Management’s Discussion and Analysis of Financial Condition and Results of Operations continued Wireless Operating Revenues and Selected Operating Statistics (dollars in millions, except ARPA and I-ARPA) (Decrease)/Increase Years Ended December 31, 2017 2016 2015 2017 vs. 2016 2016 vs. 2015 Service $ 63,121 $ 66,580 $ 70,396 $ (3,459) (5.2)% $ (3,816) (5.4)% Equipment 18,889 17,515 16,924 1,374 7.8 591 3.5 Other 5,501 5,091 4,360 410 8.1 731 16.8 Total Operating Revenues $ 87,511 $ 89,186 $ 91,680 $ (1,675) (1.9) $(2,494) (2.7) Connections (‘000):(1) Retail connections 116,257 114,243 112,108 2,014 1.8 2,135 1.9 Retail postpaid connections 110,854 108,796 106,528 2,058 1.9 2,268 2.1 Net additions in period (‘000):(2) Retail connections 2,041 2,155 3,956 (114) (5.3) (1,801) (45.5) Retail postpaid connections 2,084 2,288 4,507 (204) (8.9) (2,219) (49.2) Churn Rate: Retail connections 1.25% 1.26% 1.24% Retail postpaid connections 1.01% 1.01% 0.96% Account Statistics: Retail postpaid ARPA $ 135.99 $ 144.32 $ 152.63 $ (8.33) (5.8) $ (8.31) (5.4) Retail postpaid I-ARPA $ 166.28 $ 167.70 $ 163.63 $ (1.42) (0.8) $ 4.07 2.5 Retail postpaid accounts (‘000)(1) 35,404 35,410 35,736 (6) — (326) (0.9) Retail postpaid connections per account(1) 3.13 3.07 2.98 0.06 2.0 0.09 3.0 (1) As of end of period (2) Excluding acquisitions and adjustments 2017 Compared to 2016 Wireless’ total operating revenues decreased by $1.7 billion, or 1.9%, during 2017 compared to 2016, primarily as a result of a decline in service revenues, partially offset by an increase in equipment revenues. Accounts and Connections Retail postpaid accounts primarily represent retail customers with Verizon Wireless that are directly served and managed by Verizon Wireless and use its branded services. Accounts include unlimited plans, shared data plans and corporate accounts, as well as legacy single connection plans and family plans. A single account may include monthly wireless services for a variety of connected devices. Retail connections represent our retail customer device postpaid and prepaid connections. Churn is the rate at which service to connections is terminated. Retail connections under an account may include those from smartphones and basic phones (collectively, phones) as well as tablets and other devices connected to the Internet, including retail IoT devices. The U.S. wireless market has achieved a high penetration of smartphones, which reduces the opportunity for new phone connection growth for the industry. Retail postpaid connection net additions decreased during 2017 compared to 2016, primarily due to an increase in disconnects of Internet devices, partially offset by a decline in phone disconnects. 18 verizon.com/2017AnnualReport