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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-92214

Cellco Partnership
(Exact name of registrant as specified in its charter)

Delaware 22-3372889
(State of Organization) (I.R.S. Employer
Identification No.)

180 Washington Valley Road
Bedminster, NJ 07921
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (908) 306-7000

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity,
as of the last business day of the registrant's most recently completed second
fiscal quarter: $0

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]

Documents incorporated by reference:
None

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TABLE OF CONTENTS

Item No. Page
- -------- ----

PART I

1. Business 1
2. Properties 18
3. Legal Proceedings 18
4. Submission of Matters to a Vote of Security Holders 20

PART II

5. Market for the Registrant's Common Equity and Related Stockholder
Matters 20
6. Selected Financial Data 21
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 23
7A. Quantitative and Qualitative Disclosures About Market Risk 36
8. Financial Statements and Supplementary Data 36
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 36

PART III

10. Directors and Executive Officers of the Registrant 37
11. Executive Compensation 39
12. Security Ownership of Certain Beneficial Owners and Management 47
13. Certain Relationships and Related Transactions 47
14. Controls and Procedures 57

PART IV

15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 58


Signatures 89
Certifications 91

-----------------------

Trademarks, servicemarks and other similar intellectual property owned by
or licensed to us appear in italics when used. All other trademarks in this
annual report are the property of their respective owners.





PART I

Item 1. Business
- -------------------------------------------------------------------------------

Overview

We are the leading wireless communications provider in the U.S. in terms of
the number of subscribers, revenues and operating income and offer wireless
voice and data services across the most extensive wireless network in the U.S.:

o we have the largest customer base in the U.S., with 32.5 million
subscribers as of December 31, 2002, of which approximately 28.6
million were digital subscribers;

o we have Federal Communications Commission ("FCC") licenses to offer
our services in areas where approximately 252 million people reside;

o our network provides service in, or covers, areas where approximately
90% of the population in our licensed areas, or 228 million people,
reside and in 49 of the 50 and 97 of the 100 most populated U.S.
metropolitan areas;

o our network provides digital coverage in areas where approximately 220
million people reside, including almost every major U.S. city;

o we had revenues of $19.3 billion and $17.4 billion for the years ended
December 31, 2002 and 2001, respectively; and

o we had net income of $2.6 billion and $1.3 billion for the years ended
December 31, 2002 and 2001, respectively.

Our owners are Verizon Communications Inc. ("Verizon Communications"),
which is the largest provider of wireline voice and data services in the U.S.,
with 135.8 million access line equivalents, as well as the largest provider of
wireless services in the U.S. by virtue of its controlling interest in our
company, and Vodafone Group Plc ("Vodafone"), one of the leading wireless
telecommunications companies in the world. The combination of their wireless
assets in our company brought together the business and management teams of four
well-recognized wireless franchises in the U.S. market: Bell Atlantic Mobile,
AirTouch, GTE Wireless and PrimeCo. Since our formation in April 2000, we have
realized operating synergies from network and equipment cost reductions, systems
and call center consolidation and staff consolidation and believe that we will
continue to realize savings as we benefit from our size and scale, and complete
our remaining information system conversions. Over the last three years, we have
developed "Verizon Wireless" into a brand name with significant recognition as a
result of our aggressive advertising and marketing, enhanced by the strong
customer relationships developed by our predecessor companies. We also believe
that our relationships with Verizon Communications and Vodafone afford us
additional benefits, including Verizon Communications' own brand marketing
efforts and promotional opportunities with its customer base, and Vodafone's
insights from its international markets.

Industry Overview

General

Wireless communications systems use a variety of radio frequencies to
transmit voice and data. Broadly defined, the wireless communications industry
includes one-way radio applications, such as paging services, and two-way radio
applications, such as cellular telephone service, enhanced specialized mobile
radio services, personal communications services ("PCS") and narrowband PCS
service. The FCC licenses the radio frequencies used to provide each of these
applications.

Since the introduction of cellular service in 1983, wireless communications
has grown dramatically in the U.S., although growth has slowed recently. As
illustrated by the following table, domestic cellular, enhanced specialized
mobile radio and PCS providers experienced compound rates of growth of 25.0% and
29.7% in total service revenues and subscribers, respectively, over the
eight-year period from 1993 to 2001. Industry information for 2002 is not yet
available.


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Wireless Industry Statistics*


- ------------------------------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998 1999 2000 2001
- ------------------------------------------------------------------------------------------------------------------------------

Total service revenues (in billions).. $ 10.9 $ 14.2 $ 19.1 $ 23.6 $ 27.5 $ 33.1 $ 40.0 $ 52.5 $ 65.0
Ending subscribers (in millions)...... 16.0 24.1 33.8 44.0 55.3 69.2 86.0 109.5 128.4
Subscriber growth..................... 45.1% 50.8% 40.0% 30.4% 25.6% 25.1% 24.3% 27.3% 17.3%
Ending penetration.................... 6.2% 9.4% 13.0% 16.3% 20.2% 25.1% 30.8% 39.2% 45.7%


- --------------
* Source: Cellular Telecommunications & Internet Association and Paul Kagan
Associates.


Recent industry trends

The growth in the wireless communications industry in terms of
subscribers, revenue and cash flow has been substantial and has been influenced
by the following industry trends. While we believe that the industry will
continue to experience growth, we believe that the pace of future growth will
slow.

Digital capabilities and innovative pricing are driving demand and
penetration levels and impacting network capacity. Increasing demands on
network capacity may lead to future alliances among carriers and further
industry consolidation fueled by carriers' needs for scope and scale. Digital
network characteristics, including longer battery life, improved voice quality,
custom calling features and data capabilities, have improved the subscriber
experience. Many carriers offer larger bundles of included minutes and national
flat rate pricing, increasing the affordability of wireless service and
resulting in increased penetration levels and usage. While increasing usage is
driving network efficiencies and revenue growth, it also is impacting capacity
demand in some markets, necessitating capital expenditures to increase existing
network capacity. The need for carriers to expend capital efficiently for these
purposes has led some carriers to enter into cooperative agreements in some
markets to share spectrum and/or network build-out expenses and may lead to
further industry consolidation.

Deployment of next generation network technology, digital platforms
enabling two-way short messaging, development of additional wireless data
applications and color screen handsets should drive expanded wireless usage.
Existing and future wireless data technologies, coupled with the widespread use
of the Internet, have caused wireless providers to focus on wireless data
services. Most carriers now offer wireless Internet access and two-way short
messaging services. Generally, adoption of most of these services by
subscribers has not been as fast as originally anticipated. However, short
messaging service usage has recently been increasing at a faster pace,
particularly since the introduction of inter-carrier operability that permits
messages between subscribers of different carriers. Most national carriers have
recently introduced applications that can be downloaded to their subscribers'
handsets, in addition to handsets with color screens that enhance the
subscribers' use of such applications. Most of these carriers have upgraded or
are in the process of upgrading their networks to permit higher-speed data
transmission that allows or will allow them to offer higher-speed applications
such as enterprise applications, image downloads, photo messaging, music, games
and full browsing capabilities for laptop computer users.

The wireless communications industry is experiencing significant
technological change, including the increasing pace of digital system changes,
evolving industry standards, ongoing improvements in the capacity and quality
of digital technology, shorter development cycles for new services and changes
in end-user needs and preferences. There is uncertainty regarding the extent
that customer demand and service revenues will continue to increase. In
addition, alternative technologies may develop for the provision of services to
subscribers that may provide wireless communications services or alternative
services superior to those currently available from wireless providers.

Business Strategy

Our goal is to be the acknowledged market leader in providing wireless
voice and data communication services in the U.S. Our focus is on high-quality
service across a cost-effective digital network while meeting the growing needs
of our subscribers. To accomplish this goal, we must continue to implement the
following key elements of our business strategy to differentiate our service:

Provide highest network quality. We will continue to build-out, expand and
upgrade our digital network in an effort to provide sufficient capacity and
seamless and superior coverage throughout our licensed area so that our
subscribers can enjoy consistent features and high-quality service, regardless
of location. We will continue to explore strategic opportunities to expand


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our overall national coverage through selective acquisitions of wireless
operations and spectrum licenses. We believe that network quality is a key
differentiator in the U.S. market and a driver of customer satisfaction. As of
December 31, 2002, our digital network reached approximately 96% of our covered
population, and our next generation 1XRTT upgrade to our digital network, which
provides increased voice capacity, reached approximately 80% of our covered
population. We will continue to expand our digital and 1XRTT coverage and expect
both to reach nearly 100% of our covered population, with remaining non-digital,
analog cells to be converted directly to the 1XRTT standard, by mid-2003. 1XRTT,
a packet-switched protocol, also allows us to develop significantly higher data
rates for wireless data applications such as enterprise applications, image
downloading, music, games, and full browsing capabilities for laptop computer
users.

Continue to strengthen, promote and differentiate the Verizon Wireless
brand. We will continue our efforts to maintain the "Verizon Wireless" brand as
one of the most respected brand names in the U.S. Our total brand awareness is
99% among wireless users and prospects, based on an external study, the highest
among the national wireless carriers. Our "Test Man" brand campaign has been
successful in differentiating our network in the marketplace. In addition,
Verizon Communications' brand advertising benefits us in markets where we both
provide services.

Profitably acquire, satisfy and retain our customers and increase the
value of our service offerings to customers. Our revenue and net income growth
will be achieved by retaining our existing base of customers and increasing
their usage of our services, as well as by obtaining new customers. We believe
quality customer service increases customer satisfaction, which reduces churn,
and will be a key differentiator in the wireless industry. We are committed to
providing high-quality customer care, investing in loyalty and retention
efforts and continually monitoring customer satisfaction in all facets of our
service. Key elements of our commitment to customer service include our Worry
Free Guarantee, which outlines the specifics of our commitment to each Verizon
Wireless customer; incentives for two-year contracts; and convenient locations
to initiate service and receive customer support. In addition, we believe that
increasing the value of our service offerings to subscribers will increase
retention of existing subscribers and attract new subscribers. We will continue
to offer clear and simple-to-understand service offerings, such as our
America's Choice plans, to enhance subscriber awareness and use of our
services.

Continue to expand our wireless data and messaging offerings for both
consumer and business subscribers. We believe that we are in a strong position
to take advantage of the growing demand for wireless data services. To capture
this potential growth, we plan to focus on consumer, mobile professional and
enterprise solutions by providing anytime/anywhere access on a variety of
devices to subscribers. Our strategy is to leverage our wireless portal
co-branded with Microsoft, partner with the industry's premier applications
providers for enterprises, create customized solutions for vertical markets and
offer a wide variety of data options, including downloadable applications for
both enterprises and consumers.

Increase operating margins and capital efficiency. We believe that our
success will depend, in part, on our ability to continue to increase our
operating efficiency, thereby increasing operating margins. We are undertaking
a number of initiatives to increase our margins by lowering costs associated
with our network and customer service and by leveraging our scale.

Capitalize on our relationship with our owners. We continue to benefit
from our relationship with Verizon Communications and Vodafone, our two owners.
Verizon Communications is the largest provider of wireline voice and data
services in the U.S. in terms of the number of subscribers. We believe this may
present promotional and service bundling opportunities. Vodafone is one of the
leading global wireless telecommunications companies, with extensive experience
in international markets that have a higher adoption of wireless data and
prepaid services, which we view as under-penetrated markets in the U.S. We have
been working with Vodafone on joint marketing efforts targeted to global
accounts. We are also working with Vodafone, as well as infrastructure and
handset vendors, to provide our subscribers with global roaming across our and
Vodafone's networks.

Strategic Acquisitions

One of our primary business strategies is to build-out and expand our
digital network so that we may provide sufficient capacity and seamless and
superior coverage nationally on a cost-efficient basis. We have entered into
several recent transactions to acquire spectrum licenses and assets of
providers in certain markets in order to help us implement this strategy.

On August 15, 2002 we combined the business operations of Price
Communications Wireless, Inc. with certain of our assets, in a transaction
valued at $1.7 billion, including $550 million in net debt that was assumed and
redeemed. Under the terms of the transaction, we and Price Communications
Wireless formed a limited partnership consisting of Price Communications'
wireless operations and certain of our assets. We control and manage the
partnership. Price received a preferred limited partnership interest that is
exchangeable, under certain circumstances, into our equity, if an initial
public offering of our equity occurs, or into common stock of Verizon
Communications, if an initial public offering of our equity does not occur
within four years. Price Communications Wireless provided 800 MHz wireless
service to approximately 411,000


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subscribers in areas where approximately 3.5 million people reside in Alabama,
Florida, Georgia and South Carolina where we did not previously provide
service.

