Verizon Wireless 2012 Annual Report Download - page 31

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29
segment results Of OperatiOns
We have two reportable segments, Verizon Wireless and Wireline, which we operate and manage as strategic business units and organize by products
and services. We measure and evaluate our reportable segments based on segment operating income. The use of segment operating income is con-
sistentwiththechiefoperatingdecisionmaker’sassessmentofsegmentperformance.
Segment earnings before interest, taxes, depreciation and amortization (Segment EBITDA), which is presented below, is a non-GAAP measure and
doesnotpurporttobeanalternativetooperatingincomeasameasureofoperatingperformance.Managementbelievesthatthismeasureisuseful
to investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as it excludes the depre-
ciation and amortization expenses related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating
operating performance in relation to our competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to seg-
ment operating income.
Verizon Wireless Segment EBITDA service margin, also presented below, is calculated by dividing Verizon Wireless Segment EBITDA by Verizon Wireless
service revenues. Verizon Wireless Segment EBITDA service margin utilizes service revenues rather than total revenues. Service revenues primarily
exclude equipment revenues in order to reflect the impact of providing service to the wireless customer base on an ongoing basis. Verizon Wireline
EBITDA margin is calculated by dividing Wireline EBITDA by total Wireline revenues. You can find additional information about our segments in Note
13 to the consolidated financial statements.
Verizon Wireless
Our Verizon Wireless segment is primarily comprised of Cellco Partnership doing business as Verizon Wireless. Cellco Partnership is a joint venture
formedinApril2000bythecombinationoftheU.S.wirelessoperationsandinterestsofVerizonandVodafone.Verizonownsacontrolling55%interest
in Verizon Wireless and Vodafone owns the remaining 45%. Verizon Wireless provides wireless communications services across one of the most exten-
sivewirelessnetworksintheUnitedStates.
Weprovidetheseservicesandequipmentsalestoconsumer,businessandgovernmentcustomersintheUnitedStatesonapostpaidandprepaid
basis. Postpaid connections represent individual lines of service for which a customer is billed in advance a monthly access charge in return for a
monthly network service allowance, and usage beyond the allowances is billed monthly in arrears. Our prepaid service enables individuals to obtain
wireless services without a long-term contract or credit verification by paying for all services in advance.
All financial results included in the tables below reflect the consolidated results of Verizon Wireless.
Operating Revenues and Selected Operating Statistics  (dollarsinmillions,exceptARPA)
Increase/(Decrease)
Years Ended December 31, 2012 2011 2010 2012 vs. 2011 2011 vs. 2010
Retailservice $ 61,440 $ 56,660 $ 53,308 $ 4,780 8.4 % $ 3,352 6.3 %
Other service 2,293 2,497 2,321 (204) (8.2) 176 7.6
Service revenue 63,733 59,157 55,629 4,576 7.7 3,528 6.3
Equipment and other 12,135 10,997 7,778 1,138 10.3 3,219 41.4
Total Operating Revenues $ 75,868 $ 70,154 $ 63,407 $ 5,714 8.1 $ 6,747 10.6
Connections ('000):(1)
Retailconnections 98,230 92,167 87,535 6,063 6.6 4,632 5.3
Retailpostpaidconnections 92,530 87,382 83,125 5,148 5.9 4,257 5.1
Net additions in period ('000):(2)
Retailconnections 5,917 4,624 1,977 1,293 28.0 2,647 nm
Retailpostpaidconnections 5,024 4,252 2,529 772 18.2 1,723 68.1
ChurnRate:
Retailconnections 1.19% 1.26% 1.38%
Retailpostpaidconnections 0.91% 0.95% 1.02%
Account Statistics:
RetailpostpaidARPA $ 144.04 $ 134.51 $ 125.75 $ 9.53 7.1 $ 8.76 7.0
Retailpostpaidaccounts('000):(1) 35,057 34,561 34,268 496 1.4 293 0.9
Retailpostpaidconnectionsperaccount(1) 2.64 2.53 2.43 0.11 4.3 0.10 4.1
(1) As of end of period
(2) Excluding acquisitions and adjustments
nm - not meaningful
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued