Michael Stefanski - SVP, IR Fran Shammo - CFO

David Barden - Bank of America Phil Cusick - JPMorgan Brett Feldman - Goldman Sachs Simon Flannery - Morgan Stanley Michael Rollins - Citi Investment Research John Hodulik - UBS Mike McCormack - Jefferies LLC Kevin Smithen - Macquarie Amir Rozwadowski - Barclays Jennifer Fritzsche - Wells Fargo Jonathan Schildkraut - Evercore Partners

Good morning and welcome to the Verizon Third Quarter 2014 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the floor will be opened for questions following the presentation. (Operator instructions) Today’s conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to your host, Mr. Michael Stefanski, Senior Vice President, Investor Relations.

Thanks, David. Good morning and welcome to our third quarter earnings conference call. This is Mike Stefanski and I’m here with Fran Shammo, our Chief Financial Officer. As a reminder our earnings release, financial and operating information, the investor quarterly and the presentation slides are available on our Investor Relations website. Replays and a transcript of this call will also be made available on our website. Before we get started, I would like to draw your attention to our Safe Harbor statement on slide 2. 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 in Verizon’s filings with the SEC, which are available on our website. This presentation contains certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials we’ve posted to our website. The quarterly growth rates disclosed in this presentation are on a year-over-year basis, unless otherwise noted as sequential. In terms of our financial results, I’ll point out that there were no special items included in our reported earnings for the third quarter of 2014. Earnings per share of $0.89 compares with adjusted earnings of $0.77 per share in the third quarter of last year, an increase of 15.6%. On a year-to-date basis, adjusted earnings per share of $2.65 were up 21.6%. Keep in mind that the $2.65 per share a year-to-date result in 2014 does not reflect full ownership of Verizon Wireless from the beginning of the year since the transaction close on February 21. As previously noted full ownership from January 01, to the date of closing would have represented an additional $0.07 of earnings per share in the first quarter. For purposes of comparability in the Wireline segment, the historical results of the business within the public sector that we sold on July 01 have been reclassified for all periods prior to the sale. These results, which previously were part of global enterprise, have been moved to corporate and other, consistent with how we’ve dealt with divested operations in the past. You can access this reclassified historical information on our website. With that I’ll now turn the call over to Fran.

Thanks Mike, good morning everyone. Our third quarter results demonstrate the consistency of our performance and our ability to compete effectively and deliver strong operating and financial results. We entered the year with great confidence in our ability to generate strong financial performance in 2014 and our conviction has not changed. We believe that steady and consistent investments in networks and platforms will drive innovative products and services and fuel our growth. Our Wireless and Wireline networks will continue to be the hallmark of our brand and provide the fundamental strength upon which we build our competitive advantage. The overall industry is very healthy and we continue to see strong customer demand for Wireless and broadband services. U.S. market has set the pace for global broadband infrastructure investments. In Wireless, all four national service providers are investing in 4G networks resulting in continued innovation, 4G device adoption and increase in customer usage. Our competitive position is strong and we’re focused on executing our strategy of providing a compelling value proposition and a great customer experience on the best most reliable network. In the third quarter, we produced very strong customer growth in Wireless and FiOS and sustained our strong growth trends in terms of revenue and earnings. We pride ourselves on being an “and” company, delivering quality growth and profitability. We continue to stand apart from our peers with very consistent high quality earnings results. We have posted double-digit year-over-year growth in reported and adjusted earnings and earnings per share in 10 of last 11 quarters. In Wireless, we had a very strong quarter of high quality connections growth and profitability. Retail postpaid device activations of 11.7 million were up 14.9%. This is higher volume than the fourth quarter last year, when we activated 11.5 million devices. Retail postpaid net adds totaled 1.5 million up 63.5% from last year. Year-to-date postpaid net adds of 3.5 million were up 37.4%, which is roughly 1 million more than a year-ago. Our Wireless EBITDA service margin was 49.5%. This is a very strong result given the volume of device activations and the relatively low percentage of customers choosing the Edge program in the quarter. In Wireline, we had a strong quarter in FiOS with 162,000 internet and 114,000 video net subscriber addition. Consumer revenues grew 4.5%. As we continue to drive FiOS penetration and customer adoption of our quantum broadband and video products. Our Wireline EBITDA margin remained stable at 23%. Our strong cash generation enables us to consistently invest in our networks for future growth and return value to our shareholders. Through the first nine months of 2014, we have invested $12.6 billion of capital and paid $5.7 billion in dividend. In early September, we were pleased to announce that our Board of Directors approved a 3.8% dividend increase which raises our annual dividend to $2.20 per share. This is the 8th consecutive year that our Board has approved a quarterly dividend increase and the highest percent increase since 2008. Now let’s get into the third quarter performance in more detail starting with the consolidated results on Slide 4. On a reported basis total operating revenue grew 4.3% in the third quarter. If we exclude the revenues of the public sector business we divested from the prior period, the comparable growth rate would have been 4.9% from the third quarter and 5.2% year-to-date. Our consolidated top-line growth continues to be driven primarily by Wireless and FiOS. In addition to top-line growth, we continue to focus on driving process improvements and cost efficiencies through our Verizon Lean Six-Sigma program. Consolidated EBITDA was $11.1 billion in the quarter and our EBITDA margin was 35%. Let’s take a look at our cash flow results on Slide 5. As I have noted in prior quarters, it is important to remember that the transaction to acquire full ownership of Verizon Wireless create a lack of comparability between the current and prior period in our state in the cash flow. The first nine months of 2014, cash flow from operations were $23.2 billion. Additional cash outlays this year included $2.5 billion of incremental cash interest payments and higher cash income taxes of $3.2 billion. In addition, we had $1.5 billion in pension contributions that we did not make in 2013. In spite of these additional cash outlets and higher capital spending, free cash flow totaled $10.5 billion through the end of September. Capital expenditures for the quarter totaled $4.1 billion and were $12.6 billion year-to-date up $817 million or 6.9%. We project that capital spending will be around $17 billion for the full year. Our deployment of capital in Wireless has been very consistent throughout the first three quarters of this year. In the third quarter, Wireless CapEx was $2.5 billion and trough nine months totaled $7.8 billion. We are deploying capital to proactively stay ahead of demand and our capital investments continue to focus on adding capacity to optimize our 4G LTE network, primarily by increasing network density and deploying spectrum. We have been actively deploying AWS spectrum across our nationwide footprint, and currently have more than 400 markets with AWS or XLTE as we branded it. Our continued deployment of spectrum along with investments in small sales, distributed antenna systems and in building solutions will allow us to build upon our network advantage. In Wireline, capital expenditures totaled $1.5 billion in the quarter and $4.2 billion year-to-date, down $273 million or 6.1%. Our balance sheet remained strong, and we continue to have the financial flexibility to grow the business and pursue our strategic goals. Gross debt of $109.2 billion was down $750 million from last quarter. Our net debt position improved to $102 billion and then net debt to adjusted-EBITDA ratio at the end of the quarter was 2.3 times. Now let’s move into the review of the segment, starting with Wireless on Slide 6. Our Wireless strategy is built on making consistent network investments and providing a compelling value proposition to our customers. This value proposition includes customer choice and an excellent service experience on the nation’s most reliable network. Our investment strategy is focused on adding capacity to our network to meet increasing demand, which is driven by 4G device adoption and higher customer usage. Growth in Wireless revenue and profitability continues to be driven by our high quality retail postpaid customer base, where we continue to see very strong 4G device adoption. As I highlighted earlier, we had another exceptional quarter of smartphone and tablet activations. Customer demand on our network continues to increase at a rapid pace. Our recently announced promotional pricing is designed to provide even greater appeal to our MORE Everything plan which we believe will drive more 4G device adoption and stimulate incremental usage on our more efficient LTE network. We expect that continued success in driving 4G device activations in the fourth quarter will create profitable growth for us as we enter 2015 and beyond. Total Wireless revenues in the quarter grew to $21.8 billion up 7%. Service revenues grew 4.8%, driven by 4G LTE connections growth and higher usage on our network. The declining rate of service revenue growth is attributable to device mix, price changes and the tradeoff between lower service revenue and higher monthly equipment billings for customers on Verizon Edge. In the third quarter the percentage of phone activations by customers choosing Edge program was approximately 12%, which was down from about 18% in the second quarter based on recent promotional pricing for Edge, the percentage of phone activations taking the installment plan option could more than double in the fourth quarter. In terms of profitability, we generated $9.1 billion of EBITDA in the quarter and our service EBITDA margin was 49.5%. The EBITDA benefit in the quarter from the Edge program was approximately $115 million. Let’s now turn to a more detailed look at Wireless revenue per account beginning on slide 7. Retail postpaid revenue per account or ARPA grew 3.5% in the quarter; growth in ARPA is a function of device adoption, accounts growth and increased usage. The continued rapid pace of 4G device adoption is improving the quality of our customer accounts. In the third quarter, we added 4.4 million 4G smartphones and 1.1 million 4G tablets to our postpaid connection space. All of the important account metrics are improving. We ended the quarter with a total of 35.4 million postpaid accounts and the number of postpaid connections per account was 2.82, which is an increase of 3.7%. 