Ivan Seidenberg - Chairman & CEO Doreen Toben - Chief Financial Officer Ron Lataille – SVP, Investor Relations

David Barden - Banc of America Securities Jeffrey Halpern - Sanford Bernstein John Hodulik - UBS Simon Flannery - Morgan Stanley Tim Horan – CIBC Mike McCormack - Bear Stearns Tom Seitz - Lehman Brothers

Good morning and welcome to the Verizon third quarter 2006 earnings conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Mr. Ron Lataille, Verizon’s Senior Vice President of Investor Relations.

Good morning, everyone. Welcome to our third quarter 2006 earnings conference call. Thanks for joining us this morning. I am 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, and 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 available on our website. This presentation also contain certain non-GAAP financial measures as defined under the SEC rules. We have provided reconciliations of these non-GAAP measures to the most directly comparable GAAP measures on the same web page as our presentation slides. Before turning the call over to Doreen for a review of our results, I would like to provide an update on a few items and cover the differences between reported and adjusted earnings. First, in mid-October the board approved the proposed spin-off of our domestic directory business to our shareholders. The spin-off will result in a new public company called Idearc which will trade on the New York Stock Exchange following the spin-off under the symbol IAR. A November 1, 2006 record date has been established for the spin-off, along with a distribution ratio of one Idearc share for every 20 Verizon shares. Subject to the satisfaction of certain conditions, distribution of shares is scheduled to occur on, or about, November 17. As you know, the recently adopted pension accounting pronouncement FAS 158 will be effective December 31, 2006. FAS 158 requires the recognition of the funded status of defined benefit plans as either an asset or a liability on the balance sheet. Based on our current estimates, we expect to decrease shareowners equity by approximately $10 billion post-tax. There is no impact to cash or earnings as a result of the adoption of this change. Additional information on FAS 158 will be included in our third quarter 10-Q. I also want to make sure you are aware of one other item which is included in our equity and earnings of unconsolidated businesses line. During the third quarter, we recognized an $85 million favorable tax benefit from Vodafone Omnitel. Now, as far as our third quarter results, reported earnings per diluted share were $0.66. On an adjusted basis, before the effects of special items, EPS was $0.68. The special items that make up the difference between reported and adjusted EPS are discussed in our earnings release and provided in reconciliation tables in the investor quarterly bulletin. Briefly, there are three special items which we are excluding from adjusted results: With that, I will now turn the call over to Doreen.

