Operator:

Good morning and welcome to Verizon First Quarter 2016 Earnings Conference Call. At this time all participants have been placed in a listen-only mode and the floor will be open for questions following the presentation. To ask a question press star and then the number one on your touch tone phone. If at any point your question has been answered you may remove yourself by pressing start and then the number two. 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. Mike Stefanski, Senior Vice President, Investor Relations.

Michael Stefanski: Senior Vice President, Investor Relations:

Thanks, -- good morning and welcome to our first quarter earnings conference call. This is Mike Stefanski and I'm here with our Chief Financial Officer, Fran Shammo. Thank you for joining us this morning.

As a reminder, our earnings release, financial and operating information, the investor quarterly and the presentation slides are available on the investor relations website. A replay and a transcript of this call will also be made available on our website.

Before we get started, I’d like to draw your attention to our Safe Harbor statement on Slide 2. Today's presentation includes forward-looking statements about expected future events and financial results that are subject to risks and uncertainties. Factors that may affect future results are discussed in the filings with SEC. This presentation includes non-GAAP financial measures. Reconciliation to these non-GAAP measures to the most directly comparable GAAP measures can be found on our website. The quarterly growth rate disclosed in our presentation slides and during our formal remarks are on a year-over-year basis unless otherwise noted as sequential.

Before Fran goes through our results, I’d like to highlight a few items. For the fourth quarter of 2016, we reported earnings of $1.06 per share on a GAAP basis. These reported results include a few non-operational items that I’d like to highlight.

Our reported earnings include a non-cash pretax loss of $165 million. For a pension mark-to-market adjustment due to settlement accounting. We expect settlement accounting to impact earnings in each of the remaining quarters in 2016. Additionally, we recognized a pretax gain of $142 million on a spectrum license transaction.

On an after-tax basis, the loss in settlement accounting amount to $102 million or $0.02 per share and the gain on the spectrum transaction amount to $88 million or $0.02 per share, affectively offsetting each other. Including the effect of these non-operational items, earnings per share of $1.06 in the first quarter compared to $1.02 per share a year-ago or a growth rate of 3.9%. There were no special items of a non-operational nature in the first quarter of 2015.

As a reminder, our Wireline results for the first quarter included the operations from the three states that we sold to Frontier on April 1, 2016. As we have done over the past year we have recognized a full quarter benefit of approximately $229 million pretax or about $0.03 per share due to these assets being classified as held for sale. This compares to $146 million pre-tax benefit or $0.02 per share that we recognized in the first quarter of 2015. Additionally the operations of AOL are not included in prior period results.

With that I will now turn the call over to Fran.

Francis J. Shammo: Executive Vice President and Chief Financial Officer:

Thanks, Mike. Good morning everyone. We remain confident in our three-tier strategy for long-term growth.

Which is to lead at the network connectivity level in the market we served. Develop new business models through global platforms and video and Internet of Things and create incremental revenue opportunities in applications and contents.

In terms of progress on this multi-tier strategy, we are focused on network leadership and operating efficiency while we developed new ecosystems in video and the Internet of Things leveraging our capabilities in the United States and scaling our platforms globally. We are also developing a portfolio of unique contents targeted at the millennial generation so that we can capitalize on the opportunity transforming mobile.

At the network connectivity layer, we consistently invest in our 4G LTE network to accommodate growth in daily usage and enable customers to experience an unmatched level of connectivity. National studies continue to recognize Verizon as the overall 4G LTE network performance leader having the best network does matter as reflected in our strong customer retention that we will discuss later. We are enhancing capacity and coverage by effectively managing our spectrum. Further densifying areas of significant usage and implementing a number of optimization techniques such as carrier aggregation.

Approximately 92% of our total data traffic is now on the LTE network. The amount of data on the network increased at a rate of approximately 50% over the prior year.

