COS Margin 55.5% 55.3% 55.8% 54.8% 55.3% 55.5% 55.6% 55.7% 55.8% 55.2% 55.6% 54.7% 55.6% 57.0% 55.5% 55.0% 54.8% 54.8% 54.8% 54.8% SG&A Margin 21.3% 21.2% 21.7% 21.0% 22.2% 21.1% 21.4% 20.4% 21.4% 21.3% 20.9% 21.1% 21.0% 23.0% 22.0% 21.0% 21.0% 21.0% 21.0% 21.0% EBITDA margin 23.2% 23.5% 22.5% 24.3% 22.5% 23.4% 23.0% 23.9% 22.7% 23.5% 23.5% 24.2% 23.4% 20.0% 22.5% 24.0% 24.3% 24.3% 24.3% 24.3% EBIT margin 2.7% 5.8% 2.1% 2.3% 1.5% 2.6% 2.3% 4.4% 4.3% 5.3% 6.2% 7.3% 6.3% -1.7% 0.4% 2.5% 2.3% 2.4% 1.9% 2.5% % of total D&A 47.7% 41.7% 42.1% 43.0% 49.1% 48.2% 47.5% 45.9% 43.8% 42.9% 40.5% 39.7% 43.0% 43.0% 43.0% 43.0% 43.0% 43.0% 43.0% 43.0% Revenue Mix Mass Markets 47.0% 49.0% 44.2% 43.1% 46.2% 46.6% 47.1% 47.9% 48.5% 49.1% 49.1% 49.1% 49.4% 42.0% 42.6% 42.2% 42.1% 43.2% 43.7% 43.3% Global Enterprise 35.5% 34.3% 37.6% 38.9% 35.9% 35.8% 35.2% 35.1% 34.5% 34.2% 34.3% 34.3% 34.0% 39.0% 38.7% 39.4% 39.4% 38.8% 38.4% 39.1% Global Wholesale 16.1% 15.9% 17.2% 17.3% 16.4% 16.2% 16.1% 15.7% 16.1% 15.8% 15.7% 15.8% 15.7% 17.8% 17.9% 17.8% 17.7% 17.2% 17.2% 17.1% Other 1.4% 0.9% 0.9% 0.7% 1.5% 1.5% 1.5% 1.2% 1.0% 0.8% 0.9% 0.8% 0.8% 1.1% 0.9% 0.7% 0.8% 0.9% 0.7% 0.6% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Company data, D.A. Davidson Estimates 9

Verizon Income Statement Est Est Est Est Est Est Est Est Est (millions, except per share data) 2014 2015 2016 2017 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Wireless 87,646 91,680 92,369 95,578 20,879 21,483 21,835 23,449 22,328 22,613 23,005 23,734 22,004 22,304 23,247 24,815 23,351 23,537 23,843 24,846 Wireline 38,429 37,720 33,300 31,925 9,662 9,631 9,576 9,560 9,469 9,423 9,355 9,473 9,290 8,027 7,882 8,101 7,950 8,011 7,869 8,094 Other 1,004 2,220 3,798 4,177 $277 $369 $175 $183 $187 $188 $798 $1,047 $877 $891 $878 $1,152 $965 $980 $966 $1,267 Total Revenue $127,079 $131,620 $129,467 $131,680 30,818 31,483 31,586 33,192 31,984 32,224 33,158 34,254 32,171.0 31,221 32,007 34,067 32,266 32,528 32,678 34,208 Cost of Service (incl. w'less equip.) 50,157 51,800 50,101 50,611 11,195 12,084 12,368 14,510 12,246 12,609 12,929 14,016 12,103 11,725 12,324 13,949 12,189 12,379 12,480 13,563 Other Cost of Service (226) 757 2,234 2,550 (6) 3 (116) (107) (150) (160) 376 691 509 575 575 575 625 625 650 650 SG&A 31,782 29,794 28,057 28,116 7,793 7,680 7,746 8,563 7,400 7,296 7,303 7,795 6,841 6,916 7,079 7,221 6,864 7,084 6,924 7,245 Other 2,100 2,702 3,011 3,500 539 577 531 453 539 678 664 821 736 725 750 800 875 875 875 875 Nonrecurring charges 12 0 0 0 6 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Adjusted EBITDA $43,254 $46,567 $46,063 $46,902 $11,291 $11,133 $11,057 $9,773 $11,949 $11,801 $11,886 $10,931 $11,982.0 $11,280 $11,280 $11,522 $11,714 $11,565 $11,749 $11,875 Depreciation 16,533 16,017 16,165 16,317 4,137 4,161 4,167 4,068 3,989 3,980 4,009 4,039 4,017 4,044 4,051 4,053 4,057 4,075 4,087 4,099 Adjusted EBIT $26,721 $30,550 $29,898 $30,585 $7,154 $6,972 $6,890 $5,705 $7,960 $7,821 $7,877 $6,892 $7,965 $7,236 $7,229 $7,468 $7,657 $7,490 $7,662 $7,776 Equity in earnings of unconsol. Affiliates and other, net 1,780 (86) (79) (79) 1,902 (43) (48) (31) (34) (18) (18) (16) (20) (20) (20) (19) (20) (20) (20) (20) Other income and (expense), net (1,194) 186 128 180 (894) 66 71 (437) 75 32 51 28 32 32 32 32 45 45 45 45 Interest expense (net) (4,915) (4,920) (4,400) (4,179) (1,214) (1,164) (1,255) (1,282) (1,332) (1,208) (1,202) (1,178) (1,188) (1,139) (1,031) (1,042) (1,052) (1,048) (1,042) (1,037) Minority interest (2,331) (496) (507) (522) (2,039) (110) (99) (83) (119) (122) (133) (122) (120) (123) (132) (132) (130) (130) (131) (131) Adjusted Income Before Taxes $20,061 $25,234 $25,040 $25,986 $4,909 $5,721 $5,559 $3,872 $6,550 $6,505 $6,575 $5,604 $6,669 $5,986 $6,077 $6,307 $6,500 $6,337 $6,514 $6,634 Income tax (expense) benefit (5,697) (8,901) (8,771) (9,225) (968) (1,937) (1,864) (928) (2,331) (2,274) (2,315) (1,981) (2,336) (2,097) (2,129) (2,209) (2,308) (2,250) (2,312) (2,355) Adjusted Net Income (Loss) $14,364 $16,333 $16,269 $16,761 3,941 3,784 3,695 2,944 4,219 4,231 4,260 3,623 4,333 3,889 3,949 4,098 4,193 4,087 4,202 4,279 Normalized Net Income $14,364 $16,333 $16,269 $16,761 3,941 3,784 3,695 2,944 4,219 4,231 4,260 3,623 4,333 3,889 3,949 4,098 4,193 4,087 4,202 4,279 Reconciling Entries: Merger and integration expenses (12) 0 0 0 (6) (6) 0 Other one-time expenses 7,134 (2,510) 23 0 (707) 7,841 342 (2,852) 23 Reported EBITDA 36,132 49,077 46,040 46,902 11,297 11,846 11,057 1,932 11,949 11,801 11,544 13,783 11,959 11,280 11,280 11,522 11,714 11,565 11,749 11,875 Special items included in op. income 4,751 (1,546) 23 0 0 (424) 0 5,175 0 0 222 (1,768) 23 Gains on investment activities and equity in earnings 1,047 0 0 0 1,050 (4) 0 0 0 0 Reported Net Income 8,566 17,879 16,246 16,761 2,891 4,212 3,695 (2,231) 4,219 4,231 4,038 5,391 4,310 3,889 3,949 4,098 4,193 4,087 4,202 4,279 Reported EPS $2.21 $4.37 $3.98 $4.09 $0.84 $1.01 $0.89 ($0.54) $1.02 $1.04 $0.99 $1.32 $1.06 $0.95 $0.97 $1.00 $1.02 $1.00 $1.02 $1.04 Adjusted EPS $3.66 $3.99 $3.98 $4.09 $1.15 $0.91 $0.89 $0.71 $1.02 $1.04 $1.04 $0.89 $1.06 $0.95 $0.97 $1.00 $1.02 $1.00 $1.02 $1.04 Normalized EPS $3.61 $3.99 $3.98 $4.09 $1.15 $0.91 $0.89 $0.71 $1.02 $1.04 $1.04 $0.89 $1.06 $0.95 $0.97 $1.00 $1.02 $1.00 $1.02 $1.04 Weighted avg shares outstanding 3,975 4,092 4,085 4,100 3,430 4,153 4,159 4,157 4,121 4,085 4,078 4,083 4,085 4,085 4,085 4,085 4,100 4,100 4,100 4,100 Source: Company data, D.A. Davidson Estimates 10

Two Centerpointe Drive, Suite 400 Lake Oswego, Oregon 97035 (800) 755-7848 www.davidsoncompanies.com/ecm Copyright D.A. Davidson & Co., 2016. All rights reserved. Required Disclosures D.A. Davidson & Co. expects to receive, or intends to seek, compensation for investment banking services from this company in the next three months. D.A. Davidson & Co. is a full service investment firm that provides both brokerage and investment banking services. James Moorman, CFA, the research analyst principally responsible for the preparation of this report, will receive compensation that is based upon (among other factors) D.A. Davidson & Co. s investment banking revenue. However, D.A. Davidson & Co. s analysts are not directly compensated for involvement in specific investment banking