57% of our accounts are on MORE Everything share data plan. The average data usage in MORE Everything accounts has increased nearly 50% year-over-year. I would also point out that since the ARPA metrics is calculated using service revenue, it does not capture the monthly equipment billings from customers on the Edge program. In the third quarter these monthly equipment billings totaled about $285 million and were approximately $533 million year-to-date. Let’s take a closer look in connections growth on slide 8. We ended the quarter with 106.2 million total retail connections, our industry leading postpaid connections base top the 100 million mark at 100.1 million and our prepaid connections totaled 6.1 million. In passing the 100 million postpaid connections milestone, it is worth noting that we’ve added more than 20 million new connections since 2009, representing a compound annual growth rate of around 5%. Postpaid growth has totaled 4.5 million in the quarter up from 4.2 million in the second quarter and 3.7 million a year ago. Year-to-date postpaid gross adds were up 15.1% in terms of the gross add mix in the third quarter 54% were smartphones and about 36% were connected devices primarily tablet. Most of the remaining gross adds were basic phones. Our retail postpaid churn rate of 1% was 3 basis points higher than the third quarter of last year. As I highlighted earlier, retail postpaid net adds in the quarter totaled 1.5 million compared with 1.4 million in the second quarter and 927,000 a year ago. Our postpaid net add mix in the quarter included 2.3 million new 4G devices. Within that total, 1.2 million were 4G smartphones and 1.1 million were 4G tablets. Postpaid phone net adds totaled 457,000 which is comparable to 481,000 in the third quarter last year. Within the postpaid phone category, the 1.2 million new 4G smartphone adds were partially offset by net declines in basic and 3G smartphones. Tablet net adds were more than 1 million for the second consecutive quarter. Tablets provide good growth to increase data consumption, lower churn of the account level and have a lower cost subsidies in the smartphones. We have significant headroom in terms of further penetration as our postpaid tablet base was 6.5 million at the end of the quarter. Further customer adoption of tablets clearly represents an incremental growth opportunity for us. Our postpaid upgrade rate was 7.2% in the third quarter. Once again, these were high quality smartphone upgrades either from a basic phone 3G to 4G or 4G to a newer 4G smartphones, about 1.2 million were 18% of smartphone upgrade this quarter were from basic phones, nearly 50% of the remaining smartphone upgrades were 3G to 4G which we monetized through higher data usage and lower cost to serve. You will recall that in the fourth quarter of 2012, we activated 3.1 million 3G iPhones as it was the first time we offered a free apple device to customers signing a new two-year contract. A majority of these customers will be coming off contract this quarter providing us with a unique opportunity to try 4G smartphone adoption, almost all of our retail connections growth in 2014 have been postpaid. The first nine months prepaid net adds were only 5000 compared with 274,000 in 2013, we believe that price sensitive prepaid customers are moving to the postpaid market. Next, let’s turn to the Slide 9 and take a look at the device activations and our continued progress in driving 4G adoption and usage. As I have highlighted, postpaid device activations were very strong at 11.7 million. During the quarter, we activated 8.9 million smartphones and 1.3 million tablets. Our smartphone penetration at the end of the quarter increased to 77% of total phones. We have 65.4 million smartphones in total and 48.2 million of them are 4G. A year ago, we had 29 million 4G smartphones that we’ve made significant progress in driving 4G penetration and yet we still have a significant opportunity in front of us with more than 17 million 3G smartphones and 20 million basic phones in our connections space. Beyond smartphones, tablets and other internet devices are contributing to our overall 4G device penetration. At the end of the third quarter, more than 59% of our retail postpaid connections were 4G, up from 38% a year ago. Data and video usage on our network continues to rise. Currently about 79% of our total data traffic is carried on the 4G LTE network. As we handle this increased demand, our network continues to be acknowledged as the performance leader and national studies conducted by widely recognized third party organizations. We have raised our own network standards and our performance continues to get better. Let’s move next to our Wireline segment starting with a review our consumer and mass markets revenue performance on Slide 10. In the consumer business, we continue to see positive revenue trends driven by FiOS. In the third quarter, consumer revenue growth was 4.5%, making it 9 consecutive quarters of growth in excess of 4%. Mass market which includes small business grew 3.2%. FiOS now represents 76% of consumer revenue and we’re sustaining strong double-digit revenue growth. In the third quarter, FiOS consumer revenue grew 12.3% driven by customer additions, pricing actions and quantum penetration. Strong adoption of quantum continued at 57% of our FiOS internet customers described of higher speed ranging from 50 megabytes to 500 megabytes per second. We continue to enrich the customer value proposition and drive investment returns by creating new and innovative services on our FiOS platform. In the second quarter, we introduced FiOS quantum TV with enhanced features and functionality in terms of storage, recording capabilities and control of content. In July, we introduced Speed Match, a service upgrade that increases customer upload speeds to match their download speeds. This competitive advantage provides FiOS customers with faster and more consistent upload speeds, which is compelling for social media and gaming activities. Our focus in FiOS markets is to drive higher penetration by adding quality customers, generating profitable growth in a very competitive market and improving our overall investment returns. In broadband, we added 162,000 net FiOS internet customers in the quarter and now have 6.5 million subscribers representing 40.6% penetration. Overall, net broadband subscribers in the third quarter were up positive 69,000, up more than 23%. In FiOS video, we added 114,000 net subscribers that we now have 5.5 million subscribers representing 35.5% penetration. During the quarter, we converted 55,000 customers from copper to fiber bringing our year-to-date total to around 200,000. This network evolution initiative is enabling us to systemically upgrade the network and provide higher quality of service to customer. Beside from the maintenance savings and improvements in customer satisfaction, conversions to fiber also provide a long-term opportunity for customer to purchase FiOS services which resulted in additional recurring revenue. Let’s turn to Slide 11 and cover the enterprise and wholesale business. In the enterprise space we continue to work through secular and economic challenges. In the third quarter, global enterprise revenue declined $155 million or 4.4%. Revenue declines in legacy transport services and CPE continue to outweigh growth in newer and more strategic applications which were smaller in scale. Strategic services totaled $2.1 billion and grew 1%. This category, as currently defined, includes both the IP layer and application such as data center, cloud, security and managed and professional services. Revenue from services in the IP layer have been impacted by competitive price compression which is offsetting growth in application services. In our global wholesale business, quarterly revenues declined $79 million or 4.8%. Healthy demand for Ethernet services in each of last few quarters has offset a larger portion than expected as the revenue declines from price compression, technology migration and other secular challenges. In the third quarter, Wireline operating expenses declined 1.7% and our EBITDA margin was 23%. As we said, we are making progress but are not satisfied. We have more work to do in order to drive improved profitability in this segment. On a year-to-date basis, the Wireline EBITDA margin was up 60 basis points to 23%. From an overall segment perspective, our strategy is to continue scaling our FiOS business and improve the enterprise revenue mix by driving growth in the newer strategic services like cloud and security. In addition, we believe that process improvements and retooling efforts using Verizon Lean Six-Sigma principle will improve our cost structure and drive operating efficiency, resulting in a stronger Wireline business. Let’s move next to our summary slide. With three quarters of 2014 behind us, our financial performance has been strong. We continue to deliver high quality double-digit earnings growth and our cash generation is strong, enhanced by full access to all the Wireless cash flows. These cash flows have allowed us to consistently invest in our networks and platforms for future growth and innovation. In addition, we returned value to shareholders with the 3.8% dividend increase. We have a strong market position and that demonstrated the ability to compete effectively and execute our strategy. Our high quality customer base in Wireless and Wireline continue to be the hallmark of our brand and provides the fundamental strength upon which we will build our competitive advantage. We are also building for the future through our global platforms in video delivery and machine-to-machine. New revenue streams from machine-to-machine in Telematics are beginning to emerge. In the third quarter these revenues were approximately $150 million and totaled more than $400 million through nine months, an increase of more than 40% year-to-date. Our strong volume growth in both Wireless and FiOS gives us great confidence heading into the fourth quarter. We continue to target consolidated revenue growth of 4% in 2014. For the full year, our consolidated adjusted-EBITDA margin as well as the Wireless EBITDA service margin results will be dependent on fourth quarter volumes and Edge installment plan take rates. The Wireline EBITDA margin remains on track to expand on a full year basis. With that I will turn the call back to Mike so we can get to your questions.

