Good morning, and welcome to the Verizon Second Quarter 2012 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. John Doherty, Senior Vice President, Investor Relations for Verizon.

Thanks, Brad. Good morning, and welcome to our second quarter 2012 earnings conference call. Thanks for joining us this morning. I'm John Doherty. With me this morning is our Chief Financial Officer, Fran Shammo. Before we get started, let me remind you that our earnings release, financial and operating information, the investor quarterly and the presentation slides are available on our Investor Relations website. This call is being webcast. If you would like to listen to a replay, you can do so from our website. I would also like to draw your attention to our Safe Harbor statement. Information in this presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Discussion of factors that may affect future results is contained in Verizon’s filings with the SEC, which are also 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 also available on the website. Before Fran takes you through the details of our results, I’d like to cover a few items upfront. Second quarter earnings per share were $0.64, up 12.3% from last year and $0.05 higher than the first quarter. To the first half of the year, EPS of $1.23 was 15% higher than a year ago. There were no special items of non-operational nature included in our reported results for the second quarter or the first half of this year or the comparable periods in 2011. In terms of activity below the operating income line, you will note that equity in earnings from unconsolidated businesses, which is primarily our minority interest in Vodafone Italy declined by about $50 million this quarter due to the continued economic pressures in Europe. This represents about $0.02 in earnings per share. other than that, there is nothing unusual in terms of other income, interest or income taxes. I'd also point out that the quarterly growth rates disclosed in our presentation slides and during our formal remarks are on a year-over-year basis unless otherwise noted as sequential. with that, I'll turn the call over to Fran.

Thanks, John. Good morning, everyone. Before we get into the details, let me start with a few comments about our financial results. We continue to execute well across the entire business. Solid top line performance combined with a strong focus on profitability, and cost management has resulted in double-digit growth in operating income and earnings per share for the last two quarters. This strong operating performance together with our disciplined capital spending is driving significant increases in free cash flow, resulting in capital efficiency gains and an improving return on investment profile for the entire business. Through the first half of the year, we generated $7.8 billion of free cash flow, which is more than twice the amount we generated in the first half of 2011. The Wireless business is firing on all cylinders and our strategic actions and results clearly demonstrate our position of leadership in the industry. We continue to post strong growth in retail service revenue, driven by increased smartphone penetration, Internet device adoption and new customer additions. In the second quarter, this top line growth combined with effective cost management and excellent customer retention resulted in a record setting EBITDA service margin of 49%, which surpassed our previous high of 47.8% in the third quarter of last year. In Wireline, consumer revenues were up 2.5%, which was the highest growth rate we've seen in several years. While we continue to face challenges in the enterprise and wholesale markets, we are confident that the decisions we’re making and the actions we are taking are the right ones for the long-term. We're intensely focused on profitability management and key actions related to this include product portfolio rationalization, targeted pricing moves and cost management initiatives. I will go through these in more detail during our segment review. In time,…

Thanks, Brian. Before we jump into questions, I know that we are having some link issues with the IR website this morning. we are working on it, and all the typical documents will be available shortly if they are not already. With that Brad, let's take our first question, please.

(Operator Instructions) our first question will come from Jason Armstrong of Goldman Sachs. You may ask your question. Jason Armstrong – Goldman Sachs Group Inc.: Great, thanks. Good morning, Fran. A couple of questions, first on the FiOS metrics you just talked about, sort of a new range for additions that I guess implies more or like 160,000 to 180,000 adds per quarter going forward. You flipped a little bit lower than that this quarter, I am just – can you help us think through that. You obviously talked about some price hikes, are we also at a point where the base is large enough that 2Q seasonality in video i.e., were negative, and then rebounced in 3Q, is this starting to catch up with the business as well. And then second question, just on the wireless distribution. it was roughly this time last year you announced intentions for a $10 million upstream payment to the JV partners. Can you help us think through maybe a timeline for announcing the distribution for next year and then given the stronger free cash flow you’ve seen in the business, would that point sort of conceptually to a bigger distribution? Thanks.

