Verizon Verizon Communications Communications

Inc.Inc.

Presentation panelPresentation panel

► Abdul Samad (32)Abdul Samad (32)(history, statistics, organizational chart, product n services n mission (history, statistics, organizational chart, product n services n mission

statement)statement)

► Muhammad Riaz(40)Muhammad Riaz(40)(vision statement, current strategy, financial analysis)(vision statement, current strategy, financial analysis)

► Shah e Rawan(48)Shah e Rawan(48)(Financial ratios, internal assessment n external assessment)(Financial ratios, internal assessment n external assessment)

► Akhtar Zaib Khan(46)Akhtar Zaib Khan(46)(Swot matrix, strategies n recommended strategy)(Swot matrix, strategies n recommended strategy)

► Waqar(17)Waqar(17)(Organizational culture, target market & description(Organizational culture, target market & descriptionRumelts criteria)Rumelts criteria)

History of Verizon History of Verizon CommunicationsCommunications

► 2000 – Bell Atlantic and Vodafone combine U.S. wireless 2000 – Bell Atlantic and Vodafone combine U.S. wireless operations to form Verizon Wirelessoperations to form Verizon Wireless

► Jun 2000 – Verizon Communications Inc. formed with merger of Jun 2000 – Verizon Communications Inc. formed with merger of Bell Atlantic Corp. and GTE Corp to become the number one Bell Atlantic Corp. and GTE Corp to become the number one communications provider.communications provider.

► 2004 – Verizon embarks on next generation broadband services 2004 – Verizon embarks on next generation broadband services (EV-DO, FiOS)(EV-DO, FiOS)

► Dec 2005 – Acquired competitor MCI Inc.Dec 2005 – Acquired competitor MCI Inc.

► 2005 – Verizon becomes first wireless provider to offer a 2005 – Verizon becomes first wireless provider to offer a nationwide broadband servicenationwide broadband service

► 2005 – Wins Frost & Sullivan’s Product Innovation Award2005 – Wins Frost & Sullivan’s Product Innovation Award

► 2006 – 2007 – Invested $34.6 billion to maintain, upgrade, and 2006 – 2007 – Invested $34.6 billion to maintain, upgrade, and expand its technology infrastructureexpand its technology infrastructure

► Headquartered in New York, New YorkHeadquartered in New York, New York

► 2009 Total Operating Revenue of $93.5 billion2009 Total Operating Revenue of $93.5 billion

► Employs nearly 235,000 employeesEmploys nearly 235,000 employees

► Largest wireless and fixed-line service providerLargest wireless and fixed-line service provider

► Operates three business unitsOperates three business units Verizon WirelessVerizon Wireless WirelineWireline Verizon BusinessVerizon Business

Statistics

Lowell McAdamPresident & CEO

                              

    Richard J. Lynch Richard J. Lynch Executive Vice President & Executive Vice President & Chief Technology OfficerChief Technology Officer

Ivan G. SeidenbergChairman and Chief Executive Officer

                            

  

  

Dennis F. StriglDennis F. StriglPresident and Chief Operating President and Chief Operating OfficerOfficer

                              

  

William P. Barr William P. Barr Executive Vice President &Executive Vice President &General CounselGeneral Counsel

                              

  John W. Diercksen John W. Diercksen Executive Vice President – Executive Vice President – Strategy, Development & PlanningStrategy, Development & Planning

                            

  

  

Shaygan Kheradpir Shaygan Kheradpir Executive Vice President &Executive Vice President &Chief Information OfficerChief Information Officer

                            

  

  

Marc C. Reed Marc C. Reed Executive Vice President Executive Vice President - Human Resources- Human Resources

                            

  

  

John G. Stratton John G. Stratton Executive Vice President &Executive Vice President &Chief Marketing OfficerChief Marketing Officer

                            

  

  

Thomas J. Tauke Thomas J. Tauke Executive Vice President Executive Vice President – – Public Affairs, Policy & CommunicationsPublic Affairs, Policy & Communications

                            

  

  Doreen A. Toben Doreen A. Toben Executive Vice President and Chief Executive Vice President and Chief Financial OfficerFinancial Officer

                            

  

  John F. Killian John F. Killian President – Verizon President – Verizon BusinessBusiness

