©2005 Tony Gauvin, UMFK Verizon Tony Gauvin All images from www22.verizon.com

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Overview Existing Condition Industry overview New Vision and Mission External opportunities and threats CPM EFE Internal strengths and weaknesses IFE Analysis SWOT Matrix SPACE BCG IE matrix Grand Strategy Matrix QSPM Possible strategies Recommendations Strategic implementation and desired results Annual objectives (goal) and polices Evaluation Procedure

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Verizon Overview Verizon Communications Inc. is a provider of communications services with four operating segments: Domestic Telecom Domestic Telecom services principally represent Verizon's telephone operations that provide local telephone services in 29 states and the District of Columbia Domestic Wireless Domestic Wireless products and services include wireless voice and data services and equipment sales across the United States. Information Services The Information Services segment encompasses Verizon’s domestic and international publishing businesses, including print SuperPages and electronic SuperPages.com directories, as well as Website creation and other electronic commerce services. This segment has operations principally in North America and Latin America International The International segment has wireline and wireless communications operations and investments primarily in the Americas, as well as investments in Europe.

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK History Formed on June 30, 2000, with the merger of Bell Atlantic Corp. and GTE Corp. GTE 7.1 million wireless customers 35 million land lines in US, Canada and Caribbean Bell Atlantic 43 million mobile customers World’s largest directory information service Trades as VZ on NTSE

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Stock Price Performance

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Industry overveiw (2005) More than 40 percent of long-distance telephone use and more than a third of local telephone use has been supplanted by new technologies. By 2004 the number of long-distance calls made over wireless networks exceeded those made over wireline networks. Wireless minutes of use exceeded 1 trillion in More than 180 million Americans have wireless phones - approximately one in five of whom use their mobile phones as their main communications device. More than 70 percent of American households are connected to the Internet, and by 2010 an estimated 62 percent will use broadband access. 80 percent of American adults under age 50 use the Internet. Instant messages, which already outnumber s, are not only becoming the principal means of communication for young people, but have evolved beyond text to voice and video. Nationwide wireless networks and Internet-based communications have changed traditional distinctions between "local" and "long-distance" services.

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Compare to Industry

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK A Global Market

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Key Facts 32.5 Million customers In 49 of the top 50 US markets Revenue is flat for Income is flat for Spent 12 billion in 2002 to build out fiber plant (DSL)

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Goals and Objectives Verizon had no published Mission and Vision, The following is from 2004 Annual report Verizon is creating the future of communications by ushering in a new era in wireline and wireless broadband connectivity. We are transforming our networks, products and services to provide our customers with the best possible communications experience at home, work or on the go … now and in the future. Our strategic investments have created the nation’s most reliable wireless voice network, delivered a portfolio of innovative mobile products and produced over 43 million loyal customers. We are also transforming our wireline networks to deliver superior broadband services. Because of our commitment to innovation and investment, our customers are better informed, better entertained and better connected to the things that matter most to them. By creating the future for our customers, we are also creating the future for ourselves. We are transforming our revenue base around the growth markets of the future and positioning ourselves to compete for an increasing share of the new markets being created by broadband and wireless technologies.

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Proposed Vision At Verizon, our vision is to be the market leader in delivering innovative, integrated communications solutions to customers at home, at work and on the go.

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Proposed Mission At Verizon, our mission is to be the market leader in delivering innovative, integrated communications solutions to customers at home, at work and on the go. The more people connected to a network, the more valuable it is to users. That’s the idea that underlies our business. It’s also the philosophy behind our commitment to our communities. Our aim is to mobilize and empower the millions of individuals and organizations —employees, retirees, customers and nonprofits —that comprise the Verizon community, putting the tools for progress into the hands of people who can make a difference on the local level. We promote employee volunteerism through matching gift programs that recognize contributions of money and time. And we are helping build a strong and lasting infrastructure for progress by making sure people have the fundamental skills —like literacy and access to technology —to succeed in the digital era.”

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK External opportunities and threats

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK EFE EFE Matrix

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK CPM Competitive Profile Matrix VerizonAlltel SBC (Cingular) Critical Success Factors WeightRatingWeighted Score RatingWeighted Score RatingWeighted Score Market Share Price Financial Position Consumer Loyalty Brand Awareness Total

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Internal strengths and weaknesses