Over the long-term densification of our wireless network particularly in urban and concentrated usages areas is required to add capacity to manage these growing consumption trends as well as to pre-position ourselves for the 5G technology of the future. A key element of this densification strategy is access to fiber. During the quarter we announced our intention to acquire Excel Communications which will provide us the opportunity to deepen and expand our fiber assets nationwide as well as to lease millimeter wave spectrum for 5G testing purposes with the option to buy.

We are also very excited about the announcements made last week do deploy a new fiber platform within the city of Boston that will support wireless and wireline technologies to consumers and enterprises across the city in a network efficient way. This approach gives us tremendous flexibility to innovate, develop, and deliver services with the mix of technologies over the same fiber assets.

In terms of 5G our technical testing is going well and there is a strong interest and commitment from members of 5G forum to prepare for fixed wireless commercial pilots using the technology next year. Improving our operating cost structure is a priority. We will continue work on our operating model and I'll confident that we can improve efficiencies as we have done in the past. We remained focused on cost reductions throughout the entire business and are making progress in driving efficiencies, reducing overhead costs and streamlining support.

We have several initiatives that have already been taken and others that we plan to implement for 2016 and beyond.

In the fourth quarter of 2015, we restructured our wireless organization to improve our ability to address the changing needs of our customers faster and more efficiently. Additionally, we continue to look at opportunities across all lines of business. You are starting to see these benefits in the first quarter. Overall, consolidated headcount since the end of 2015 is down approximately 3%, as we continue to increase the efficiency of our operations.

We expect to receive additional savings from a number of initiatives during the second half of 2016.

We continue to streamline business support functions, utilizing our Lean Six Sigma approach across the business to reduce redundancy, drive consistency, and improve speed of delivery in the market. Across wireless we have identified opportunities to gain further efficiencies within the store operations, call center operations and supply chain processes by simplifying our execution model while improving the overall customer experience. Network related opportunities exists for consolidation and elimination of unnecessary facilities to gain synergies and reduced costs. Always more work to be done here, but we're pleased with the continued progress.

Our networks and operating model also enable us grow and expand our revenue stream through new ecosystems, platforms, content and solution layers. We are enhancing our overall long term global digital media strategy which includes premium content, distribution and advertising platforms across all screens. The video platform continues to expand as we add more unique content that appeals to millennial audiences such as the partnership recently announced with Hearst. Our joint venture with Hearst includes developing two initial channels a video programming targeting the digital millennial audience to be distributed across multiple distribution platforms.

Additionally, we signed an agreement to acquire an equity stake in Awesomeness TV and entered into an agreement to create new premium content service featuring short forum mobile content that will launch initially on Go90.

Just over the past few days we announced the acquisition of their 50% ownership in Complex Media with Hearst. The investments in AwesomenessTV and Complex Media position us as partial owners and the number one digital media brands for young millennials. On the Go90 application, we remained encouraged by the viewership of Go90, but as we have said before, we are still in the very early stages of gain interaction and engagement. Verizon wireless subscribers now have greater flexibility when streaming live sports, concerts and original series content within Go90 on the mobile devices and can enjoy this content free of data charges with our FreeBee data service.

We look forward to expanding our Go90 content to other media through our AOL brands and the web later this year. Within the Internet of Things ecosystem, we continue to develop platform and our network to take advantage of the opportunities to innovate and offer solutions that address some of the more pressing social, economic, and business challenges. We have launched our own utility transportation and health-care solutions with products like NetworkFleet, GridWide, Verizon Share, Hum and one of our newest products Intelligent Track and Trace. Our things based platform is set to accelerate the adoption of Internet of Things products and solutions by making it easier, faster and more accessible to develop applications. New revenue streams from the Internet of Things are growing with revenues of approximately $195 million in the quarter, a year-over-year increase of about 25%. While we build for the future fundamental execution and quality financial results are our top priority.