                            

  

  Daniel S. Mead Daniel S. Mead President – Verizon Services President – Verizon Services OperationsOperations

                            

  

  Virginia P. Ruesterholz Virginia P. Ruesterholz President – Verizon President – Verizon TelecomTelecom

                            

  

  Thomas A. Bartlett Thomas A. Bartlett Senior Vice President and Senior Vice President and ControllerController

                            

  

  Marianne Drost Marianne Drost Senior Vice President Senior Vice President - Deputy General Counsel & Corporate Secretary- Deputy General Counsel & Corporate Secretary

                            

  

  Ronald H. Lataille Ronald H. Lataille Senior Vice President - Investor Senior Vice President - Investor RelationsRelations

                            

  

  Kathleen H. Leidheiser Kathleen H. Leidheiser Senior Vice President - Internal Senior Vice President - Internal AuditingAuditing

                            

  

  Catherine T. Webster Catherine T. Webster Senior Vice President and Senior Vice President and TreasurerTreasurer

Organizational Chart (Current)

Products and ServicesProducts and Services

►ServicesServices Voice and DataVoice and Data Info./Dir. PublishingInfo./Dir. Publishing

• Products– Handsets– Accessories– Calling Cards

““Verizon’s mission is to enable people and Verizon’s mission is to enable people and businesses to communicate with each other. We businesses to communicate with each other. We

are also committed to providing full and open are also committed to providing full and open communication with our customers, employees communication with our customers, employees

and investors.”and investors.”

Mission Statement Mission Statement (Actual)(Actual)

Mission Statement Mission Statement (Proposed)(Proposed)

““Verizon’s mission is to maintain leadership in Verizon’s mission is to maintain leadership in communications by continuously stretching the communications by continuously stretching the

boundaries of technology and providing our boundaries of technology and providing our customers with the means to communicate in customers with the means to communicate in

ways not thought before.”ways not thought before.”

Vision Statement (Actual)Vision Statement (Actual)

“For our Core Goals, we decided on just one: To create the most respected brand in

communications.”

Vision Statement Vision Statement (Proposed) (Proposed)

“For our Core Goals, we decided on just one: To create the most respected brand in

communications through latest technological innovations in products paired with excellent

customer service.”

Current Key StrategiesCurrent Key Strategies

Financial AnalysisFinancial Analysis

MetricMetric VerizonVerizon AT&TAT&T QwestQwest IndustryIndustry

Earnings per Share (TTM - Diluted)Earnings per Share (TTM - Diluted) 1.961.96 2.062.06 1.491.49 1.67*1.67*

Price / Earnings Ratio (TTM - as of 6/30/2008)Price / Earnings Ratio (TTM - as of 6/30/2008) 17.4817.48 15.9315.93 2.522.52 17.2517.25

EBITDA (TTM in billions)EBITDA (TTM in billions) 31.5131.51 42.5842.58 4.614.61 9.09*9.09*

Share Price Performance (Prior 12 Months)Share Price Performance (Prior 12 Months) -14.9%-14.9% -18.6%-18.6% -60.2%-60.2% -31.1%**-31.1%**

ROEROE 11.4411.44 11.1111.11 n/an/a 10.2410.24

Leaders are in boldLeaders are in bold

* Average of ten largest companies (by market * Average of ten largest companies (by market cap) in industry cap) in industry

** iShares Dow Jones US Telecom Sector ETF** iShares Dow Jones US Telecom Sector ETF

Price PerformancePrice Performance

Financial RatiosFinancial Ratios

ProfitabilityProfitability► Profit Margin (ttm)*:2.39%Profit Margin (ttm)*:2.39%► Operating Margin. Operating Margin.