In addition, on December 19, 2002, we signed an agreement with Northcoast
Communications, L.L.C., to purchase 50 PCS licenses and related network assets,
for approximately $750 million in cash. Network investment for additional
capacity has been factored into our near-term capital program and we will fund
the purchase utilizing our existing intercompany loan facility with Verizon
Communications. The licenses cover large portions of the East Coast and
Midwest, including such major markets as New York; Boston; Minneapolis, MN;
Columbus, OH; Providence, RI; Rochester, NY; and Hartford, CT. Total population
served by the licenses is approximately 47.2 million and includes 10 MHz in
each of the 50 license areas, in the D, E, and F blocks of the 1800-1900 MHz
frequency band. The transaction is subject to customary closing conditions,
including FCC approval of the assignment of the licenses to us, and is expected
to close during the second quarter of 2003.

Competition

There is substantial competition in the wireless telecommunications
industry. We expect competition to intensify as a result of the higher
penetration levels that currently exist in the industry, the development and
deployment of new technologies, the introduction of new products and services,
the auction of additional spectrum, and regulatory changes. Other wireless
providers, including other cellular and PCS operators and resellers, serve each
of the markets in which we compete. We currently provide service to 49 of the
top 50 markets in the U.S., and each of these 49 markets has an average of five
other competing wireless providers. Competition also may increase to the extent
that smaller, stand-alone wireless providers transfer licenses to larger,
better capitalized and more experienced wireless providers.

We compete primarily against five other major wireless service providers:
AT&T Wireless, Cingular Wireless, Nextel Communications, Sprint PCS and
T-Mobile USA (formerly VoiceStream). The wireless communications industry
experienced significant consolidation during the past several years. This trend
may continue. Further consolidation may create larger, well-capitalized
competitors with substantial financial, technical, marketing and other
resources to compete with our offerings.

We believe that the following are the most important competitive factors
in our industry:

o Brand recognition. We introduced the "Verizon Wireless" brand name in
April 2000. Based on an external study done in late 2002, our total
brand awareness is the highest among the national wireless carriers.

o Network quality and coverage. In recent years, competition in our
industry has led to lower prices and to the popularity of pricing
plans that do not charge for roaming. As a result, the ability to
offer high quality national coverage through one's own network is
important. We own licenses that cover much of the country and we will
need to expend significant amounts to complete the build out of our
network. We have a more extensive network than any of our competitors.
Most of our competitors also have build-out needs, which they are
seeking to mitigate with affiliate relationships with other wireless
providers that permit them to reduce the cost of roaming through
network sharing arrangements.

o Network technology and digital service. Digital service offers
benefits to the subscriber and also permits a network to have greater
capacity. Our network is mostly, but not yet fully, digital. We expect
to have digital technology fully deployed in nearly all of our network
in 2003. Some of our competitors have fully digital networks.

o Customer service. Quality customer service and care is essential to
ensure that existing subscribers do not terminate service and to
obtain new subscribers. We are very focused on improving our customer
service and care. Most of our competitors are also focusing on
improving customer service and care.

o Capital resources. In order to expand and build-out networks and
introduce next generation services, wireless providers require
significant capital resources. We generate significant cash flow from
operations and have well-capitalized owners. Some of our competitors
also have significant cash flow and well-capitalized owners.

As a result of competition, we may encounter further market pressures to:

o increase advertising and promotional spending;

o reduce our prices;

o restructure our service packages to offer more value;

o respond to particular short-term, market-specific situations, for
example, special introductory pricing or packages that may be offered
by new providers launching their service in a particular market;

o increase our capital investment to ensure we retain our market
leadership in service quality; or


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o introduce new service offerings that are less profitable.

Such market pressures could cause us to experience lower revenues, margins
and average revenues per user.

Some of the indirect retailers who sell our products also sell many of our
competitors' products, which may lead to consumer confusion and increasing
movement of subscribers between competitors, and could have a material adverse
effect on our results of operations. Our competitive success will depend on our
ability to anticipate and respond to various factors affecting the industry,
including the factors described above, new services and technologies, changes
in consumer preferences, regulatory changes, demographic trends, economic
conditions, and pricing strategies by competitors.

Wireless Services

Our service packages are designed around key customer groups, from the
young adult market to multinational business accounts. We tailor our voice and
data offerings, pricing plans and handsets to the needs of these customers.

Voice Services

Price plans. We offer a variety of simple, straightforward packages with
features and competitive pricing plans that are designed to meet the needs of
various consumer and business users, at the local, regional and national level.
Specifically, we offer:

o the America's Choice plans, which offer simple, flat-rate nationwide
service with no additional roaming and long distance charges for calls
on our preferred network within the U.S.;

o family/small group and shared minute plans designed for multiple-user
households and small businesses;

o mobile-to-mobile plans for multiple-user households and small work
groups;

o corporate plans targeted at major accounts, which are businesses with
over 100 lines;

o plans targeted at national accounts with over 1,000 wireless lines;
and

o basic services and enhanced features, including caller ID, call
waiting and call forwarding, three-way calling, no answer/busy
transfer, voice recognition, voice mail and Mobile Messenger short
messaging service.

We set consistent pricing guidelines in order to maintain uniform
marketing across our markets, but we customize our plans by local market in
terms of the number of minutes and other features included at each access point
based on local competitive needs.

Prepaid. We believe the prepaid market represents a large and growing
under-penetrated market opportunity. We market prepaid service to distinct
consumer groups. Our national digital prepaid product, branded "[FREEUP]", is
aimed directly at the youth and young adult markets. [FREEUP] includes
on-network roaming and long distance, reduced rates for nights and weekends and
mobile-to-mobile pricing along with Mobile Messenger two-way short messaging
and voicemail. In addition, we believe that the introduction of data services
such as Get It Now will enhance the attractiveness of [FREEUP] to the youth and
young adults markets. While we have historically experienced higher churn rates
with our prepaid subscribers than other subscribers, our experience has been
that the increased churn is offset, at least in part, by the lower costs of
acquiring new prepaid subscribers. Our prepaid calling plans utilize a billing
service provided by Boston Communications Group, Inc. This billing service, and
its use by us and others, is the subject of a patent infringement suit by
Freedom Wireless, Inc. Should Freedom Wireless prevail, an injunction could be
issued, which, depending on its timing, could prevent us from continuing to
offer the prepaid calling plans, which would reduce our revenues and
subscribers or we could be required to pay a licensing fee that could increase
our costs. See "Legal Proceedings."

Telematics. Telematics involves the integration of wireless services into
vehicles. Telematics products offer a variety of voice and data services,
including directions, one-button access to an operator for roadside assistance,
mobile e-mail and traffic alerts, and also permit an operator to access a car's
on-board diagnostic sensors to identify problems or to locate a stolen car. We
are currently the national provider of wireless service to General Motors'
OnStar service. We do not currently include telematics subscribers in our
company's subscriber data.


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Wireless Data Services

We are a leader in providing wireless data services in the U.S. and offer
the following products:

Express Network - 1XRTT. In 2002, we launched higher-speed 1XRTT
technology, which is the next generation of code division multiple access
("CDMA") wireless data access, throughout the majority of our network, which
enables higher-speed applications such as enterprise applications, image
downloads, music, games and full browsing capabilities for laptop computer
users. 1XRTT is a packet-switched protocol capable of average data rates of 40
to 60 kilobits per second, with bursts of up to 144 kilobits per second,
depending on network traffic levels.

Get It Now. In 2002, we launched our Get It Now service using binary
runtime environment for wireless ("BREW") technology from Qualcomm. BREW
technology adds computer-like functionality to handsets, enabling applications
to be downloaded over-the-air directly to the subscriber's wireless device.
Consumers are charged transactional fees for subscriptions or downloads, which
are included with their monthly service bill. Our Get It Now service includes a
library of over 50 applications in the following categories:

o Messaging (get text, get email, get im);

o Information (get web, get info);

o Entertainment (get tunes, get games); and

o Imaging (get pix).

Mobile Messenger/Text Messaging. Our Mobile Messenger service offers
two-way short messaging, which allows subscribers to both send and receive
short text messages using handsets and various other devices. Two-way short
messaging has demonstrated its appeal to both consumers, especially young
adults, and business subscribers. For example, in December 2002, approximately
3.6 million of our subscribers utilized our two-way messaging service. We also
offer alert features, offering our subscribers numerous alert categories, which
they can select over the Internet, that are tailored to particular customer
markets. In April 2002, we launched inter-carrier service, providing
interoperability of short messaging services over different wireless providers'
networks.

Mobile Web. Our Mobile Web service offers easy to use, customized access
to content through our portal, which is co-branded with Microsoft. This service
allows subscribers to access the Internet, e-mail and personal information
management tools, such as calendars and address books, through handset-based
menus. We differentiate our services through our relationship with Microsoft
and by facilitating our subscribers' access to Internet content through an
easy-to-use, personalized format that allows them to use their desktop
computers to select the data content they want displayed on their handsets.
These customized content services, when integrated with our two-way short
messaging service, allow us to provide critical information to our subscribers
on a timely basis while they are mobile. Through our partnerships with premier
content providers, we currently offer our subscribers access to a wide variety
of services, in categories including information, instant messaging and gaming.

Wireless Business Solutions. We are also developing applications and
strategic service offerings for business subscribers designed to enhance their
overall productivity by providing handset access to secure corporate intranets
and e-mail accounts using our voice portal and other technologies. Our voice
portal, "Voice Gear", was launched in November 2002.

Mobile Office. Our Mobile Office product permits subscribers to use their
laptop or personal digital assistant, through their handset, to access the
Internet or back office enterprise servers for various applications like
Internet access and e-mail. We also offer a stand-alone PC card that permits a
subscriber to access the Internet using a laptop without the need to use one of
our handsets. These PC cards use our 1XRTT data technology. We also provide
each subscriber to our service compression software, which provides increased
speeds for Internet traffic.

CDPD Services. In 1994, we were the first wireless provider to introduce
cellular digital packet data ("CDPD") service, which we now offer in many major
U.S. metropolitan areas. In addition, our CDPD subscribers can roam on the CDPD
networks of other wireless providers. The service is used for data
communications in public safety, field service, remote Internet access and
retail. We also sell CDPD capacity on a wholesale basis to third party service
providers, which provide wireless data services to end-users. Although our
largest CDPD roaming partner, AT&T Wireless, has announced plans to phase out
CDPD services in 2004, we intend to continue to support CDPD through the end of
2005, by which time we intend to transition subscribers and applications to our
high-speed 1XRTT Express Network.

While we anticipate that wireless data will assist us in attracting and
retaining subscribers, our wireless data services may not be as successful as
anticipated. The deployment and delivery of wireless data services relies, in
many instances, on new and


6



unproven technology that may require substantial capital outlays and additional
spectrum capacity. Furthermore, wireless data services entail additional
specific risks. For example, the success of wireless data services substantially
depends on the ability of others to develop applications for wireless devices
and to develop and manufacture devices that support wireless applications. In
addition, there could be legal or regulatory restraints on wireless data
services as the applicable laws and rules evolve.

Handsets

We believe that our leading position in the U.S. wireless industry in
terms of the number of subscribers has enabled us to become the service
provider of choice for handset manufacturers and has helped us to develop
exclusive offers for our subscribers and branded handsets that complement our
focus on high-quality service. For example, we were the first wireless provider
to introduce a 1XRTT handset that includes global positioning system ("GPS")
technology. GPS technology provides emergency 911 compatibility, capable of
providing the caller's number and location to public safety agencies, and will
enable future location-based services. In June 2002, we introduced nationally
the first BREW-compatible device in the U.S. to include a color screen. In
September 2002, we introduced our first 1XRTT and BREW-compatible handset with
a color screen. We introduced a variety of 1XRTT-compatible devices in 2002 in
addition to handsets, including a modem-and-voice card from Sierra Wireless
that permits users to transmit voice or data from their devices over our
high-speed Express Network, and Thera, a Pocket PC from Audiovox. We also make
connectivity kits available for purchase that allow the user to utilize the
handset as a modem that can connect to our 1XRTT high-speed Express Network.

All of the handsets that we offer are headphone/earphone compatible. In
order to maintain customer satisfaction and loyalty, our subscribers can
purchase protection for their handsets and accessories through third-party
insurance providers, extended warranty and repair and upgrade options. We also
offer our subscribers accessories, such as chargers, headsets, belt clips,
faceplates and batteries.

Suppliers. We purchase handset and accessory products from a number of
manufacturers, with the substantial majority of our purchases distributed among
Motorola, LG Info Comm, Kyocera Corporation, Audiovox Corporation and Nokia
Corporation. A key component of all wireless handsets is the chipset, which
contains the "intelligence" of the handset. Nokia produces its own CDMA
chipsets; all of our other handset suppliers rely on Qualcomm Incorporated for
the manufacturing and supply of chipsets. Additionally, there are a number of
other components common to wireless handsets provided by various electronic
component manufacturers that we do not deal with directly. Disruption of the
supply of Qualcomm chipsets to a number of our core suppliers or a shortage of
common components to a number of suppliers could have a material adverse effect
on our ability to sell handsets to new subscribers.

Product Distribution. We have developed relationships with Communications
Test Design, Inc. and New Breed Corporations for substantially all of our
handset and other product warehousing, distribution and direct customer
fulfillment, as we do not own significant warehousing and distribution
infrastructure.