Free cash flow for the quarter totaled $4 billion. We continue to execute a disciplined capital allocation model with the priority to invest for the future. Capital expenditures were $3.4 billion in the first quarter, which included approximately a $150 million -- to the markets that were sold to Frontier. Wireless capital spending totaled $2.2 billion in the quarter, down about 9.5% from a year ago which was the result of the timing of investments.

We fully anticipate capital spending for the year to be within our guided range of $17.2 billion to $17.7 billion.

Our balance sheet is strong and gives us the financial flexibility to grow the business. We ended the quarter with $109.9 billion of total debt, net debt of $104 billion, and a ratio of net debt to adjusted EBITDA of 2.2 times. We completed the sale of properties to Frontier on April 1, 2016. The pre-tax proceeds from the sale were used to repay outstanding debt in the current quarter.

In early April we already executed tender offers and early redemptions to repay over $10 billion in debt to reduce our total debt balance.

Now let's move into our review of the segments starting with wireless on Slide 7. In Wireless, we posted a balanced quarter of quality connections growth and margin expansion. Postpaid net adds totaled 640,000 in a seasonally low volume quarter, excluding all wholesale connections including IoT. Net-phone additions were negative 8000 for the quarter as compared to a negative 138,000 a year-ago.

A significant improvement over the prior year driven by customer retention. Retail postpaid churn was 0.96%, down 7 basis points for the quarter and sequentially consistent. We have taken many actions to improve and simplify our customer experience and provide the best network which have resulted in improved customer loyalty and satisfaction.

We ended the quarter with $112.6 million total retail connections excluding all wholesale connections. Our industry leading postpaid connections base grew 4.4% to $107.2 million and our prepaid connections totaled $5.4 million. Postpaid gross additions were $3.7 million, consistent with the prior year. The majority of gross ads were 4G smartphones and tablets.

The composition of our 640,000 postpaid net adds was very strong. Within the postpaid net adds, we added 452,000 new 4G smartphones in the quarter, which were partially offset by a net decline in 3G smartphones resulting in 284,000 net new smartphones. The remainder of the offset and phone net adds were basic devices. Tablet net adds totaled 507,000.

Other connected devices of a 176,000 were added during the quarter, with Verizon wireless retail Hum device is being a large contributor. We are beginning to see traction and increasing demand for the Hum product which we introduced last year. Net prepaid devices declined by a 177,000.

Let's now take a look at 4G device activations and upgrades on Slide 8. Total postpaid device activations totaled 9.9 million in the quarter, down about 3.9%. Approximately 82% of these activations were phones with tablets accounting for the majority of the other device activations. We ended the quarter with 73.8 million smartphones in total and our smarphone penetration increased to 85% of total phones.

4G device is now comprised more than 81% of our retail postpaid connections base. As expected, seasonality and lower customer demand for new devices is contributed to the softer volumes of upgrades in the first quarter. About 5.8% of our retail postpaid base upgraded to a new device in the first quarter, which represents the decline from the prior year of 70 basis points.

Now, let's review wireless profitability and revenue on Slide 9. In the wireless segment, profitability in cash-flows were driven by our high quality retail postpaid customer base. In terms of profitability, we generated $10.2 billion of EBITDA in the quarter, an increase of 1.7% and had an EBITDA margin of 46.2%, an increase of 140 basis points. Total wireless operating revenues declined 1.5% in the quarter to $22 billion.

Overall, about 48% of our postpaid phone customers are on an unsubsidized service pricing plan.

We expect the second quarter take rate for device installment plan to be around 70%. During the quarter, 5.5 million phones were activated on a device installment plan. We have about 28.8 million devoice installment phone connections in total, representing 33% of our postpaid phone base.

The increased penetration of quantum and the desire for a higher data speeds are the primary drivers of the Fios growth. At the end of the quarter about 78% of our consumer Fios internet customers subscribe to data speeds of 50 megabits per second or higher.

Additionally, the increasing number of customers opting for higher speeds is evident as about 60% of our consumer Fios internet sales are opting for speeds at 100 megabits and above. Fios internet subscriber growth remains strong in the first quarter. In broadband we added 98,000 net Fios customers for the quarter, which was consistent with the fourth quarter. Overall, net broadband subscribers decreased by 10,000 in the quarter.