Thanks, Ron, and good morning, everyone. Let me start by saying that we had another strong quarter as both wireless and wireline continued to perform well and contributed to our objective of creating long-term growth. Each of our three network platforms are focused on delivering quality, growth and creating long-term value. Verizon Wireless continues to grow. Its high performance, organic growth model demonstrates the long-term benefits of a deep and profitable relationship with our customers. In the quarter, revenue growth exceeded 18%. We added 2 million retail customers and also increased service ARPU. Our investments in the wireline business are creating the same foundation for long-term growth. We are building new customer relationships through our broadband initiatives. We now have 522,000 FiOS data customers and 118,000 FiOS video customers. The increase in FiOS data customers drove another excellent quarter for total broadband performance. Between DSL and FiOS data, we generated 448,000 net adds this quarter. In the enterprise business market, we continue to see major contract wins and renewals as we expand and deepen our relationships with customers. Revenues from key strategic services like IP and managed services grew 25% and helped drive our second straight quarter of sequential growth. Okay. Let's turn to slide 4 and look at some of the details. Total revenues were up 25.8% versus the year-ago quarter, a comparison that is favorably affected by the inclusion of MCI this year. Throughout the rest of the discussion, when I refer to year-over-year comparisons, they will be on a pro forma basis unless otherwise noted. Consolidated revenue growth was 3.6% year-over-year and 2.5% sequentially. Revenue increases were once again driven by growth in wireless, broadband and enterprise data services. Operating income increased 6.6% and operating income margins increased 50 basis points year-over-year. As a reminder, these results include the effect of net pensions and OPEB which amounted to $332 million in the third quarter and slightly higher than last year. Also remember that we do not exclude the effects of amortization of intangibles from our adjusted results. The amount of amortization expense related to the acquisition of MCI is about $210 million annually and is $53 million this quarter. Our adjusted EPS for the quarter was $0.68 per share. Looking at our cash flows and balance sheet, we continue to have very strong cash generation. On a year-to-date basis, CFFO for our continuing operations totaled $17.9 billion, $2.9 billion higher than the same period last year. Year-to-date capital spending was $12.3 billion, of which $7.3 billion is wireline and $4.8 billion is wireless. We continue to maintain out stated guidance for full-year CapEx spending. Debt was $41.7 billion at September 30, and all our credit metrics remain strong. Let's turn now to the wireline financials on slide 6. Revenues were up sequentially for the second quarter in a row and continue to show steady improvement year over year. On a year-over-year basis, third quarter revenues were down 4.7%, which is better than the 6.2% decline in the second quarter and the 6.8% decline in the first quarter. So we are definitely seeing an improvement in the top line. In addition to our focus on improving the top line, we are equally focused on the expense side. Third quarter cash expenses declined 1.3% year over year; excluding FiOS, cash expenses decreased by $350 million, or 3.8% year over year. Our goal is to offset FiOS expenses with reductions in the core business. You can see from our results that wireline margins were sequentially lower in the third quarter, primarily due to access line losses and increased FiOS dilution. FiOS represented $0.09 of total earnings dilution this quarter, up $0.02 from the second quarter. This incremental dilution was driven by strong customer growth and higher video cost. At this point, we expect full-year FiOS earnings dilution to be about $0.31 to $0.32 per share, which is about $0.02 higher than our previous guidance. As a result, we are expecting fourth quarter wireline margins to reflect these changes. In addition to our continued focus on reducing costs in the traditional telecom business, we will also see increasing flow through of cost savings in the large enterprise market. While only nine months into our integration of MCI, we are on track with our plans and are already seeing significant operational benefits. When we complete the billing and other system conversions, we will see additional cost synergies. Going forward, we continue to see significant opportunities for wireline cost savings. A big driver of the underlying revenue growth comes from data. This data transformation is improving our revenue mix and creating higher value, more retentive customers, both residential and business. Data is becoming more significant and now represents 32% of total wireline revenues. Quarterly data revenues totaled $4.1 billion, up 6.3% year-over-year and 3% sequentially. Within telecom, data growth is driven by the strong demand for broadband in the consumer and small business markets, as well as continued, healthy demand for high-speed, high capacity services in the wholesale market. Total mass market broadband subscribers now total 6.6 million with more than 6 million DSL customers and 522,000 FiOS data subs. In Verizon business, quarterly data revenues totaled $2.6 billion, $1.1 billion of which comprises what we call “strategic services”. These revenues, which include Internet, IP, private IP, various management services such as network solutions and Ethernet and ring services, grew nearly 25% since last year and are up 5% sequentially. The next chart is a closer look at telecom revenues. The most encouraging news here is that consumer retail revenues, excluding mass-market MCI, increased sequentially for the first time since the second quarter of last year, due primarily to broadband growth. On a year-over-year basis, third quarter revenues were down 3.3%, which is an improvement from the 4% decline in the second quarter. Also encouraging is the fact that average revenue per household per month has increased more than 2% sequentially and year over year, providing evidence that our broadband initiatives are expanding our relationship with customers. Revenues from the former MCI mass market