Ivan Seidenberg - Chairman and CEO Doreen A. Toben - Executive Vice President and Chief Financial Officer Ronald H. Lataille - Senior Vice President - Investor Relations

John Hodulik - UBS Jeffery Halpern - Stanford Bernstein Mike McCormack - Bear Stearns David Barden - Banc of America Securities Simon Flannery - Morgan Stanley Timothy Horan - CIBC World Markets Michael Rollins - Citigroup Jason Armstrong - Goldman Sachs

Good morning, and welcome to the Verizon First Quarter 2006 Earnings Conference Call. At this time, all participants have been place in a listen-only mode, and the floor will be open for questions following the presentation. (Operator Instructions) It is now my pleasure to turn the call over to your host, Ron Lataille, Senior Vice President, Investor Relations of Verizon.

Everyone, welcome to our first quarter 2006 earnings conference call. Thanks for joining us this morning. I’m Ron Lataille. With me this morning are Ivan Seidenberg, our Chairman and CEO, and Doreen Toben, our Chief Financial Officer. Before we get started, let me remind you that our earnings release, financial statements, the investor quarterly publication, and the presentation slides are on the investor relations website. This call is being webcast. If you would like to listen to a replay, you can do so from our website. I would also like to draw your attention to our safe harbor statement. Information in this presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Discussion of factors that may affect future results is contained within this presentation and is also contained in our SEC filings, which are on our website. This presentation also contains certain non-GAAP financial measures, as defined under the SEC Rules. As required by these rules, we have provided reconciliations of these non-GAAP measures to the most directly comparable GAAP measures on the same webpage as our presentation slides. You should also be advised that information about our opening balance sheet adjustments, as a result of the MCI merger transaction, will be part of our 10Q. Before turning the call over to Doreen for her review of our results, I would like to cover the differences between reported and adjusted earnings. Reported earnings per diluted share for the first quarter of 2006 were $0.56. On an adjusted basis, before the effects of special items, EPS was $0.60. The special items that make up the $0.04 difference between reported and adjusted EPS are discussed in our earnings release and provided in reconciliation tabled in the investor quarterly bulletin. Briefly, there are four special items, each of which represents a $0.01 charge to earnings which we are excluding from adjusted results; after-tax charges of $16 million associated with the redemption of the former MCI notes; $28 million of after-tax charges for relocation and other costs related to our move to the Verizon centre; $35 million after-tax for merger integration costs, primarily re-branding; and lastly, a $42 million cumulative effect of a change in accounting for share-based compensation payments. As part of the acquisition of MCI, we established an opening balance sheet value associated with intangible assets, namely customer lists, which are amortized on a monthly basis. Annualized, this will result in approximately $210 million of expense, or about $52 million per quarter. Consistent with our past practices, we will not be excluding the effects of this amortization from our adjusted results. With that, I will now turn the call over to Doreen.