In Fios video we added 36,000 net customers in the quarter which improved from 20,000 net customers in the fourth quarter.

The demand for custom TV remains strong and during the first quarter, custom TV represented about 38% of our Fios video sales. Due to the lower price of the bundle and the lower content cost associated with the custom TV a custom TV customer generates less revenue but contributes more margin than the traditional Fios video customer.

Let's turn to Slide 11 and cover enterprise and wholesale as well as the Wireline segment in total. The segment EBITDA margin was 23.4% for the quarter, up 70 basis points from the prior year due to strong cost control. Total operating revenues for the entire wireline segment declined 1.9% in the quarter. In the enterprise space, secular and economic challenges remain, but we are seeing stabilization in the rate of decline on a constant currency basis.

In the first quarter, global enterprise revenue declined 3.1% on a constant currency basis was down about 2.6%, and our global wholesale business revenues declined 4% in the first quarter. Trends for both enterprise and global wholesale remain consistent with 2015 results.

Recast total revenue for the first quarter of 2016 excluding these three markets was approximately $8 billion which is comparable to the prior year.

At the same time, we are continuing to executed disciplined capital allocation model with the priority to the invest for the future. Since the Vodafone transaction closed, we have maintained a strong balance sheet, invested in new businesses, improved our debt profile and return value to our shareholders both through an accelerated share repurchase program and through a dividend increased each year.

With that, I will turn the call back to Mike so we can get to your questions.

Michael Stefanski:

Fran, thank you. We're ready to open it up for questions if we can take the first question please.

Question & Answer

Operator:

Thank you, Sir. We will now begin our question-and-answer session. If you would like to ask a question you may press star and then the number one. Please unmute your phone and record you name clearly when prompted.

Your name is required to introduce the question. To withdraw your request you may press star and then the number two. Our first question comes from Brett Feldman of Goldman Sachs.

Please go ahead with your question.

Brett Feldman: Goldman Sachs:

Thanks and I appreciate the color. I didn't catching the release, are you try still reporting postpaid -- and if so could you break it out for us.

Francis J. Shammo:

Sure. We are going to continue to report the postpaid -- but we will get that out to everybody so that you can see that.

Brett Feldman:

Okay and then on just a separate question, you noted that you are going to making this investment in Boston also be if you can give us some thoughts around the timing of that so we can think about how that might flow through in the CapEx and then are you thinking that there could be an opportunity to continue to expand your fiber presence, particularly as you think about densifying your wireless network. Thanks.

Francis J. Shammo:

Yes, sure Brett, thanks. Well I mean Boston is a unique situations. So we announced the intent to expand Fios in Boston.

Understand that the LFA has to be negotiated with the city council and that is the public process that will take approximately 6 months. We have been in discussions with some broad framework, but we need to go through that process. It's also important to note that the LFA is only for video linear TV services. It is not required for broadband or 5G.

We will start the internet capability with testing homes, but for the video product we will have to wait to go through the LFA city council process.

Brett Feldman:

Is this the last significant fiber deployment you would expect to make within your remaining footprint or do you think that there is an opportunity to keep doing this in the North East.

Francis J. Shammo:

Well I think what we will have to do Brett is we will take one city at a time obviously we sold out Alexander, build out our Baltimore. So, if we get to our position where we believe we're going to need to invest in densification in those cities than that's an opportunity for us to take a look at it. But at this time we are concentrating on Boston.

Brett Feldman:

Thanks for taking the question.

Michael Stefanski:

Thank you. Next question please.

Operator:

Thank you. Our next question comes from Simon Flannery with Morgan Stanley. Please go ahead with your question.

Simon Flannery: Morgan Stanley:

Thanks.