Paging

We offer local, regional and nationwide messaging and narrowband PCS
services in all 50 states, the District of Columbia and portions of Canada.
Compared to traditional messaging, narrowband PCS permits us to offer more
services, including two-way messaging, the ability to reply to e-mails and to
deliver a variety of information services such as mail, weather summaries, news
and other information. We had approximately 1.9 million units in service as of
December 31, 2002, a reduction of 624,000 units since January 1, 2002. Like
many others in the paging industry, we have experienced a decline in the number
of paging units in service and expect the decline to continue. We do not
currently include paging subscribers in our company's subscriber data.

Network

We have licenses to provide mobile wireless services on the 800 MHz or
1800-1900 MHz portions of the radio spectrum in areas that include
approximately 252 million people, or 90% of the U.S. population. The 800 MHz
portion is used to provide either analog or digital cellular services, while
our 1800-1900 MHz areas are all digital and provide PCS services. We also have
licenses to provide messaging and narrowband PCS services on the portions of
the radio spectrum set aside for those services. We obtained our domestic
spectrum assets through application lotteries, mergers, acquisitions,
exchanges, FCC auctions and allotments of cellular licenses.


7



Coverage

We have the largest network coverage of any wireless telephone carrier in
the U.S., with licensed and operational coverage in 49 of the 50 largest
metropolitan areas. As of December 31, 2002, our built network, which includes
approximately 19,300 cell sites, covered a population of approximately 228
million and provides service to approximately 32.5 million subscribers. In
addition, we have signed numerous roaming agreements with a variety of
providers, including ALLTEL, Sprint PCS, AT&T Wireless, Cingular Wireless, US
Cellular and Western Wireless, to ensure that our subscribers can receive
wireless service in virtually all areas in the U.S. where wireless service is
available. Many of these agreements are terminable at will by either party upon
several months' notice. Some competitors, because of their call volumes or
their affiliations with, or ownership of, other wireless providers, may be able
to obtain roaming rates that are more favorable than the rates we obtain.

We offer analog and digital service in our 800 MHz markets and digital
service in our 1800-1900 MHz markets. While our 800 MHz markets are
substantially built-out, some of our 1800-1900 MHz markets still require
significant build-out, and, overall, areas where approximately 10% of the
population in our licensed areas, or 24 million people, reside are not yet
covered. In addition, even those areas of our network that are substantially
built require upgrades to increase capacity and to accommodate succeeding
generations of digital technology.

As we continue to build and upgrade our network, we must complete, or have
others complete, a variety of steps, including securing rights to a large
number of cell site and switch site locations and obtaining zoning and other
governmental approvals. Adding new cell sites has become increasingly
difficult. In particular, high density wireless networks require more
engineering precision, as cell site coverage areas become smaller and
acceptable locations for new sites must be specifically located within one or
two city blocks. In some instances, we have encountered difficulty in obtaining
the necessary site leases at commercially reasonable rates and the zoning
approvals needed to construct new towers. In addition, the ability to buy or
lease property, obtain zoning approval and construct the required number of
radio facilities at locations that meet the engineering design requirements is
uncertain. We utilize tower site management firms, primarily Crown Castle
International Corp., and, to a lesser extent, American Tower Corporation, as
lessors or managers of the majority of our existing tower sites upon which our
operations depend, and plan to rely upon them for some of the sites we expect
to add in the future. We sometimes rely upon the same firms to obtain real
estate and tower locations for the continued expansion of our network and the
same firms serve many of our competitors' networks, so they have potentially
conflicting interests. Two of our tower site management firms have passed
through bankruptcy in the last year. While a bankrupt firm could reject its
leases with us, we have not been adversely affected to date.

Additionally, problems in vendor and equipment availability, technical
resources or system performance could delay the launch of operations in new
markets or conversion to digital or enhanced digital technologies or result in
increased costs in all markets. Our primary switch and cell site equipment
infrastructure vendor is Lucent Technologies Inc., which currently provides
approximately 64% of our switches and the majority of our cell site equipment,
and Motorola, Inc. and Nortel Networks Corp., which provide nearly all of our
remaining switches and cell site equipment. The majority of our markets are
restricted, for reasons of economic practicality and/or technical
compatibility, to using cell site equipment provided by the supplier of the
switch serving that particular market. Although we have deployed interoperable
switch and base station equipment from two of our infrastructure suppliers in
several markets and there has been some recent success in establishing industry
interoperability standards among vendors, these standards are not widely
implemented and may not be fully practical because they do not cover all system
features and attributes.

Technology

CDMA technology is our primary network technology platform and as of
December 31, 2002, was available to approximately 96% of the population to
which we provide service, or approximately 220 million people. We expect
digital coverage to reach nearly 100% by mid-2003. We believe ours to be the
most extensive digital mobile wireless network of any company in the U.S.,
supporting 28.6 million digital subscribers. Digital usage currently accounts
for approximately 97% of our busy-hour traffic.

There are several existing digital technologies for mobile wireless
communications, and each is incompatible with the others. We have selected CDMA
technology and its compatible 1XRTT upgrade for our network because we believe
that this technology and its evolution path offer several advantages. Other
wireless service providers have chosen global system for mobile communications
("GSM") or other technologies. At present, GSM leads in worldwide market share.
GSM's scale advantages may enable lower equipment costs and a faster pace of
technology evolution. Current or future versions of CDMA and 1XRTT may not
provide the advantages that we expect.


8



Next Generation Deployment

We began implementing CDMA digital technology in 1996 with the deployment
of IS-95, a digital standard. In 2001, we began our deployment of the next
generation of CDMA, known as "1XRTT," and we commercially launched 1XRTT in the
first quarter of 2002. Our 1XRTT network, branded and marketed as our Express
Network, enables increased spectral efficiency for voice services and
high-speed wireless data services. Once 1XRTT is fully deployed and all our
subscribers are using next generation handsets, it is expected to almost double
our network's voice capacity compared to the previous version of CDMA. Our next
generation migration strategy has been successful as we have achieved a
pervasive next-generation technology footprint quickly and cost effectively
while maintaining spectral efficiency. As of December 31, 2002, we have
commercially deployed 1XRTT in portions of our network that cover approximately
80% of the population covered by our network, and 84 of the 100 most populated
U.S. metropolitan areas. We expect 1XRTT to reach virtually all of the
population covered by our network by mid-2003, with almost all remaining analog
cell sites being converted to digital and employing 1XRTT technology.

In addition to 1XRTT, the CDMA technology path includes 1XEV, a
technological upgrade that could follow 1XRTT. We expect 1XEV to be capable of
data rates of up to 384 kilobits per second for mobile users and up to 2.4
megabits per second for stationary users. We have successfully completed 1XEV
technical trials in 2002 and plan commercial trials in San Diego and in
Washington, D.C. and certain of its suburbs later in 2003.

We have been able to implement 1XRTT, and would be able to implement 1XEV,
by changing plug-in components and software in our CDMA network rather than
replacing our existing network. Because 1XRTT and 1XEV involve upgrades and not
replacements of our existing network, the capital expenditures necessary for
the upgrades are more limited than those required for the replacement of our
network.

Wireless providers have begun to introduce improved next generation
wireless products and may soon introduce other advanced wireless products.
There are multiple, competing next generation standards, several options within
each standard, vendor-proprietary variations and rapid technological
innovations.

Cost Structure

An effective and efficient network is necessary to ensure that we have a
competitive cost structure. Digital technology helps us improve our network's
effectiveness and efficiency by enhancing capacity and providing network usage
with less capital and operating expense per minute of use than analog
technology. Fixed costs, such as those related to towers, shelters and other
common equipment, are reduced per minute of use as they can be spread over a
larger number of minutes because of the higher capacity of the CDMA network.
Features associated with digital technology may also lead to lower per minute
costs. For example, over-the-air programming of compatible handsets selects the
most cost-effective roaming partners using preferred roaming lists.

We have also undertaken other initiatives to reduce our network cost and
improve efficiency. We have migrated to lower-cost providers for our long
distance services, such as Verizon Select Services. In addition, we own a
microwave network, which extends from New York to Texas and provides two main
benefits. First, it supports the carriage of our wireless long distance in
those areas. Second, it provides redundancy for service interruption to other
facilities, which is less expensive than purchasing alternative services from a
third party. In addition, we have our own Signaling System 7, or SS7, network
and thus have significantly reduced the need to pay others for those services.
SS7 is a separate signaling channel needed for call set-up and advanced calling
features.

The continued build-out, technological upgrade and capacity enhancements
of our network will require significant capital outlays.

CDPD Network

Our CDPD network offers CDPD data transmission at speeds of up to 19.2
kilobits per second in major metropolitan areas. In addition, our CDPD
subscribers can roam on the CDPD networks of other wireless providers. Although
our largest roaming partner, AT&T Wireless, has announced plans to phase out
CDPD services in 2004, we intend to continue to support CDPD service through
2005.

Spectrum

We currently own a combination of spectrum in the 800 MHz and 1800-1900
MHz bands that can be used for voice, messaging and data telecommunications,
including Internet access. These bands consist of blocks of 10, 15, 25 and 30
MHz of spectrum, which combine to give us spectrum levels ranging from 10 MHz
up to 45 MHz. We own at least 25 MHz blocks of spectrum in 49 of the top 50
markets in the U.S. We expect that the demand for our wireless services will
grow over the next


9



several years as the demand for both traditional wireless voice services and new
wireless data Internet services increase significantly. See "--Industry
Overview." Based upon our current assumptions as to growth in demand for voice
and data services from our existing and new subscribers and our present plans
for improving the efficiency of our use of our existing spectrum, we could need
additional spectrum in some of our markets to meet anticipated demand within the
next one to two years. The consummation of our December 2002 agreement with
Northcoast Communications, L.L.C. to purchase 10 MHz PCS licenses in 50 markets,
which is pending FCC approval of the assignment of the licenses to us, would
enable us to meet this near-term spectrum requirement in those markets covered
by the Northcoast transaction where this requirement exists. In the remaining
markets (as well as those markets covered by the Northcoast transaction, in the
event that this transaction does not close), we could take various steps, beyond
those in our current plans, to increase the capacity of our existing spectrum
and thereby extend that time period, such as adding more cell sites and further
increasing usage of 1XRTT handsets, although these steps could be costly.
Failure to obtain access to additional spectrum where required would result in
degradation in the quality of our existing service through increased delays in
initiating calls, more calls being dropped, and a reduction in our ability to
provide other services and obtain new subscribers.

Actual developments might differ materially from our estimates. It is
difficult to estimate the extent to which the conversion of subscribers to
digital service and anticipated technological advances will themselves
stimulate even greater usage per subscriber. In particular, it is difficult to
predict the amount of spectrum that may be required to meet the demand for
wireless data and Internet access, since it is a relatively new and developing
market.

In addition to acquiring spectrum in the secondary market, one of the
primary means to acquire additional spectrum is through participation in FCC
auctions. In addition to 78 MHz of spectrum in the 700 MHz band that has been
allocated for mobile and fixed wireless services, the FCC plans to license 90
MHz of spectrum in other bands that would be technically suitable for mobile
and fixed wireless services. See "Regulatory Environment-Spectrum
Acquisitions." We intend to continue to acquire more spectrum primarily through
acquisitions from existing license holders, as we do not expect the FCC to
auction any significant usable licenses in the near future. However, we expect
substantial competition in acquiring new spectrum, and we may not be able to
purchase additional spectrum on favorable terms or at all.

Messaging and Narrowband PCS

We currently have three nationwide one-way messaging channels for use by
our paging network and one nationwide asymmetrically paired 50-12.5 kilohertz
narrowband PCS license. We also resell narrowband PCS services using other
carriers' networks. In addition, we have numerous market area licenses for
one-way messaging and three regional asymmetrically paired 50-12.5 kilohertz
narrowband PCS licenses. Our network, either directly or through reselling
arrangements, provides local, regional and nationwide messaging and narrowband
PCS services in all 50 states, the District of Columbia and portions of Canada.

Marketing

In addition to providing high-quality services and customer care, we focus
our marketing strategy on targeting solutions based upon our subscribers'
needs, promoting our brand, leveraging our extensive distribution network and
cross-marketing with our owners.

We have established ourselves as a leading provider of wireless service in
the U.S. An external study done in late 2002 found that our total brand
awareness is 99%, the highest among the national wireless carriers. Our
marketing efforts are focused on a coordinated program of television, print,
radio, outdoor signage, Internet and point of sale media promotions. We
coordinate our marketing efforts throughout our service area in order to ensure
that our marketing message is consistently presented across all of our markets.
Our promotion of the "Verizon Wireless" brand has been supplemented by Verizon
Communications' own brand marketing efforts, reinforcing the awareness of our
services in shared markets and capitalizing on the size and breadth of its
customer base. We offer our national America's Choice plans, which appeal to
nationwide travelers, our corporate plans, for large corporate customers, and
prepaid plans that appeal to youth and multicultural markets, and budget
conscious consumers.

