4 Dear Shareholder, One quality that defines a great company is how it responds to change. Most companies embrace change with a certain degree of reluctance. That’s never been the Verizon way. Throughout our history, we have been drivers of change while also remaining true to our corporate mission, strategic vision and core values. In early 2017, we outlined our plan for maintaining this balance. We would devote the year to expanding two of our strongest traditional assets our loyal, high-quality customer base and our preeminent network while also seizing opportunities in dynamic sectors of our industry. We successfully introduced Unlimited wireless plans, added capabilities to our best-in-class networks, combined our existing Media business and the operating business of Yahoo! Inc. (Yahoo) to become an insurgent in digital media, and increased our presence in the telematics and Internet of Things (IoT) markets. This positions our company not only for short-term profitability, but also for growth over what is certain to be a long period of expansion, change, disruption and opportunity across our industry. We achieved strong financial and operational results in 2017. Bigger picture: We anticipated and drove industry trends, and we used our unique collection of network and media assets to take full advantage of the rapid evolution of our industry. These initiatives are paying off. In our wireless business, we ended 2017 with 116.3 million retail wireless connections, a 1.8 percent increase from the previous year. We added 1.8 million postpaid smartphones, with an industry-leading postpaid phone churn of less than 0.8 percent for the year, and 11 consecutive quarters of churn below 0.9 percent. As a statement of our uncompromising commitment to our customers and to showcase the strength of our network, we rolled out our Unlimited offering in the first quarter. Our aim was to deepen our already-tremendous customer loyalty and to attract new customers. That’s exactly what happened. Our network quality was a strong selling point, and our Unlimited plans contributed to customer growth and increased overall demand for high- speed data services. Doubling down on network superiority The success of Unlimited isn’t just about the market reputation of our network it’s also about real-world reliability. We knew these offerings would generate substantially more traffic for us to handle. When that traffic came, our network didn’t flinch. In fact, we extended our lead in network quality as a result of the investments we’ve made in anticipation of ever-growing demand. When marketing meets reality, reality wins. We have our customers’ backs no matter how many videos they stream or group chats they join, and this network quality advantage has been recognized by the most respected third-party evaluators. In 2017, Verizon won more awards than any other provider in the J.D. Power Wireless Network Quality Study for the 18th time in a row. RootMetrics ranked Verizon as the best network in the U.S. for the ninth year running. The superiority of our network is hardly a secret. There’s also a deeper layer to this story that does not get as much attention as it should. Let me share my perspective on why Verizon’s network quality will be an even bigger asset to our company and our customers in the future. I just referred to our anticipation of ever-growing demand. That isn’t an extrapolation from the growth that we’ve seen in years past. It’s a prediction that we are on the cusp of a wholly new era of tech-driven innovation a Fourth Industrial Revolution based on connective technologies such as IoT, next-generation robotics, artificial intelligence, virtual reality, augmented reality, 3D printing, nanotechnology, wearable technology and autonomous vehicles. These innovations—enabled by 5G networks—are at widely varying stages of maturity and ubiquity. What they have in Verizon’s core purpose: To give people the ability to do more in this world.
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