v3.25.4
Leasing Arrangements
 12 Months Ended
Dec. 31, 2025
Leases [Abstract]  
Leasing Arrangements
Note 6. Leasing Arrangements
We enter into various lease arrangements for network equipment including towers, distributed antenna systems, small cells, real estate and connectivity mediums including dark fiber, equipment, and other various types of assets for use in our operations. Our leases have remaining lease terms ranging from 1 year to 30 years, some of which include options that we can elect to extend the leases term for up to 25 years, and some of which include options to terminate the leases. For the majority of leases entered into during the current period, we have concluded it is not reasonably certain that we would exercise the options to extend the lease or not terminate the lease. Therefore, as of the lease commencement date, our lease terms generally do not include these options. We include options to extend the lease when it is reasonably certain that we will exercise that option.

During December 2024, we completed a transaction with Vertical Bridge REIT, LLC (Vertical Bridge) pursuant to which Vertical Bridge obtained the exclusive rights to lease, operate and manage over 6,000 wireless towers from Verizon in exchange for an upfront payment of $2.8 billion. Under the terms of the agreement, Vertical Bridge has exclusive rights to lease, operate and manage the towers over an average term of approximately 30 years, with the option to acquire the towers at the end of the lease terms. We have leased back a portion of the capacity on the towers from Vertical Bridge for an initial term of 10 years, with eight optional renewal terms of five years each, subject to certain early termination rights. We continue to include the towers in
Property, plant and equipment, net in our consolidated balance sheets and depreciate them accordingly. The upfront payment, which is primarily included within Other liabilities on our consolidated balance sheet, is accounted for as prepaid rent and as a financing obligation. We recorded prepaid rent of $2.0 billion related to the portion of the towers for which the right-of-use has passed to Vertical Bridge, which is reflected in Cash flows from operating activities in our consolidated statements of cash flows. In addition, we recorded a financing obligation of $830 million related to the portion of the towers that we continue to occupy and use for network operations, which is reflected in Cash flows from financing activities in our consolidated statements of cash flows.

In March 2025, we renewed our lease with American Tower Corporation (American Tower) originally entered into in March 2015. Pursuant to the original transaction, American Tower acquired the exclusive rights to lease and operate approximately 11,300 of our wireless towers. The renewal extends our subleased capacity on the towers from American Tower for an additional 5 years, with options to renew. We continue to include the towers in Property, plant and equipment, net in our consolidated balance sheets and depreciate them accordingly.

In addition to the rights to lease and operate the towers, Vertical Bridge and American Tower assumed the interest in the underlying ground leases related to these towers. While Vertical Bridge and American Tower can renegotiate the terms of and are responsible for paying the ground leases, we are still the primary obligor for these leases and accordingly, the present value of these ground leases are included in our operating lease right-of-use assets and operating lease liabilities. We do not expect to be required to make ground lease payments unless Vertical Bridge or American Tower defaults, which we determined to be remote.

The components of net lease cost were as follows:
(dollars in millions)
Years Ended December 31,Classification202520242023
Operating lease cost(1)
Cost of services
Selling, general and administrative expense		$5,731 $5,607 $5,432 
Finance lease cost:
Amortization of right-of-use assetsDepreciation and amortization expense584 329 259 
Interest on lease liabilitiesInterest expense116 98 69 
Short-term lease cost(1)
Cost of services
Selling, general and administrative expense		15 21 29 
Variable lease cost(1)
Cost of services
Selling, general and administrative expense		338 310 313 
Sublease incomeService revenues and other(191)(216)(210)
Total net lease cost$6,593 $6,149 $5,892 
(1) All operating lease costs, including short-term and variable lease costs, are split between Cost of services and Selling, general and administrative expense in the consolidated statements of income based on the use of the facility or equipment that the rent is being paid on. See Note 1 for additional information. Variable lease costs represent payments that are dependent on a rate or index, or on usage of the asset.

Supplemental disclosure for the statements of cash flows related to operating and finance leases were as follows:
(dollars in millions)
Years Ended December 31,202520242023
Cash Flows from Operating Activities
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases$(5,280)$(5,067)$(4,929)
Operating cash flows for finance leases(116)(98)(69)
Cash Flows from Financing Activities
Financing cash flows for finance leases(944)(794)(612)
Supplemental lease cash flow disclosures
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities3,642 4,385 2,634 
Right-of-use assets obtained in exchange for new finance lease liabilities1,104 1,051 968 
Supplemental disclosures for the balance sheet related to finance leases were as follows:
(dollars in millions)
At December 31,20252024
Assets
Property, plant and equipment, net$2,048 $1,692 
Liabilities
Debt maturing within one year$943 $894 
Long-term debt1,568 1,455 
Total Finance lease liabilities$2,511 $2,349 

The weighted-average remaining lease term and the weighted-average discount rate of our leases were as follows:
At December 31,20252024
Weighted-average remaining lease term (years)
Operating leases88
Finance leases43
Weighted-average discount rate
Operating leases4.3%4.1%
Finance leases5.0%4.8%

The following table presents the maturity analysis of operating and finance lease liabilities as of December 31, 2025:
(dollars in millions)
YearsOperating LeasesFinance Leases
2026$5,272 $994 
20274,983 736 
20283,580 510 
20293,087 259 
20302,512 108 
Thereafter8,735 139 
Total lease payments28,169 2,746 
Less interest4,676 235 
Present value of lease liabilities23,493 2,511 
Less current obligation4,542 943 
Long-term obligation at December 31, 2025
$18,951 $1,568 

As of December 31, 2025, we have contractually obligated lease payments amounting to $2.0 billion primarily for office facility operating leases and small cell colocation and fiber operating leases that have not yet commenced. We have legally obligated lease payments for various other operating leases that have not yet commenced for which the total obligation was not significant. We have certain rights and obligations for these leases, but have not recognized an operating lease right-of-use asset or an operating lease liability since they have not yet commenced.
Leasing Arrangements
Note 6. Leasing Arrangements
We enter into various lease arrangements for network equipment including towers, distributed antenna systems, small cells, real estate and connectivity mediums including dark fiber, equipment, and other various types of assets for use in our operations. Our leases have remaining lease terms ranging from 1 year to 30 years, some of which include options that we can elect to extend the leases term for up to 25 years, and some of which include options to terminate the leases. For the majority of leases entered into during the current period, we have concluded it is not reasonably certain that we would exercise the options to extend the lease or not terminate the lease. Therefore, as of the lease commencement date, our lease terms generally do not include these options. We include options to extend the lease when it is reasonably certain that we will exercise that option.

During December 2024, we completed a transaction with Vertical Bridge REIT, LLC (Vertical Bridge) pursuant to which Vertical Bridge obtained the exclusive rights to lease, operate and manage over 6,000 wireless towers from Verizon in exchange for an upfront payment of $2.8 billion. Under the terms of the agreement, Vertical Bridge has exclusive rights to lease, operate and manage the towers over an average term of approximately 30 years, with the option to acquire the towers at the end of the lease terms. We have leased back a portion of the capacity on the towers from Vertical Bridge for an initial term of 10 years, with eight optional renewal terms of five years each, subject to certain early termination rights. We continue to include the towers in
Property, plant and equipment, net in our consolidated balance sheets and depreciate them accordingly. The upfront payment, which is primarily included within Other liabilities on our consolidated balance sheet, is accounted for as prepaid rent and as a financing obligation. We recorded prepaid rent of $2.0 billion related to the portion of the towers for which the right-of-use has passed to Vertical Bridge, which is reflected in Cash flows from operating activities in our consolidated statements of cash flows. In addition, we recorded a financing obligation of $830 million related to the portion of the towers that we continue to occupy and use for network operations, which is reflected in Cash flows from financing activities in our consolidated statements of cash flows.