Thanks, Ron, and good morning, everyone. Let me summarize our first quarter by saying that across all our operations, we have never been more focused on executing our strategies and delivering results. Our financial performance for the quarter was on target with our expectations. Adjusted EPS of $0.60, we generated solid cash flows, and our integration efforts to date are going well, with targeted synergy savings ahead of plan. As I previously told you, 2006 quarterly earnings would not be spread evenly throughout the year. We expected the first quarter to be the lowest, with earnings ramping more in the second half of this year for two principal reasons: expected improvements in Verizon business and increased synergy savings. We reported strong operating metrics in key growth areas, namely wireless and broadband. Along with our operating focus, we continue to increase our flexibility in returning value to our owners. The Verizon information services divestiture is on schedule to be completed this year. In early April, we entered into agreements to sell our remaining Latin American assets for approximately $3.7 billion. We repurchased about $400 million of stock during the quarter, as part of the $1 billion we intend to buy back this year. Let’s look at some of the details. Our consolidated revenues for the fourth quarter were $22.7 billion. Revenues in the first quarter last year were $18 billion. On a pro forma basis, which adds the former MCI results to 2005, and helps put results on a comparable basis for full quarter, revenues would be $23 billion this quarter compared with $22.3 billion a year ago, or 3.1% growth. This increase was driven primarily by growth in wireless, broadband and data services. I would also note that international revenues increased this quarter primarily due to the sale of publication rights at TRTC. This sale, which amounted to $167 million, recognized royalties we would have received in future periods. These increases were offset by: Next, let’s take a look at cash expenses, operating income, and margins excluding special items. For purposes of this discussion, I’m also excluding net pensions and OPEB costs. Adjusted cash expenses were $14.6 billion this quarter compared with $10.9 billion last year. On a pro-forma basis, adjusted cash expenses were $14.8 billion compared with $14.7 billion last year, an increase of 0.8%. Increase in wireless cash expenses due to growth were offset in large part by decreases in Wireline. Adjusted operating income of $4.4 billion is $694 million higher than a year ago. Operating income margins were 19.2% this quarter, compared with 20.4% in the first quarter last year. On a pro-forma basis, adjusted operating income would have been $4.4 billion this quarter versus $3.8 billion last year, an increase of $531 million, or 13.9%. Operating income margins would have been 19%, a 180 basis point improvement over 17.2% margins a year ago. Slide 6 highlights our cash flows, debt, and capital expenditures. We continue to generate very strong cash flows with $6.1 billion in the first quarter, which is $2.1 billion higher than first quarter last year. This large increase is the result of several factors. First quarter last year included higher dividend distributions to Vodafone. Last year we made higher pension contributions during the first quarter, and in addition, we paid income taxes during the first quarter of 2005 related to the sale of our Canadian assets. Capital spending was $4.1 billion in first quarter, of which $2.4 billion is wireline and $1.6 billion is wireless. The $472 million year over year increase is due primarily to the inclusion of MCI this quarter. Debt increased to $43.1 billion, primarily as the result of additional debt assumed in the MCI acquisition. During the quarter, we redeemed the MCI debt, which will result in interest expense savings of approximately $190 million in 2006. Net debt is $41.8 billion at the end of the quarter, compared with $38.2 billion at the end of the year. Lastly, our credit metrics remain strong. Let’s move to Wireline. Results are pretty much as expected for revenues and margins. As I said earlier, we expect to see improvements in these areas as we move through the year. On slide 7, you can see continued customer growth, particularly in broadband and freedom packages. We continue to make great progress in broadband. In the last six months, we have added 1.2 million broadband customers, which was industry leading. With less than 15% penetration of retail access lines, we see lots of headroom for more and more broadband customer growth. When you look at the trend of revenue generating units, or RGU’s, that is the combination of retail residential access lines, broadband connections, and video subscribers. We have seen improvement over the last two quarters. We have taken some specific steps and established targets to accelerate improvement, particularly in the consumer market. For example, we introduced new freedom plans and pricing to respond to the competitive marketplace. As a result, we saw a significant increase in freedom customers. We signed up about 1.6 million new freedom customers in the last 12 months, about half of these in the past quarter alone. In addition to simulating new customer subscriptions, this action has also helped customer retention and increased traditional in-region long distance subscriber counts. We have added 346,000 new LD lines this quarter. This does not include any of the former MCI LD lines. Even with these actions, consumer ARPU for legacy Verizon was still up 2% year over year, and down only about 1% sequentially. We saw some improvement in the retail residential line losses in the first quarter. We have seen two quarters in a row in which broadband net adds have exceeded the declines in lines. We’re confident these steps and some additional actions we have planned will result in stronger consumer metrics. Let’s take a look at Wireline revenues. Revenues for the first quarter were $12.5 billion. In the same quarter last year, revenues were $9.4 billion. On a pro-forma basis, revenues would be $12.7 billion this quarter, compared with $13.6 billion a year ago, or a decline of 6.8%. Let’s take a look at wireline revenues by market. The consumer market includes Verizon’s local, LD, DSL, FiOS Data, and Video, and the former MCI consumer local and LD businesses. Revenues for the first quarter totaled $4.3 billion, compared with $3.8 billion last year. On a pro-forma basis, revenues declined $280 million, or 6.1%. As expected, a large portion of this decline relates to legacy MCI local and long distance business. From a strategic perspective, we have no intentions to actively retain these out-of-region customers. As expected, traditional voice products also declined. These reductions are offset in part by revenues from broadband, which increased significantly compared with the first quarter of 2005. The former MCI mass market revenues declined 22%. In the small- and medium-sized business market, revenues totaled $1.4 billion in the first quarter. On a pro-forma basis, revenue growth was flat. The improvement in business DSL and freedom packages that we saw this