(ttm):17.42%(ttm):17.42%Management EffectivenessManagement Effectiveness► Return on Assets (ttm):5.19%Return on Assets (ttm):5.19%► Return on Equity (ttm):11.95%Return on Equity (ttm):11.95%

Balance SheetBalance SheetTotal Cash (mrq):Total Cash (mrq): 7.21B7.21BTotal Cash Per Share (mrq):Total Cash Per Share (mrq):

2.552.55Total Debt (mrq):Total Debt (mrq): 52.79B52.79BTotal Debt/Equity (mrq):Total Debt/Equity (mrq): 60.7460.74Current Ratio (mrq):Current Ratio (mrq): 0.730.73Book Value Per Share (mrq):Book Value Per Share (mrq):

13.6413.64

► Income StatementIncome Statement► Revenue (ttm):Revenue (ttm): 106.56B106.56B► Revenue Per Share (ttm):37.66Revenue Per Share (ttm):37.66► Qtrly Revenue Growth 2.60%Qtrly Revenue Growth 2.60%► Gross Profit (ttm):Gross Profit (ttm):

62.42B62.42B► EBITDA (ttm):EBITDA (ttm):

34.97B34.97B► Net Income (ttm): 2.55BNet Income (ttm): 2.55B► Diluted EPS (ttm):Diluted EPS (ttm): 0.90 0.90► Qtrly Earnings Growth (yoy): Qtrly Earnings Growth (yoy):

146.90%146.90%

Internal assessmentInternal assessment

StrengthsStrengths►Reliable / Robust WirelessNetworkReliable / Robust WirelessNetwork►Marketing / Brand AwarenessMarketing / Brand Awareness►Corporate Strategy/Joint VentureCorporate Strategy/Joint Venture►Financial Performance PositionFinancial Performance Position►Advanced Fiber NetworkAdvanced Fiber Network

Internal AssessmentInternal Assessment

WeaknessWeakness►Geographic ConcentrationGeographic Concentration►CDMA TechnologyCDMA Technology►Declining Access LinesDeclining Access Lines►TV services limited / sharedTV services limited / shared►Fee StructureFee Structure

External AssessmentExternal Assessment

OpportunitiesOpportunities► Increasing usage of wireless broadband applicationsIncreasing usage of wireless broadband applications► Increasing % of their capital expenditures towardIncreasing % of their capital expenditures toward

growth-oriented ventures, through reduced debt loadgrowth-oriented ventures, through reduced debt load► Ability to bring cost structures more in line with Ability to bring cost structures more in line with

revenues through consolidations, as work forces are reduced, revenues through consolidations, as work forces are reduced, businesses streamlined, and services further bundledbusinesses streamlined, and services further bundled

► Price reductions for broadband service coupled with demand Price reductions for broadband service coupled with demand for faster connections.for faster connections.

► Using new size to reach further in the U.S. but mainly to Using new size to reach further in the U.S. but mainly to expand into the foreign markets.expand into the foreign markets.

External AssessmentExternal Assessment

ThreatsThreats► Competitor's adaptation of Verizon's core competency Competitor's adaptation of Verizon's core competency

in customer servicein customer service► Technological advances and regulatory reforms.Technological advances and regulatory reforms.► Economic slowdown resulting in weaker consumer Economic slowdown resulting in weaker consumer

spending.spending.► Competition: AT&T's contract with Apple.Competition: AT&T's contract with Apple.► CDMA technology's cost benefits coming to an end CDMA technology's cost benefits coming to an end

with advances in GSMwith advances in GSM

SWOT MatrixSWOT Matrix

Verizon’s Top Three Verizon’s Top Three StrategiesStrategies

• Pursue 4G TechnologyPursue 4G Technology– Transition from CDMA Transition from CDMA GSM GSM

Recommended Strategies:

• Be the first to bring FiOS into the home nationally– Increased Speed, Quality, & Flexibility– Opportunity for premier quad bundling

• Increase Investment in R&D – Long Term Evolution– Fiber Optic Service

• Pursue 4G technology (Long Term Evolution) with the transition from CDMA GSM

• Initial Target: Europe/ Asia• “Any apps, Any device”

• Free and wide open network

• Expand coverage network

• Expand customer base

• Opportunity to dominate

Final Recommended Strategy

► Employees Own Their CareerEmployees Own Their Career- - Company knows improvement of company & workforceCompany knows improvement of company & workforce

- - Company wants workforce to have careers not just jobsCompany wants workforce to have careers not just jobs - - “Customers like current affair & passion.” - Melissa (customer service “Customers like current affair & passion.” - Melissa (customer service

supervisor)supervisor) - - Trained to be team spirited. Helped each other & help employees to Trained to be team spirited. Helped each other & help employees to

see & overcome challengessee & overcome challenges

► Employee TrainingEmployee Training - - Tools & framework available to resolve any customer problemsTools & framework available to resolve any customer problems - - SupportSupport - - Passion & TrainingPassion & Training