business were $637 million and declined $204 million or 24.4% year on year. The important takeaway here is that growth is improving in the key areas of focus, namely data and broadband. Let's look at some customer metrics. In residential retail, let's start with our 23 million primary voice lines which are down 419,000 sequentially. Primary voice lines are generally impacted more by competition from either wireless, cable telephony or some IP substitute service. As you know, our competitive response has been to push our broadband products, both DSL and FiOS data, bundle them with our voice services and in certain markets, combine that with a FiOS TV offer. I would say we're doing fairly well. During the third quarter, we added 120,000 more net broadband and video customers than the decline in primary lines. In addition, we have many more customers on voice packages. The number of Freedom customers has increased by about 2.5 million in the past year. We now have about 7.5 million in total. On a consumer RGU basis, which includes additional or secondary lines, we were up about 1% versus last year, and essentially flat sequentially. We tend to view additional or secondary line loss as being driven more by secular change and technology substitutions than competition. In fact, our own broadband initiatives are influencing customers to disconnect their additional lines. Our bundling and broadband initiatives are starting to take hold. We believe that this expanded customer relationship will improve revenue per household and increase customer loyalty, thereby improving retention. Total access lines were down 7.5% compared with a year ago, and were 977,000 lower on a sequential quarterly basis. One-third of the total lines lost in the quarter were a combination of wholesale lines and former MCI mass market customers in regions. We will spend the next few minutes on FiOS. About a month ago, we conducted a FiOS briefing session in which we talked about our revenue opportunities, the network transformation, the customer experience and the business plan assumptions and economics. Hopefully one of your takeaways from that session was our enthusiasm and the progress to-date and our confidence in the plan assumptions and outlook. Our quarterly results demonstrate the steady progress we are making and validation of our confidence. As I mentioned earlier, we had 522,000 FiOS data customers at the end of the quarter. Third quarter net adds were 147,000 compared with 111,000 in the second quarter. We had 3.8 million homes open for sale. Our subscriber penetration rate was 14%. You can see from the ramp and our customer additions that we are gaining market share in a growing broadband market. Our FiOS video customer total was 118,000 at the end of the quarter. Here, quarterly net adds were 63,000 compared with 35,000 last quarter. With 1.2 million homes open for sale, we currently have a 10% subscriber penetration rate. As we indicated, customer acceptance in video is ahead of plan and the fact that we have many new and innovative features just around the corner bodes well for us, and we continue to differentiate our video service. Lastly, our churn in FiOS customers this quarter remains under 1.5% per month. Our full-year targets of 725,000 FiOS data customers and 175,000 FiOS video customers remains the same. A quick update with where we are with the capital cost to pass and connect premises. Starting with the cost of pass, again, we are pleased with our progress to-date. We have moved average costs down from 1,400 per home to 845 as of the end of September. That is a 40% decline in less then two years. On the capital cost to connect, we have moved costs down steadily as we have gained experience and expect this will continue. Capital cost per premise connected was $900 in September, down 25% this year, and we feel good about our $880 target by the end of the year. Beyond next quarter, we believe that GPON and other technologies will help us to further reduce capital spending per home and expect to see greater improvements as we move through the year. From a deployment standpoint, we had passed 5.3 million premises through the end of September, and we should have no problem meeting our goal of 6 million cumulative by the end of December. In Verizon business, we are focused on sequential revenue improvement. Revenues were up once again on a sequential basis, increasing by 1.7%. In the enterprise business, the sequential growth of 3% this quarter is an improvement over the 1% sequential growth last quarter. Continued traction in our strategic services revenues is driving the sequential growth. I talked about this earlier in the context of wireline data revenues. We are seeing growth in Internet, private IP, Ethernet and ring services. We are also seeing some improvement in core services trends. Data services like ATM, frame and private line were up slightly. Voice services were essentially flat. In addition, we saw strong government project revenues and some improvements in CPE sales. We are optimistic that we will continue to see steady improvement in both enterprise and total revenues and expect to see year-over-year growth in total business revenues within the next two quarters. Broadly speaking, considering all aspects of combining the two companies, we would say that the integration efforts, after only nine months, have been a great success. We are definitely seeing operational benefits: salesforce and product integration, marketing efforts and customer relationship work have all gone very well. As far as synergies go, we realized about $150 million in incremental synergies during the quarter, bringing our year-to-date total to around $350 million. Most of these savings are driven by headcount reductions, sourcing savings, network optimizations and traffic migration. We also have a number of systems integration projects underway that will result in additional cost savings in 2007 and beyond. We are currently on track to meet our synergy target for the year of $550 million. So, good progress at Verizon business. Let's turn now to wireless. Verizon wireless continues to deliver outstanding, industry-leading financial results and performance metrics. Total quarterly revenues, which are now just shy of $10 billion, grew 18.2% year-over-year. Sequentially, revenues were up $607 million or 6.6%. Verizon wireless has the highest total revenues in the industry, as well as the highest growth rate. Notably, this growth was once again accompanied by the industry's best margins. EBITDA grew to $3.8 billion, a sequential improvement of 6.8%. The quarterly EBITDA margin was 45%, up from 41.5% a year ago and 44.4% in the second quarter. Our margin performance is driven by the quality of our customer base and our efficient cost structure. Strong growth in service revenues was again driven by increased data usage and significant customer growth. Total service ARPU of $50.59 increased almost 2% sequentially and nearly 1% year over year. Not surprisingly, this is entirely retail-related. Data revenues accounted for more than 14% of service revenue and represented $1.2 billion of revenue in the quarter. Data made up $7.16 of total service ARPU, up substantially year-over-year and $0.76 sequentially. We had an outstanding quarter of customer growth. Our retail customer growth is, far and away, the best in the industry. We added 2 million net new retail customers during the quarter, extending our industry lead in having the most retail customers. These are customers that choose Verizon-branded service from our direct and indirect channels. Total net adds were 1.9 million, as reseller churn resulted in a net negative of about 70,000 customers. This marks the ninth consecutive quarter in which we added more than 1.5 million net retail customers. Our 54.6 million retail customers represent more than 96% of our total customer base of 56.7 million. Retail postpaid customers represent nearly 93% of our base. This quarter, 88% of all retail gross adds were postpaid. This was higher sequentially, although lower than last year. Retail continues to be our focus. That is because we serve and manage these customers directly. These are high quality customers in terms of loyalty and lifetime revenue. They also tend to have the highest margins. We continue to outperform the industry when it comes to customer loyalty. Total customer churn was 1.24%, retail churn was 1.15%, and retail postpaid churn was 0.95%. All three of these churn rates are lower than the third quarter last year. The slight sequential increases in each are in line with previous seasonal trends. Retail gross adds in the quarter were almost 6% higher than a year ago and sequentially better by more than 10%. This performance is particularly impressive, considering some of the predictions last year when we decided not to continue our RadioShack relationship. Retail gross adds from direct channel grew even faster, up 9.1% year-over-year. Importantly, these direct channels produce 74% of our retail postpaid gross adds this quarter. This is a key metric for us and one that we track very closely. This is because we know that customers buying through our direct channels have higher ARPU and lower churn. We also continued to expand and diversify our indirect distribution channel, which includes local and national outlets like Best Buy, Costco and Wal-Mart. Taking advantage of new retail channels and models, both direct and with our indirect partners, has helped us maintain a high quality base and been an important factor in developing our industry-leading efficiency and profitability. As I have said many times, the key to our success in wireless data is our commitment to investing in our premier network. Nearly 31 million, or about 57% of our retail customers, are data users, up significantly from just one year ago. To date, 13.7 million or more than 25% of our retail customers, have EV-DO capable devices. Moreover, data revenues from business applications such as broadband access and email have increased 135% in just one year. More than one-third of our data revenues come from business focused applications. We have three times more broadband access subscribers than one year ago and more than 55% of our data revenue growth comes from services other than messaging, primarily EV-DO based. We have an industry-leading portfolio of EV-DO capable devices, and we're taking advantage of exclusive periods on such devices as the Motorola Q, the LG Chocolate and the Samsung i830. In spite of these impressive data growth numbers, we are 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. I will summarize the quarter as follows. We're gaining market share and expanding customer relationships. It is true in broadband and video with Verizon DSL and FiOS. It is true in Verizon business, and it is certainly true in Verizon wireless. Our organic growth initiatives are gaining momentum. We expect to continue this steady progress, and we are confident that this will differentiate us long term. On the cost side, we continue to see significant opportunities. We know how to control expenses, and we have an intense focus on reducing costs. Along with strong operational execution, we continue to increase our financial flexibility and increase value to our shareowners. As far as our current share buyback program, we repurchased an additional $350 million in shares during the third quarter for a total of $1.35 billion year-to-date. You will recall that we originally estimated $1 billion for the full year, and we did that in six months. At that time, we increased the buyback program by another $500 million for the second half of the year. We expect to complete the $1.5 billion by year end. As Ron noted earlier, the Idearc spin-off has been approved by our Board with distribution of shares scheduled to occur on or about November 17. As Idearc has reported in its SEC filings, Idearc plans to incur about $9 billion of debt in connection with the spin-off. As a result of the spin-off, Verizon will reduce its debt by about $7 billion through a debt-for-debt exchange mechanism and will receive about $2 billion in cash. As previously announced, we plan to recommend to the board that it maintain the Verizon annual dividend at its current level immediately following the spin-off. Going forward, our intention is to continue to pay a competitive dividend. Finally, the sales of our Latin America assets are proceeding. All these changes to our asset portfolio, along with continued strong cash generation, will unlock value for our owners. In summary, we are on track to meet our operational and financial performance targets for the year. With that, I will turn it back to Ron so we can get to your questions.