Our pricing options, wireless data service offerings, equipment and
enhanced features are designed to appeal to a wide range of consumer and
business users.

Sales and Distribution

Our sales strategy is to use a mix of direct, indirect and resale
distribution channels in order to increase subscriber growth while reducing
subscriber acquisition costs. A goal of our distribution strategy is to
increase direct sales through our company-owned stores, as well as through
telemarketing and web-based initiatives, while simultaneously strengthening our
indirect


10


channels to maintain an extensive distribution system of highly trained sales
agents. We believe that our extensive company-owned distribution system is a key
strength and competitive advantage. We are investing significant resources to
achieve this goal by providing our sales representatives with in-depth product
and sales training. We also have programs in place to train indirect
representatives and offer dedicated account service to our indirect retailers.

Direct

Company-owned Stores. Company-owned stores are a core component of our
distribution strategy. Our experience has been that customers entering through
our store channel are higher value subscribers who generate higher revenue per
month on average than those who come through other mass-market channels and
they are less likely to cancel their service. As of December 31, 2002, we
operated approximately 1,260 stores, kiosks and carts.

Business-to-Business. We have a dedicated business-to-business sales
force. We enable company-specific web environments for our business customers.
We have developed extranets for business clients such as The Boeing Company,
Gannett Co., Inc., General Electric Company, IBM Corporation, Microsoft,
Qualcomm and Xerox Corporation that permit their employees to directly access
online our negotiated corporate rates.

Telemarketing and Web-Based. We have a telemarketing sales force
dedicated to receiving incoming calls. In addition, we offer fully-automated,
end-to-end, web-based sales of wireless handsets, pagers, accessories and
service in all of our markets. Our web-based sales channel, located at our
web-site, www.verizonwireless.com, enables prospective subscribers to purchase
a complete service package, including the handset, basic and enhanced features
and accessories.

Indirect Retailers and Agents

We have approximately 66,000 indirect retail locations selling wireless
services, including approximately 13,000 full service locations and 53,000
locations offering prepaid-calling replenishment only, as of December 31, 2002.
We have programs in place to train and support indirect representatives. We have
implemented a "store-within-a-store" program with RadioShack, our largest
indirect retailer, at approximately 4,550 of its locations. In addition, we have
arrangements to sell our wireless services through other national and regional
retailers.

Resale

We also resell wireless capacity, with approximately 1.1 million resale
lines as of December 31, 2002. We have approximately 40 resellers, including
TracFone Wireless, our largest reseller, which resells our service on a prepaid
basis and accounts for a majority of our total wholesale lines.

Our resale business involves the sale of wholesale access and minutes to
independent companies that package and resell wireless services to end-users. We
have dedicated wholesale account teams that work with these resellers and we
provide them with billing records for their subscribers. These resellers
generally provide prepaid and postpaid services to subscribers under their own
brand names and also provide their own customer service and billing. As of
December 31, 2002, our revenue from resale was approximately 1.3% of total
revenue. Because we sell these services on a wholesale basis we incur no direct
subscriber acquisition cost, although our total revenue per unit from resale is
less than it is from our direct subscribers. As a result, our average revenue
per user is negatively impacted by an increase in wholesale subscriber lines.

Customer Care, Retention and Satisfaction

Differentiated, best-in-class customer care, retention and satisfaction are
essential elements of our strategy. The cost of adding new subscribers is one of
the most significant cost elements in the wireless industry. Therefore,
satisfying and retaining existing subscribers is critical to the financial
performance of wireless operators. Our customer care, retention and satisfaction
programs are based on ensuring subscriber convenience and ease of use and
cultivating long-term relationships with our subscribers.

We offer our subscribers a full range of choices and options for making
requests and inquiries to maximize convenience. Subscribers are able to contact
us by telephone, in person at company-owned stores, through web-based
applications and through our self-serve applications over the phone.

We have 26 full-service call centers. We also have established
relationships with third-party vendors. As part of our commitment to delivering
superior customer service and our Worry Free Guarantee, we have undertaken a
program to make the existing call centers even more efficient and effective
through the enhancement of system capabilities and process improvement.


11


We offer customer service in multiple languages and through Telecommunication
Devices for the Deaf. In addition, we also offer customer care services over
the Internet in many of our markets, allowing subscribers to review their
monthly bill, analyze usage, make payments and obtain answers to frequently
asked billing questions. We have also created dedicated teams to handle
specialized markets, including data/Mobile Web customers, business customers,
including both national accounts and small to medium-sized businesses, paging
and prepaid customers.

We have a major national retention and loyalty program, our Worry Free
Guarantee, under which we commit to provide an extensive and advanced network,
responsive customer service, the option to change to any qualifying price plan
or airtime promotion at any time with a new two-year contract without payment
of any additional fees and a 15-day money-back equipment satisfaction
guarantee. It also includes free handset upgrades every two years (up to a $100
value), which we call our New Every Two plan, provided that customers sign new
two-year contracts with a retail price plan that costs $35 or more for monthly
access.

Another major retention and loyalty program is a customer life cycle
management program in which we contact customers at key points in their service
tenure with targeted information and offers. The program offers proactive
rate-plan analysis aimed at increasing the value of service to the customer and
provides the customer with an opportunity to purchase enhanced services,
features and accessories.

Information Systems

Our information systems consist of the following systems: billing, point
of sale, provisioning, customer care, data warehouse, fraud detection and
prevention, financial and human resources. These systems are comprised of
systems from our predecessor companies. For example, in April 2000, we had 13
major billing systems and over 150 other systems keyed to the customer's
geographic location. Since April 2000, we have completed the integration of our
human resources management systems and internal financial reporting systems and
currently have seven billing systems and 70 other systems. We have developed
plans to further integrate and consolidate these systems into two billing
systems and less than 30 other systems by the end of 2004.

We anticipate that the full implementation of these plans will be completed
in 2004 and will contribute to a reduction in our operating costs and expenses
as a percentage of revenues during each further stage of implementation. We
employ experienced professionals who have in the past successfully consolidated
billing systems, and we understand the complexities of consolidating these
various systems. However, we may encounter difficulties that could cause
disruptions in some of our markets while we integrate systems. Although we
expect to realize continued cost savings from the integration of information
systems, the integration process is costly and will take time to implement. We
offer no assurance that we will be able to realize these cost savings, and we
may suffer lapses in service or delays in billing our customers while we
integrate systems.

Environmental Matters

We are subject to various foreign, federal, state and local environmental
protection and health and safety laws and regulations, and we incur costs to
comply with those laws. We own or lease real property, and some environmental
laws hold current or previous owners or operators of businesses and real
property liable for contamination on that property, even if they did not know
of and were not responsible for the contamination. Environmental laws may also
impose liability on any person who disposes of hazardous substances, regardless
of whether the disposal site is owned or operated by such person. Although we
do not currently anticipate that the costs of complying with environmental laws
will materially adversely affect us, we may incur material costs or liabilities
in the future due to the discovery of new facts or conditions, the occurrence
of new releases of hazardous materials or a change in environmental laws.

Intellectual Property

We own or are licensed under a number of patents in the U.S. covering
service offerings, and have also developed many brand names and trademarks for
service offerings. We license patents and technology to and from our owners or
their affiliates and third parties. Pursuant to these license agreements, our
owners or their affiliates maintain the right to license or sublicense our
patents and technology to third parties, including our competitors.

Verizon Communications owns the trademarks issued for "Verizon" and
"Verizon Wireless" and some service offering names, but licenses them and other
marks to us on a non-exclusive basis until 2 1/2 years after it ceases to own
any interest in our company or we begin to use a different brand name. We
believe that the "Verizon Wireless" brand-name is very important to


12



our business and we have invested substantial amounts to build our brand equity.
Our non-exclusive license to use this name does present several risks to this
brand equity:

o Because we market our products and services under the same name as
Verizon Communications and other providers, including Verizon
Communications' wireless provider in Puerto Rico, our reputation and
ability to attract and retain subscribers could be adversely affected
if the reputation of Verizon Communications or those other providers
were to decline.

o The license will terminate if we fail to perform all material
obligations under the contract or 2 1/2 years after Verizon
Communications ceases to have any beneficial ownership of the
partnership. In addition, we are required to change our brand name and
discontinue the use of any trademarks owned by Verizon Communications
at any time if we are directed to do so by Verizon Communications. We
would then be required to develop a new brand identity, which could be
costly and take time to be publicly recognized.

Similarly, Verizon Communications owns the trademarks for some of our
service offering names, and licenses them to us on a non-exclusive basis. We
face risks similar to those described above in connection with these
trademarks.

Employees

As of December 31, 2002, we employed approximately 39,300 employees on a
full-time equivalent basis. We consider our relationship with our employees to
be good. Unions currently represent approximately 50 of our employees, but
labor unions are attempting to organize various segments of our workforce and
we expect ongoing efforts to organize our employees. Two unions, the
Communications Workers of America and the International Brotherhood of
Electrical Workers, have agreements with us that would require our company to
take a neutral position if the union conducts an organizing campaign in some of
our markets. The agreements further require us to recognize and bargain with
these unions if they present union authorization cards signed by 55% of the
employees in an appropriate bargaining unit within these markets. This "card
check" organizing process is advantageous to unions because it allows them to
avoid a more difficult secret ballot election process conducted by the National
Labor Relations Board.

Regulatory Environment

The FCC regulates the licensing, construction, operation, acquisition and
transfer of wireless systems in the U.S. pursuant to the Communications Act of
1934, as amended by the Telecommunications Act of 1996, and other legislation
and the associated rules, regulations and policies promulgated by the FCC.

To use the radio frequency spectrum in the U.S., wireless communications
systems must be authorized by the FCC to operate the wireless network and
mobile devices in assigned spectrum segments, and must comply with the rules
and policies governing the use of the spectrum as adopted by the FCC. These
rules and policies, among other things, (1) regulate our ability to acquire and
hold radio spectrum, (2) impose technical obligations on the operation of our
network, (3) impose requirements on the ways we provide service to and
communicate with our subscribers, (4) regulate the interconnection of our
network with the networks of other carriers, and (5) impose a variety of fees
and charges on our business that are used to finance numerous regulatory
programs and part of the FCC's budget.

The process of obtaining U.S. operating authority for a wireless system
requires three separate proceedings to be completed by the FCC: (1) allocating
radio frequency spectrum segments for the services, (2) adopting rules and
policies to govern the operation of the wireless systems in the allocated
spectrum segments and (3) issuing licenses to applicants for use of the
spectrum allocations.

In addition, because licenses are issued for only a fixed time, generally
10 years, we must periodically seek renewal of those licenses. The FCC will
award a renewal expectancy to a wireless licensee that has provided substantial
service during its past license term and has substantially complied with
applicable FCC rules and policies and the Communications Act. The FCC has
routinely renewed wireless licenses in the past, and none of our licenses has
ever been denied or even challenged. However, the Act provides that licenses
may be revoked for cause and license renewal applications denied if the FCC
determines that a renewal would not serve the public interest. Violations of
FCC rules may also result in monetary penalties or other sanctions. FCC rules
provide that competing renewal applications for licenses will be considered in
comparative hearings and establish the qualifications for competing
applications and the standards to be applied in hearings.

Wireless systems are subject to Federal Aviation Administration and FCC
regulations governing the location, lighting and construction of transmitter
towers and antennas and are subject to regulation under federal environmental
laws and the FCC's


13



environmental regulations, including limits on radio frequency radiation from
mobile handsets and antennas. State and local historic preservation, zoning and
land use regulations also apply to and can delay tower siting and construction
activities.

We are licensed to use radio frequencies in several different spectrum
allocations that are available for a wide range of communications services,
even though the services may have different names and use different
frequencies. Generally, those services can be divided into "broadband"
services, which can be used for voice as well as data and messaging services,
and "narrowband," which are used for nonvoice services, principally paging and
messaging services. These two broad categories are separately discussed below.

Broadband Wireless Services Systems

Our cellular systems operate on one of two 25 MHz frequency blocks, known
as the "A" and "B" blocks, in the 800 MHz band. Cellular systems principally
are used for two-way mobile voice applications, although they may be used for
data applications and fixed wireless services as well. Cellular licenses are
issued for either metropolitan statistical areas or rural service areas, two in
each area.

Our broadband PCS systems operate on one of six frequency blocks in the
1800-1900 MHz bands. PCS systems generally are used for two-way voice
applications although they may carry two-way data communications and fixed
wireless services as well. For the purpose of awarding PCS licenses, the FCC
has divided the U.S. into 51 large regions called major trading areas, which
are comprised of 493 smaller regions called basic trading areas. The FCC
awarded two PCS licenses for each major trading area, known as the "A" and "B"
blocks, and four licenses for each basic trading area known as the "C," "D,"
"E," and "F" blocks. The two major trading area licenses authorize the use of
30 MHz of PCS spectrum. One of the basic trading area licenses is for 30 MHz of
spectrum, and the other three are for 10 MHz each.