quarter should help customer retention and provide opportunities for growth in the future quarters. Looking at Enterprise business, which includes the domestic retail Enterprise customers of both MCI and Verizon, revenues were $3.4 billion for the first quarter of this year. on a pro-forma basis, revenues were down about 5.4%. As expected, traditional voice and non-IP circuit switch data services have declined, although we are seeing some very early positive signs of growth in certain strategic products, such as managed network data services and other IP related services. Wholesale revenues, which include former Verizon wholesale carrier and local MCI wholesale, were $2.1 billion in the first quarter. On a pro-forma basis, revenues were down 3.5%, due primarily to declines in local wholesale, as well as volume declines in leasing long-haul capacity. Data is a growing percentage of our overall Wireline revenues now standing at approximately 30% of total. Data revenues totaled $3.9 billion in the first quarter of 2006, of which $3.6 billion is data transport. On a pro-forma basis, data revenues were up 4% as we continue to see growing demand for high-cap, high-speed data circuits. With Verizon business, data revenues totaled more than $2.4 billion, and approximately 30% of this revenue is IP related. Let’s take a look at Wireline cash expense and operating income margin, excluding special items. Once again, for the purposes of this discussion, I’m also excluding net pensions and OPEB costs. On a pro-forma basis, cash expenses were $583 million, or 6.2% less than a year ago. Reductions in access costs contributed to this decline, due to lower volumes, a more favorable mix for international and wholesale, and an increase in on-net traffic. In fact, our plans are to reduce access costs this year by $1 billion. There are a number of other factors contributing to the decline in expenses: FiOS expenses increased in the quarter. FiOS represented $0.06 of EPS dilution this quarter. Traditional Telco margins increased this quarter compared with fourth quarter last year. We see significant opportunities for additional cost-savings in addition to merger synergies, and we are confident that the Wireline margins will expand as we go through the year. We officially launched Verizon business at the end of January, and we’re seeing a fast operational start. Our integration efforts are going well, with targeted synergy savings ahead of plan. In fact, we realized about $50 million in synergies in the first quarter. We expect to see a significant ramp-up in synergies in the second half of 2006, particularly as we complete the migration of off-network voice and IP traffic onto Verizon’s networks. This process is well underway already. You can see the first half, second half targets on slide 12. As far as force reduction efforts are concerned, we are ahead of plan at the end of first quarter. We are at about one-third of our total force reduction target for the year. Most of this headcount came off the payroll at the end of March, so we’ll see related cost-savings in the second quarter. I remain confident that we will exceed the $550 million of targeted synergies for the full year. Most of our integration costs incurred to date have been for rebranding, which I’m sure you have seen over the last couple of months. We also incurred some integration costs for systems integration initiatives, which are progressing well and are on track. We expect to see cost-savings from systems integration activities later this year. We are aggressively inter-connecting the Verizon and MCI Enterprise network. We recently announced that we have the largest ultra long-haul network in the United States. We also have an expansive global presence. Verizon business now operates the world’s largest wholly-owned facilities based global network. As far as market opportunities, both global and domestic, we see continued demand for IP-based applications, managed services, and wireless integration, driving growth potential. Our focus is to increase revenues from strategic services, which include private IP, IPVPN, managed security, hosting, managed data network, and other internet services. As you can see on slide 13, revenues from these services totaled $890 million in the first quarter, representing an increase of about 18% year over year. We intent to lead the shift to IP services and are out front, continuing to build momentum in this area. During the quarter, we launched an integrated wireless and wireline offering for business customers that combines the power of the nation’s most reliable wireless network and the Verizon business IP network. We expanded Ethernet and wireless EVDO to private IP services, and we have enhanced our voice portfolio, introducing more choice and flexibility. We also intend to capitalize on growth opportunities by focusing on growing market share penetration in the managed security and hosting markets. Success through continued growth in these areas is vital to offsetting expected declines from our traditional core business. It’s becoming increasingly clear that customers want higher bandwidth and higher speeds. As you know, our long-term strategy for meeting these bandwidth requirements is fiber to the premise, and our investment dollars are focused on this initiative. We continue to see a strong and growing customer response to our FiOS data product offerings. Looking at the penetration for FiOS data on slide 14, we are ahead of plan. We are seeing very good customer acceptance and consistent monthly penetration gains. In market grow, we have been selling FiOS data for at least six months. The average penetration at the six-month mark for each was 9%. The corresponding penetration rates at the nine- and twelve-month mark are 12% and 17% respectively. These markets are spread throughout our footprint, and compete with all the major cable players. These early penetration rates indicate that we are well on our way to achieving our goal of 30% penetration in five years. In video, we have acquired 57 franchises to date, and are open for sale in select markets in seven different states. We are seeing great initial acceptance by customers across our whole footprint, particularly in the more mature data markets. We have now achieved a 12% penetration in Texas, 10% in Florida, and 9% in Virginia -- quite impressive numbers. In Temple Terrace, Florida, we have 16% penetration. In Herndon, Virginia, it is 10% in less than four months time. In Massapequa Park on Long Island, we have achieved 6.5% in just three months time. More than 60% of our video customers have selected advanced desktop boxes, with either digital video records, high-definition or both. This is a good indication of future potential as it gives these customers the capability to fully participate in our advanced service offerings. Virtually all of our video customers choose a digital package. Obviously, a large percentage of our video customers were already very satisfied FiOS data users, anxious to take all three services from us -- voice, data, and video. This is important. It’s a great pull-through on FiOS data we are seeing as customers decide to take our video