Thank you, Fran. Before taking questions I would like to remind everyone that we filed an application to participate in the AWS-3 spectrum auction. As a result due to the FCC’s rules, we cannot answer any questions related to the auction or AWS-3 spectrum. David we are now ready to take questions.

Thank you. We will now begin the question-and-answer session. (Operator Instructions) One moment for the first question. Your first question comes from David Barden of Bank of America. Please go ahead with your question. David Barden - Bank of America: Hey guys thanks for taking the question. So two if I could. First, I was wondering if you could just talk a little bit in light of Lowell’s comments in the briefing about his conviction level, confidence level about 4Q. About the Cadence Competition and how you felt you had to respond over the course of the quarter, obviously things started off fairly stable and then we have the T-Mobile promotion followed by the Sprint promotion followed by incremental actions in terms of double data and things like that. So if you kind of give us a sense us to how the quarter trended and what you are seeing that’s giving you the confidence for the rest of the fourth quarter would be helpful. And then second Fran, I think that we have got a pretty good understanding that Smartphone customers have been generating roughly double the value of feature phone customers. You are referencing the 4G Smartphone opportunity is beings something incremental to the 3G Smartphone opportunity. If you could put some numbers around that, that would be super helpful. Thank you so much.

Okay, great. Thanks David. So look on the competitive front. I think that the takeaway here is just that we provide an extremely strong quarter from growth perspective and I anticipate you’re going to see that across the industry. If you look at as I said we see a shift from prepaid to postpaid not necessarily within our base because of high quality and strict requirements we have from a credit perspective. But there is still a lot of growth out there. If you look at just the industry itself I mean you take tablets, you take the video consumption, you look at machine-to-machine and internet of things, I mean all these things are contributing to our growth. If you look at machine-to-machine for us it’s the first time we gave you a revenue number and that’s growing to 40% year-over-year. So it’s more than just about a smartphone customer as I said before if I could I would stop disclosing net adds, it’s all about how we build the base of revenue and how we continue to grow this business into the future. If you look at the competitive front, there was a lot of movement but it was not unexpected I mean as you go into the fourth quarter, this is normally a very high competitive quarter, it’s a very high volume quarter for ourselves from a holiday perspective but I think if you look at us as we’ve done in the past we look at what the competition is doing, we take a very rational and logical approach to what we’re going to respond to? If you looked at what we did, we responded with some Edge pricing on a promotional basis that quite honestly puts us back into the market given all the moves we were slightly out of the market like if you saw it back in the first quarter of this year we did similar things and we continue to grow and we continue to produce the profitability that’s expected of our shareholders. So, I think the response you’ve seen is a logical rational response, there will be upcoming promotions I’m sure from everyone as the holiday season gets closer and we have our own plans in place to execute on. So I think from a fourth quarter perspective, you should expect high volume, you should expect from us that our upgrade rate will increase, we have the highest backlog of any previous launch of an iPhone that we have coming into the fourth quarter, which is a high backlog of both new customers and also for upgrades. So I know that our upgrade rate is going to be fairly significant in the fourth quarter as we said on the call here 3.1 million, 2012 3G iPhone customers are waiting to upgrade now as they come out of contracts so that’s a great perspective and that leads me into your second question. So if you think about some of the data points we have given you from a 3G smartphone customer to a 4G smartphone customer, the first time we’ve told you that within our MORE Everything plan which is for the majority 4G smartphone customers. Their usage pattern is going up 50% year-over-year. If you look at tablets, a tablet customer uses more than the 3G smartphone customer. So if you start taking together with the volume increases and other industries have put out what the usage pattern of video customers are on a 4G LTE network, video is a huge consumption for us and it continues to increase quarter-over-quarter, year-over-year and that’s driving that 50% increase in usage in our 4G base. So when you combine all of that, every time we can move a customer from a 3G smartphone or a basic phone into our 4G portfolio, their usage and revenue goes up. So it’s a great combination for us. And I’ll end the question that says, again we’re focused on the quality of our base and the quality of our adds to generate our growth. Michael Stefanski : Thank you, David. David will ready for the next question.