Thanks, Doreen. Operator, Ivan and Doreen are now ready for questions.

(Operator Instructions) Your first question comes from David Barden - Banc of America Securities. David Barden - Banc of America Securities: Hi guys, good morning. Two questions, if I could, Doreen. Maybe the first on, as you pointed out, the Latin America sales looking on track, the directories spin-off is moving ahead. When you look at the cash that is going to be coming in the door from those and the debt capacity that will be opened up, could you talk a little bit more about what the game plan is as your buybacks starts to come to resolution here? The second thing would be just on the margins, You were talking about operational expense goals on target. One of those goals was expanding wireline margins sequentially over the course of the year. You have taken up the FiOS solution guidance a few pennies, but it does not seem like necessarily that would be the biggest driver for some of the margin compression we saw on wireline. if you could kind of elaborate a little on the net impact of MCI merger statement versus the FiOS guidance that you have said would be reflected in the fourth quarter number, that would be great.

Okay. Maybe if I start with the cash question. I think first we should say we feel really good about what we have accomplished this year. The $1.5 billion share buyback looks to be a good target for us. We think that the spin-out of directory is creating incremental value for us. And then, as you know noted I think in one of your write-ups, the spin-out actually increases the dividend for Verizon. So it probably gives us, I don't know, 4%, to 4.5% dividend increase this year. We have about just under $3 billion coming back from international. We also have $2.8 billion in spectrum that we need to pay for, mostly in the fourth quarter. So I think if we complete all these transactions, what I would expect is at least a $7 billion debt reduction coming in from the directory piece. We will use the cash on the $2.8 billion of spectrum that is a fourth quarter item, and then I think for the rest of it, what we are going to do is certainly meet with our Board, go through what we will do with the rest of the cash and it will be a first quarter discussion, I think, with you folks. On the margin question, I would say it really is predominantly FiOS. In the FiOS area, I would suggest it was mostly in cost of acquisition. Two things: the video ads were a little bit higher than we expected. Cost of acquisition, marketing installation a little bit high. Not bothered by that, because similar to the capital costs and homes passed and homes connected, we feel comfortable that we are going to be able to get the numbers where we need, so that was really driving it, as well as there was a one-time true-up on the content cost. We really hadn’t been doing much on content cost because it was so early on, so the third quarter had a pretty decent accrual to start the content cost. David Barden - Banc of America Securities: What was that number, Doreen?

I actually don't have it right in front of me. Maybe Ron can get it to you later, but it was probably not insignificant from the FiOS perspective. As far as synergies with the VZB, they are on track. We are comfortable with them, and they will certainly grow to the 550 in the fourth quarter. It is predominantly a FiOS issue as far as the margin, coupled with the access lines are probably a little bit softer than we had originally anticipated in the plan. It is probably the other piece of the margin story. David Barden - Banc of America Securities: Great, thanks guys.

Your next question comes from Jeffrey Halpern - Sanford Bernstein. Jeffrey Halpern - Sanford Bernstein: Thanks. A couple of questions for you. The first one on wireless and Verizon business. Can you talk a little bit about where you are in the ability for Verizon business to really cross-sell the wireless services, especially as you are moving into managed services and starting to beef up those offerings, the ability to help enterprise customers move applications to the mobile and to the network? Secondly, just to follow-up on David's question about FiOS and specifically focusing on multiple dwelling units in '07, because you mentioned in your FiOS briefing session a couple of weeks ago that you are clearly moving closer to that, and it is a significant portion of your base of access lines. Can you talk a little bit about how you anticipate the CapEx to connect customers looking in '07 given the MDU discussion?

On the first question, a couple of things going on right now on the cross-selling with the technologies. We have very sophisticated approaches to putting bids together and working with customers. So we have our salesforces out making joint proposals to customers. We have our operations teams working through operational capabilities for our customers. We have just had a couple of industry conferences in which we have laid out some longer-term product maps so that we can show our customers exactly how we see some of the capabilities. For example, when you look at IP protocols both for wireless and land line, you're looking at four-digit dialing both in wireless and land line. So we are looking at a whole series of capabilities that will unfold out over the next two to three years and give customers a sense of where we're heading with this. I think there is a lot of discussion about this wireless/wireline issue. I think the important point for us is to focus on solution selling and help customers understand how the technology unfolds. So we're at the beginning. We have a couple of trials going on here or there on various capabilities. On the consumer side, Jeff, you didn’t ask, but on that we're about to open up a couple of stores that will sell both wireless and broadband, so we're looking at some things that we're doing in that area. So this is an exciting opportunity for us, but it is going to be driven mostly by product evolution, and that is how we see taking advantage of the opportunity.