service. One out of every two new to FiOS video subscribers also make the decision to get all three services from us when they place their order. As a result, approximately 80% of our video customers are triple-play customers. We are experiencing very low churn with these customers. In addition, we benchmark quite well in terms of ARPU. As we move forward, we expect to continually enhance our video products and differentiate it even more with convert capabilities, so we are off to a strong start. Let’s move now to Wireless. Verizon Wireless continues to surpass its own industry performance milestones with record net adds and profitability for our first quarter, and the lowest churn ever recorded by a major carrier. This was: Verizon Wireless added 1.7 million net new customers in the first quarter 2006. More than 1.6 million of these were retail. Only 59,000 were reseller customers. We posted more retail net adds than any other carrier, which means more people buy the Verizon brand than any other. We now have 53 million customers nationwide, an increase of 16.7% since the first quarter last year. We have a high-quality customer base with about 96% retail, and only 4% reseller. We are the fastest-growing U.S. wireless company in terms of net adds, with 7.6 million new customers in the last 12 months alone. We continued to set records for low churn, a key measure of customer loyalty, with total monthly churn of 1.18% for the first quarter 2006, the lowest in the company’s history and the lowest ever in the wireless industry. Churn among the company’s retail post-paid customers was exceptional, at only 0.92%, another company and industry record. These results show that it really is the network and our award-winning call quality, reliability, and the overall best experience in wireless that attracts and retains customers. The strength of the wireless brand in the marketplace is driven by our premier wireless network. The best proof points for network reliability is churn. Slide 18 shows our very strong revenue growth trends over the past five quarters. Total revenues grew 18.8%. Service revenue was up $1.1 billion, or 16% compared with first quarter last year, driven by increasing data usage and the high quality customer profile of new adds. As I said, most are retail net adds. Service ARPU was $48.67, down only 0.7% versus last year, as compared with a 1.9% year over year decline in the fourth quarter. Moving to wireless data, data revenue accounted for nearly 11.5% of first quarter service revenue. Data contributed $5.58 of ARPU, up from $4.85 last quarter -- very strong sequential growth. More than half of our retail customers are data users, up 47% since this time a year ago. Our data usage results for the first quarter illustrate how popular our data services are: 9.6 billion text messages, 171 million picture and video messages, and nearly 45 million downloads of games, ringtones and ring-back tones. The key to our success in wireless data is our commitment to investing in the network. Verizon Wireless was the first carrier to build a nationwide wireless broadband network, and we have the most experience in delivering broadband services. Our EBDO network gives us extensive broadband coverage coast to coast. We continue to see strong uptake from business customers on broadband access cards and TDA’s. Embedded laptops from major manufacturers are also contributing to the steady growth in broadband usage. Our superior broadband network enables product innovation for consumers as well. Examples of this innovation are V CAST, the first consumer wireless multimedia service, and V CAST Music, the world’s most comprehensive wireless music service. Customers can transfer their own music to their phones at no charge, download directly to their phones or PC, and identify music while it’s playing. We now have a music library of 1 million songs and growing. We’re really just at the beginning of the wireless broadband revolution, and we have the network and products to take significant advantage of this growth trend. Of course, growth is only part of the Verizon Wireless story. We continue to grow with increasing profitability as our operating income margin for the first quarter was 24%. Quarterly EBITDA margins were 44.5%, up from 41% in the first quarter last year. Our EBITDA was $3 billion or more for each of the last four quarters. Our margin expansion is organic, it’s driven by our revenue growth, customer mix, and economies of scale. Cash expense per subscriber remained low at just under $27, down 6.6% from one year ago. Verizon Wireless continues to be the industry leader in cost efficiency. Our low-cost structure is the result of many efficiencies in the business, including but not limited to, our distribution channel mix. During the first quarter, about 73% of our retail growth adds came from our direct distribution channels. Despite not doing business with Radio Shack, gross adds increased to 3.5 million, which is 120,000 higher than first quarter a year ago. We have found the customers who buy through our direct channels have lower churn. They also come to our stores for service and upgrades. Unlike customers from resellers or MVNO’s, these customers and those from our indirect channel, which I’ll talk about next, are our customers. They are buying the Verizon Wireless brand. We have a relationship with them -- a relationship that we impact directly and work hard to preserve. At the same time, we continue to expand and diversify our indirect distribution channel, which includes individual agents and national resellers such as Costco and Best Buy. During the first quarter, we also added Wal-Mart to our distribution mix to sell a pre-paid product. To date, we have more than 12,000 total doors in our indirect channel with a diversified mix that is working quite well. Before leaving the wireless review, let me wrap up by saying it is obvious that we have built significant momentum and continue to generate strong growth and profitability. We have the most loyal customer base in the industry, the lowest churn in the industry, and a very high percentage of our customers on one- or two-year contracts, an indicator of the quality of our customer base. We continue to introduce innovative products and services for our customers. In closing, I would say the three headlines for the quarter are: On the cost side, we continue to see significant opportunities to drive margin expansion. Our Verizon services organization, which we mentioned to you last quarter, has identified a number of cost-saving initiatives that span the entire business. Examples include call-center consolidation, strategic sourcing, fleet operations, transportation, real estate and IT systems work. The information services divestiture is still on track to happen this calendar year. No further information as far structure goes, but this will be forthcoming soon. Details of our Latin America assets are proceeding, and we remain committed to our previously announced 1 billion share repurchase program for 2006. We are well on our way toward that goal, having repurchased 400 million to date. Thanks for your attention. Ron, I’ll turn it back to you.