Your next question comes from Phil Cusick of JPMorgan; please go ahead with your question. Phil Cusick - JPMorgan: Hi guys, thanks. Two things one to follow up, Fran something you just said prepaid customers move into the postpaid market is that a good thing or bad thing, do you think these customers offer a similar churn level that pass the credit check. Right? And did they tend to bring their own devices or they taking Edge to the different rate from one feasibility you have and then second there has been a lot of articles written likely on asset sales from you whether that was Wireline assets or towers. Can you give us an update on how you’re thinking about that? Thanks.

Thanks Phil. On the prepaid customer move to postpaid look I mean, we’re just looking at the overall industry and where prepaid growth is from a year ago to where it is today and the assumption is that we do we see the prepaid customer moving. If you look at the entry prices now that are on postpaid and this is really around single line not multifamily. But if you look at single line pricing, those price points are pretty darn close to what a prepaid customer would pay on prepaid. So the hurdle is there is a credit check and obviously for Verizon we’ve not changed our credit profile for any of our customers it’s same as it has been for over a year now even when Edge was introduced. So, again it’s not as favorable to us it was more of where are these customers going and we think they are going to a lower end type entry point which is not unusual. I mean the same thing happened back in the Voice world when Voice became closer to what the prepaid were. So, from a device perspective some is on device but others are also buying up into device. As far as the asset sales go, look I’ve nothing to announce today. We said publically that we certainly would entertain a sale of our towers if the terms and conditions were right. And at this point, we don’t have anything there. And as Lowell and I’ve always said, we continue to look at our portfolio for opportunities but it has to be at the right time, the right place, and the right price and so therefore there is really nothing to talk further because there is nothing to announce. Michael Stefanski : David next question please.

Your next question comes from Brett Feldman of Goldman Sachs. Please go ahead with your question. Brett Feldman - Goldman Sachs: Thanks for taking the question. I just want to maybe a follow-up on the full year margin guidance, it sounds like and correct me if wrong, but it sounds like it’s most sensitive to the Edge take rate and so along those lines in the past you’ve been fairly agnostic or you’ve seen somewhat agnostic as to whether your customers were choosing a subsidy or choosing Edge. I am wondering how you’re changing your thought process, meaning are you trying to achieve desire outcome. You noted that it looks like the take rate could double in the fourth quarter and then just broad levels, is there a breaking point? Meaning if Edge were to see adoption rate above a certain level you probably will have margins that were up and if that was below they probably be down just sort of help us with the modeling exercise? Fran Shammo : So look, there is a bunch of factors entering into the fourth quarter here. As I said, we do think that the Edge rate will take an uptick and you’ve probably seen us increasing our advertising around the price points of Edge which is where the rest of the industry has been and advertising around. So we need to be in market with those price points which is why we launched the promotional pricing that you saw. But if you look at the 12% this quarter or the 18% last quarter, you can kind of get a flavor on what the impact is to our bottom line, which is 120 basis points this quarter. I think it was 134 basis points last quarter. So beyond that I am not going to give any further information on that, but if you think about the Edge take rate at the double then you can kind of extrapolate what that math would be, but then offsetting that will be the upgrades. And at this point, I don’t know where the upgrade will come whether it will be Edge or onto the old subsidy model. Again, we’re very focused on customer choice, we give our customers the choice of the subsidized handset with the higher service pricing or we give them the edge which they pay for the phone over the term, but it gives them the availability to upgrade sooner. So it is the customer choice and it’s hard for me to identify what that will be. But as I said, Brett, we have a very high volume of backlog on the iPhone. We have a bunch of new phones coming out in the fourth quarter from other manufacturers that are extremely good. So I think we’ll have a great lineup of products. It’s going to be a high volume, highly competitive time of the year and beyond that I’m not going to give any specific guidance to margins but it will certainly be based on those volumes and how those customers come in. Michael Stefanski : David next question please.

Your next question comes from Simon Flannery of Morgan Stanley. Please go ahead with your question. Simon Flannery - Morgan Stanley: Fran, you’ve talked about a $17 billion number for CapEx, you're coming towards to the end of the ex-LTE rollout, is there some opportunity for the -- it seems like the growth rate have slowed but some CapEx as a percent of revenues to fall over the coming quarters or are we going to continue keeping at this sort of rate as a percentage of revenues? And the on the Wireline side, a bit of softness in SMB and enterprise, you’ve talked about some of the secular factors, do you detect any change in macro or in the competitive environment or is it just more of the same?

So on CapEx, we said we’d be around $17 billion. As we’ve said that coming into this year, we were determined to improve our CapEx to revenue ratio and I believe we will do that on a year-over-year basis. This year we had a much more flatness to our CapEx spending, so if you look at prior year we’ve always had more of a ramp into the back half of the year. You won’t see that this year, so it’s become more level and I do anticipate that we’ll be able to continue to improve on our CapEx-to-revenue ratio. As far as whole dollars go, we set around the $17 billion mark and I’ll give you some more guidance in January, but I don’t anticipate that that will change pretty materially going into the next year. So again, the focus will be to continue to increase that CapEx-to-revenue ratio. And then on the Wireline side, first let’s talk about the consumer small business area, so we did have an inflexion point this quarter where we did suffer a 4.1% decline in the small business and some of that was due a year-over-year comparison but some of that due to some onetime things and I think that will come back in line here in the fourth quarter. But we did have a very good strong FiOS quarter at 4.5%. The other thing I would say around FiOS is, if you look at the components of content and our revenue per customer, our revenue per customer is growing nicely and is actually outpacing the cost of content. And this year, if you look at our content cost, we’re around that 2% to 4% growth rate in content. So from a competitive standpoint that’s an advantage for us to drop more margins to the bottom on our consumer piece and if you look at FiOS, FiOS continues to contribute more and more net income quarter-over-quarter, so that’s a positive. On the Enterprise side, look I think that I feel like I record this every quarter and it does not change. I really don’t see much change in the Enterprise spectrum. If you look at the European market and it’s softening for us and also with the FX impact to some of that softness of where the dollar is. So I think where we have a lot of headwinds right now in Enterprise and I will honestly tell you I don’t see that changing for at least the next couple of quarters at this point in time. Michael Stefanski : David next question please.