On the multiple dwelling unit question, first I would say that I think we're making progress as far as getting the builder/owner’s consent, which was a big piece of the MDUs. Certainly have made technical progress in being able to do it. I would suggest that we would anticipate on a cost to connect that it should actually run cheaper, as you would expect, depending on what technology. So that actually should be a help to us. Jeffrey Halpern - Sanford Bernstein: Great, thank you.

Your next question comes from John Hodulik - UBS. John Hodulik - UBS: Good morning. Two quick ones, maybe first for you, Doreen. With the FiOS guidance, does the increase in expected dilution this year make you more confident in your ability to lower that number in '07? If that is not the case, is it purely a success-based issue where if you add more subscribers, that number could go up, or just your thoughts on that given the new guidance would be great. And then maybe one for Ivan. The wireless results are obviously very strong, and I think we were surprised on the net add side considering a lot of other carriers are having trouble adding subscribers. Do you see an end to this, given the penetration rates we're seeing in the US, or do you think you can maintain this level for another year or two? I would just love to hear how you think about the industry, given the strong margins and net adds.

John, I will start with the FiOS question. I would suggest that we have said FiOS dilution should be about flat for '07. I will continue with that kind of guidance. It is, as you would imagine, however, success-based. To the extent we are much more successful than we think in video or data, that number would move. But for right now, I would still suggest it is about flat. John Hodulik - UBS: Great.

On the wireless question, look, we are very excited about our wireless results, obviously. They have been strong for almost four years now, five years. So here is the way we think about it. We think that the growth in wireless and the sustainability of our performance is really a function of how the team thinks about investing in their business. So I believe that they have made very smart, very prudent and very thoughtful investments in their capabilities. So whether it is investments in the network; we have been on the network promotion game since 1999, 2001. So now we are up to EV-DO, EV-DO RevA. We have invested in the channels. We have invested in great handsets and products. We have great culture. We have good distribution across the company. So my view of all of this is that as long as you see us making forward-looking investments in our capabilities that the growth should be sustainable. In fact, our view is that if you look at the results for the last couple of quarters, most of the analysts ask us if we can sustain it. Actually if you look at the results, we have actually widened the lead across the board. I think as the industry goes through consolidations, companies are going through various changes in their own business. I think we are in a position where we have been through most of those changes. We can take advantage of this. If you want a good analogy, it is a little bit like trying to catch the Kenyans in marathon running. I think you can keep improving your numbers, but I have a feeling that the Kenyans keep getting faster. John Hodulik - UBS: Okay, great. Thanks.

Your next question comes from Simon Flannery - Morgan Stanley. Simon Flannery - Morgan Stanley: Thank you, good morning. Ivan, given that we've now almost completed the directory spin, is it time to again open discussions with Vodafone to see if there's any change in their position? Also, on the small medium-size business, some of your competitors have seen very strong growth in that unit, and that is something that hasn’t yet turned around for you. Are there specific dynamics that might make that better in '07? Thanks.

Simon, I'm happy to answer the first question. I wouldn’t link the two. I think that if I can, since you asked it that way, I might take a second and just comment. When we think of the directory spin, our board has been very focused on why we are investing for growth in FiOS and in wireless and in completing the Verizon business transaction with MCI, that we were very concerned about making sure we return some value to shareholders. At the same time, we were improving our balance sheet. So we think the spin stands on its own. We feel good about it. As to the Vodafone issue, I think it stands where it always has. This is driven by Vodafone's view of their business. We have a contract with them that would suggest they pull the trigger on whether they want to exit the put or not, and that as you might all view, that over the last several months, every time it looks like Verizon is instigating any change it has a negative effect on both stocks. So I think the agreement I have with Arum is that if and when he is ever ready to consider it, that is the way we will move forward. At this point we're not assuming that Vodafone has changed its mind on this put.

I think on the small and medium business, I would start with some of it is definitional. I do think that we probably have a little bit more medium in our business definition perhaps than the others, so I'm not sure it's exactly apples-to-apples. Some of it is migration on the medium guys up to different data services. We are putting more feet on the street, more agency agreements, and also I think we are pretty encouraged because MCI brought a lot of products to the table that we did not have before. So if I look at our current ramp, it is much better than it was. So I think going forward, I am encouraged with the additional sales capability and the additional products that they now have. Simon Flannery - Morgan Stanley: Great, thank you.