Francis J. Shammo:

Sure, thanks Simon. So one guidance first and foremost, we are absolutely confident at this point in time based on every everything that we have planned and the timing of the union leader contract that we can deliver on the 399 compared to last year. Just to set the record here I mean again we do not give revenue guidance we gave EBITDA margin percent guidance and we gave EPS guidance that will be relatively comparable to 2015.

So if you step back a second and look at earnings per share at 2015 coming in at a 399. We have to keep in mind a $0.13 of that was from our asset held for sales. So really comparable number is $3.86 and as we said we felt good about growing earnings back to that 399 through our normal operation results of the business.

So if you take that fourth quarter and move it forward for the first quarter a $1.06. So that would mean we are $0.04 ahead of the prior year. That $0.04 which is somewhat attributed to the Frontier properties for the fourth quarter will reversed in the second quarter. So if you start out your base line from last year's reported EPS of a $4.04 is taken right off the top for that.

And then as we talked, there is going to be some timing on offsetting this stranded cost, and again I want to reiterate that we've always said that the stranded cost would be offset on a consolidated basis not within total wireline segment. So we do have some timing here we are looking at business transformation activities.

Now finally, obviously on this the timing of the union agreement we have plan for that and if it goes longer then we will comeback in mid-year. But keep in mind that we are looking at this as a long-term agreement for both providing quality jobs for our employees and returning shareholder value to our shareholders. So that's where we stand with guidance hopefully that clears it up a little bit.

On the second question or the second part of your question around the strike. Yes at this point it's too early to tell the impacts I mean we have deployed thousands of management employees to take on the work. We obviously always during this period of time for little behind on the install work. We still see good momentum coming in from a sales perspective so there is a little bit of a backlog there and we will just have to work through this.

But right now really no financial impact for say in the second quarter that I am anticipating unless this drags on for a much longer period of time. On the data center sale look I mean this is still I would consider an exploratory there is a lot of activity going on but nothing at this point that I am prepared to announce in a public forum, but we continue to explore that activity.

Simon Flannery:

Very helpful. Thanks.

Michael Stefanski:

Next question please.

Operator:

Thank you. The next question comes from David Barden of Bank of America Merrill Lynch. Please go ahead with your question.

David Barden: Bank Of America Merrill Lynch:

And then just the second question if I could would be on upgrade rate I didn't see it in the notes yet for this quarter, but obviously reports to that it's been lower than normal and I was wondering if you kind of talk about how you see the cadence for shape of the year with the iPhone 7 might be coming up in the back part of the year and kind of the amount of upgrades you'd see kind of by that point in time. Thanks.

Francis J. Shammo:

Yes. Thanks, David. So on earnings look I mean we've been pretty open about 2016 and of course we've got a lot of things going in the lot of different directions obviously if you look at it even with Verizon wireless and the headwind of the revenue here and the transformation of the pricing model.

But to your question of where do I think upgrade rates are going to go, at this point based on what we know we think that upgrade rates will be relatively the same as '15. I can't talk to the fourth quarter yet, because I just don't know what the devices are going to look like in our line up at this point in time.

David Barden:

Great. Thanks, Fran.

Michael Stefanski:

Tory, next question please.

Operator:

Thank you. Next question comes from Phil Cusick of JP Morgan. Please go ahead with your question.

Phil Cusick: JP Morgan:

Hey, guys thanks. Two quick ones if I can, one can you comment on the FCCs special access reforms. How you thinking about that and then two the potential of borrow against handset receivables what do you think is the cost in that market Fran versus the normal bond market.

Francis J. Shammo:

Hi, thanks, Phil. So on FCC special access, look the FCC will take action this month sometime on special access rule making and its investigation of the certain discount that we and other large legacy providers offers for DS1s and DS3s. I mean, we've reached out, we reached the deal with the lot of -- in order to resolve the long standing and contentious regulatory issue here.

