Verizon Wireless 2006 Annual Report Download - page 21

Supporting these key focus areas are continuing initiatives to
enhance the value of our products and services through well-man-
aged deployment of proven advanced technology and through
competitive products and services packaging. At Wireline, as of
December 31, 2006, we met our goal of passing six million premises
with our high-capacity fiber network (FiOS), doubling the number of
premises passed compared to year-end 2005. We added 517,000
new FiOS data connections in 2006. In 2005, Verizon began offering
video on the FiOS network in three markets. By the end of 2006,
Verizon had obtained over 600 video franchises covering 7.3 million
households with service available for sale to 2.4 million premises.
We had 207,000 FiOS TV customers by the end of 2006. We are also
developing and marketing innovative product bundles to include
local wireline, long distance, wireless and broadband services for
consumer and general business retail customers. These efforts will
also help counter the effects of competition and technology substi-
tution that have resulted in access line losses, and will enable us to
grow revenues by becoming a leading video provider.
Also at Wireline, we will continue to focus investments in strategic
areas by rolling-out next generation global IP networks to meet the
ongoing global enterprise market shift to IP-based products and
services. Deployment of new strategic service offerings, including
expansion of our voice over IP (VoIP) and international Ethernet
capabilities, introduction of cutting edge video and web-based con-
ferencing capabilities and enhancements to our virtual private
network portfolio, will allow us to continue to gain share in the enter-
prise market. Additionally, we will continue to integrate the business
of the former MCI to drive continued growth in synergy, supporting a
focus on operational efficiency and continued creation of share-
owner value.
At Verizon Wireless, we will continue to execute on the fundamentals
of our network superiority and value proposition to deliver growth for
the business and provide new and innovative products and services
for our customers such as Broadband Access, our EV-DO service.
To accomplish our goal of being the acknowledged market leader in
providing wireless voice and data communication services in the
U.S., we will continue to implement the following key elements of
our business strategy: provide the highest network reliability through
our code division multiple access (CDMA) 1XRTT technology and
EV-DO (Revision A) infrastructure, which significantly increases data
transmission rates; profitably acquire, satisfy and retain our cus-
tomers; and increase the value of our service offerings to customers
while achieving revenue and net income growth. We also continue to
expand our wireless data, messaging and multi-media offerings for
both consumer and business customers and take advantage of the
growing demand for wireless data services and focus on operating
margins and capital efficiency by driving down costs and leveraging
our scale.
In January 2007, Verizon announced a definitive agreement with
FairPoint Communications, Inc. (FairPoint) that will result in Verizon
establishing a separate entity for its local exchange access lines and
related business assets in Maine, New Hampshire and Vermont,
spinning off that new entity to Verizon’s shareowners, and immedi-
ately merging it with and into FairPoint. The total value to be
received by Verizon and its shareowners in exchange for these oper-
ations will be approximately $2,715 million.
CONSOLIDATED RESULTS OF OPERATIONS
In this section, we discuss our overall results of operations and high-
light special and non-recurring items. As a result of the spin-off of
our U.S. print and Internet yellow pages directories business, which
was included in the Information Services segment, as well as
reaching definitive agreements to sell our interests in
Telecomunicaciones de Puerto Rico, Inc. (TELPRI) and Verizon
Dominicana, each of which was included in the International seg-
ment, the operations of our former U.S. print and Internet yellow
pages directories business, Verizon Dominicana and TELPRI are
reported as discontinued operations and assets held for sale.
Accordingly, we now have two reportable segments – Wireline and
Domestic Wireless. Prior period amounts and discussions are
revised to reflect this change. We include in our results of operations
the results of the former MCI business subsequent to the close of
the merger on January 6, 2006.
This section on consolidated results of operations carries forward
the segment results, which exclude the special and non-recurring
items, and highlights and describes those items separately to ensure
consistency of presentation in this section and the “Segment
Results of Operations” section. In the following section, we review
the performance of our two reportable segments. We exclude the
effects of the special and non-recurring items from the segments’
results of operations since management does not consider them in
assessing segment performance, due primarily to their non-recurring
and/or non-operational nature. We believe that this presentation will
assist readers in better understanding our results of operations and
trends from period to period.
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Management’s Discussion and Analysis
of Results of Operations and Financial Condition continued