Your next question comes from Michael Rollins of Citi Investment Research. Please go ahead with your question. Michael Rollins - Citi Investment Research: Hi, thanks for taking the question. Fran you referenced that the MORE Everything plans were generating 50% greater usage year-over-year. Is there a way to think about how much revenue that usage is contributing? And how you feel about the ability to monetize the growth in consumption in some of the rate plans have promoted higher usage buckets? Thanks.

Yeah, thanks Michael. So look, I am not going to give you specific how the revenue increases. I mean you can see that in our ARPA which is growing nicely if you see the sequential improvement in ARPA this quarter. From last quarter it grew to a 161 from 159. So if you look at year-over-year we are up 3.5%. So I think that metrics speaks for itself as how we are monetizing the increased usage. But if you think about this the 4G LTE network is three to four times more efficient than prior network. So I guess I look at it this way, if you back in time and you go back to the voice world. And you go from the beginning of time to where that voice world matured. What happened was the price per minute decreased and usage increased, and the overall industry increased its revenue because of that increase in usage. And I, kind of, look at the data world in the same perspective. You are going to see the price per megabit decreased but the usage is going to outpace that. And at least our Tier pricing structure and the MORE Everything planned. Each time you upgrade you are going to incrementally pay a little bit more for what you use. And that’s really what’s favoring in on the revenue growth. But it’s also coming over very efficient network that does not cost incrementally to produce that increased usage. So it’s a good combination to have in efficient network with an ever increasing consumption rate. So I do anticipate that the structure works. I think it’s going to grow, as long as we increase the data bundle usage on a competitive standard basis. I still think though with the increasing usage as we said 50% year-over-year you are still going to see a healthy growth in the revenue on an ARPA basis. So think the combination works. But you will see that megabit or price per megabit decrease with the continued increase in consumption. Michael Rollins - Citi Investment Research: Thanks.

Next question please David?

Your next question comes from John Hodulik of UBS. Please go ahead with your questions. John Hodulik - UBS: Thank you. Fran maybe a quick follow-up to Mike’s question on the service revenue. I mean similar margins there is a lot of moving parts as we look into fourth quarter. But you saw a 100 basis points of service revenue growth deceleration. You are going to be having more Edge come through. Is that the kind of deceleration we should see again in the fourth quarter or does it do all the upgrades sort of offset that. That’s number one. And then number two. Apple obviously recently announced they move to soft SIM card at least for the iPads, the new iPad that they are introducing. Verizon was conspicuously absent from the companies in the U.S. supporting that. Can you give a little color in terms of your position in terms of that new product? Thanks.

Sure, thanks. So on the service revenue side, look there is a lot of puts and pushes here from a service revenue perspective. So if you go back I mean obviously we had a price change in the first quarter which is working its way through the system as we said before we were not going to reprice our base in one lump sum. We would work on that and address those customers that were a high churn profile, and treat them accordingly which we have done for many many years and we continue to do that. And that puts a pressure on service revenue as we get them into the price plan that’s going to keep them on our network. In addition, Edge has an impact here because you are moving service revenue into equipment revenue when we gave you those numbers in the upfront comments of how you should think about that. But that improves the -- if you take those recurring monthly billings on equipment revenue and put them back into the revenue stream that increases the rate of percentage increase that we have and also increases the service revenue growth year-over-year. But look there is some deceleration here as Michael brought up on the last one. As we continue to increase the bundles, this is going to take a little bit of time before people have to take the next step up. But I will tell you this quarter with our NFL agreement and the amount of video consumption we are having. We had one of the best quarters ever of customers stepping up for the next bucket. So, again I think all these things factor into it, but Edge will definitely have a deceleration factor on the service revenue. As far as the soft card SIM card with Apple. We have our own SIM card that we are putting in the devices both in our indirect channels and our store channel. So that’s really all that is to be said on that issue. John Hodulik - UBS: Okay, thanks Fran.

David next question please?

Your next question comes from Mike McCormack of Jefferies. Please go ahead with your question. Mike McCormack - Jefferies LLC: Hey guys, thanks. Fran could you just hit briefly on the small medium enterprise marketplace. It seems like you have continued weakness what you pointed out. How much of that is technology migration versus the cable competitors starting to move up market a little bit. And then secondly thinking about over the top there is been a lot of stuff in the past couple of weeks and it seems like sort of a building discussion between HBO, CBS. How do you guys think about that? I know bought the Intel OnCue business. When do you get more aggressive there?