Thank you. Operator, we’re now ready for questions.

Thank you. The floor is now open for questions. (Operator Instructions) Your first question is from John Hodulik of UBS. Please go ahead, sir. John Hodulik - UBS : Thank you. Two things. First, on the wireless front, the margin’s at 44.5%. I think in the past you talked to ’06 numbers in the low to mid 40’s, coming off of almost 47% in the fourth quarter. Does it make sense now to talk about maybe mid to upper 40’s going forward in the wireless business? Switching over to the consumer side, you made a couple of moves to improve the stickiness of the products there. First with the reduction in price in the freedom plans, how far through the base are we there in terms of getting those prices down to what would be considered something on par with what you’re seeing from the cable industry. Second of all, the increase in speeds on the FiOS data service yesterday, just a little bit about the thought process behind that move.

Okay, let me see if I can take them in order. If I start with the wireless margins, I think if you go back, we’ll sort of five consecutive quarters over the 40% level. I’m certainly comfortable that we’ll continue there. I think what I said last time, and I’m going to stay with it, is that in a high growth, which we continue to be a high growth environment, you’ll still going to see sort of low 40’s, what number that is exactly, but low 40’s. If you went to a slower growth, I think you could see that margin kick up over 45 or so, but we will be in the high growth area for a while. If I move to the freedom question, I think we’re probably where we need to be with freedom pricing right now. We’re pretty comfortable. We did see the effect of the stickiness. I don’t think you’ll see us do much more with pricing on the freedom side of the equation. I think on the move that you saw yesterday primarily I guess in New York, New Jersey and Connecticut on speed, I think we’re responding. You’ve probably seen that we’ve reorganized a little bit, much more regional, and have laid out the organization that way. I think you’ll see more regional pricing from us, or speeds, and I think it’s really just competing with our competitors in a certain area that we change the speeds. John Hodulik - UBS : Okay, thanks.

Next question, operator.

Thank you. Your next question is from Jeffery Halpern of Stanford Bernstein. Please go ahead, sir. Jeffery Halpern - Stanford Bernstein : Thank you. First I just want to say thank you to Dominic for all the work he’s done over the last seven years with our team, at least, and wish him a lot of luck in his new role internally. As for my questions on wireless, I was hoping you could discuss -- I know you can’t discuss the status of your discussions with Vodafone and VenFin, but I was hoping maybe you could articulate the areas you see as holding the greatest potentials, of course, of synergy if you owned Verizon Wireless outright. Secondly, on FiOS, you obviously gave a lot more incremental detail on your deployment and penetration levels you’re seeing. I was hoping maybe you could discuss some of the areas of operational efficiency that you are also seeing. For example, on slide 11, you mentioned incremental savings from automation and self-service. Does that yet include the benefit of customer self-provisioning on FiOS? Thank you. Ivan Seidenberg : Jeff, it’s Ivan here. On the wireless question, you asked two questions about wireless on the Vodafone side. I think the first issue is that you can see that we had extraordinarily strong performance in wireless. We still remain interested in purchasing the 45% of Vodafone’s Verizon Wireless. Vodafone is fully aware of our views of this, and fully aware of how we think about this particular issue. There’s no new news to report. The decision is really more in their court at this point. You asked about potential synergies of owning the whole thing. Remember, in this case, in the short-term, what we would say is it’s a trade-off of the extraordinary earnings and capacity of the company. Basically swapping, since we would do this mostly on a cash basis, is swapping that for earnings. We think that’s financially attractive. In the longer term, we think that wireless markets will regionalize a lot more than they are now. Even Vodafone signaled that with its recent reorganization, so when you think out over two, three, four, five years, what you have is the issue of convergence, which is products and services between wireless and Verizon business. You see consumer plays between wireless and FiOS. You see opportunities for all sorts of bundling. I think in the longer term, the synergies will come with more product and being a lot more responsive to the convergence of software, consumer electronics, and carrier services that will give us a chance to develop a much stronger presence in the marketplace. On the cost side, I don’t think there’s much more we can do. I think that Vodafone and we have done just about everything that we should be doing in the business, so really in the longer term, owning 100% of the assets will make us a lot more competitively regionally, the same way that global wireless markets are beginning to evolve across the globe.

Jeff, by the way, thanks for the kind words on Dominic. We certainly agree, and I know that we’ve gotten that comment from lots of the folks out there. Ivan Seidenberg : We gave him a much harder job.

I think on the cost side of the FiOS equation, the savings, most of what we’re seeing is still anecdotal. We are certainly very pleased with what we’re seeing. We are not yet into self-provisioning. However, you’ve probably seen the customer satisfaction levels are incredible, and both whether it’s data or video in the product, the churn is extremely low. As far as the cost at this point, it’s still anecdotal, and we’ll get more to you in the future. Jeffery Halpern - Stanford Bernstein : Great, thank you.

Thanks, Jeff. Next question, Operator.

Thank you. Your next question is from Mike McCormack of Bear Stearns. Please go ahead with your question. Mike McCormack - Bear Stearns : Maybe just a quick update on what’s happening at MCI. The SME growth looked maybe a little bit weaker than the peers, but maybe you can break it down for us between the legacy Telco versus MCI. Then, within MCI, can you give us a sense for how quickly you think mass market revenues are going to decline? Secondly, the competition with respect to the Bell South/AT&T transaction, doesn’t that change your competitive positioning out of region? Thanks.