Yeah. sure, Jason, thanks for the question. So first on the FiOS piece. just a couple of things here, so yes, there was – we actually did have slower growth in this quarter than we anticipated. so a couple of factors here, one was there was a seasonable unusually high move season in the month of June compared to prior second quarter. so we experienced some additional moves out and normally in this business, it takes us a quarter to recapture the move in. So I think that partially would set off from a timing difference. But more importantly, I think that we have refocused more on our profit, on the FiOS side. So first we went through these price ups, you saw some of the benefits there in the first quarter, where we drove our consumer revenue growth, the 2.5%. And this was the price ups of our set-top boxes and you’re going to see more price ups coming in the third quarter around the bundles and into the fourth quarter. In addition, we launched our Quantum product and the price ups that we have on people choosing additional speeds. I am extremely confident with both of these actions. We can double our revenue growth by the end of this year from 2.5% to around 5%, and I am very confident that we can accomplish that. So, one is that that we’re really concentrating on revenue growth. Second is, as you know we’ve really concentrated around copper to FiOS migration. We nearly doubled the amount of migrations we did in the second quarter versus the first quarter and also what we’re seeing is, the first quarter migrations that we accomplished, these customers are generating more ARPU, close migrations and free, because they are also selecting higher speeds under our Quantum offers. So I think the range as we said is probably in the neighborhood of 150,000 to 170,000. I know you said, 160,000 to 180,000 but it’s around 150 to 170. But we are on a steady growth pattern, and I believe that we are really focusing in on better margins and acceleration of the top line. On the Verizon wireless dividend, I know there has been a lot of press lately out there and I am not sure where this idea is coming from, but I can tell you, right now the only thing I will say is that, there is not distribution on the agenda for the upcoming Verizon wireless board and that’s probably I am going to say at this point in time. Jason Armstrong – Goldman Sachs Group Inc.: Okay, thanks Fran.

Brad, can we move on to the next question please.

Our next question comes from John Hodulik of UBS. You may ask your question. John Hodulik – UBS: Thanks, guys. Two quick ones for you on the Wireline side; first, Fran, thanks for all the info on the product rationalization on the wholesale side. But you could give us some idea of when you think you should start to see some improvement, I think the 10% was a little bit worse than we thought, when do you think that could start to get better? And then, second of all, if you could update us on the union contract and where you are in negotiations that would be great.

Okay, great. Thanks, John. So on the wholesale side, yeah, 10% decline, this was accelerated from 8.9% in the first quarter. And to be honest, I think that we're fighting an uphill battle here on the core voice in LTE product, and that will continue to decline. The focus right now is to reposition ourselves for Ethernet and fiber-to-cell, and those products are picking up. And I think that quite honestly the range that you see here is probably the range that we will continue with somewhere between an 8% to 10% decline going forward. But again, this is a diminishing revenue stream and we will continue to manage that stream. On the union side of that half, as I've mentioned before, when we entered into these negotiations, we knew that this was going to be extremely difficult and very hard negotiations, and it was going to be a long-haul not a short-haul. And given our peers, it took them 500 days to get the contributions and some pension resets, and we're now almost the year-end of this, sort of 365 days. So, when you look at the profitability of this business over the last five years, it has decreased and this cost structure is not sustainable going forward. We really needed the business to address this cost structure in relation to the benefits, particularly healthcare contributions and pensions, and we need increased flexibility around our work rules, which we – some of these work rules date back to 1960. So we aren't asking for things that have not already been given to other companies, these are not new issues for the union, a many of our peer companies are already there. So we are standing strong on our position of cost restructure in this business, so the negotiations are continuing albeit slow and the process will take as long as it takes for us. So at this point, that’s what I’ll report on the union negotiation. John Hodulik – UBS: Great. Thanks, Fran.

Thanks, John. Brad, can we move to the next one please?

Our next question comes from Simon Flannery of Morgan Stanley. Your line is open. Simon Flannery – Morgan Stanley: Thank you very much. Good morning. Following up on the pension situation, have you had a chance to run the numbers on the new highway bill and the new discount rates and any impact that you may have on your near-term pension contributions? And related to that, you’ve talked about strong cash flow generation this quarter, your leverages in the low ones, how are you thinking about target leverage here, about dividend increases for Verizon Corporation and potential buybacks down the road? Thanks.

First, you have to look at the borrowing rates. Second, you have to look at tax rates structures, then what the current rate is versus what future rates may be. And then you have to look at the overall pension strategy that we have related to our pension plan. So at this point, I’m not prepared to speak to whether we will adopt the funding plan or not adopt it, what I will tell you is, this is not material to the cash flow either this year or into the next three years, and again, it is just the timing issue. So I will have more to report on that as we complete our analysis and come into the 2013. As far as cash flow goes, we had an unbelievable quarter in cash flow from operation generation, our continued focus in on investment and making the right investments to return additional investments on that and get greater returns both in the wireline and the wireless business. As I said, we really have curtailed the spending on our EV-DO networks, which is generating more cash flow in the wireless business. But again, without really going into a lot of detail here, the dividend policy is extremely important, it is a board decision, but it is very, very important to Low and I, and we will continue to recommend to the board what we think is appropriate. And from a share buyback, as I said before, I don’t think we are in a position to start buying back shares, it is always a timing issue for companies to – when the best time to do that is and at this point, we probably won’t be in a position to do anything like that until late ’13 or early ’14. Simon Flannery – Morgan Stanley: Great. Thank you.

Thanks, Simon. Brad, let’s move on.

Our next question will come from Philip Cusick of JPMorgan. Your line is open. Philip Cusick – JPMorgan Chase & Co.: Hi, guys. Thanks Brad. You mentioned that some customers have been moving over to the new price plans, I wonder if you can give us some idea of whether we should be looking for some ARPU headwind in the third quarter versus the rapid rate that you’ve been growing before it starts to sort of be accretive maybe in next year? Thanks.

Yeah, thanks Phil. I mean, it is very preliminary, we just launched this on June 28, so we just started in on this. I think some of the positive factors that we are seeing, is that obviously all of your adopters are always your optimizers, but to be honest based on where we are at right now, we are actually tracking ahead of where we thought we would be and we don’t see any ARPU impact in the third quarter or fourth quarter. I think our trend will continue that we have established here in the first and second quarter. And the benefit though that we do see is that we are seeing some 3G unlimited customers move into our 4G share data plan product and that is excellent for us from a cash flow position on capital efficiency and cost reduction metrics. So there are some interesting things there, and then that again the other thing on ARPU here is, as Internet device ARPU continues to improve that gives us better opportunity to accelerate our overall ARPU growth. Philip Cusick – JPMorgan Chase & Co.: That’s all. Thanks Fran.

Thanks, Bill. Can we take the next question, please?

Our next question comes from Jonathan Chaplin of Credit Suisse your line is open. Jonathan Chaplin – Credit Suisse Securities: Thanks. Fran, I’m wondering if you can give us some context of where you think, sort of longer-term over the next three or four years, CapEx to revenue trends in wireless?

Well, I think that without giving a lot of guidance here, beyond this year which we set our overall capital plan will be flat to down from where we were last year. Obviously, you can see that wireless is utilizing capital extremely efficiently, down, I think now or most for the year about $1.3 billion year-over-year. Our overall CapEx to revenue ratio in the first half of 2011 was 16.4%, and that’s down to 13.1%, and as I said before, we are committed to continue to improve on that metric this year and continuing to ’13 and ’14. And I think we will leave it at that. Jonathan Chaplin – Credit Suisse Securities: Thanks.

Thanks, Jonathan. Brad, let's take the next question.

Our next question comes from Michael Rollins of Citigroup. Your line is open. Michael I. Rollins – Citigroup Global Markets: Hi, thanks for taking the questions. Just a quick side note, if you can just give us an update on the wireless net debt at the end of the quarter. And then secondly, if you can go in a little bit more depth on what's happening in the enterprise business, maybe you could help us size Europe or international for you, versus U.S. and give us a sense of what strategic services, would be growing at, if you can have the European issues, this CPE influence side, et cetera. Thanks.

Sure, Michael thanks. So for the end of this quarter gross debt on wireless box is a $10.9 billion. On July 1, we actually paid down another piece of that debt of $800 million. The cash rate now is $8.4 billion so net debt at the end of this quarter was $2.4 billion. On the Enterprise business just a kind of set some of this – as I said last quarter, our international revenue is about $400 million a quarter. We were growing close to 15% to 17% on a year-over-year basis, both within EMEA and in Asia. Last quarter, we said that we saw the first time that it actually went flat on year-over-year basis, and this quarter we actually saw a decline on a year-over-year basis. Strategic services is about 75% of our sales in international, which is very different than it is here in the United States. So with the FX impact and the impact that Europe is having on that strategic revenue stream that is having an overall impact on the overall strategic revenue growth. I think the important thing here is the way we move forward, is that we are really building our business around platforms. And if you look at what we’ve done, we are rated number one in the world on security. We have build our data center platform around our Terremark acquisition and now we are going to build our machine-to-machine and applications platform around the Hughes Telematics. And I think that brings a different paradigm to us going forward. So I’m very optimistic on the Enterprise business. We are showing still some growth in strategic services and I think if we didn’t have the headwinds and some of these other economic pressures, I believe we are a double-digit strategic growth company there should be no reason why we can’t get back to those numbers that we showed in the past two years. So I think this is a temporary thing, but given where we are with Europe this could be another two to three quarters out, mid ’13 before we start to turn the corner here. But we are positioning ourselves and I think we are making all the right decisions that when we do turn the corner and get some economic release that we will show a very good portfolio here. Michael Raynes – Citigroup: Thank you.