The FCC permits licensees to split their licenses and assign a portion, on
either a geographic, or "partitioned," basis or on a frequency, or
"disaggregated," basis or both, to a third party. We hold some partitioned or
disaggregated spectrum in various markets.

We must satisfy a range of FCC-specified coverage requirements. For
example, all 30 MHz PCS licensees must construct facilities that offer coverage
to one-third of the population of the service area within five years of the
original license grants and to two-thirds of the population within 10 years.
All 10 MHz PCS licensees must construct facilities that offer coverage to
one-fourth of the population of the licensed area or "make a showing of
substantial service in their license area" within five years of the original
license grants. Licensees that fail to meet the coverage requirements may be
subject to forfeiture of the license. We have met the coverage requirements
that have applied to our systems to date.

We use common carrier point-to-point microwave facilities and dedicated
facilities leased from communications companies or other common carriers to
connect our wireless cell sites, and to link them to the main switching office.
Where we use point-to-point microwave facilities, the FCC licenses these
facilities separately, and they are subject to regulation as to technical
parameters and service. Microwave licenses must also be renewed every 10 years.

Narrowband Services

We also hold a variety of authorizations granted by the FCC to provide
narrowband messaging and paging services, including three nationwide licenses.
We hold separate paging authorizations in the 150 MHz, 450 MHz and 900 MHz
paging bands. These licenses are assigned both on a per transmitter basis and
on a geographic area basis. Paging licenses were awarded historically on a per
transmitter basis and most of our paging licenses were awarded on this basis.

Transfers and Assignments of Wireless Licenses

The Communications Act and FCC rules require the FCC's prior approval of
the assignment or transfer of control of a license for a wireless system.
Before we can complete any such purchase or sale, we must file appropriate
applications with the FCC, and the public is by law granted a period of time,
typically 30 days, to oppose or comment on them. In addition, the FCC has
established transfer disclosure requirements that require licensees who assign
or transfer control of a license acquired through an auction within the first
three years of their license terms to file associated sale contracts, option
agreements, management agreements or other documents disclosing the total
consideration that the licensee would receive in return for the transfer or
assignment of its license. Non-controlling minority interests in an entity that
holds an FCC license generally may be bought or sold without FCC approval.
Effective January 1, 2003, the FCC repealed its "spectrum cap" rule, which had
limited the total amount of PCS, cellular and specialized mobile radio spectrum
any entity could hold. The only remaining rule restricting ownership of these
licenses bars one entity from holding both cellular licenses in any rural
service area. However, even without the former spectrum cap rule, the FCC has
announced that it will still consider the competitive impact of any license
transfer or merger of companies holding radio licenses on a case-by-case basis
and may impose conditions on its


14



approval of any transaction. In addition, notification and expiration or earlier
termination of the applicable waiting period under Section 7A of the Clayton Act
by either the Federal Trade Commission or the Department of Justice may be
required, as well as approval by, or notification of, state or local regulatory
authorities having competent jurisdiction, if we sell or acquire wireless
systems.

Foreign Ownership

Under existing law, no more than 20% of an FCC licensee's capital stock
may be directly owned or voted by non-U.S. citizens or their representatives,
by a foreign government or its representatives or by a foreign corporation. If
an FCC licensee is controlled by another entity, up to 25% of that entity's
capital stock may be owned or voted by non-U.S. citizens or their
representatives, by a foreign government or its representatives or by a foreign
corporation. Indirect foreign ownership above the 25% level may be allowed
should the FCC find such higher levels not inconsistent with the public
interest. These requirements apply to licensee partnerships as well as
corporations.

In its March 30, 2000 order approving the combination of the U.S. wireless
operations of Bell Atlantic and Vodafone, the FCC concluded that the public
interest would be served by allowing us to be indirectly owned by Vodafone in
an amount up to 65.1%, but stated that additional FCC approval would be
necessary before Vodafone could increase its investment further. The FCC also
stated that it would have to approve in advance any acquisition by any other
foreign entity or entities, in the aggregate, of an ownership interest of 25%
or more. In addition, as part of the FCC's approval of the combination between
Bell Atlantic and Vodafone, the parties entered into an agreement with the U.S.
Department of Defense, Department of Justice and Federal Bureau of
Investigation which imposes national security and law enforcement-related
obligations on the ways in which we store information and otherwise conduct our
business.

Spectrum Acquisitions

As is the case with many other wireless providers, we anticipate that we
will need additional spectrum to meet future demand. We can attempt to meet our
needs for new spectrum in two ways, by acquiring spectrum held by others or by
acquiring new spectrum licenses from the FCC. The Communications Act requires
the FCC to award new licenses for most commercial wireless services to
applicants through a competitive bidding process. Therefore, if we need
additional spectrum, we may be able to acquire that spectrum by participating
in an auction for any new licenses that may become available or by purchasing
existing facilities and incorporating them into our system, provided that we
are permitted to do so under FCC rules.

In December 2002, we entered into an agreement with Northcoast
Communications, L.L.C. to acquire fifty 10 MHz PCS licenses in each of 50 basic
trading areas, including New York City and Boston. Acquisition of this spectrum
will help address our short and long-term spectrum needs in various markets. We
have filed the necessary applications with the FCC for approval of the
assignment of the licenses to us and those applications remain pending.

In December 2000, the FCC began an auction of licenses for PCS spectrum
that had been awarded in previous license grants but had been cancelled by the
FCC and reclaimed from those prior licensees, who had filed for bankruptcy. We
were the winning bidder for 113 of the 422 licenses offered. We agreed to pay a
total bid price of approximately $8.8 billion upon receipt of the licenses and
paid $1.8 billion as a deposit. There were no legal challenges to our
qualifications to acquire these licenses. We were awarded 33 of the 113
licenses in August 2001 and paid approximately $82 million for them. However,
the remaining licenses for which we were the high bidder were the subject of
litigation by the original licensees, NextWave Personal Communications and
UrbanComm Communicators. In light of that ongoing litigation, in April 2002,
the FCC returned 85% of our deposit. In December 2002, pursuant to an FCC
order, we dismissed our applications for these licenses, received back our
remaining deposit, and were relieved of all our remaining obligations with
respect to the December 2000 auction. On January 27, 2003, the U.S. Supreme
Court ruled in favor of NextWave, finding that the FCC's cancellation of
NextWave's licenses violated federal bankruptcy laws.

In July 2002, the U.S. Department of Commerce released a report
identifying 45 MHz of spectrum (1710-1755 MHz) currently used by the federal
government for reassignment to the FCC so that it can be licensed for
commercial use. The FCC has announced that it plans to "pair" this spectrum
with 45 MHz of spectrum that was previously reassigned in the 2100 MHz band,
and auction the entire 90 MHz for terrestrial mobile wireless use. This 90 MHz
will provide additional capacity for commercial mobile radio service providers
to provide 3G or other advanced services or to add additional capacity to
provide existing services. However, before this spectrum becomes commercially
available, the FCC must complete a pending rulemaking to adopt licensing and
service rules, and it must adopt rules for auctioning the spectrum. In
addition, because much of the 90 MHz is currently encumbered by government or
other terrestrial users, issues related to "clearing" the spectrum (and
reimbursing those incumbent users for relocation costs) must be resolved. Given
these steps, it is unlikely that this spectrum will be available before the
2004-2005 time period.


15



There are additional spectrum bands that may be suitable for our business,
but this spectrum has not been allocated nor are auctions of this spectrum
imminent. In addition, because much of this spectrum is encumbered by existing
users, a band sharing plan or relocation of incumbent users would be necessary
before the spectrum could be fully useable for new mobile wireless services.

The FCC has begun a number of different proceedings to reexamine its
existing policies and rules governing the allocation and licensing of radio
spectrum. For example, in June 2002, the FCC formed a "Spectrum Task Force"
charged with comprehensively evaluating current spectrum policies and
recommending changes to the FCC. In October 2002, the task force issued its
report, and the FCC sought public comment on its recommendations. Among the
areas discussed by the task force in its report are the rights of incumbent
spectrum users, whether to adopt more "market-based" spectrum policies that
would, for example, allow spectrum sharing among licensed users, and whether to
adopt new policies governing interference with spectrum users. These
proceedings could lead to reassignment of various existing license holders to
different spectrum bands, change the technical and operational rules for
various wireless services, authorize new technologies to operate in bands
previously licensed for other uses, or adopt new radio interference standards
for wireless services. Depending on the specific actions the FCC takes, the
outcome of one or more of these proceedings could increase the radio
interference with our operations from other spectrum users, place new users
adjacent to our licensed spectrum, condition future renewals of our licenses on
compliance with new spectrum use rules, authorize new services to operate
without having to purchase spectrum at auction, or allow other users to share
our spectrum. These changes potentially impact the ways in which we use our
licensed spectrum, the capacity of that spectrum to carry traffic, and the
value of that spectrum.

Recent Federal Regulatory Developments

The FCC does not specify the rates we may charge for our services nor does
it require us to file tariffs for our U.S. wireless operations. However, the
Communications Act states that an entity that provides commercial mobile radio
services is a common carrier, and is thus subject to the requirements of the
Act that it not charge unjust or unreasonable rates, nor engage in unreasonable
discrimination. The FCC may invoke these provisions to regulate the rates,
terms and conditions under which we provide service. In addition, the Act
defines a commercial mobile radio service provider as a telecommunications
carrier, which makes it subject to a number of other regulatory requirements in
its dealings with other carriers and subscribers. These requirements impose
restrictions on our business and increase our costs. Among the requirements
that affect us are the following:

The FCC has imposed rules for making emergency 911 services available by
cellular, PCS and other broadband commercial mobile radio service providers,
including enhanced 911 services that provide the caller's communications
number, location and other information. Commercial mobile radio service
providers are required to take actions enabling them to provide a caller's
automatic number identification and cell site if requested to do so by a public
safety dispatch agency, at the provider's own cost. Other rules require
providers over time to supply the geographic coordinates of the subscriber's
location, either by means of network-based or handset-based technologies.
Providers may not demand cost recovery as a condition of doing so, although
they are permitted to negotiate cost recovery. These rules require us to make
significant investments in our network and to reach agreements both with
vendors of 911 equipment and state and local public safety dispatch agencies
with no assurance that we can obtain reimbursement for the substantial costs we
incur. In October 2001, the FCC granted us a limited waiver of the deployment
schedule set forth in the rules, but we must meet a number of new deployment
deadlines over the next four years. For example, we must sell increasing
percentages of handsets that satisfy the 911 mandate. We may be required to
subsidize the higher costs of these handsets in order to achieve mandated
penetration levels among our subscribers.

The FCC has established federal universal service requirements that affect
commercial mobile radio service providers. Under the FCC's rules, commercial
mobile radio service providers are potentially eligible to receive universal
service subsidies; however, they are also required to contribute to the federal
universal service fund. In December 2002, the FCC issued an order that will
significantly increase the amount of universal service contributions that
commercial mobile radio service providers must pay beginning April 1, 2003. The
FCC also adopted new rules regulating how carriers bill subscribers for
universal service contribution costs that may require expenses for
modifications to our billing systems. The FCC has also proposed to make further
revisions later in 2003 that may have the effect of further increasing our
costs to support this program. Many states also have enacted or are considering
state universal service fund programs. A number of these state funds require
contributions, varying greatly from state to state, from commercial mobile
radio service providers above and beyond contributions to the federal program.
Expansion of these state programs will impose a correspondingly growing expense
on our business.

The FCC has adopted rules regulating the use of telephone numbers by
wireless and other providers as part of an effort to achieve more efficient
number utilization. These rules required that wireless carriers be capable of
participating in number "pooling" programs as of November 2002 and maintain
detailed records of numbers used subject to audit. These mandates impose
network capital costs as well as increased operating expenses on our business.


16



The FCC has adopted rules on wireless local number portability that will
enable wireless subscribers to keep their telephone numbers when switching to
another carrier. The FCC rules require wireless carriers to offer number
portability to their subscribers beginning in November 2003. While this
requirement is presently under appeal by the wireless industry, wireless
carriers are concurrently implementing automated processes to enable number
portability. The overall impact of this mandate is uncertain. If the wireless
industry's appeal is unsuccessful, we anticipate that the mandate will impose
increased operating costs on our business and may also cause a temporary
increase in subscriber churn and subscriber acquisition and/or retention costs.

The FCC has also adopted rules requiring wireless providers to provide
functions to facilitate electronic surveillance by law enforcement officials
pursuant to the Communications Assistance for Law Enforcement Act. This mandate
will impose costs on us to purchase, install and maintain the software and
other equipment needed.