On the legacy Telco versus MCI, I’m not going to go into performance on each of those. It’s extremely difficult. If you think about it, what we’ve done on our ledgers is literally taken people and products and moved them both, so we really don’t have anymore clean here’s what MCI was, here’s what Telco was, from that perspective. I think if you competitively benchmarked the Enterprise business, I think we’ve done better than maybe some of the others and certainly better than we’ve seen in the past, but that is a combination of both the old Verizon Enterprise as well as the MCI. Mass market decline, I don’t know that we have a great view of where it’s going. On the out-of-region piece, as I mentioned in our script, we’re not really spending a lot of time with the out-of-region piece, so we expect that will continue to decline. On the in-region piece, where it makes sense, we will move those customers and go after them to move them to retail customers, but you won’t see much focus on the out-of-region customers, and you will continue to see certainly a decline. Ivan, do you want to do the competition one? Ivan Seidenberg : Mike, on the issue of the Bell South/AT&T, the way we would look at it is they’re certainly an important and formidable and obviously the number one player in the market. The way we look at this is that so much of the data market is east of Denver, and we also look at a couple of things. We have a superior wireless proposition, so you balance that with Verizon business, we’re in very good position. We have superior position in a lot of the Enterprise accounts with respect to federal government, state government and the big accounts. MCI had previously a superior position in the international, so we will capitalize on all of that as we go forward. Where AT&T and Bell South, when you put them together, they probably have some opportunity on the access side to reduce costs, so I think the competition we see there is more on the cost side than it would be on the growth side, so I think we have significant opportunity on the growth side. On the cost side, we’ll just have to work through how we make the critical mass we have, which is pretty significant, work better. In the first quarter, you saw, as Doreen reported, we had a significant reduction in controllable expense on the part of Verizon business, and we think we have a lot of headroom to continue to drive that down as we go forward. So you should look for us to think of ourselves as the higher growth, and we’ll maintain our presence on the cost side by continuing to improve from where we are. Mike McCormack - Bear Stearns : Great, thanks, Ivan.

Thanks, Mike. Next question, operator.

Thank you. Your next question is from David Barden of Banc of America Securities. Please go ahead with your question. David Barden - Banc of America Securities : A couple of questions. First, I just want to be clear, if I can, on this issue Ron, you mentioned earlier. You’re not stripping out the amortization of customer lists from your earnings reporting, so if we wanted to do apples and apples comparisons, we’d have to add that roughly $0.05 of earnings back into the numbers to make it comparable with some of the other reporting going on? I just wanted to clarify that.

David Barden - Banc of America Securities : Okay, thanks. The transitive property. The second question was obviously great success in the post-pay market to this point in time. Are you at all concerned, or what’s your appetite for a strategy for the pre-paid market? It sounds like a lot of people are really trying to mine that opportunity. Do you feel like you’re letting an opportunity slip by by not being more aggressive on that front? What’s your picture strategically for that market over the rest of the year? Last, just on the FiOS business, could you speak to the conversion rate from old DSL customers to new FiOS customers? Thanks a lot. Ivan Seidenberg : When you say what’s the appetite, first of all, we do have some fairly aggressive projects going on in the reseller market with ramp, right? So I think we’re looking at that, but I just think we have to be careful what Kool-Aid we’re drinking here. I think in our view, we have an extraordinarily powerful engine to attract high quality customers on the retail post-pay. We see no reason why we shouldn’t continue to do that, and we don’t want to lose our focus on that. The reseller and the pre-pay markets, I’m not suggesting they aren’t good customers, but they are higher churn and lower, in the long term, margin customers. So the issue is we want to work our way through that. I think we feel good about where we are with our two trials, and then of course, we have significant, as Doreen pointed out in her remarks, significant activity going on in the distribution channel. So in the longer term, we want to make sure we’re in the right position to vertically grow our business, so the big change that we would like people to look at this quarter is to see what share we took of revenues. And then what you can see is instead of focusing on customer acquisitions, which we have done well on and will continue to do well on, we see now all of the intellectual property that’s been built into our business is now starting to produce a little bit of a breakaway on taking revenue share.

On the DSL question, it’s just under a third conversion to DSL to FiOS. David Barden - Banc of America Securities : Very good. Thanks a lot.

Thanks, Dave. Next question, operator.

Thank you. Your next question is from Simon Flannery of Morgan Stanley. Please go ahead with your question. Simon Flannery - Morgan Stanley : Thanks very much. Doreen, could you give us an update on the expectations or FiOS dilution for the rest of the year, and are we still looking at a 6 million homes past at the end of the year? Also, any comments on the upcoming Spectrum auctions? Thanks. Ivan Seidenberg : I could do that. I don’t think there’s any change, Simon, on either the first two numbers. There’s no change, right?

