Capital expenditures continue to be our primary use of capital
resources and facilitate the introduction of new products
and services, enhance responsiveness to competitive challenges
and increase the operating efficiency and productivity of
our networks. Including capitalized software, we invested
$8,267 million in our Domestic Telecom business in 2005, compared
to $7,118 million and $6,820 million in 2004 and 2003, respectively.
We also invested $6,484 million in our Domestic Wireless business
in 2005, compared to $5,633 million and $4,590 million in
2004 and 2003, respectively. The increase in capital spending
of both Domestic Telecom and Domestic Wireless represents
our continuing effort to invest in high growth areas including
wireless, long distance, broadband and other wireline data
initiatives.
In 2006, capital expenditures including capitalized software
are expected to be in the range of $15.4 billion to $15.7
billion, excluding capital expenditures associated with MCI.
Including MCI, capital expenditures are expected to be $17.0
billion to $17.4 billion in 2006.
We invested $4,684 million in acquisitions and investments
in businesses during 2005, including $3,003 million to acquire
NextWave Telecom Inc. (NextWave) personal communications services
licenses, $641 million to acquire 63 broadband wireless licenses
in connection with FCC auction 58, $419 million to purchase
Qwest Wireless, LLC’s spectrum licenses and wireless
network assets in several existing and new markets, $230 million
to purchase spectrum from MetroPCS, Inc. and $297 million
for other wireless properties and licenses. In 2004, we invested
$1,196 million in acquisitions and investments in businesses,
including $1,052 million for wireless licenses and businesses,
including the NextWave licenses covering the New York metropolitan
area, and $144 million related to Verizon’s limited partnership
investments in entities that invest in affordable housing
projects. In 2003, we invested $1,162 million in acquisitions
and investments in businesses, including $762 million to acquire
50 wireless licenses and related network assets from Northcoast
Communications LLC, $242 million related to Verizon’s
limited partnership investments in entities that invest in
affordable housing projects and $157 million for other wireless
properties.
In 2005, we received cash proceeds of $1,326 million in connection
with the sale of Verizon’s wireline and directory operations
in Hawaii. In 2004, we received cash proceeds of $1,720 million,
including $1,603 million from the sale of Verizon Information
Services Canada and $117 million from the sale of a small
business unit. In 2003, we received cash proceeds of $229
million, from the sale of our European directory publication
operations in Austria, the Czech Republic, Gibraltar, Hungary,
Poland and Slovakia.
Our short-term investments include principally cash equivalents
held in trust accounts for payment of employee benefits. In
2005, 2004 and 2003, we invested $1,978 million, $1,827 million
and $1,887 million, respectively, in short-term investments,
primarily to pre-fund active employees’ health and welfare
benefits. Proceeds from the sales of all short-term investments,
principally for the payment of these benefits, were $1,634
million, $1,727 million and $1,767 million in the years 2005,
2004 and 2003, respectively.
Other, net investing activities for 2005 includes a net investment
of $913 million for the purchase of 43.4 million shares of
MCI common stock from eight entities affiliated with Carlos
Slim Helu, offset by cash proceeds of $713 million from property
sales, including a New York City office building, and $349
million of repatriated proceeds from the sales of European
investments in prior years. Other, net investing activities
for 2004 include net cash proceeds of $1,632 million received
in connection with the sale of our 20.5% interest in TELUS
and $650 million in connection with sales of our interests
in various other investments, including a partnership venture
with Crown Castle International Corp., EuroTel Bratislava,
a.s. and Iowa Telecom preferred stock. Other, net investing
activities for 2003 include net cash proceeds of $415 million
in connection with sales of our interests in various investments,
primarily TCC and Crown Castle International Corp. and $195
million in connection with the sale of our interest in Eurotel
Praha, representing a portion of the total proceeds of $525
million.
Under the terms of an investment agreement, Vodafone may
require Verizon Wireless to purchase up to an aggregate of
$20 billion worth of Vodafone’s interest in Verizon Wireless
at designated times at its then fair market value. In the
event Vodafone exercises its put rights, we have the right,
exercisable at our sole discretion, to purchase up to $12.5
billion of Vodafone’s interest instead of Verizon Wireless
for cash or Verizon stock at our option. Vodafone had the
right to require the purchase of up to $10 billion during
the 61-day period opening on June 10 and closing on August
9 in 2005, and did not exercise that right. As a result, Vodafone
still has the right to require the purchase of up to $20 billion
worth of its interest, not to exceed $10 billion in any one
year, during a 61-day period opening on June 10 and closing
on August 9 in 2006 and 2007. Vodafone also may require that
Verizon Wireless pay for up to $7.5 billion of the required
repurchase through the assumption or incurrence of debt.