The Communications Act and the FCC's rules grant various rights and impose
various obligations on commercial mobile radio service providers when they
interconnect with the facilities of local exchange carriers. Generally,
commercial mobile radio service providers are entitled to "reciprocal
compensation," in which they are entitled to charge the same rates for
terminating wireline-to-wireless traffic on their system that the local
exchange carriers charge for terminating wireless-to-wireline calls.
Interconnection agreements are typically negotiated by carriers, but in the
event of a dispute, state public utility commissions, courts and the FCC all
have a role in enforcing the interconnection provisions of the Act. Although we
have local exchange carrier interconnection agreements in place in most of our
service areas, those agreements are subject to modification, expiration or
termination in accordance with their terms, which may increase our costs beyond
the significant amounts we currently pay for interconnection. The FCC has begun
a proceeding that is reassessing its interconnection compensation rules. For
these reasons there may be changes to the interconnection prices or other terms
that we currently have in our agreements.

The FCC has adopted rules to govern customer billing by all
telecommunications carriers and the carriers' use and disclosure of customer
proprietary information. It adopted additional detailed billing rules for
landline telecommunications service providers and is considering whether to
extend these rules to commercial mobile radio services providers, which could
add to the expense of our billing process as systems are modified to conform to
any new requirements. In addition, as noted above, the new universal service
fund rules regulate the collection of universal service contributions from
customers.

Other FCC rules determine the obligations of telecommunications carriers
to make their services accessible to individuals with disabilities. The order
requires wireless and other providers to offer equipment and services that are
accessible to and useable by persons with disabilities. While the rules exempt
telecommunications carriers from meeting general disability access requirements
if these results are not readily achievable, it is not clear how the FCC will
construe this exemption. For example, the FCC is considering whether to require
that digital handsets be modified to permit their use by hearing-impaired
customers. Accordingly, the rules may require us to make material changes to
our network, product line or services at our expense.

State Regulation and Local Approvals

With the rapid growth and penetration of wireless services has come a
commensurate surge of interest on the part of some state legislatures and state
public utility commissions in regulating our industry. This interest has taken
the form of efforts to regulate customer billing, termination of service
arrangements, advertising, filing of "informational" tariffs, certification of
operation, service coverage and quality, drivers' use of handsets, provision of
emergency 911 service, and many other areas. We anticipate that this trend will
continue. It will require us to devote resources to working with the states to
respond to their concerns while minimizing any new regulation that could
increase our costs of doing business.

While the Communications Act generally preempts state and local
governments from regulating entry of, or the rates charged by, wireless
carriers, it also permits a state to petition the FCC to allow it to impose
commercial mobile radio service rate regulation. No state currently has such a
petition on file, but as wireless service continues to grow, the possibility of
new regulation increases. In addition, the Act does not preempt the states from
regulating the other "terms and conditions" of wireless service. Several states
have invoked this language to impose, or propose, various consumer-related
regulations on the wireless industry such as rules governing customer contracts
and advertising. States also may impose their own universal service support
regimes on wireless and other telecommunications carriers, similar to the
requirements that have been established by the FCC. The most extensive rules
regulating our business have been proposed by the California Public Utilities
Commission. Because of the scope of these rules and the size of our business in
California, the rules would impose significant costs on us if they are adopted
in their present form.

At the local level, wireless facilities typically are subject to zoning
and land use regulation. Neither local nor state governments may categorically
prohibit the construction of wireless facilities in any community or take
actions, such as indefinite moratoria, which have the effect of prohibiting
service. Nonetheless, securing state and local government approvals for new
tower sites has been and is likely to continue to be difficult, lengthy and
costly.


17



In addition, state commissions have become increasingly aggressive in
their efforts to conserve telephone numbering resources. These efforts may
impact us and other wireless service providers disproportionately, given the
industry's growing demand for new numbers, by imposing additional costs or
limiting access to numbering resources. Examples of state conservation methods
include number pooling, number rationing and code sharing.

Finally, states have become more active in imposing fees and taxes on
wireless carriers to raise general revenues and to pay for various regulatory
programs. In many states, some of these fees and taxes are not imposed on other
industries, placing a greater tax burden on us. In addition to the cost of
complying with new regulatory requirements, these fees also increase our costs
of doing business and may result in higher costs to our subscribers.

Item 2. Properties
- -------------------------------------------------------------------------------

We maintain our corporate headquarters in Bedminster, New Jersey and have
four area and 22 regional offices, as well as additional offices for our paging
services, located throughout the United States. We also maintain facilities
comprised of administrative and sales offices, customer care centers, retail
sales locations, switching centers, cell sites and data centers. Locations are
generally leased to provide maximum flexibility, with the exception of
switching centers, which are usually owned due to their critical role in the
network and high set-up and relocation costs.

As of December 31, 2002, we operated approximately 1,260 retail stores
and kiosks that support our direct distribution channel. Additionally, we had
170 offices and 6 storage facilities. At that date, network properties included
148 switching locations and approximately 19,300 cell sites, as well as
additional properties for our paging network. We believe that our facilities
are suitable for their purposes and that additional facilities can be secured
for our anticipated needs, although we may have difficulty obtaining additional
cell sites.

Our gross investment in property, plant and equipment consisted of the
following at December 31:

- -----------------------------------------------------------------------------
(in millions) 2002 2001
- -----------------------------------------------------------------------------
Land and improvements $ 94 $ 68
Buildings 3,768 3,048
Wireless plant equipment 21,719 19,465
Rental equipment 162 196
Furniture, fixtures and equipment 2,703 2,599
Leasehold improvements 798 737
- -----------------------------------------------------------------------------
Gross property, plant and equipment $ 29,244 $ 26,113
- -----------------------------------------------------------------------------


Item 3. Legal Proceedings
- -------------------------------------------------------------------------------

From time to time, we are a party to various litigation matters incidental
to the conduct of our business. We are a defendant in a number of actions,
including class actions, arising out of our business as well as the business
affairs of the AirTouch, GTE Wireless and PrimeCo entities that now comprise
our business.

Under the U.S. Wireless Alliance Agreement between Vodafone and Verizon
Communications, we have rights of indemnification from Vodafone and Verizon
Communications. Generally, under this agreement, Vodafone and Verizon
Communications, as the successor to Bell Atlantic and GTE, are required to
indemnify us for losses, as that term is defined in the underlying agreements,
that may be incurred in connection with wireless businesses formerly conducted
by Vodafone, Bell Atlantic and GTE, and pertaining to events which occurred or
causes of action which existed prior to April 3, 2000, with respect to Vodafone
and Bell Atlantic, and prior to July 10, 2000, with respect to GTE. This
indemnification does not apply to PrimeCo assets contributed to us and is
subject to exceptions. See "Certain Relationships and Related Party
Transactions--U.S. Wireless Alliance Agreement."

To the extent, therefore, that we may be subject to liability or loss in
connection with any of the following matters and arising out of events or
causes of action which existed prior to the dates set forth above, we intend to
exercise our right to be indemnified by Vodafone or Verizon Communications for
such liability or loss. See "Certain Relationships and Related Party
Transactions--U.S. Wireless Alliance Agreement."

We are a defendant in six purported class actions alleging antitrust
violations, including Parrish, et al. v. Pacific Telesis Group, et al., filed
in California Superior Court, Sacramento County, on December 17, 1998, brought
on behalf of California


18


consumers alleging antitrust violation and/or unfair trade practices claims. The
suit includes claims of a conspiracy to "horizontally allocate" customers and a
conspiracy to fix the wholesale and retail prices of cellular telephone service.
Another suit, Brook, et al. v. AT&T Cellular Services, Inc., et al., filed in
the U.S. District Court for the Southern District of New York on April 5, 2002
(f/k/a Wireless Consumers Alliance, et al. v. AT&T Wireless, et al.), alleges
that Cellco and other wireless service providers exert anticompetitive control
over wireless networks and the market for wireless phones by engaging in illegal
tying and monopolization. The plaintiffs in Brook amended the complaint on
January 10, 2003 and, among other things, now assert a nationwide class which
overlaps with the following four cases. A petition for MDL coordination of this
case and the following four cases was heard on January 28, 2003. A third suit,
Millen, et al. v. AT&T Wireless PCS, LLC, et al., filed in the U.S. District
Court for the District of Massachusetts on or about August 3, 2002, alleges that
Cellco and other wireless service providers restrain competition, impose
unlawful tying arrangements with respect to wireless phones and wireless
service, and monopolize the market for wireless phones. This case has been
stayed pending a ruling by the MDL panel. A fourth suit, Truong, et al. v. AT&T
Wireless PCS, LLC, filed in the U.S. District Court for the Northern District of
California on or about September 20, 2002, similarly alleges that Cellco and
other service providers restrain competition, impose tying arrangements with
regard to wireless phones and service, and monopolize the market for wireless
phones. A fifth purported class action, Beeler et al. v. AT&T Cellular Services,
Inc., filed in the U.S. District Court for the Northern District of Illinois on
or about September 30, 2002, asserts essentially identical claims to the above
handset antitrust suits, alleging that Cellco and other service providers
restrain competition in the Chicago metropolitan area, impose tying
arrangements, and exert monopoly power over the market for wireless phones. This
case has been stayed pending a ruling by the MDL Panel. A sixth purported class
action, Morales, et al. v. AT&T Wireless PCS, LLC, et al., filed in the U.S.
District Court for the Southern District of Texas on or about September 27,
2002, asserts essentially identical claims to the above handset antitrust suits.
This case is stayed pending a ruling by the MDL Panel. In each case, the
plaintiffs seek treble damages, fees and an injunction. The cases are all in a
preliminary phase. These suits fall under the indemnification provisions in the
alliance agreement.

We are defending a lawsuit alleging patent infringement, Freedom Wireless,
Inc. v. BCG, Inc. et al., U.S. District Court, Eastern District Court of
Massachusetts, filed March 30, 2000, alleging that the defendants are
infringing or contributing to the infringement of patents held by the plaintiff
related to prepaid wireless service technology. The plaintiff in the above suit
seeks unspecified monetary damages as well as injunctive relief. An adverse
decision could materially affect our prepaid business and impair our national
digital prepaid plan. Another patent infringement suit, Philip S. Jackson v.
AT&T Wireless Services, Inc., et al., filed June 19, 2002 in the U.S. District
Court in Illinois, alleging that the defendants are infringing a patent
relating to the use or sale of automated interactive telephone systems, was
recently dismissed without prejudice to repleading. Plaintiff in this case also
sought unspecified monetary damages and injunctive relief. The Freedom Wireless
case is, and the Jackson case was, at the time it was dismissed without
prejudice, at a preliminary stage, and we are not currently able to assess the
impact, if any, of these actions on our financial position or results of
operations. In each of these actions, we intend to assert or already have
asserted, the right to be indemnified by our vendors for any losses arising out
the claims of infringement asserted against us. In addition, we believe that we
have, and have asserted, insurance coverage claims for any loss arising out of
the claims asserted against us. These matters are also covered, in part, by the
indemnification provisions in the alliance agreement. However, the
indemnification claims are unlikely to cover the full cost of defense and
potential liability.

We are a defendant in lawsuits alleging personal injuries, including brain
cancer, from wireless phone use, specifically: Christopher Newman, et al. v.
Motorola, Inc., et al., filed August 1, 2000 pending in U.S. District Court in
Maryland; Murray v. Motorola, Inc., et al., filed November 15, 2001; Agro v.
Motorola, Inc., et al., filed February 26, 2002; Cochran v. Audiovox Corp., et
al., filed February 26, 2002; and Schwamb v. Qualcomm Inc., et al., filed
February 26, 2002, all originally filed in the U.S. District Court for the
District of Columbia (subsequently transferred to the U.S. District Court in
Maryland as part of MDL No. 1421 described below); Horn v. Motorola, Inc., et
al., originally filed May 8, 2002 in the U.S. District Court for the Western
District of Texas (subsequently transferred to MDL No. 1421); and Gibb Brower,
et al. v. Motorola, Inc., et al., filed April 19, 2001, pending in the U.S.
District Court in Maryland (MDL No. 1421). Plaintiffs in the above seven suits
seek compensatory, consequential and/or punitive damages. In Brower, plaintiff's
amended complaint includes purported class action claims and seeks, among other
relief, money for research and medical monitoring. In Newman, the court granted
summary judgment for defendants, and plaintiffs have appealed to the Fourth
Circuit Court of Appeals. Between April and June 2001, we and various other
wireless carriers and various phone manufacturers became defendants in statewide
class actions, including: Farina, et al. v. Nokia Inc., et al., Pennsylvania
Court of Common Pleas, Philadelphia County, filed April 19, 2001; Gilliam, et
al. v. Nokia Inc., et al., New York Supreme Court, Bronx County, filed April 23,
2001; Pinney, et al. v. Nokia Inc., et al., Maryland Circuit Court, Baltimore
County filed April 19, 2001; and Gimpelson et al. v. Nokia Inc., et al., Georgia
Superior Court, Fulton County, filed June 8, 2001. Plaintiffs in each of these
four suits seek damages and injunctive relief requiring defendants to provide
headsets to all class members. All of these class actions were removed to
federal court, and subsequently coordinated by the Judicial Panel for
Multi-District Litigation and transferred to the U.S. District Court in Maryland
(MDL No. 1421). Plaintiffs in these suits claim that wireless phones were
defective and unreasonably dangerous because the defendants failed to include a
proper warning about alleged adverse health effects, failed to encourage the use
of a headset, and failed to include a headset with the phone. We believe we are
entitled to indemnification by handset manufacturers in connection with all of
these suits and intend to pursue


19



those rights. In each of these actions arising out of personal injury claims, we
believe that we have, and have asserted, insurance coverage claims for any
losses arising out of the claims asserted against us. These matters are also
covered by the indemnification provisions in the alliance agreement. On March 5,
2003, the court dismissed plaintiffs' claims in the Farina, Gilliam, Pinney and
Gimpelson cases. Plaintiffs in these cases have the right to appeal. An adverse
outcome in any of these matters could have a material adverse effect on our
results of operations, financial conditions and/or prospects.