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK IFE IFE Matrix

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Key Ratios

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Key Ratios

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Key ratios

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Key Ratios

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK SWOT Matrix 1.Top wireless provider in the U.S. serving 49 of the top 50 markets 2.High-speed data network in all major markets 3.Largest provider of local, long distance, data, and broadband services in 2/3 of the top 100 markets in the U.S. 4.Leading print and on-line directory publisher with 2100 in U.S. and 13 other countries 5.Verizon invested 12 billion in 2002 in 400,000 miles of fiber-optic cable. 6.Marketing campaign – brand awareness 1.49 billion dollars in long term debt 2.Lack of international presence 3.Revenue only increased 4 percent since year end S-O StrategiesW-O Strategies million possible investors in Europe, UK, and Germany 2.Strengthening foreign currencies vs dollar- Euro advantages 3.Increased usage in wireless services 4.Small wireless providers are consolidating with larger providers due to increased competition 5.Increased desire for high-speed internet service 1.Expand wireless services into Europe, UK and/or Germany (S1, O1, O3) 2.Expand high speed internet service in Europe, UK and/or Germany (S2,O5) 3.Acquire small domestic wireless providers such as Powertel or Aerial (S1, O4) 4.Invest capital into fiber optic cable to compete with cable companies. (S5, O5) 1.Purchase international wireless providers such as MMO 2 (W2, O4) 2.Offer services to people in Europe to increase revenue due to the difference in foreign currency (W1, O2) S-T StrategiesW-T Strategies 1.New regulatory complaints (new phone # portability) 2.Rising costs of healthcare 3.Global unrest- economic monetary and financial 4.Consumer privacy rights being attacked 5.Weak Consumer spending 6.Decreasing demand for traditional voice lines and fixed lines 7.Increasing overlap of telecommunication territories 8.Increasing competition for providers of web search directories 9.Increasing providers of wireless services 10.Brand recognition 1.Enter into a joint venture with MCI to offer a package deal (S1, T12) 2.Proceed with legal battles to serve local markets to increase traditional voice and fixed lines.(S3, T7) 1.Expand globally in Europe (W2, T7) 2.Liquidate the Telecommunications Services such as fixed lines and traditional lines business to reduce long-term debt. (W1, T6)

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Space Matrix SPACE Matrix Y axis Financial strength +4+1 worst to + 6 bestY axis: 4 + (-2) = 2 Environmental stability -2-1 best to -6 worst X axis Industry strength 5 +6 best to +1 worstX axis: 5 + (-1) = 4 Competitive advantage -1-6 worst to –1 best (2, 4) ConservativeAggressive DefensiveCompetitive

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK BCG

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK IE Matrix

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK GSM

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Matrix Analysis and SWOT Summary Alternative StrategiesIESPACEGRANDCOUNT Forward Integration XXX3 Backward Integration XXX3 Horizontal Integration XXX3 Market Penetration XXX3 Market Development XXX3 Product Development XXX3 Concentric Diversification X1 Conglomerate Diversification XX2 Horizontal Diversification X1 Joint Venture 0 Retrenchment 0 Divestiture 0 Liquidation 0

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Possible Strategies Grow Fiber plant to increase domestic sales opportunities (again) Move into European markets Wireless High Speed Internet Acquire smaller wireless providers to grow US markets Joint venture with large provider for Wireless

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK QSPM

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK QSPM

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Decisions Primary Grow US wireless market by performing Joint Bundling wireless effort with MCI Alternatives Buy smaller wireless providers Move in Foreign Markets Increase Optical Fiber capacity

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Show me the Money! EPS/EBIT Analysis Amount Needed1,000M Interest 5% Tax Rate35% Share Price$25 Shares Outstanding2,765M

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Implementation Objectives Increase income by 40% in next 3 years Increase revenue by 25% in next three years Decrease cost by increasing efficiencies to match income goals Decrease long–term debt Use increased income to pay down debt Match sector avg’s within 3 years

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Goals & Policies Telecom division 5% reduction in expenses per annum Wireless 15% increase in sales per annum

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Evaluations Qtr & Yearly financial reports Balanced Scorecard Yearly strategic meeting of division management and corporate management

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK 2004 Financial Statistics Operating Revenues $71.3 billion Net Income$7.0 billion EPS (diluted basis)$2.51 Capital Expenditures$13.3 billion Total Debt$39.3 billion Cash Flow from Operating Activities $21.8 billion Weighted Average Shares Outstanding $2.77 billion Shareowners 2.7 million

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK 2004 Financial Statistics Operating Revenues $75.1 billion Net Income$7.4 billion EPS (diluted basis)$2.65 Capital Expenditures$13.3 billion Total Debt$39 billion Cash Flow from Operating Activities $22 billion Weighted Average Shares Outstanding $2.9 billion Shareowners 2.7 million

Wednesday, March 23, 2005© 2005 Tony Gauvin, UMFK Press Releases January 8, 2004 Verizon Wireless Announces Roll Out of National 3G Network June 27, 2004 Verizon Communications Reports 6% Second-Quarter Revenue Growth, Led by Wireless Revenue Growth of 25% Verizon Communications Reports 6% Second-Quarter Revenue Growth, Led by Wireless Revenue Growth of 25% October 21, 2004 Verizon Deploying Fiber Optics to Homes and Businesses in 6 More States in Northeast and Mid-Atlantic Verizon Deploying Fiber Optics to Homes and Businesses in 6 More States in Northeast and Mid-Atlantic March 13, 2005 Verizon-MCI Transaction Creates New Competitor in Large-Business, Government Markets, Seidenberg Says Verizon-MCI Transaction Creates New Competitor in Large-Business, Government Markets, Seidenberg Says January 26, 2006 Verizon Communications Reports Strong 4Q 2005 Results, Driven by Continued Growth in Wireless and Broadband Verizon Communications Reports Strong 4Q 2005 Results, Driven by Continued Growth in Wireless and Broadband