► Place to GrowPlace to Grow

► Get Degree Verizon PayGet Degree Verizon Pay

► Medical / Health Benefits compensation for tuitionMedical / Health Benefits compensation for tuition

► Day care programDay care program

Organizational Culture (current)

► Motivational FactorsMotivational Factors- Company wants to treat their job as a career- Company wants to treat their job as a career

- Continued support to their employees professional or - Continued support to their employees professional or personallypersonally

- Aspires to further develop their employees standard- Aspires to further develop their employees standard

- Holds motivational meetings - Holds motivational meetings

- Holds informal affairs for their employees- Holds informal affairs for their employees

- “Company wants improvement of company and - “Company wants improvement of company and workforce”workforce”

- Trains employees to be team-spirited to helped - Trains employees to be team-spirited to helped employees to see and overcome challenges.employees to see and overcome challenges.

Organizational Culture (Revised)

Target Market DescriptionTarget Market Description

► GeographicGeographic: Mostly U.S.; more prevalent in the North : Mostly U.S.; more prevalent in the North Eastern region of the U.S.Eastern region of the U.S.

► AgeAge: Male and female, young teens (12-17), college : Male and female, young teens (12-17), college students (18-24), recent college grads (25-30), and students (18-24), recent college grads (25-30), and familiesfamilies11. .

► EthnicityEthnicity: Caucasian, Hispanic, African-American, and : Caucasian, Hispanic, African-American, and other non-Hispanic. other non-Hispanic.

► Education: Education: High school diploma and college grads.High school diploma and college grads.► OccupationOccupation: Students, blue collar and white collar, : Students, blue collar and white collar,

young and older professionals, executives, business young and older professionals, executives, business owners.owners.

► User statusUser status: Regular user: Regular user► Usage rateUsage rate: Medium and Heavy users: Medium and Heavy users► Loyalty statusLoyalty status: Strong: Strong► Attitude towards productAttitude towards product: Positive: Positive

Target MarketTarget Market

► Current Market PositionCurrent Market Position Heavily saturated market with a massive user Heavily saturated market with a massive user

base of over 67.2 million usersbase of over 67.2 million users They differentiate themselves from others They differentiate themselves from others

through network quality and customer service as through network quality and customer service as shown in ads and also slogans: “We never stop shown in ads and also slogans: “We never stop working for you” and “Can you hear me now?”working for you” and “Can you hear me now?”2 2

► Revised Market Position Revised Market Position (the above plus)(the above plus) Integrate marketing divisions in different Integrate marketing divisions in different

regional areas to better focus on the target regional areas to better focus on the target market in the area.market in the area.

Consistency – YesConsistency – Yes Consonance – YesConsonance – Yes• Innovate products moving towards 4G Innovate products moving towards 4G technologytechnology

- Wireless should obtain only 4G conversion - Wireless should obtain only 4G conversion • Implement StrategyImplement Strategy

-- Product TrainingProduct Training

- Geographic Structure- Geographic Structure

• TransitionTransition

- Change from CDMA to GSM- Change from CDMA to GSM

- Focus on greater global reach- Focus on greater global reach• Merging International & Current CustomerMerging International & Current Customer

- Vodafone subs will be able to roam on - Vodafone subs will be able to roam on Verizon’s Verizon’s

Feasibility – YesFeasibility – Yes Advantage – YesAdvantage – Yes

Verizon has the recourses to implement the Verizon has the recourses to implement the technological change.technological change.

New Innovated ProductsNew Innovated Products

- Faster, Profitable CPU in the palm of your - Faster, Profitable CPU in the palm of your hands. hands.

• International Travelers can use GSM (SIM card International Travelers can use GSM (SIM card devices) devices)

• Opportunity to expand into emerging marketsOpportunity to expand into emerging markets

• Strengthen NetworkStrengthen Network

Strategy: Transition towards implementing 4G technology in order to gain an international footprint.

Rumelt’s Four Criteria

Thank YouThank You