Thanks Mike. Brad, let’s move on to next question, please.

Our next question will come from David Barden of Merrill Lynch. You may ask your question. David W. Barden – Bank of America/Merrill Lynch: Hey, guys. Thanks for taking the question. Fran, just a quick housekeeping item. I think this quarter you said that Wireline margins in the second half would be higher than the first half. Is that the same thing as what you said last quarter that Wireline margins would be up year-over-year, just to clarify? And then, the upgrade rate fell from 8% in 1Q to 7% in 2Q and obviously that’s a big swing factor for margins, almost 200 basis points. Have you think for the rest of the year and maybe as a run rate as a function of the actions that you’ve taken for upgrades, how do you think about that 7% upgrade rate as a baseline as a driver of margins through the rest of the year, and maybe just generally going forward? Thanks.

Sure. Thanks, David. So on the Wireline margins, look, we are very, very solid on improving our Wireline margin here in the second half, first the first half. I think that given some of the cost structure issues that we have, especially around the contract, we think that we can still improve our margins. If we can get to a better [inhere] with the contract, then I think that we can actually improve our margins on a year-over-year basis, but that will come down to a timing issue. I do think, though, that when we’re focusing on the consumer side of the house, as I said, I’m very confident that we can double our revenue growth here. We are very focused in on the profitability of FiOS. The profitability increase in Wireline this quarter was really centered around the FiOS, really progress that we made on a quarter-to-quarter basis. So I think we have a lot of good things here, and we’ll just have to play this out, but we’re very, very confident that we’ll improve our wireline margins here. On the upgrade side of the house, obviously this is timing a lot of things go into play here. We’ve made a lot of moves in the last year and a half around restructuring our upgrade policies. As you know, we’ve launched our $30 upgrade fee. Obviously, this all has an impact on the level of upgrades and then of course, there is always that Rumour Mill out there with a new phone coming out in the fourth quarter. And so people maybe waiting, but look, we manage this on a quarter-to-quarter basis. I think, the way I look at this though going into the back half of this year on the upgrades is that, we’ll manage this business on a profit and on a growth trajectory. And if you think about what wireless has done when we get to the fourth quarter. We will have taken $5 billion out of our cost structure in the last three years, which is why we can generate margins of 49%, which beat our all-time high from last year. So I think that wireless has a very good track record in history to deliver both on profitability and growth.

Thanks, David. Brad, we will move on. David W. Barden – Bank of America/Merrill Lynch: Thanks, Fran.

Our next question comes from Mike McCormack of Nomura Securities. Your line is open. Michael McCormack – Nomura Securities: Hey, guys, thanks. If I maybe just a little bit deeper dive on that thought process, and we obviously with some new policies in place and relatively lower upgrades. We might not see the same pattern, we saw last year and last year, we all remember that people were waiting for the iPhone in Q4, so Q3 margins were super high. Should we not expect that same dynamic given the changes in policies? And then secondly, on the FiOS side, when you talk about profitability, is this on a per subscriber basis or just slowing down overall growth adds, and should – we will not be making a margin sacrifice to take share here? Thanks.