transactions. I, James Moorman, CFA, attest that (i) all the views expressed in this research report accurately reflect my personal views about the common stock of the subject company, and (ii) no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Ratings Information D.A. Davidson & Co. s Institutional Research Rating Scale Definitions (maintained since 7/9/02): BUY: Expected to produce a total return of over 15% on a risk adjusted basis over the next 12-18 months NEUTRAL: Expected to produce a total return of >0-15% on a risk adjusted basis over the next 12-18 months UNDERPERFORM: Expected to remain flat or lose value on a risk adjusted basis over the next 12-18 months Rating Distribution (as of 3/31/2016) Coverage Universe Distribution Investment Banking Distribution azbycx IR IIG Combined IR IIG Combined BUY (Buy) 62% 76% 63% 7% 7% 7% NEUTRAL (Hold) 38% 24% 37% 9% 0% 9% UNDERPERFORM (Sell) 0% 0% 0% 0% 0% 0% IR denotes Institutional Research; IIG denotes Individual Investor Group Research whose rating scale is Buy/Add, Neutral, Sell/Reduce. Investment Banking Distribution denotes companies from whom D.A. Davidson & Co. has received compensation in the last 12 months. 11

Two Centerpointe Drive, Suite 400 Lake Oswego, Oregon 97035 (800) 755-7848 www.davidsoncompanies.com/ecm Copyright D.A. Davidson & Co., 2016. All rights reserved. Target prices are our Institutional Research Department s evaluation of price potential over the next 12-18 months and 5 years, based upon our assessment of future earnings and cash flow, comparable company valuations, growth prospects and other financial criteria. Certain risks may impede achievement of these price targets including, but not limited to, broader market and macroeconomic fluctuations and unforeseen changes in the subject company s fundamentals or business trends. Other Disclosures Information contained herein has been obtained by sources we consider reliable, but is not guaranteed and we are not soliciting any action based upon it. Any opinions expressed are based on our interpretation of data available to us at the time of the original publication of the report. These opinions are subject to change at any time without notice. Investors must bear in mind that inherent in investments are the risks of fluctuating prices and the uncertainties of dividends, rates of return and yield. Investors should also remember that past performance is not necessarily an indicator of future performance and D.A. Davidson & Co. makes no guarantee, express or implied, as to future performance. Investors should note this report was prepared by D.A. Davidson & Co. s Institutional Research Department for distribution to D.A. Davidson & Co. s institutional investor clients and assumes a certain level of investment sophistication on the part of the recipient. Readers, who are not institutional investors or other market professionals, should seek the advice of their individual investment advisor for an explanation of this report s contents, and should always seek such advisor s advice before making any investment decisions. Further information and elaboration will be furnished upon request. 12