Okay, thanks Mike. So look on the enterprise space, I think there is a couple of things here. I mean you do have the Tech Refresh and obviously as they come off legacy and going into IP. I mean the IP has a lower price point. And then also as I said in my opening remarks this IP market is becoming more and more competitive from a pricing perspective. So as what we’re faced with as we have major customers who are renewing coming off 3 and 5 year contracts. Obviously, they’re being reprised back into where the IP market is today which is pretty significantly lower than it was 3 to 5 years ago. So, you’re having that pricing pressure happen there we’re gaining new business but again it’s coming in at a lower rate and we still have that decline of voice and LB that’s going away and it just can’t offset it. From a strategic services perspective, we’re seeing some good things here we’re also seeing some improvement in the federal space but as you know in this business when you start to improve it could take 6 to 8 months before that revenue comes to be as you implement this new technology. So there is some glimmer of hope here as the federal government starts to purchase more but we’re probably not going to see any of that until ‘15 but then again that we’re working against the bunch of headwinds as far as repricing on the IP in the tech refresh. As far as cable and what’s happening in the small business, look I mean, as I said in the previous quarters where we have FiOS and compete in the small business market we’re gaining share. We’re losing share outside of that FiOS footprint in the old copper and I’m not going to be able to compete there with the speed. So that is something that we’re just going to continue to see here into the future around that copper plant. But within FiOS we continue to gain share, we expand where we can to capture more small businesses in that footprint and we capitalize on that but we’ve to remember it’s only in 13 states. Unidentified Company Representative : As far as over the top goes I think that the way I look at this is great for the customer, this is great for the industry this shows that there are new innovative type arrangements that are happening and as we said before we’re having discussions with a lot of content providers around innovative models going forward and I think this sets a lot of space so I think it opens up a lot of doors and it’s something optimistic for the future of the video business. Mike McCormack - Jefferies LLC: Okay, and just like a quick follow up on the small medium piece of it, do you see cable gaining more capabilities there, or there is still really relegated to the very small customer base? Fran Shammo : Well, when they say that they are moving up my perception of this as we’ve look at small medium business and then even in the medium business we capture medium business as anyone that has a 1,000 or less employees so it’s a pretty different definition of where they’re seeing they’re moving up from versus where we are playing. And again within our enterprise business we’re really focused on the major large enterprise customers and we really deal with that small business which is what we classify as 20 and below employees within our FiOS arena. So it is a different spectrum of definition but look they are increasing their capability, they’re having success in that what I would consider small business arena maybe the lower and mid business level but they’ll continue to do what they do and we’ll continue to do what we do. Mike McCormack - Jefferies LLC: Great, thanks guys. Michael Stefanski : Next question please.

Your next question comes from Kevin Smithen of Macquarie; please go ahead with your question. Kevin Smithen - Macquarie: Thanks Fran, can we talk a little bit about your net debt targets? Obviously with the spectrum auction coming up potential assets sales, all of this stuff is going impact your ability to deleverage going forward. Can you talk a little bit about kind of where we should think about net debt at the end of ’15 and given the lower interest rate environment, does that change your calculus on the amount of leverage you want to leave on the balance sheet?

Thanks Kevin. So, it is what I’ll say because I’m not going to give any guidance of where I think our debt will be in ’15 at this point but today where we stand is as you see where we’re at net debt of $102 billion with our gross debt at $109.2 billion, we have a net debt-to-EBITDA ratio of 2.3 and the gross debt-to-EBITDA ratio of 2.5. I’ll reference you back to S&P report that came out like maybe a month ago on some projections around what they thought, we would spend in the future for auctions and also how much debt that they think that we would pay down and report was extremely optimistic and said that they could see us being upgraded within the 12 to 24 month period of time as things continue. So, I think we are right on track with where we said we would be when we close on the Vodafone deal I said that, we wanted to get back to A minus rating within 4 to 5 years, the S&P report shows that, that could be accelerated based on our performance here. We are generating strong cash flow and what I would tell you is we’re in a great position to execute on the strategic initiative that we need to execute on but we’ll have more to say on this as we close out this year and come to our call in January. Kevin Smithen - Macquarie: And just quickly on FiOS, we’ve seen a last few years significant price hikes which as you indicated is more than offset programming cost increases kind of as you look at the ’15, should we expect more of that and can you too have revenue growth outpace cost inflation on the FiOS side?

Yes, so I will guidance next call on where we think FiOS growth rate will be but here is what I’ll say is, last year we did our price increases in the fourth quarter we’re doing that again this year to be ready to absorb the content cost that always happen on January 01, so that’s something that you should anticipate and you will see. Kevin Smithen - Macquarie: Thanks.

Next question please.

Your next question comes from Amir Rozwadowski of Barclays. Please go ahead with your question. Amir Rozwadowski - Barclays: Fran, just building on Mike’s prior question on the recent developments around over-the-top and unbundling, it seems as though you feel pretty comfortable around the opportunity particularly giving you investment in fiber and delivering from these high bandwidth capabilities to you customer. I was wondering if you think about the competitive landscape and developments like this, does it strengthen your view on the diminishing ability for competitive direct video services like satellite technology to compete, and what seems to be an increasing on-demand and OTT world? And then I guess secondly, if we think about the opportunity on the Wireless side, you folks have made a number of tuck-in acquisitions around content distribution and I was wondering how we should think about and obviously there is the relationship with the NFL, how we should think about the opportunities on that front? And when we could start to see some either material adoption from customers or sort of some of these new revenue streams come to fruition? Thanks a lot.