Our top priority though is to ensure that our business services are in a level plane field with all the other competitors including cable companies. We intend to work with the industry and the FCC to develop our framework for that. That applies to all competitors equally and we lies on the public policy to determine where and when regulation is appropriate. So we will wait to see what the FCC does here Phil and then we will respond accordingly.

We are still doing a lot of analysis around it and at this point it is just something that we continue to look at and nothing to announce here today that we are going to change anything at this point in time.

Phil Cusick:

All right. Thanks, Fran.

Francis J. Shammo:

Sure.

Michael Stefanski:

Tory, next question please.

Operator:

Thank you. Next question comes from Mike Rollins of Citigroup. Please go ahead with your question.

Mike Rollins: Citigroup:

Francis J. Shammo:

Yes. Thanks, Mike. So, on an investment side look I mean, we've been pretty opened at our main priority is to get our debt level back to an a minus rated company and we're on track to do that, and everything we do that continues to be the top priority.

But again this goes to our strategy and attacking a certain population that quite honestly Verizon is under penetrated in. And if you look at that acquisition it directly goes to GENZ 73% of their audience is Millennials.

So these are real strategic for us to improve the viability of that platform. The other you are going to see is do this year to is around Go90. The Go90 product will start to across all of the ALO platforms this year. That is going to enhance both the ALO platforms and its always also going to enhance the Go90 platform.

So look continuing with our strategy, we will as I said before, we will open the box at some point in time to give you more visibility to this and I continue to say that, that will be mid-year to maybe third quarter of this year where we will start to produce some numbers around some of these more specific platforms that we talk about.

Mike Rollins:

And Fran is there are ratio or stated numbers you could put around how you perceived or getting to that a minus debt level are there indications that you've received for that.

Francis J. Shammo:

Sure I mean if you look at each of the rating agencies, each of the rating agencies have the different approach. Because some of them include the pension plan unfunded liability, others include the OPEB unfunded liability, others don't include any of that. Securitization some include some don't.

So each of them has a different metrics. But if you look our overall GAAP ratio kind of Fios and tests with where we would need to be and based on the GAAP ratio you should look at 2.0 to 2.1 type area in order to achieve that A minus rating.

Mike Rollins:

Thank you very much.

Michael Stefanski:

Tory next question please.

Operator:

Thank you. Next question comes from Craig Moffett of MoffettNathanson. Please go ahead with your question.

Craig Moffett: MoffettNathanson:

Francis J. Shammo:

Yes, thanks Craig. Well look I mean I am not going to speck anything that deal with Yahoo. So let's just talk about what we have on the table today, and under the sponsor data rating type issues I mean the net neutrality already aviates some of this and we've structured our sponsor data program to comply with all the FCC net neutrality rules.

So for example, if any party third party is interested in that we will offer that on bond discriminatory basis and we've priced it accordingly at a commercially favorable rate that we believe is in direct really compliance with the FCC Net Neutrality Rule.

But re-classing broadband under title 2 was not necessary doing sure and open internet. I mean there has been nothing ever that shows that it's not has been an open internet. So this will obviously have some negative current sequences on innovation as whole. But look I mean we're company that has operated under regulation for 100 years and is been very successful.

So we are all wait to see what the SEC concludes and then we'll operate accordingly. But it's too early to say what exactly is going to happened here.

Craig Moffett:

And Fran just the specific limitations that might or might not be imposed on the YouTube customer data under the privacy and PRM that stems from reclassification does that impact your ability to monetize an asset like Yahoo or AOL in general to as you think about how you would use that for advertising purposes.

Francis J. Shammo:

Michael Stefanski:

Tory, next question.

Operator:

Thanks you. Next question comes from John Hodulik of UBS. Please go ahead to question.

John Hodulik: UBS:

Francis J. Shammo:

Yes. Sure, thanks John. So, on the comparative environment of Verizon, I mean look coming into '15 and again in '16 we said that the top priority would be maintain the high quality of our base and you see us doing that.