Your next question comes from Tim Horan – CIBC. Tim Horan – CIBC: Thanks. Great quarter, guys. Two questions. Just to follow-up on the capital structure. Ivan, what do you think is the right kind of debt to EBITDA multiple longer term after you are done with a lot of these transactions and when FiOS dilution peaks? Secondly, I guess more subtly, do you think the cable companies are targeting you where you're doing your FiOS upgrades or where you are about to, try to lock in customers before hand or during the process? Thanks.

Okay. I will start, and if Doreen has anything she wants to add, she can. Look; on the debt to EBITDA numbers, just to make this pretty clear, if you take a look at the structure of our board, we have 12 of 14 directors who are financial experts, of which eight of them have been either the CFO or CEOs of both of their companies. For the past three or four years, they have been extremely pointed in directing us to do a couple of things, which is invest for growth -- which you see -- and at the same time, improve our balance sheet. So our targets on debt to EBITDA were about 1.4, 1.5. Doreen and I have talked about this, and we think that in this kind of an environment and in this kind of an industry, it should probably be a little bit lower. So whether it is 1.2 or 1.1 or 1.3, that is something Doreen is more qualified to answer. But it definitely, long term, should be lower than the 1.5. I think, Tim, we have moved in that direction. So we think a really strong balance sheet, coupled with strong investments in growth, is what our board has asked us to focus on. So I think we are moving through that. I think these shareholder-friendly transactions that we have been able to move on this year in terms of the Idearc spin, the sale of non-strategic long-term assets and moving through that is a good structure for us. So, as we move out into the future, I think having a strong balance sheet is something that we want to make sure we have, as well as investment-grade ratings for our Company. Hopefully that answers that in a way that gives you a sense that this is really a board-driven activity that frankly, Doreen and I agree with completely, and our job is to execute on that view.

I guess the only thing I would add is it is probably no longer a one metric issue. So I don't think it's just debt to EBITDA, Tim, I think you have to look at free cash flow to debt as well. So I think there are a couple of other metrics that we will be working with and taking to our board in the beginning of the year to see where we land. But it definitely with directory going out, it is lower than 1.5 and higher than 1, so someplace in between. Tim Horan – CIBC: Thanks. And on the cable targeting of the FiOS upgrades, the reason I asked –

That is a good question. Here is what I would say to that. As we go over operating results, here is what we would say. We would say that a lot of the cable companies have had mature evolution of their technologies in some of our markets. Obviously Cablevision has, as has Comcast; so I don't think it is a question of targeting us. It is a matter of where they have started. Cox has also been pretty far along the train up there in the New England area. So I think the way I would look at this is not that we have been targeted. It is that it has followed along their own technology evolution, and I happen to believe that the models that you have seen in certain markets will roll out across the country in the way they have done that. The other side of the coin is, you can see in some of the markets where they have rolled out early, we have started to see a little bit of a plateauing of some of the services they are selling. So our view of this whole access line issue is that we will continue to see some pressure on access lines. Some will come from wireless substitutions. Some will come from the cable companies, the over-the-top VoIP. But we think, as we look out into the future, our strategies for our own wireless and our own FiOS will begin to arrest that. Perhaps Doreen could help you operationalize that in your models in a second here.

As far as access lines?

Yes, sure.

What I would say is, as we go into '07 and we look at the back half of '07 third/fourth quarter, we would expect that you are going to see certainly an improvement in where we are today and a flattening of the access lines is what we are predicting. So it would be better. Tim Horan – CIBC: Thanks.

Your next question comes from Mike McCormack - Bear Stearns. Mike McCormack - Bear Stearns: Thanks, guys. Doreen, I am just trying to maybe dig into the margin question a little bit deeper. If you look at the pressure sequentially, we're looking at about 80 basis points of pressure sequentially. 70 basis points appears to be FiOS related, and then you've got an offset from MCI synergies ramping up, in my math, around 100 to 120 basis points. So it looks like there is something significant in the range of 100 to 130 basis points of pressure. Is that just increasing competition and pressures on the traditional business? Secondly, on the enterprise revenue trends, obviously we’re hearing good things across the industry. Maybe just a comment on the competitive environment, and Verizon's appetite, there has been a lot of consolidation. Are there any assets out there on the enterprise side that might be of interest? Thanks.