No, we had said last time, it’s about $0.25 to $0.30, so it’s around $0.06. It might ramp up a tad in the second half of the year. Ivan Seidenberg : Great. Simon, on the issue of the SEC’s auction, we are evaluating our options and what I’m told is you have to file an application in a few weeks, and then the bidding doesn’t start until June, so we have a whole month here to sort of organize our thinking of it. As soon as we figure it out and decide, we’ll let you know.

Also, the 6 million hasn’t changed, and I think I used the number in the text where we are, so we’re in good shape for the 6 million. Simon Flannery - Morgan Stanley : Thank you.

Thanks, Simon. Next question, operator.

Thank you. Your next question is from Timothy Horan of CIBC World Markets. Please go ahead with your question. Timothy Horan - CIBC World Markets : Thank you. Good quarter. Two questions, a lot of emerging carriers are seeing the same kind of seachange in the wholesale IP marketable enterprise, I guess, and wholesale. Are you guys seeing the same thing out there in terms of pricing, maybe volumes? Any change there? On the Vodafone issue, I think one of the concerns had been paying taxes on any sale historically. Is that still a concern, and are there any other steps you could take, maybe having a publicly traded wireless stock to spin out the shareholders, or anything else to get around that? Thanks. Ivan Seidenberg : I don’t want to get in over my head here, but on the first question about the wholesale IP and the seachange, here’s the way I think we would look at that. The way we look at the market and what our people are telling us is that there’s tremendous activity out there right now for next-generation products, new products and services, and all these managed network services -- in that area, we feel that there’s some stability and rationality to how we’re bidding and how we see the market accepting these bids. With respect to conversions and all these other renewals and everything else, we’re not sure that we’re seeing the same seachange. Maybe others have, but we talk to the same customers they do. We’re not sure of that. So I think the quicker we get to the next generation products, that’s where we’re seeing the stability come in, and that’s why we’re so focused on the growth areas in this market. Overall, I think that we’re better off today after the consolidation with the new AT&T and the consolidation for Verizon. I think we’re heading in the right direction, but seachange is a strong term. So I think we’re incrementally moving in the right direction. With Vodafone, the issue is that I don’t think there’s ever been any change in assumption that whenever a transaction would be consummated, whether it’s now or two years or 20 years, there’s going to be a tax bill. I don’t think anybody should think that there’s any way around that. I think that’s fine. That’s the reason why if you look at a transaction, you pay a premium on an EBITDA multiple-basis, a cash flow basis that would cover some of that. I think it’s part of the drill. By the way, I think the same -- you do get some efficiency by coupling Omnitel with the transaction, which I didn’t mention before, but we’re certainly going to do that. So I think, Tim, we are very comfortable with trying to be as efficient as we can, but I don’t think that we understand a structure right now that would eliminate the gains on a business that we had built in the past ten years, and the gains are extraordinary. I think it’s just part of the deal unless, Doreen, you have a…

No, I don’t have any. I don’t think we would look to IPO it. Ivan Seidenberg : No. Timothy Horan - CIBC World Markets : Okay, thank you.

Okay, Tim, thanks. Next question, operator.

Thank you. Your next question is from Michael Rollins of Citigroup. Please go ahead with your question. Michael Rollins - Citigroup : Good morning. A couple of questions. First, back on the wireless side, as you’re looking to manage revenue share in wireless, can you talk about the prospects of possibly returning to growth in ARPU and how you look at those opportunities and whether you think that’s feasible over the next 12 to 24 months. The second question is just back on the MCI side. When you talked about the integration process and laid it out, you talked about a lot of work that had to be done to the network, a lot of investment that you wanted to put into the network to further integrate it. Can you talk about where we are in that process and how we should expect those integration expenses to be invested through the year? Thanks.

On the revenue, first of all, I think over the longer term, data growth, we’re over 11% now. We have 3G coming. V CAST is really starting to really go. You’ve got music really starting to kick in, so I would say over the longer term, you’ll see a difference, but I do want to say that we -- the most important thing that I measure is really revenue growth and margins. To the extent that the ARPU is flat or a little bit down or a little bit up, the two key metrics really is what’s your revenue growth and how high is my margin. Having said that, data will continue to be a much bigger piece going forward. Ivan Seidenberg : Absolutely. I think that when you think of all of the upside opportunity, when you lay your broadband network on top of wireless, I think you’re going to see tremendous vertical opportunity going forward. Frankly, I think as all the carriers start investing in these things, and some of them have a little bit of a catch-up here, but as we all start doing that, I think the whole industry will start moving in the direction of more vertical growth. To me, that’s a good sign. On the MCI thing, I guess the one point I would make is that I think Doreen laid out the synergy plan here. I think we have a very fast operational start. We also talked about, we had some significant force reductions in March that will start to show up in April, May and June and the rest of the year. We have a capital program in MCI of about a little over $1.6 billion I guess it is that we said. That’s about the right number. It could deviate by $100 million here or there, but we’re in the right ballpark on that. If I may make one point, the one thing we’ve never said is prior to the transaction, a lot of us here had some question about what we would find once we closed the transaction. The good news is that once we closed the transaction, there’s nothing that we’ve seen on the network side or the IT side that was different than what MCI told us, so we feel very comfortable that we have a good path on the $550 million in synergies this year, and all of the other grooming and all of the other restrictive minutes that we’ve been able to do with Verizon Wireless and Verizon Telecom. So I’m not sure that there’s anything else that we could suggest, other than we feel very comfortable in where we are in the process for our 2006 plan. And as we move into ’07, we’ll talk about that more later in the year. Michael Rollins - Citigroup : Thank you.