So a couple of thoughts here Amir, so number one is when I look at the, quote, over-the-top type of video area, I mean there is two avenues there is the over-the-top into the home and there is the over-the-top via Wireless. And I think over-the-top via Wireless you’re already starting to see that with agreements like the NFL and some other things. I also think that with the technology of multicast coming, this will certainly open up doors for more of that content to be delivered over-the-top via the Wireless network because multicast is so efficient in delivering a programming type service over the LTE network. But of course that will be major around more live events concerts, sports those types of things. As far as over-the-top into the broadband home, I think that what this says is that the content providers there have realized that there is a whole population out there that do not subscribe the satellite TV or linear TV and they’re trying to penetrate that millennial base that does not have these types of offers and wants something smaller, more convenient for them. And as I said, I think this brings in a lot of innovative type models of how to really attack some of these other segments of the marketplace that don’t have that type of service. Do I think in the near-term, this is going to decrease linear TV or satellite TV? No, I don’t. But I think it’s another avenue of how we open up the ecosystem with innovative models and that’s something that we’re very-very interested in especially around Wireless and even as we go out into more of the broadband type market.

David next question please.

Your next question comes from Jennifer Fritzsche of Wells Fargo. Please go ahead with question. Jennifer Fritzsche - Wells Fargo: Fran, I realized you can’t talk about the AWS-3 Auction, but I wanted to explore the broadcast auction, last time we’ve heard from you, you said there you needed to know more about the rules to kind of express your enthusiasm. We know little bit more today, I just wanted kind of take your pulse on what your thoughts are as we look at it today?

Yes, so Jennifer unfortunately, I can’t, I’m not actually allowed to -- my lawyers have told me I am not allowed to answer any type of spectrum questions, and at this point, it’s still far in the future and we’re focused on the current one. So I think at this point, I’ll leave it at that. Jennifer Fritzsche - Wells Fargo: Got it, if I could just explore just an M2M question then.

Sure. Jennifer Fritzsche - Wells Fargo: Obviously, great growth there, you’ve guided or talked about 40% growth year-over-year. Do you think we’re the point we’re kind of seeing this near move or we’ve often then dream for or is this the year really accelerating ‘14, ’15 rather?

Well, I think that as we try to allude over the last couple of quarters, we gave you growth rate this quarter. We’re giving you revenue numbers and we’ll continue to do that going forward. As I said before, this is not necessarily about how many connections I put on the network. This is about how many of those connections actually pay revenue when we earn money. And so as you know we stopped this closing connection a while ago. But I will tell you that the connection growth is ever increasing here. There is a lot of avenues that are being open up around Internet of Things, around healthcare, around energy management fleet. So you can go through all the verticals and there is some many solutions that are coming to forbear, which is why over -- I guess now a year and half ago, we opened up our second innovation center out in Palo Alto. So this is something that we’re very-very focused on, I think there is a lot of good opportunity here and this will certainly be a driver of growth for the entire industry. The other thing I think that separates us apart from our competition is obviously with our Hughes acquisition. We play an another tower that no one else plays, I mean everybody is playing today in the connectivity tower, but with our Hughes acquisition, we’re actually playing in the customer service and concierge tower as well and being able to deliver some of that big data and looking at ways to monetize some of that data to our end customers who are really business customers, who are looking at business-to-business versus business-to-consumers. So this is just another area, I think of growth for the industry and obviously we’re capable to capitalize on that.

David, we have time for one more question please.

And you last question today comes from Jonathan Schildkraut of Evercore Partners. Please go ahead with your question. Jonathan Schildkraut - Evercore Partners: I got a question on LTE broadcast, I just wanted to get an update on where we were and understand whether sort of implementation go forward as about technology or is it about content? And then Fran, you’ve made some interesting comments about sort of the growth of video within the date consumption packages that you currently have. And I’m wondering if you looked at what amount of that video could ultimately be sent out over LTE broadcast and potential implications to margins? Thanks. Fran Shammo : Sure, thanks Jonathan. So look, LTE multicast, the network was ready in August of this past year so we have to build out the network to be able to handle multicast as you know we demonstrated it back in January with the Super Bowl where the network is capable, the chipsets are now being implemented into most of the devices that are coming out in the fourth quarter, some phones in the third quarter have those chipsets but most will have it in the fourth quarter not all. So look, the way I look at this ecosystem is that’s going to us about a year before those chipsets ramp and there we have some volume there which gets the attention of the content provider. But as I said before having a lot of great conversations with content providers they’re excited about it but again they want to see how many customers actually have the capability to use that technology and I think that will be a year away but I think that opens up a lot of new avenues for us. I don’t know yet what the -- how the ecosystem will generate revenue on this, is it a revenue share model, is it an advertising model, this is a consumer pay model, we’re not sure yet of how the ecosystem will play itself out and I think that will come within the next year. The other critical piece here is that for the first time coming in the fourth quarter we’ll have an independent third party to be tell the content providers who actually watches their shows on a mobile handset which has never been able to be done before other than from the carriers. So I think this does again open up some of that ecosystem. So, from that perspective I think we’re really in good shape from an ecosystem perspective and as far as the bundling goes and the usage goes again what the way to see how this multicast technology comes to market and how it’s capitalized on it.

Alright, thank you but before we end the call I’d like to turn the call back to Fran for few closing remarks.

Thanks Mike and thanks everyone for joining us today. Here is my closing comments I guess I’d say look, we had another strong quarter of operating and financial results, we count ourselves on a quality base and a quality addition. We count on the quality of our network and driving top line growth and profitability. By focusing on execution around the assets we already have in place we’re delivering consistent high quality earnings and returning value to our shareholders. At the same time we’re developing new products and services in the areas of video delivery, over the top, machine-to-machine for future growth and profitability. We have great confidence in our ability to execute on our strategy and grow the business profitably while making the necessary capital investments to position us for the future. Thank you everyone for joining us today and have a great day.

Ladies and gentlemen that does conclude the conference call for today. Thank you for your participation and for using Verizon Conference Services. You may now disconnect.