I think on the margin issue, Mike, you were right, it is really coming, I mentioned in the text here, that it was access lines. I think it really is coming on the regular telco wireline side of the business in that the loss of access lines was causing the additional piece of the margin erosion for the most part.

On the enterprise, Mike, I think on that point, a couple of things. Generally what we are seeing is some consistent pressure on some of the repricing of contracts like you would have normally seen. But we are seeing, for example, as Doreen pointed out earlier, strategic services are up over 20%, and we are seeing some stabilization in the way customers are looking at overall contracts. So we are feeling better about our ability to continue to ramp. As you can see in the results sequentially, we're up 3% in Verizon Business and 1.7% year-over-year. As to your other question in terms of assets, no, I think we are pretty much focused on organic movement. We have a lot of work on the IT side and in the systems side to improve our capabilities. We're also working on product maps to generate a lot of new products and services. So we don't see a big strategic need for any movement at this point, so it is not something we are out in the market hunting for. Mike McCormack - Bear Stearns: Great. Thanks, guys.

Your next question comes from Tom Seitz - Lehman Brothers. Tom Seitz - Lehman Brothers: Thanks for taking the question. Could you comment on the demand environment in wireline business? The economic data seems to say one thing one week and another thing the next. I was wondering from your perspective, given the long sales cycle, are you seeing any slowing down in the number of RFPs that you're getting to look at or any requests for delays in circuit delivery, given the economic backdrop in the demand for business telcos services? Secondly, with respect to small and medium business, are you starting to see in your territories any evidence of cable starting to target the small business market? They have certainly talked about doing it, and I was wondering any, prelaunch marketing activity, advertising campaigns, et cetera? Thanks.

If I start on the demand side for Verizon business, we are incredibly pleased. You know, I would say they are not seeing any slowdown due to the economic conditions. More RFPs, I think, than they have ever seen. They are writing more business than they have ever seen. If you would talk to any of the salesforce, incredibly encouraged with what they are seeing. So absolutely none as far is that is concerned. On the small business side, I think what we would say is cable, especially in our territory, Cablevision for a long time has been targeting the small business. You have probably seem maybe Comcast starting to ramp, but Cablevision has been after the business segment for a very long time. So I think we are used to it. I would say outside the Cablevision territory, I don't think it is something that we are seeing a lot of at the moment. Tom Seitz - Lehman Brothers: Great, thank you very much.

Operator, I would like to turn the call over now to Ivan Seidenberg for some concluding remarks.

Thank you. Just a couple of comments to close the call. As always, thank you for listening in and participating on our call. The headlines for us are pretty clear. We feel that this was an important quarter for us, not only in delivering the results that Doreen talked about, but beginning to see some expansion of our top line, particularly generating a lot of organic growth across the board. Our view of all of that is with the right investments in new platforms and services, the market is going to respond to the kind of innovation that we think all this technology brings. We think that if you look very quickly, VZW, a great quarter, making the right investments and our view is they have the capability to not only sustain, but continue to widen their read on the industry. In the telco, as you can see, we had overall a positive quarter, even though we do have some work to do to continue to drive profitability, but we are very comfortable and actually pleased with the expansion of the top line with our broadband volumes and the success of FiOS. One thing we didn’t get a chance to talk about is that every customer survey we do for people who already have FiOS, the churn is low and the customer satisfaction numbers are off the charts, so we know the product is a winning product and it is a question of making sure that we continue to drive the profitability, as you have been asking the question. Verizon business, lots of activity, top line expansion, lots of interest in customers moving to IP and MPLS. We still have obviously voice pressures on the business, but for the most part, customers are really being driven to all of the new technology. Lastly, hopefully you see in 2006 that we spent a great deal of time trying to unlock value in other ways in terms of asset sales, the Idearc spin, improving the balance sheet, share buyback that Doreen talked about, effective dividend increase that comes. So we feel good that as we head toward the end of the year, we have approached driving value for shareholders in a more balanced way, and hopefully you can see that it is being reflected in the performance of the stock so far this year. So thank you all, and we will continue to do what we do and we will see you in the first quarter.

Operator, that concludes our third quarter earnings call. Thank you everybody for joining us today.