Thanks, Mike. Next question, operator.

Thank you. Your next question is from Jason Armstrong of Goldman Sachs. Please go ahead with your question. Jason Armstrong - Goldman Sachs : Thank you. A couple of questions. First on video, you obviously had some good traction with video penetration in some of the initial markets. I’m wondering if you could update us on the success-based costs in the video installs, sort of how that’s trending. Second question, just to hit Vodafone one more time, maybe from a different angle, I’m wondering specifically if you could talk about any sort of tax or balance sheet advantages to buying the entire stake versus doing a transaction in pieces. Finally, just a housekeeping question on international. You mentioned the sale of directory publication rights in Puerto Rico, and I think associated with this was some sort of a one-time royalty step-up which impacted revenues and EBITDA. I’m just wondering if you could quantify that amount. Thanks.

On the international, it was in my script. It was $160 million, maybe $165 million revenue. So that was that piece of it. On the video penetration, we are on the home path number probably where we said we needed to be, so we are doing extremely well there. My sense is we will probably beat the number that we had out to the streets there, so real good progress. On the connected, we are not where we need to be at, so we’re making progress, but certainly not there yet. However, I will make a comment for ’06. The past capital number is a much bigger number than the connected number, as you would imagine, because we’re capping 6 million homes, but there’s no capital push on the budget for ’06 or on what we’ll spend, but we need some more work to do on connected, and cash is in really good shape. Ivan Seidenberg : In all fairness to Vodafone, there really isn’t much else to say on this one. As I said earlier, we’re interested in acquiring the share, and that’s a good asset, but the next step is really up to our partners in Verizon Wireless, Vodafone. And they fully understand our views on this. You’re right, there are probably a gazillion ways of looking at this, and I can assure you we’ve looked at all gazillion ways, so let’s just leave that sit now and we’ll get back to it when it’s appropriate. Jason Armstrong - Goldman Sachs : Okay, thanks.

Thanks, Jason. Operator, I would like to turn the call over to Ivan Seidenberg right now for some concluding remarks. Ivan Seidenberg : Thank you always for your interest in the company. I only have a couple of comments. I think most of your questions cover the highlights. As Doreen indicated, we feel we’re off to a solid start in ’06. We’ve got superior momentum in wireless. There’s always the question that we get about the sustainability in the quarter-over-quarter build. Hopefully you see in this quarter, we’ve added some new dimensions, a significant pick-up in data revenues, terrific churn performance, which really shows the depth of our network reliability and best network concept. We’re really focused on lots of new products into the marketplace, and taking revenue share. MCI off to a fast operational start, and I know everybody always looks for inflexion points, whatever that means, but I think we’re at a point here where for the rest of the year, you’ll see us building momentum here on both the revenue and the margin side, and the MCI transaction. We’re very excited about the customer activity out there that would suggest that the market may be ready for a lot of new products and services in this space, which should bode well for the entire sector, frankly. On the Telco side, the questions that you asked are all good ones. I’m sure you’ll have more. The exciting thing for us is that the theory of the case is starting to be demonstrated in results that we’ve seen, this terrific focus on speed of internet access and speed of delivery of services. We’ve seen what the video bundle does. We see what the 15 to 30 megabytes data speeds do. We feel that’s a terrific proposition. Our goal is to scale it as fast as we can and move through the process. But bundles are great and we think that will do very well. Hopefully you notice that while we’re doing all that and we still have competitive activity. We’ve taken some steps with regional and local pricing, as well as a very strong focus on controllable expenses in the quarter, so we’re able to hold margins in the legacy Verizon Telco and overall, and move our business forward. The overall business model for us is really a focus on improving revenues throughout the year, improving margins throughout the year, and improving cash flow throughout the year. We didn’t talk in the call about other activities that we have in place, the return guide to shareholders, but we’re moving along in the disposition of our three international properties. They’re moving along quite well and we should start to see the fruits of that in the second quarter with perhaps one or even two of the transactions moving to closure before we announce earnings for the second quarter. Then we’re moving along in our planning and the disposition of directory, and we’ll have a lot more to say to you about that during the second quarter. So we feel that we’re in a very good position to show incremental improvements throughout the year. With that, Ron, I think that I have no further comments and we all thank you very much for your being with us this morning.

Thanks, Ivan, and thank you everybody for joining us this morning.