10. Segment Information

 

Reportable Segments

We have two reportable segments, Wireless and Wireline, which we operate and manage as strategic business units and organize by products and services, and customer groups, respectively. We measure and evaluate our reportable segments based on segment operating income, consistent with the chief operating decision maker’s assessment of segment performance.

Our segments and their principal activities consist of the following:

 

Segment		Description
Wireless		Wireless’ communications products and services include wireless voice and data services and equipment sales, which are provided to consumer, business and government customers across the United States.
Wireline		Wireline’s voice, data and video communications products and enhanced services include broadband video and data, corporate networking solutions, data center and cloud services, security and managed network services and local and long distance voice services. We provide these products and services to consumers in the United States, as well as to carriers, businesses and government customers both in the United States and around the world.

Corporate and other includes the results of our media business including Oath, our telematics and other businesses, investments in unconsolidated businesses, unallocated corporate expenses, pension and other employee benefit related costs and lease financing. Corporate and other also includes the historical results of divested businesses and other adjustments and gains and losses that are not allocated in assessing segment performance due to their nature. Although such transactions are excluded from the business segment results, they are included in reported consolidated earnings. Gains and losses that are not individually significant are included in all segment results as these items are included in the chief operating decision maker’s assessment of segment performance. We completed our acquisition of Yahoo’s operating business on June 13, 2017. The results of operations of Yahoo’s operating business from the date of closing until June 30, 2017 were insignificant to our condensed consolidated statements of income.

On April 1, 2016, we completed the sale of our local exchange business and related landline activities in California, Florida and Texas, including Fios Internet and video customers, switched and special access lines and high-speed Internet service and long distance voice accounts in these three states to Frontier Communications Corporation (Frontier). The transaction, which included the acquisition by Frontier of the equity interests of Verizon’s incumbent local exchange carriers (ILECs) in California, Florida and Texas, did not involve any assets or liabilities of Verizon Wireless. Additionally, on May 1, 2017, we completed the Data Center Sale (see Note 2 for additional information). The results of operations for these divestitures is included within Corporate and other for all periods presented to reflect comparable segment operating results consistent with the information regularly reviewed by our chief operating decision maker.

In addition, Corporate and other includes the results of our telematics businesses for all periods presented, which were reclassified from our Wireline segment effective April 1, 2016. The impact of this reclassification was insignificant to our condensed consolidated financial statements or our segment results of operations.

During the first quarter of 2017, Verizon reorganized the customer groups within its Wireline segment. Previously, the customer groups in the Wireline segment consisted of Mass Markets (which included Consumer Retail and Small Business subgroups), Global Enterprise and Global Wholesale. Pursuant to the reorganization, there are now four customer groups within the Wireline segment: Consumer Markets, which includes the customers previously included in Consumer Retail; Enterprise Solutions, which includes the large business customers, including multinational corporations, and federal government customers previously included in Global Enterprise; Partner Solutions, which includes the customers previously included in Global Wholesale; and Business Markets, a new customer group, which includes U.S.-based small business customers previously included in Mass Markets and U.S.-based medium business customers, state and local government customers and educational institutions previously included in Global Enterprise.

The reconciliation of segment operating revenues and expenses to consolidated operating revenues and expenses below includes the effects of special items that management does not consider in assessing segment performance, primarily because of their nature.

We have adjusted prior period consolidated and segment information, where applicable, to conform to the current period presentation.

 

The following table provides operating financial information for our two reportable segments:

 

				Three Months Ended June 30,								Six Months Ended June 30,
(dollars in millions)				2017				2016				2017				2016
External Operating Revenues
Wireless
Service				$	15,605			$	16,692			$	31,335			$	33,461
Equipment					4,298				3,704				8,062				7,658
Other					1,306				1,216				2,588				2,412
Total Wireless					21,209				21,612				41,985				43,531
Wireline
Consumer Markets					3,184				3,165				6,385				6,345
Enterprise Solutions					2,387				2,378				4,779				4,802
Partner Solutions					1,008				1,002				1,999				2,031
Business Markets					921				845				1,803				1,707
Other					74				84				135				166
Total Wireline					7,574				7,474				15,101				15,051
Total reportable segments				$	28,783			$	29,086			$	57,086			$	58,582
Intersegment Revenues
Wireless				$	73			$	92			$	175			$	177
Wireline					228				239				469				476
Total reportable segments				$	301			$	331			$	644			$	653
Total Operating Revenues
Wireless				$	21,282			$	21,704			$	42,160			$	43,708
Wireline					7,802				7,713				15,570				15,527
Total reportable segments				$	29,084			$	29,417			$	57,730			$	59,235
Operating Income (Loss)
Wireless				$	7,410			$	8,017			$	14,486			$	15,897
Wireline					68				(524	)			287				(653	)
Total reportable segments				$	7,478			$	7,493			$	14,773			$	15,244

 

(dollars in millions)		At June 30, 2017				At December 31, 2016
Assets
Wireless		$	222,275			$	211,345
Wireline			67,778				66,679
Total reportable segments			290,053				278,024
Corporate and other			225,651				213,787
Eliminations			(262,726	)			(247,631	)
Total consolidated - reported		$	252,978			$	244,180

A reconciliation of the reportable segment operating revenues to consolidated operating revenues is as follows:

 

		Three Months Ended June 30,								Six Months Ended June 30,
(dollars in millions)		2017				2016				2017				2016
Total reportable segment operating revenues		$	29,084			$	29,417			$	57,730			$	59,235
Corporate and other			1,778				1,366				3,238				2,675
Eliminations			(351	)			(361	)			(751	)			(706	)
Operating results from divested businesses			37				110				145				1,499
Total consolidated operating revenues		$	30,548			$	30,532			$	60,362			$	62,703

Fios revenues are included within our Wireline segment and amounted to approximately $2.9 billion and $5.8 billion, respectively for the three and six months ended June 30, 2017. Fios revenues amounted to approximately $2.8 billion and $5.5 billion, respectively, for the three and six months ended June 30, 2016.

A reconciliation of the total of the reportable segments’ operating income to consolidated income before provision for income taxes is as follows:

		Three Months Ended June 30,								Six Months Ended June 30,
(dollars in millions)		2017				2016				2017				2016
Total reportable segment operating income		$	7,478			$	7,493			$	14,773			$	15,244
Corporate and other			(285	)			(457	)			(599	)			(966	)
Severance, pension and benefit charges (Note 8)			(607	)			(3,550	)			(607	)			(3,715	)
Net gain on sale of divested businesses (Note 2)			1,774				1,007				1,774				1,007
Acquisition and integration related charges (Note 2)			(152	)			-				(152	)			-
Gain on spectrum license transaction (Note 2)			-				-				126				142
Operating results from divested businesses			24				61				98				784
Total consolidated operating income			8,232				4,554				15,413				12,496
Equity in losses of unconsolidated businesses			(28	)			(20	)			(49	)			(40	)
Other expense, net			(19	)			(1,826	)			(865	)			(1,794	)
Interest expense			(1,218	)			(1,013	)			(2,350	)			(2,201	)
Income Before Provision For Income Taxes		$	6,967			$	1,695			$	12,149			$	8,461

No single customer accounted for more than 10% of our total operating revenues during the three and six months ended June 30, 2017 and 2016.