I mean we now have 48% of our base over on the new pricing and we continue to push for that so. You saw the 7 basis point increase in churn for the last couple of quarters. What I was say though as if you look ahead last year's second quarter the churn was a like that 0.90 I would not anticipate. Nor -- anticipate that we'll achieve that churn rate again because things have kind of flat and down now.

But as far as the smartphone churn we are continuing to see improvement in that smartphone churn which gets us to holding a flat churn rate overall. So I think that's really what's important to us right now is that smartphone churn rate which is a really where we dedicating all of our concentration in our promos.

So that's really where we use, and go after the prepaid market more to come on this during the year but currently that's how we operate under the prepaid model.

John Hodulik:

Okay, thanks Fran.

Michael Stefanski:

Tory next question please.

Operator:

Thank you. Next question comes from Mike McCormack of Jefferies. Please go ahead with your question.

Mike McCormack: Jefferies:

Hey, Fran thanks. Maybe just quick comment on what your view is maybe holistically on the video landscape. What other assets do you think Verizon required and I am specking about Fios video long term where does that go, and then I guess on the service revenue stabilization that 50% bench mark what kind of factors would be built into that to get real expectation.

Francis J. Shammo:

Okay, thanks Mike. So on the video landscape look I mean I think we've set the bar on where we are going on video. Both in the in-home and outside the home.

So in the home where the first to come out with our custom TV package which re-bundled certain content and it's been very successful I mean this quarter even with the re-bundle of custom TV, we had a 38% take rate on the bundle and what I will tell you is yes, it does give us some top-line pressure because it's a lower bundle from a revenue prospective. But the content cost is considerably lower. Therefore, it generate actually more margin for us.

So it's the right thing they do this is where customers want, then don't want the pay for 300 channels anymore and only watch 17 on average. So we are trying to give customers what they want and that's afraid obviously with all the content providers, but we are doing it within the legality of our contracts in of course we want reach any of our contracts, but it's the way that the environment is moving.

So that's kind were we add on that.

Mike McCormack:

Thanks, Fran. Thanks for the color.

Francis J. Shammo:

Sure.

Michael Stefanski:

Tory, we have time for one more question please. Can you please just skew that up.

Operator:

Thank you, Sir. Our final question comes from Amir Rozwadowski of Barclays. Your line now open. Please go ahead for your question.

Amir Rozwadowski: Barclays:

Thank you very much and good morning Fran. I was wondering if we could discuss your network plans Fran. In the near term as you mentioned your CapEx was down high single-digit during the quarter but you remained fully committed towards your guidance levels. What initiatives are top of mind or what seems to an implied in proving spending projected to the year and I guess our longer term I was wondering if you could briefly discuss some of your initiatives on 5G.

The folks clearly seem to be pushing the timeline that is well ahead of your domestic players and most of the global players as well. What is the imperatives of this focus and where to meet the time when you expect what type of assets you think you need ensure to be able to meet those expectations. Should be expect additional view of our excel or some organic investments in fiber anything along those lines. Thank you.

Francis J. Shammo:

Hi thanks Amir. So first on just the CapEx. Look there is some timing here and the reason that is because if you look at it in the fourth quarter of last year we really accelerated our spend really in wireless to prepare for the Super Bowl and that was whole densification project on the West Coast around San Francisco and San --.

So you could assume that second quarter maybe a little wider than in the past, but again right on track with where we thought we would stay. On the 5G question, look we are committed to being the first US Company to rollout 5G wireless technology. We are currently what I would call doing sandbox, sandbox is and creating innovation centers.

We are working with the 5G technology forum which includes all the major OEMs and handset OMEs we will evolve this 5G ecosystem rapidly just like we did with LTE to ensure an aggressive pace of innovating.

Michael Stefanski:

Thank you. We will now turn the call back to Fran for some closing comments.

Francis J. Shammo:

We look forward to positive '16 with confidence in our ability to execute our strategy, create value for our customers, our employees, and our shareholders. Thank you again for joining Verizon this morning. Have a great day.

Operator:

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