VERIZON COMMUNICATIONS INC

Verizon Communications Inc., is one of the world's leading providers of communications services. Our domestic wireless business, operating as Verizon Wireless, provides wireless voice and data products and services across the United States using one of the most extensive and reliable wireless networks. Our wireline business provides communications products and services, including voice, broadband data and video services, network access, long distance and other communications products and services, and as well owns and operates one of the most expansive end-to-end global Internet Protocol networks. We have a highly diverse workforce of in broad outline 195,400 employees as of September 30, 2011.

The sections that follow

In the sections that follow, we provide information about the important aspects of our operations and investments, both at the consolidated and segment levels, and discuss our results of operations, financial position and sources and uses of cash. To boot, we highlight key trends and uncertainties to the extent practicable. We as well monitor several key economic indicators as so then as the state of the economy in general, primarily in the United States where the majority of our operations are located, for purposes of evaluating our operating results and assessing the potential impacts of these factors on our businesses.

Revenue Growth - To generate revenue growth we are devoting our resources to higher growth markets just as the wireless market, the broadband and video markets, and the provision of strategic services to business markets, to put it more exactly than to the traditional wireline voice market. While the three months ended September 30, 2011, consolidated revenue increased 5.4% compared to the similar period in 2010 in some cases due to executing this strategy.

In Domestic Wireless, while the three months ended September 30, 2011 compared to the similar period in 2010, strong customer growth coupled with strong demand for smartphones and internet data devices and increasing service revenue drove a total revenue increase of 9.1%.

In Wireline, while the three months ended September 30, 2011 compared to the similar period in 2010, earnings were positively impacted by a 15.6% increase in strategic services revenue, which now represents 49% of total Global Enterprise earnings, as so then as the expansion of consumer and small business FiOS services. The increase in strategic services revenue was due in some cases to the acquisition of Terremark Worldwide, Inc., described below.

The increase in earnings from our growth markets

The increase in earnings from our growth markets was partially offset by lower revenue resulting from a decline in total voice connections and decreased minutes of use in the Wireline segment. FiOS subscriber growth was lower in the third quarter than in prior quarters due to installation delays caused by storm conditions in the Mid-Atlantic and Northeast regions coupled with the work stoppage of our union-represented employees in August. Our union-represented employees are currently working pursuant to this agreement their before existing labor contract as negotiations continue.

During April 2011, we acquired Terremark, a global provider of information innovation infrastructure and cloud services. The acquisition improved Verizon's competitive position in the managed hosting and cloud services space, enhanced our offerings to business and government clients globally and enabled us to grow consolidated earnings. While the third quarter of 2011, we acquired a provider of cloud software research, which is expected to furthermore enhance our offerings of cloud services.

Market Share Gains - In our wireless business, our goal is to continue to be the market leader in providing wireless voice and data communication services in the United States. As of September 30, 2011, total connections increased 6.5% to 107.7 million compared to September 30, 2010. As the demand for wireless data services grows, we continue to increase our data earnings by expanding our penetration of data services as a result of increased sales of smartphones and other data-capable devices. Data revenue now represents 40.6% of Verizon Wireless total service revenue and retail postpaid data average revenue per customer per month increased by 15.7% to $22.22. In 2010, we launched our fourth-generation Long-Term Evolution innovation mobile broadband network in 38 major markets, and as of October 20, 2011, we have launched 4G LTE (Long Term Evolution, latest standard in the mobile network technology) in 165 markets covering more than 186 million people throughout the country. By the end of 2011, we expect LTE (Long Term Evolution, latest standard in the mobile network technology) to be available in more than 175 markets.

In our wireline business, we continue to see improving trends and progress toward our goal of becoming the leading provider of communications products and services in each of the markets in which we operate.

revenue from our FiOS broadband and video products comprised a greater proportion of our revenue from growth markets as we added 20,000 net wireline broadband connections, including 138,000 net new FiOS Internet subscribers, for a total of 8.6 million connections, including 4.6 million FiOS Internet subscribers; and,

As of September 30, 2011, we achieved penetration rates of 34.6% and 30.6% for FiOS Internet and FiOS TV, respectively. With FiOS, we have created the possibility to increase revenue per customer as then as improve overall Wireline profitability as the traditional fixed-line telephone business continues to decline due to customer migration to wireless, cable and other newer technologies.

The expansion of strategic service offerings

We are as well focused on gaining market share in our enterprise business through the expansion of strategic service offerings, including expansion of our Voice over Internet Protocol and international Ethernet capabilities, managed network and cloud services and security solutions.

Profitability Improvement - Our goal is to increase operating income and margins. Strong wireless data and FiOS revenue growth continue to positively impact operating results. Even though the recent economic recovery has positively impacted our earnings in the business market, renewed economic pressures could impact our revenue and profitability in future quarters. Nevertheless, we remain focused on cost controls with the objective of driving efficiencies.

Operational Efficiency - During focusing resources on revenue growth and market share gains, we are continually challenging our management team to lower expenses, particularly through research-assisted productivity improvements, including self-service initiatives. These and other efforts, just as supply chain initiatives, real estate consolidation, call center routing improvements, a centralized shared services organization, and information research and marketing efforts, have led to changes in our cost structure with a goal of maintaining and improving operating income margins.

Customer Service - Our goal is to be the leading company in customer service in every market we serve. We view superior product offerings and customer service as a competitive differentiator and a catalyst to growing earnings and gaining market share. We are committed to providing high-quality customer service and continually monitor customer satisfaction in all facets of our business. To boot, we are focused on providing the highest network reliability and innovative products and services. Our 4G LTE network received numerous third-party accolades addressing the superior speed and performance of our network. While the nine months ended September 30, 2011, we invested $12.5 billion in capital expenditures.

There have been no significant changes to the information related to trends affecting our business that was disclosed partly II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2010.

In this section, we discuss our overall results of operations and highlight items of a non-operational nature that are not included in our segment results. We have two reportable segments, which we operate and manage as strategic business units and organize by products and services. Our segments are Domestic Wireless and Wireline. In "Segment Results of Operations," we review the performance of our two reportable segments.

Corporate, eliminations and other includes unallocated corporate expenses just as certain pension and other employee benefit related costs, intersegment eliminations recorded in consolidation, the results of other businesses just as our investments in unconsolidated businesses, lease financing and divested operations, and other adjustments and gains and losses that are not allocated in assessing segment performance due to their non-operational nature. Though such transactions are excluded from the business segment results, they are included in reported consolidated revenues. Gains and losses that are not individually significant are included in all segment results as these items are included in the chief operating decision maker's assessment of segment performance. We believe that this presentation assists users of our financial statements in better understanding our results of operations and trends from period to period.

Corporate, eliminations and other while the nine months ended September 30, 2010 included a one-time non-cash adjustment of $235 million, primarily to adjust wireless data earnings. This adjustment was recorded to properly defer before recognized wireless data earnings that were earned and recognized in future periods. The adjustment was not material to the condensed consolidated financial statements. Should the contingency arise, the results of operations related to the divestitures we completed in 2010 included in Corporate, eliminations and other are as follows: