Good morning and welcome to the Verizon First 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 first quarter 2014 earnings conference call. This is Mike Stefanski and I am here with our Chief Financial Officer, Fran Shammo. Thank you for joining us this morning. 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. Replays and a transcript of this call will be made available on 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 our website. The quarterly growth rates disclosed in this presentation are on a year-over-year basis, unless otherwise noted as sequential. Before Fran takes you through the details of our quarterly performance, I would like to cover a few details about our reported results. For this discussion, let’s turn to Slide 3. For the first quarter, we reported earnings of $1.15 per share on a GAAP basis. Our reported results reflect a partial quarter with 55% ownership of Verizon Wireless in just over five weeks to full ownership. Since this transaction to acquire Vodafone’s stake closed on February 21. The weighted average common shares outstanding for the first quarter were 3,430 million. Given the issuance of 1,275 million new shares of Verizon as part of the deal consideration. The timing of the closing had no effect on our consolidated income…

Thanks Mike. Good morning everyone. As I stated on our last few conference calls, we have great confidence in our ability to generate strong financial performance in 2014. Over the years, our steady and consistent investments in networks and platforms have supported innovative products and services and fueled our growth. Our wireless and wireline networks will continue to be the hallmark of our brands and provide the fundamental strength upon which we build our competitive advantage. Now that the Wireless transaction is behind us, we have the immediate financial benefit of earnings accretion from the deal and full access to the very significant cash flows of Verizon Wireless. As we have previously stated, we are targeting 4% consolidated top-line growth in 2014 with an expansion of our consolidated EBITDA margin. The ingredients for success are unchanged, solid operational execution and a disciplined focus on meeting our financial objectives and creating value for our shareholders. With an eventful first quarter behind us, I’d say we are off to a strong start. We maintained our growth momentum and delivered excellent top-line and bottom-line results. While the timing of the Wireless transaction closing caused some reporting complexity, our $0.84 adjusted earnings per share represent a growth of 23.5% and would be even greater if we assume full ownership of Wireless for the entire quarter. We have consistently delivered high quality earnings growth with double-digit increases in reported and adjusted earnings per share in eight of the last nine quarters. Our cash flow generation in the quarter was also impressive and we continue to invest in our networks and platforms. Our Wireless results were very good with service revenue growth of 7.5% and a service EBITDA margin of 52.1%, an expansion of a 170 basis points. In FiOS, our positive revenue growth trends and…

Thank you, Fran. David, we are now ready to take the questions.

Thank you. We will now begin the question and answer session. (Operator Instructions) Your first question comes from Phil Cusick of JPMorgan. Please go ahead with your question. Phil Cusick – JPMorgan: Hey guys, thanks. So I guess, if we – just talk about subscribers on both sides, churn up in Wireless leading to some handset share losses this quarter and FiOS softer, too. You seem to be responding to T somewhat with the Edge price cuts recently and allowing people to trade down. How should we think about the impact to ARPA in 2Q and beyond from these trade-down effects? And then what about responding to cable on the FiOS side? Are you happy with the revenue ramp due to rate increases or do you try harder on subs as we go forward, too? Thanks.

Hi, good morning, Phil. So, look, I think that, let’s talk about the subs and the churn and then we can talk about the EDGE pricing. So, first off, I think if you put this quarter in perspective, coming into this quarter from the fourth quarter on the end of the first quarter call here or the fourth quarter, we talked about how we would take a very rational disciplined approach in responding to the competitive marketplace. And that’s what you saw us do through the quarter. Now having done that, through January and February we saw a lot of pressure around our basic phone customer base which is why we launched our low-end 4G price point on More Everything to give those basic customers a chance and a view into getting over to a smartphone on our 4G network and we saw the improvements through the month of March. In addition, if you look at our tablet sales, we said coming into this year, that tablet would be a major growth trajectory for the entire industry and I think that’s what you are seeing. You are going to see that this is a very underpenetrated marketplace and the more we drive tablets into our 4G network, the more revenue stimulation we create. So we had one of the best tablet quarters ever even without the Christmas season from the fourth quarter. So, when you look at the churn, the churn was definitely impacted via the basic phone customer base. So, we actually had one of the best quarters ever adding 866,000 4G smartphones to our base and then another 634 tablets. So the net effect of the loss was mainly within the basic phone base and some 3G smartphone customers which led us to then refresh our shared pricing…

Okay, David, let’s take the next question please.

And your next question comes from Simon Flannery of Morgan Stanley. Please go ahead with your question. Simon Flannery – Morgan Stanley: Great, thanks a lot. Good morning, Fran. Just to quickly follow-up on EDGE, have you had any change in your view about the – kind of the sell activity of the EDGE product? It seems like T-Mobile and AT&T are pushing these fairly broadly, and in the past you have sort of said you want to reserve this for your best customers. Any change there? And then perhaps you could touch a bit more on the network. Where are you on the AWS rollout and have you solved all the congestion problems you were talking about a couple of quarters ago? Thanks.

Thanks, Simon. So, first on EDGE, look, this is a customer choice. This is not what I want. It really comes into our customer choices and again, we are going to allow our customers to choose the right plan for them and if you look at the economics, it depends on what phone choose. So, if you decide to take a free iPhone that’s out in the marketplace today, you may be better off going on the subsidy plan for two years end up paying less over time than the installment plan. If you decide to take a very high-end handset, then you may benefit by going to the installment sale. So, I think it’s a personal choice. It also comes down to when do you think you are going to upgrade. If you are a customer that wants to hold your phone on for a two-year period of time or longer, it depends what plan you may choose. If you decide, you want to upgrade every year, then obviously the installment plan is the plan that you have to select. So, this comes down to personal choice and again our sales forces is not compensated to drive traffic to any one sort of plan. At the end of the day, it’s all about customer satisfaction and treating our customers and the choices that they want. So, again, its – the way I look at this is, as we manage the business, these plans are all profitable plans to us. So it comes down to customer choice. On the network side of the house, I think that, in my script, I was pretty deliberate on making some statements there about some third-party studies that were done in the first quarter and I think that speaks to itself as to where we are with our network. We are through the congestion. The network performance is delivering what we expected to and as you see that in our CapEx spending, we are going to be more leveled this year. If you know historically, we’ve always had more of a ramp from the first quarter to the fourth quarter. We will be more leveled with that. So we are really concentrating on the density and the diversification of the 4G network, especially in the major cities and that’s where we have deployed AWS and we will continue to deploy AWS throughout the year more into the smaller cities and into the rural markets, but right now the concentration is in the major cities like New York, San Francisco, Chicago et cetera. So, Simon, that handles the question. Thanks.

David, we can take the next question now.

The next question comes from David Barden of Bank of America. Please go ahead with your question. David Barden – BofA Merrill Lynch: Thanks guys, thanks for taking the questions. So, Fran, I apologize – I got – I have to ask one more on EDGE, too, which is that one of the things we saw coming out of the AT&T result was that there is really two parts to these installment plans. One is the mechanical part of changing the accounting where you take some of the service revenue and you put it into equipment revenue and that's the relatively easy part. Another part of the puzzle thought was that, if AT&T was very aggressive at pushing this pricing out to people even if they didn't take the installment payment plan because they felt like it was an immunization tool against incremental competition. So, could you kind of share with us kind of what we should be expecting from Verizon in terms of not just how the EDGE program is going to unfold, but how you're going to use the EDGE pricing as a competitive tool if it all? And then the second question, if I could was, on the Wireline margin side, a pretty strong margin, especially for 1Q, which historically has seen lots of headwinds for bonuses and FICA and other things. So I was wondering if you could kind of maybe give us a picture of whether we can use 1Q as a starting point for some of the Six-Sigma improvements and stuff that you are working on for the rest of the year? Thanks.

All right, David. Good, thanks. So on the mechanical side, look, I mean, this is a fairly complex accounting for the EDGE pricing. But really there is two main components to this. First is you book up the receivable, you record the revenue over the time, but the amount of revenue that you record is based on the residual value that you assign and the liability that you set up for that telephone. And I would say that, our approach is going to be extremely conservative. So, we will probably be recording less revenue upfront under the installment sale, just so that we can get a feel for what the uncollectability is going to be over time. How much value these phones are going to be worth a year or two years out depending upon how many phones hit the market at the same place. We do think that there could be some saturation effect in the outer years. So we will take a very conservative approach here on the accounting. As far as the competitive environment, look, I am not going to speak for anybody else. I think, we’ve shown, we will be rational and deliberate on how we respond to the marketplace. We are responding to our customers’ requests. This recent move that we made related to allowing out of contract subscribers to move over to the EDGE pricing, I believe is a good move for us because again it treats our customers the way they want to be treated and it is a retention tool for us. So, it will help to deliver a lower churn metric in the future. And it’s up to them whether they want to move, we are not going to deliberately move our customers, it will be totally to their choice. So,…

David, let’s take the next question.

And your next question comes from Mike McCormack of Jefferies. Please go ahead with your question. Mike McCormack – Jefferies & Company: Hey guys. Thanks. Fran, and just one thought on smartphones obviously becoming a bigger part of the base. Do you think smartphones are causing shorter handset lives, meaning as we look at adoption of EDGE or other EIP programs with smartphones needing to be upgraded more often. It's actually a better plan for the carriers and particularly for Verizon? And then secondly on Enterprise, if you could just comment, you made some comments regarding the decline in revenue there, maybe rank order what you are seeing there with respect to technology change, pricing and then demand? Thanks.

Okay. So, on the – look, I think it’s way too early to tell yet how the impact of the installment plans will react on the upgrade rate. I mean, we’ve been at this for years and the upgrade rate is pretty steady. You will have fluctuations based on seasonality, but coming out of the first quarter, we really didn’t see any change in that. But we probably really won’t see the impact of early upgrades probably for another six to eight months. So, I think we are going to have to hold on what the expectation there is. But I think the other thing too though is that, just from an overall product set, you know, smartphones are, as I said coming into the quarter, are going to be a slower portion of the growth, I think for the entire industry as we go forward as the penetration grows. So we look to those other facets of the tablets and machine-to-machine and then if you look beyond that with VoLTE and multicast giving our customers even additional features that could potentially drive more usage on the network. So that’s really what the future holds for us. The smartphone category, I do believe that upgrades may increase with EDGE, but again I think it’s too early to tell. On the Enterprise side, look, I think what we continue to see here is that the United States is the highest corporate tax payer in the world and until we fix that situation, with all the discussions in Washington whether extenders will happen, won’t happen, whether we’ll get through tax reform or we won’t get the tax reform, there is just too much uncertainty out there for enterprises to really lock down on where they are going in the future. So, I think, this is where we are playing right now. The public sector is still a major drag on our results and as you know, we include the public sector in our enterprise results. And that's also now impacting the strategic services because they are also starting to cut and move away from some of the more strategic products. So, I think, for this year, we just, we are satisfied with being flat with last year which is what I came into this year saying, and I think if we can resolve some of the issues and the uncertainties, and I think we are on a better path for enterprise. But right now, I think we are where we are. Mike McCormack – Jefferies & Company: Okay, Fran, just on the pricing situation, is that a competitive issue or is it just technology change that lowers the price points for the product sets?

No, look, we are extremely competitive and have a great product set in our Enterprise space and obviously if we get into the details, I mean, if you look at security and look at our cloud services, they are growing. If you look at the huge Telematics platform, that’s growing in the enterprise space, but then we have all this legacy voice and core and even within the IP products, you see the price compression happening on those products and each year it comes up for renewal you have a price compression. So, some of it is competitive, but we are in an extremely competitive environment. But look, I mean, people are just cutting enterprises are still focused on cost structure. They are not increasing their investments, they are increasing their spends. So that’s where we sit. Mike McCormack – Jefferies & Company: Thanks, Fran.

David, let’s take the next question.

And your next question comes from Michael Rollins of Citi Investment Research. Please go ahead with your question. Michael Rollins – Citi Investment Research: Hi, thanks, good morning. Fran, I was wondering if we could just take a step back in the Wireline business and just talk a little bit about the homes where you don't have FiOS. I think it’s – and maybe you can give an update on a number, maybe roughly 8 million homes where you don't have plans to build FiOS. What you do in those markets to stay competitive and to try to improve the financial outlook or is that a source of even possible asset optimization at some point? Thanks.

Sure, Mike. Thanks. This could be a record quarter since you didn’t ask me about net debt on Wireless. So that’s a good thing. But, look, on the FiOS and the copper houses, so, within the FiOS footprint as we said, we now have less than 1 million homes left that are on copper. So we will continue to migrate them. Outside of the FiOS footprint obviously, really we are taking two measures there. One is the Wireless portfolio and replacing some of that that old voice legacy copper voice with our LTE voice product that Wireless has been selling across the nation for almost two years now called Home Phone Connect. Within Wireline, they have a very similar product called VoiceLink which in essence is the same thing. So we will try to replace that copper legacy with those technologies. But look, I mean, outside, this is kind of where you say it’s you have to nurture it and harvest what you have and we know that we are not going to be able to compete with speed in that environment and we will continue to do the best we can. Now, there will be certain areas, maybe another year or so, where we may look to extend the fiber a bit and include some small businesses which we compete extremely well in within the FiOS footprint and they are very profitable customers. But beyond that, Mike, I think we are in harvest mode and we will continue to do the best we can with the technologies we have as alternatives for our customers. Michael Rollins – Citi Investment Research: Thanks very much.

David, next question.

Your next question comes from John Hodulik of UBS. Please go ahead with your question. John Hodulik – UBS: Okay, thanks, guys. Fran, just quickly back to EDGE if we could, can you give us a sense of what the take rates you are seeing on smartphone sales these days? I think you said that it increased with the change in pricing, but if you could give us some color there that would be great. And then maybe the percentage of smartphones now that are on Edge pricing. And then maybe if possible, how that is going to evolve over time, especially now that you are moving some of the off-contract customers over to the new pricing?

Yes, thanks, John. So, as far as the take rate on EDGE, I would tell you that we were less than 15% in the first quarter from a take rate. I expect that to potentially double with the launch of this payment plan option within our indirect channel. I would also say that, it is going to become more and more difficult for us to separate out and give a normalized basis with and without EDGE. And the reason I say that is, as we start to launch this in our indirect channel, you are going to get into all kinds of confusion of how the commission works, who bought the phone, who is doing – we will do the installment on that, but we may not have actually sold the phone to the indirect. They may have bought it outright. So there is implications with how compensation will work. So although we gave you separate data here in the first quarter because it was easy, because it was just within our direct channel, I think that is going to become more complicated going out here. So, from a take rate perspective, it’s hard for me to tell what the take rate will be. But I do believe it will probably double into the second quarter with the launch of our indirect channel John. So that's really all I can talk about on the EDGE. It’s too early for us to tell what the rate will be. John Hodulik – UBS: Okay, but in terms of the percentage of smartphones in the base that are on EDGE is it sort of mid single-digits at this point?

It’s less than 2%. John Hodulik – UBS: Less than 2%, got it, okay. All right, thanks, Fran.

Thanks.

David, next question.

Your next question comes from Amir Rozwadowski of Barclays. Please go ahead with your question. Amir Rozwadowski – Barclays Capital: Thank you very much. Fran, two areas I would like to touch on and this is sort of dovetailing on the prior question. You mentioned that EDGE penetration will increase, potentially doubling next quarter. I was wondering if you could give us how much of your earnings growth is attributed to sort of your expectations of rising penetration of EDGE? And then secondly, now that you've fully integrated the contribution of the Wireless business from Vodafone, how should we think about the quarterly progression of earnings now that there is a larger portion of your revenue is coming from one – what may argue – one could argue is a less fluctuating wireless business, which may now include less contribution to subsidy costs if EDGE penetration rises? Thanks a lot.

Sure, Amir. Thanks, so on the EDGE and the contribution, look, as I just said to the previous question it’s going to be very, very hard for me to start to separate this given the indirect channel. Look, I think the guidance we have given, I stand behind the guidance that we’ve given, we’ll do our best to try to give some clarity in this going forward, but as I said it’s going to be a cloudy environment and it’s hard for me to sit here today to say, oh, EDGE is going to contribute X basis points of my profitability. I just don’t know, because I don’t know what the take rate will be. And I want to make sure we talk about take rate not penetration. So, it’s going to be the take rate of new additions, not the penetration of the base. As far as quarterly earnings, this is a great question, because, historically, you would see more of an uptick in the second and third quarters. And I think now that we have a 100% of Wireless, you are going to see a more consistent earnings per share for us going forward other than the fourth quarter obviously which is more seasonal. So that has its own issues. But, I think you are going to see a more consistent first, second and third quarter and then the fourth quarter will have its own decline, because of the seasonality with that. So that’s a good question and thanks for asking. Amir Rozwadowski – Barclays Capital: Thanks a lot for your incremental color, Fran.

David, let’s take another question please.

And your next question comes from Kevin Smithen of Macquarie. Please go ahead with your question. Kevin Smithen – Macquarie: Thanks, can you talk a little about the recent FCC regulatory comments regarding net neutrality and the broadcast auction rules; what your positions are on this and how you think this evolves over the next several months?

Yes, so, I know the FCC was issuing an order today on net neutrality. I have not had a chance to look at the order. We will be excited to read that order and then we can give our comments on that. So, unfortunately, being on the call, I have not seen it and been updated on that. And as far as the auctions go, look, I think that, we are obviously preparing for those auctions. As I talked about in the beginning here with our gross debt, we are preparing our balance sheet and our financial wherewithal to participate in these auction is coming up. And, look, as we continue to look at these rules, and work through these rules, we will continue to – behind the scenes if you will, work with the FCC to get the rules that we need. But, it’s an important step forward for the pool of spectrum available to meet our customer needs and we will certainly take advantage of what the FCC is working on as far as the auctions go. Kevin Smithen – Macquarie: And when can we expect to hear more details about your video strategy? I think you said last quarter it would be soon. So, is it still soon or is it very soon?

Well, this is – Kevin, this is on the over-the-top type strategy or? Kevin Smithen – Macquarie: Yes and just EdgeCast and VDMS and all of the aggregation of the intellectual property that you bought in the last 12, 18 months.

Yes, so, video – Verizon video, digital media services is ramping up. We are still in what we would call a dataset with a lots of content providers and testing the system and I believe as I said before that will – that revenue will start to ramp in 2014. So that’s the first step in just putting content through and digitalizing that content potentially inserting ads into that content. Obviously, we added the uplink and the EdgeCast assets to that and really that was in preparation to prepare for the over-the-top if you will. But I think it’s still way too early to tell on the on queue acquisition obviously the first priority for us it IPTV. But as you overlay that to the other asset sets, what I would say is, we are in a great position to take advantage of the marketplace when and if content starts to sort itself out from an over-the-top perspective. So, that’s probably all we would say at this point in time on that one Kevin.

Okay, David, we have time for one more question.

Your last question comes from Joseph Mastrogiovanni of Credit Suisse. Please go ahead with your question. Joseph Mastrogiovanni – Credit Suisse: Hi guys. Thanks for taking my question. Fran, if I could just follow-on to the last question, how should we think about – how you are thinking about splitting your budget between the AWS and the broadcast auctions?

Well, I think it’s too early to tell. I guess, what we are focused on, or at least, what I am focused on right now is the AWS auction which we know will happen at the end of this year with attainment being sometime in the first quarter. So that’s top priority and then we’ll deal with the broadcast licenses after that within 2015. So right now, the priority is AWS. Joseph Mastrogiovanni – Credit Suisse: Thanks.

Thank you.

Okay, that ends our questions. So I’d like to turn it over to Fran for some closing remarks.

So, thanks, Mike. So, look everyone, thank you for joining us this morning. And I think I would just recap that said, the first quarter for us was a great start to the year. We consistently invest and focus on the profitable growth to drive strong financial performance and revenue earnings and cash flow, we are focused on customer satisfaction. Our proven ability to scale this business and drive operational efficiencies in order for us to deliver more value to our customers and compete effectively in all areas of our business. We continue to focus on our strategy to deliver the highest quality overall customer experience. We listen to our customers, monitor the competitive environment and respond where necessary in a rational manner. We are very confident in our ability to execute and improve on our business fundamentals driving consistent customer value while delivering growth in customers, revenues, earnings, and cash flow. We are very excited about the future of this industry. We are excited about our investment, the innovation curve that we are delivering. The customer satisfaction that we have and the delivery of value to our shareholders and to our employees, our more valuable assets. So thank you for joining our call this morning 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.