Thanks, Mike. So just a couple of things on the margin side of the half. So I mean, I think, again, I’ll just repeat what I said is, we’ll manage this business both on a growth and profitability perspective for wireless, and I think we’ve proven that. look I mean, obviously the fourth quarter is always a seasonable volume quarter for the industry, and I expect that to happen again with the holiday season that’s coming up. So it will really factoring on the volumes that what new devices, and I’m sure, we’re going to have plenty of new devices that come up between now and the holiday season. and if you look at phone to device side of the house, we just launched the Samsung Galaxy 3 on our 4G LTE network. And it proved the point that when we launch a very technical phone that’s great when appearance and viability that people accept that phone, and that phone is selling extremely well. So all these factors come into play, but I think that we are very, very confident that what we laid out in January of 2011 regardless of what phones come, what phones don’t come, and what kind of a season it will be, we will hit our financial objectives. On the FiOS side of the house, as I said, we did have some seasonality pressure here, but look, we have to balance the perspective; most of you’d look at our wireless portfolio. we have to balance the consumer wireline portfolio in the same fashion. we have to balance growth with revenue acceleration and improving profitability. and that’s what we’re set out to do, and we’ll make the decisions in the right ones to in order to achieve all three of those metrics. Michael McCormack – Nomura Securities: Great, thanks Fran.

Thanks, Mike. Brad, can we take the next question please.

Our next question is from Brett Feldman of Deutsche Bank. Your line is open. Brett Feldman – Deutsche Bank Securities:

Sure. Thanks, Brett. On the vote of our dividends the board meets on a quarterly basis and in each – the partnership agreements specifically states that on an annual basis the dividend will be reviewed at the end of the year. So that’s really all there is to say on that. On the 700 A and B megahertz sale, as you know, we’ve already hired a third-party, we are ready to go as soon as we get approval on the SpectrumCo deal. So, this is going to be an immediate thing, not something that’s going to take a while. So we are really setup to go and it will be as fast as we can get the auction done, and make sure that we get a price that we believe is fair, and then we will sell the spectrum. So that’s the timeline. Brett Feldman – Deutsche Bank Securities: Great, thanks for that.

Thanks, Brett. And just an update – I continue to get updates on the IR related – website related issue. We continue to work it. We should have all documents available very shortly for those that couldn’t get them. Brad, right now, it looks like we have time for two more questions. Thanks.

Our next question comes from Tom Seitz with Jefferies. Your line is open. Thomas Seitz – Jefferies & Co.: Yeah, thanks for taking the question. Fran, you mentioned you’re accelerating a bit the copper shutdown., in the past, you’ve mentioned that a gating factor was regulatory approval to shutting down the copper plant for those that wanted circuit switched lines. I’m wondering if there has been any sort of change in the local regulatory environment that allows you to accelerate that? And then secondly, I think in the past you’ve mentioned the shutdowns would be in the hundreds of thousands, is that materially going up? And is that a thing where you’d sacrifice a bit of margin and maybe spend a bit more CapEx to accelerate this process.

Okay. So on the copper shutdown piece, over the past few years we have gotten a lot of regulatory release in a lot of states on copper being the provider of last resort and those types of things. So as we go here and through our product rationalization, we are moving as quickly as we possibly can in shutting down that copper plant and obviously we did that in Dallas a year ago and we currently have one we’re running in Florida that we’re shutting the switch. So we continue down that path and we’re doing that as quickly as possible, and as I said, from a FiOS to copper migration, or a copper to FiOS migration, we nearly double the amount of migrations that we did, and so we’re being as aggressive as we possibly can in these areas. So from that perspective I think we’re right on track. Thomas Seitz – Jefferies & Co.: Okay. Thank you.

Thanks, Tom. Brad, let’s take our last question please.

Our last question comes from Kevin Smithen of Macquarie. Your line is open. Kevin Smithen – Macquarie Capital: Thank you. Your investment in Italy was, I think, you said a $0.02 drag on EPS this quarter. How should we think about the impact over the next few quarters, and can you talk about what the strategic importance of your Italian asset and that is this going to a be drag, why not try to dispose it?

I think that given the pressures that we’re seeing in Europe it’s not unforeseen that there would be a pressure there in the Omnitel market of Italy. And what we’re seeing is that that created a $0.02 pressure on a year-over-year basis. Strategically, I’m not going to discuss whether we’re going to stay a partner or not a partner, but right now it is a strategic asset for us to be a partner. Kevin Smithen – Macquarie Capital: And you think that $0.02 drag will continue over the next few quarters, will it get worse, how should we model it?

I think it will be pretty consistent. Kevin Smithen – Macquarie Capital: Okay.

Okay. thanks, Kevin. Brad, that concludes our call. Thanks everybody, we appreciate you dialing in this morning and once again, we’re doing everything we can to work on the IR related – website related issue we had this morning.

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