In March 2025, we renewed our lease with American Tower Corporation (American Tower) originally entered into in March 2015. Pursuant to the original transaction, American Tower acquired the exclusive rights to lease and operate approximately 11,300 of our wireless towers. The renewal extends our subleased capacity on the towers from American Tower for an additional 5 years, with options to renew. We continue to include the towers in Property, plant and equipment, net in our consolidated balance sheets and depreciate them accordingly.

In addition to the rights to lease and operate the towers, Vertical Bridge and American Tower assumed the interest in the underlying ground leases related to these towers. While Vertical Bridge and American Tower can renegotiate the terms of and are responsible for paying the ground leases, we are still the primary obligor for these leases and accordingly, the present value of these ground leases are included in our operating lease right-of-use assets and operating lease liabilities. We do not expect to be required to make ground lease payments unless Vertical Bridge or American Tower defaults, which we determined to be remote.

The components of net lease cost were as follows:
(dollars in millions)
Years Ended December 31,Classification202520242023
Operating lease cost(1)
Cost of services
Selling, general and administrative expense		$5,731 $5,607 $5,432 
Finance lease cost:
Amortization of right-of-use assetsDepreciation and amortization expense584 329 259 
Interest on lease liabilitiesInterest expense116 98 69 
Short-term lease cost(1)
Cost of services
Selling, general and administrative expense		15 21 29 
Variable lease cost(1)
Cost of services
Selling, general and administrative expense		338 310 313 
Sublease incomeService revenues and other(191)(216)(210)
Total net lease cost$6,593 $6,149 $5,892 
(1) All operating lease costs, including short-term and variable lease costs, are split between Cost of services and Selling, general and administrative expense in the consolidated statements of income based on the use of the facility or equipment that the rent is being paid on. See Note 1 for additional information. Variable lease costs represent payments that are dependent on a rate or index, or on usage of the asset.

Supplemental disclosure for the statements of cash flows related to operating and finance leases were as follows:
(dollars in millions)
Years Ended December 31,202520242023
Cash Flows from Operating Activities
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases$(5,280)$(5,067)$(4,929)
Operating cash flows for finance leases(116)(98)(69)
Cash Flows from Financing Activities
Financing cash flows for finance leases(944)(794)(612)
Supplemental lease cash flow disclosures
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities3,642 4,385 2,634 
Right-of-use assets obtained in exchange for new finance lease liabilities1,104 1,051 968 
Supplemental disclosures for the balance sheet related to finance leases were as follows:
(dollars in millions)
At December 31,20252024
Assets
Property, plant and equipment, net$2,048 $1,692 
Liabilities
Debt maturing within one year$943 $894 
Long-term debt1,568 1,455 
Total Finance lease liabilities$2,511 $2,349 

The weighted-average remaining lease term and the weighted-average discount rate of our leases were as follows:
At December 31,20252024
Weighted-average remaining lease term (years)
Operating leases88
Finance leases43
Weighted-average discount rate
Operating leases4.3%4.1%
Finance leases5.0%4.8%

The following table presents the maturity analysis of operating and finance lease liabilities as of December 31, 2025:
(dollars in millions)
YearsOperating LeasesFinance Leases
2026$5,272 $994 
20274,983 736 
20283,580 510 
20293,087 259 
20302,512 108 
Thereafter8,735 139 
Total lease payments28,169 2,746 
Less interest4,676 235 
Present value of lease liabilities23,493 2,511 
Less current obligation4,542 943 
Long-term obligation at December 31, 2025
$18,951 $1,568 

As of December 31, 2025, we have contractually obligated lease payments amounting to $2.0 billion primarily for office facility operating leases and small cell colocation and fiber operating leases that have not yet commenced. We have legally obligated lease payments for various other operating leases that have not yet commenced for which the total obligation was not significant. We have certain rights and obligations for these leases, but have not recognized an operating lease right-of-use asset or an operating lease liability since they have not yet commenced.