We are a defendant in a number of purported consumer class actions,
brought on behalf of subscribers throughout the country, alleging common law
and statutory claims of misrepresentation, inadequate disclosure, unfair trade
practices, violation of laws prohibiting unsolicited advertisements, or breach
of contract related to our advertising, sales, billing and collection
practices. These include claims relating to the practice, and alleged
nondisclosure, of rounding up of partial minutes of airtime usage to full
minute increments, send-to-end billing, negative options, ring time billing,
billing for busy or incomplete calls, billing while roaming, first incoming
minute free feature, monthly charges for bundled minutes, early disconnection
charges, charges for local and toll calls, handset insurance, any inability to
use handsets on another carrier's network, market transfer issues, price
discrimination and other practices and charges, as well as the adequacy of our
wireless coverage and the quality of service. The actions are in various stages
of the litigation process. Plaintiffs in these putative class actions have not
specified the alleged damages they seek. We are not currently able to assess
the impact, if any, of these actions on our financial position or results of
operations.

From time to time, we receive inquiries from state Attorneys General
offices or other consumer-protection agencies seeking information about our
advertising, consumer disclosures and/or billing practices. On March 21, 2001,
we received a letter of inquiry on behalf of 22 state Attorneys General
offices, requesting information concerning the advertising and marketing of
various products and services offered by us, as well as information concerning
various billing practices. We have provided documents and other information
responsive to the request and have met with representatives of the Attorneys
General. We cannot predict whether or not this inquiry will continue and, if it
does, what impact, if any, it may have on our business practices or results of
operations.

We are a defendant in a number of cases in various courts involving claims
by agents and resellers who allege that we breached our contracts with those
agents and resellers, have tortiously interfered with their contractual
relationships with others, have violated antitrust laws, and have engaged in
discrimination, fraud and unfair competition. We are not currently able to
assess the impact, if any, of these actions on our financial position or
results of operations.

We are also a defendant in other legal actions involving claims incidental
to the normal conduct of our business, including actions by customers, vendors
and employees. We believe that these other actions will not be material to our
financial position or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders
- -------------------------------------------------------------------------------

Not Applicable.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
- -------------------------------------------------------------------------------

Not Applicable.


20



Item 6. Selected Financial Data
- -------------------------------------------------------------------------------

Selected Financial Data

Cellco Partnership (d/b/a Verizon Wireless)

The following selected consolidated historical financial data should be
read in conjunction with, and are qualified by reference to, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our financial statements and related notes thereto included elsewhere in this
filing. The statement of operations and cash flow data for the years ended
December 31, 2002, 2001 and 2000 and the balance sheet data as of December 31,
2002 and 2001 are derived from the audited financial statements included
elsewhere in this filing. We derived the remaining financial data from our
audited or unaudited financial statements.

The financial information presented below includes results of operations
for (1) Bell Atlantic Mobile and GTE Wireless for all periods retroactively
restated on a consolidated basis, (2) our various significant acquisitions,
including the U.S. mobile wireless and paging operations of Vodafone, PrimeCo
and some Ameritech wireless operations in the Midwest from their date of
acquisition and (3) our various disposed assets until the dates of disposition.


- ---------------------------------------------------------------------------------------------------------------------------
(in millions, except other operating data) Year Ended December 31,
(unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------

Statement of Operations Data:
Operating Revenue:
Service revenue $ 17,747 $ 16,011 $ 13,000 $ 6,967 $ 6,178
Equipment and other 1,513 1,382 1,222 692 463
- ---------------------------------------------------------------------------------------------------------------------------
Total operating revenue 19,260 17,393 14,222 7,659 6,641

Operating Costs and Expenses:
Cost of service (excluding depreciation and
amortization related to network assets included
below) (1) 2,788 2,651 2,398 1,578 1,040
Cost of equipment 2,669 2,434 2,023 935 678
Selling, general and administrative 7,029 6,525 5,505 2,665 2,572
Depreciation and amortization 3,293 3,709 2,897 1,105 959
Sales of assets, net (7) 9 (859)(2) 8 (5)
- ---------------------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 15,772 15,328 11,964 6,291 5,244

Operating Income 3,488 2,065 2,258 1,368 1,397

Other Income (Expenses):
Interest expense, net (602) (642) (507) (164) (129)
Minority interests (127) (60) (136) (76) (92)
Equity in income of unconsolidated entities 14 6 57 (2) (19)
Other, net 4 (3) 5 12 11
- ---------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes and
cumulative effect of a change in accounting
principle 2,777 1,366 1,677 1,138 1,168
Provision for income taxes (193) (62) (149) (206) (262)
- ---------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of a change in
accounting principle 2,584 1,304 1,528 932 906
Cumulative effect of a change in accounting principle - (4) - - -
- ---------------------------------------------------------------------------------------------------------------------------
Net Income $ 2,584 $ 1,300 $ 1,528 $ 932 $ 906
===========================================================================================================================

Other Operating Data:
Subscribers (in millions) (end of period) (3) 32.5 29.4 26.8 14.2 11.0
Subscriber churn (4) 2.33% 2.52% 2.61% 2.50% 2.30%
Covered population (in millions) (end of period) (5) 228 221 214 N/A N/A
Average revenue per user (6) $48.35 $47.83 $47.55 $48.99 $49.86
Ratio of earnings to fixed charges (7) 3.91 2.35 3.03 5.83 7.19



21



Selected Financial Data, continued

Cellco Partnership (d/b/a Verizon Wireless)


- ---------------------------------------------------------------------------------------------------------------------------
(in millions, except other operating data) Year Ended December 31,
(unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------

Cash Flow Data:
Net cash provided by operating activities $ 6,569 $ 4,481 $ 3,276 $ 2,167 $ 2,341
Net cash (used in) investing activities (3,361) (7,311) (5,530) (5,246) (1,073)
Net cash (used in) provided by financing activities (3,282) 2,941 2,287 3,094 (1,249)
Capital expenditures 4,354 5,006 4,908 1,537 1,258

Balance Sheet Data:
Property, plant and equipment, net $ 17,688 $ 15,966 $ 12,772 $ 7,273 $ 6,073
Total assets 63,186 60,150 55,495 15,627 10,800
Total debt 13,506 15,347 12,992 5,357 2,321
Minority interest in consolidated entities 1,575 365 354 418 265
Partner's capital subject to redemption 20,000 20,000 20,000 - -
Total partners' capital 20,289 18,545 16,475 7,340 6,126


- ----------

(1) Cost of service includes: (a) roaming charges billed to Verizon Wireless
for our subscribers' usage outside of the Verizon Wireless network, (b)
direct telecom charges, which are costs to handle calls over our network,
including landline charges, trunk lines and other costs to maintain our
network and (c) all site rentals, tower rentals and network related
salaries.

(2) Includes $848 million of gain-on-sale in connection with the disposition
of certain southwestern U.S. properties.

(3) All subscriber information, including the number of subscribers at any
date, churn and revenue per subscriber, is presented for our voice and
broadband data service and excludes paging subscribers and telematics
subscribers, but includes subscribers who purchase service from resellers
of our service.

(4) Subscriber churn is calculated as a percentage by determining the number
of subscribers who cancel service during a period divided by the sum of
the average number of subscribers per month in that period. We determine
the average number of subscribers on a per-month basis using the number of
subscribers at the beginning and end of each month.

(5) Covered population refers to the number of people residing in areas where
we have licenses that can receive a signal from our cell sites.
Information is not available for periods other than the years ended
December 31, 2000, 2001 and 2002.

(6) Average revenue per user is determined by dividing service revenues in
each month within a period by the sum of the average number of subscribers
per month in the period. Average revenue per user includes revenue from
paging services and telematics, but does not include subscribers to those
services.

(7) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of pre-tax income from continuing operations plus fixed charges
and other earnings adjustments. Fixed charges consist of interest expense,
including capitalized interest, and the interest component of rental
expense. Included in earnings for the year ended December 31, 2000 was
$848 million of gain-on-sale in connection with the disposition of certain
southwestern U.S. properties. If such sale had not occurred, the ratio of
earnings to fixed charges would have been 1.97.


22



Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- -------------------------------------------------------------------------------

Overview

We are the leading wireless communications provider in the United States
in terms of the number of subscribers, network coverage, revenues and operating
income. We have the largest wireless network in the United States covering 49
of the 50 most populated metropolitan areas throughout the United States. We
believe our leadership position within the wireless industry will allow us to
take advantage of increasing penetration and usage trends within the United
States in the coming years. See "Business --Industry Overview."

Operating revenue. Our operating revenue consists of revenue from the
provision of services and revenue from sales of equipment. Equipment revenue
includes revenue from sales of handsets, pagers and accessories. Equipment
revenue associated with the sale of handsets, pagers and accessories is
recognized when the products are delivered to and accepted by the customer, as
this is considered to be a separate earnings process from the sale of wireless
services. Service revenue, which we record when services are provided, includes
revenue from:

o monthly access charges;

o airtime usage;

o long distance charges;

o toll and data usage charges;

o charges for features such as voice mail, short messaging services and
caller ID;

o gross roaming charges, or incollect fees, charged to our subscribers
for usage outside our network;

o gross roaming charges, or outcollect fees, charged to other wireless
service providers whose subscribers use our network; and

o paging service revenue.

In recent years, we have experienced an increase in the net number of
subscribers, which has increased our revenues. We expect that we will continue
to achieve increases in our total subscribers during the next several years,
assuming that the overall market for wireless services continues to grow as
expected. See "Business --Industry Overview." Subscriber growth continues to be
an important revenue source, and we believe that the continued addition of
high-quality post-paid customers will increase our revenue. Our current
management focus is to grow our customer base primarily through internal
growth, assuming the overall market continues to grow. In addition, we expect
that we will achieve some growth from business acquisitions, although
acquisitions are expected to be a less important factor.

Prior to 2001, we experienced decreasing average revenue per user due to
increased industry penetration and the continued migration of high-usage analog
customers to digital price plans, which have a higher monthly recurring access
charge but include a larger bundle of included minutes. During this period, the
increase in access fees was more than offset by the dilution of per-minute
usage revenue from these high-usage customers. Although there was dilution over
the short term as the subscriber base has migrated to digital service, we
believe that digital subscribers have a higher average revenue per user than
analog customers overall, including lower-usage digital customers from whom we
benefit from the higher monthly recurring access charges. Currently, we are
experiencing a slight increase in average revenue per user due to higher access
price plan offerings. In addition, with digital services, we can offer more
services such as Web access, which has increased average revenue per user, and
we expect to continue to provide more services over time. However, service
revenues have been negatively impacted by decreasing prices for incollect and
outcollect fees and toll and long distance charges as a result of competition
and rate renegotiations. We expect that trend to continue.

We expect continued growth from wireless data as a result of the recent
introduction of new applications for business and consumer use, including
access to e-mail, Get It Now applications through the use of color screen
handsets, personal information management data, Internet content, and the
developing services for downloadable applications. Our historical results of
operations do not include any material revenues from these wireless data
services, but we expect revenues from wireless data services and applications
to increase over time.

Operating Costs and Expenses. Our operating expenses consist of the
following:

o Cost of service: includes roaming charges billed to Verizon Wireless
for our subscribers' usage outside of the Verizon Wireless network and
direct telecom charges, which are costs to handle calls over our
network, including


23



landline charges, trunk lines and other costs to maintain our network,
as well as site rentals, tower rentals and network-related salaries;

o Cost of equipment: includes costs of handsets, pagers and accessories,
and the cost of shipping, warehousing and distributing these products.
We subsidize the cost of handsets sold in our direct channels to
reduce the customer's up-front cost of our service and, as a result,
equipment revenue is more than offset by the related cost of
equipment, resulting in a net subsidy. In addition, we have actively
focused on selling to new customers, and upgrading existing customers
to, tri-mode handsets, which, although subsidized, result in higher
service margins since they permit us to reduce roaming expenses. As we
expand our direct distribution channels and continue to grow, the
number of handsets that we sell will continue to increase, which will
result in higher cost of equipment. We believe that, as one of the
largest purchasers of handsets in the United States, we will be able
to purchase handsets at attractive rates;

o Selling, general and administrative expenses: includes all operating
expenses not included in the other operating expense categories,
including commissions and non-network related salaries; and

o Depreciation and amortization: includes depreciation of network and
other fixed assets and amortization of intangibles. Beginning January
1, 2002, we no longer amortize the value of our cellular licenses,
goodwill or assembled workforce in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other
Intangible Assets."

Critical Accounting Policies and Estimates

The following discussion and analysis is based upon our consolidated
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of our financial statements requires management to make estimates and
assumptions that affect the reported amounts of revenue and expenses, and
assets and liabilities, during the periods reported. Estimates are used for,
but not limited to, the accounting for: allowance for uncollectible accounts
receivable, unbilled revenue, fair values of financial instruments,
depreciation and amortization, useful life and impairment of assets, accrued
expenses, inventory reserves, equity in income (loss) of unconsolidated
entities, employee benefits, income taxes, contingencies and allocation of
purchase prices in connection with business combinations. We base our estimates
on historical experience, where applicable, and other assumptions that we
believe are reasonable under the circumstances. Actual results may differ from
those estimates.

We believe that the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements:

o We recognize service revenue based upon access to the network (access
revenue) and usage of the network (airtime/usage revenue), net of
credits and adjustments for service discounts. We are required to make
estimates for service revenue earned but not yet billed at the end of
each reporting period. These estimates are based primarily upon
historical minutes of use processed. Our revenue recognition policies
are in accordance with the Securities and Exchange Commission's
("SEC") Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements."

o We maintain allowances for uncollectible accounts receivable for
estimated losses resulting from the inability of our customers to make
required payments. We base our estimates on the aging of our accounts
receivable balances and our historical write-off experience, net of
recoveries.

o When recording our depreciation expense associated with our network
assets, we use estimated useful lives. As a result of changes in our
technology and industry conditions, we periodically evaluate the
useful lives of our network assets. These evaluations could result in
a change in our useful lives in future periods.

In addition, we have adopted the provisions of SFAS No. 142, as of January
1, 2002. In conjunction with this adoption, we have reassessed the useful lives
of previously recognized intangible assets. Our principal intangible assets are
licenses, including licenses associated with equity method investments, which
provide us with the exclusive right to utilize certain radio frequency spectrum
to provide wireless communication services. While licenses are issued for only a
fixed time, generally 10 years, such licenses are subject to renewal by the
Federal Communications Commission ("FCC"). Renewals of licenses have occurred
routinely and at nominal cost. Moreover, we have determined that there are
currently no legal, regulatory, contractual, competitive, economic or other
factors that limit the useful life of our wireless licenses. As a result, the
wireless licenses have


24



been treated as an indefinite life intangible asset under the provisions of SFAS
No. 142 and have not been amortized but rather were tested for impairment. We
will reevaluate the useful life determination for wireless licenses at least
annually to determine whether events and circumstances continue to support an
indefinite useful life.

Previous business combinations have been for the purpose of acquiring
licenses and related infrastructure in the secondary market to enable us to
build out our network. The primary asset acquired in such combinations has been
wireless licenses. In the allocation of the purchase price of these previous
acquisitions, amounts classified as goodwill have related predominantly to the
expected synergies of placing the acquired licenses in our national footprint.
Further, in purchase accounting, the values assigned to both wireless licenses
and goodwill were principally determined based on an allocation of the excess of
the purchase price over the acquired net assets. We believe that the nature of
our wireless licenses and related goodwill are fundamentally indistinguishable.

In light of these considerations, on January 1, 2002 amounts previously
classified as goodwill, approximately $7,958 million for the year ended December
31, 2001, were reclassified into wireless licenses. Also, assembled workforce,
previously included in other intangible assets, is no longer recognized
separately from wireless licenses. Amounts for fiscal year 2001 have been
reclassified to conform to the presentation adopted on January 1, 2002. In
conjunction with this reclassification, and in accordance with the provisions of
SFAS No. 109, "Accounting for Income Taxes", we recognized a deferred tax
liability of approximately $1,627 million related to the difference in the tax
basis versus book basis of the wireless licenses. This reclassification,
including the related impact on deferred taxes, had no impact on our results of
operations. This reclassification and the methodology used to test wireless
licenses for impairment under SFAS No. 142, as described in the next paragraph,
have been reviewed with the staff of the SEC.

When testing the carrying value of the wireless licenses for impairment, we
determined the fair value of the aggregated wireless licenses by subtracting
from enterprise discounted cash flows (net of debt) the fair value of all of the
other net tangible and intangible assets. If the fair value of the aggregated
wireless licenses as determined above had been less than the aggregated carrying
amount of the licenses, an impairment would have been recognized. Upon the
adoption of SFAS No. 142 and during 2002, tests for impairment were performed
with no impairment recognized. Future tests for impairment will be performed at
least annually and more often if events or circumstances warrant.

On January 1, 2002, we adopted SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." This standard re-addresses financial
accounting and reporting for the impairment or disposal of long-lived assets. It
concludes that a single accounting model be used for long-lived assets to be
disposed of by sale and broadens the presentation of discontinued operations to
include more disposal transactions. The adoption of SFAS No. 144 has had no
material effect on our results of operations or financial position.

Presentation of Financial Information

Our financial information includes results of operations for Bell Atlantic
Mobile and GTE Wireless retroactively restated for all periods on a consolidated
basis, and also includes financial information for the following entities from
their date of acquisition:

o Vodafone Group Plc's ("Vodafone") U.S. wireless operations, beginning
April 3, 2000;

o PrimeCo Personal Communications L.P.'s ("PrimeCo") wireless
operations, which, prior to April 3, 2000, were reflected as an equity
investment in the partnership's results of operations as a result of
Verizon Communications Inc.'s ("Verizon Communications") 50% ownership
of PrimeCo's wireless operations and, beginning on April 3, 2000, were
consolidated as a result of Vodafone's contribution of the remaining
50% to the partnership;

o ALLTEL Communications ("ALLTEL") operations in Iowa and Nevada that
were acquired by the partnership on April 1, 2000 in connection with
the disposal by the partnership of operations in Arizona, New Mexico
and Texas; and

o ALLTEL operations in Illinois, Indiana and Pennsylvania and its
minority interest in several of our New Jersey and New York properties
that were acquired on June 29, 2000, in connection with the disposal
of GTE Wireless operations in Ohio, Florida and Alabama.


25



Each of those acquisitions was accounted for under the purchase method of
accounting, and the dispositions were recorded as sales.

In addition, the financial information:

o includes results of operations for various properties that have since
been sold; and

o gives effect to our assumption and/or retention of $9.5 billion in
debt, including $5.5 billion from Verizon Communications and $4.0
billion from Vodafone, in April and July 2000, which in the case of
debt assumed from Vodafone, we intend to keep outstanding, or
refinanced by debt that will remain outstanding, until at least April
2005.

As a result of these significant acquisitions and dispositions, a
comparison of our results of operations between 2001 and 2000 may not be
meaningful.

Results of Operations

2002 Compared to 2001

Subscribers

We ended 2002 with 32.5 million subscribers, compared to 29.4 million
subscribers at the end 2001, an increase of 3.1 million net new subscribers, or
10.5%. Of these new subscribers, approximately 84% were the result of internal
growth and 16%, or approximately 485 thousand, were the result of business
acquisitions.

Approximately 3.5 million net retail customers were added through internal
growth during 2002, partially offset by a net reduction of wholesale customers
of approximately 937 thousand, primarily related to the loss of WorldCom Inc.
resale customers. We no longer have any WorldCom resale subscribers in our
customer base. Also, fourth quarter net additions were reduced by 85 thousand
to account for unusually low disconnect activity in the reseller channel that
we believe was a result of delayed reseller reporting of disconnects.

In August 2002, we added approximately 411 thousand subscribers as a
result of the acquisition of Price Communications Wireless, Inc.'s ("Price")
operations in Alabama, Florida, Georgia and South Carolina. The remainder of
the subscribers added through acquisitions were primarily the result of the
acquisition of certain Dobson Communications Corporation wireless operations in
the first quarter of 2002.

The overall composition of our customer base as of December 31, 2002 was
91% retail postpaid, 6% retail prepaid and 3% resellers. Approximately 28.6
million, or 88% of our subscribers as of December 31, 2002, subscribed to CDMA
digital service, compared to 75% as of December 31, 2001.

Total churn, including retail and wholesale, decreased to 2.33% for the
year ended December 31, 2002, compared to 2.52% for the year ended December 31,
2001. We believe churn was reduced due to our network quality and the success
of our retention programs.

Operating revenue

Total operating revenue for the year ended December 31, 2002 was $19,260
million, an increase of $1,867 million, or 10.7%, compared to the year ended
December 31, 2001.

Service revenue. Service revenue for the year ended December 31, 2002 was
$17,747 million, an increase of $1,736 million, or 10.8%, compared to the year
ended December 31, 2001. This increase was primarily due to the 10.5% increase
in subscribers, as well as an increase in average service revenue per user for
the year ended December 31, 2002 compared to the similar period in 2001.

Average service revenue per user increased 1.1% to $48.35 for the year
ended December 31, 2002 compared to the similar period in 2001, primarily due
to higher access price plan offerings. In addition, retail customers, who
generally produce higher service revenue than wholesale customers, comprised
approximately 97% of the subscriber base at the end of 2002, compared to


26



93% at the end of 2001. These increases were partially offset by decreased
roaming revenue as a result of rate reductions with third-party carriers and
decreased long distance revenue due to bundled pricing.

Equipment and other revenue. Equipment and other revenue for the year
ended December 31, 2002 was $1,513 million, an increase of $131 million, or
9.5%, compared to the year ended December 31, 2001. The increase was attributed
to an increase in gross retail subscriber additions and higher customer
equipment upgrades in the year ended December 31, 2002 compared to the similar
period in 2001.

Operating costs and expenses

Cost of service. Cost of service for the year ended December 31, 2002 was
$2,788 million, an increase of $137 million, or 5.2%, compared to the year
ended December 31, 2001. The increase was primarily due to increased direct
telecom charges caused by increased minutes of use of approximately 46% for the
year ended December 31, 2002 compared to the similar period in 2001,
substantially offset by lower roaming, local interconnection and long distance
rates. Service margins increased by 0.9% to 84.3% for the year ended December
31, 2002, compared to the similar period in 2001.

Cost of equipment. Cost of equipment for the year ended December 31, 2002
was $2,669 million, an increase of $235 million, or 9.7%, compared to the year
ended December 31, 2001. The increase was primarily due to an increase in
handsets sold, due to growth in gross retail activations and an increase in
equipment upgrades. The increase in equipment upgrades as well as the
introduction of color screen handsets in the second half of 2002 caused our
negative equipment margin, or subsidy, to increase by 0.3% to a 76.5% negative
margin for the year ended December 31, 2002.

Selling, general and administrative expenses. Selling, general and
administrative expenses for the year ended December 31, 2002 were $7,029
million, an increase of $504 million, or 7.7%, compared to the year ended
December 31, 2001. This increase was primarily due to a $242 million aggregate
increase in sales commissions in our direct and indirect channels, for the year
ended December 31, 2002 compared to the similar period in 2001, primarily
related to an increase in retail gross subscriber additions and contract
renewals. Also contributing to the increase was a $185 million increase in
salary and wage expense, which included a one-time severance charge of
approximately $31 million from the first quarter of 2002. In addition, we
incurred approximately $152 million in merger integration costs for the year
ended December 31, 2002 primarily related to billing systems conversions. To
the extent gross subscriber additions continue to increase, we expect to
continue to incur increased advertising and customer acquisition related
expenses.

Depreciation and amortization. Depreciation and amortization for the year
ended December 31, 2002 was $3,293 million, a decrease of $416 million, or
11.2%, compared to the year ended December 31, 2001. The decrease was primarily
attributable to a reduction of amortization expense of approximately $1.1
billion from the adoption of SFAS No. 142, effective January 1, 2002, which
requires that our indefinite-lived intangible assets no longer be amortized.
This decrease was partially offset by increased depreciation expense related to
the increase in depreciable assets during 2002. Depreciation expense will
increase over time as we continue to build-out and upgrade our network.

Other Income (Expenses)

Interest expense, net. Interest expense, net for the year ended December
31, 2002 was $602 million, a decrease of $40 million, or 6.2%, compared to the
year ended December 31, 2001. The decrease was primarily due to a reduction in
the average borrowing rates from Verizon Communications (from approximately
5.39% in 2001 to 5.06% in 2002). In addition, total debt levels were lower at
December 31, 2002 compared to 2001, due primarily to the return by the FCC of
the $1.7 billion deposit on the disputed licenses for which we were high bidder
in the FCC re-auction, which we used to reduce borrowings from Verizon
Communications.

Minority interests. Minority interests for the year ended December 31,
2002 was $127 million, an increase of $67 million, or 111.7%, compared to the
year ended December 31, 2001. The increase was mainly attributable to an
increase in minority partners' income for the year ended December 31, 2002
compared to the similar period in 2001 that resulted from an increase in the
income from subsidiary partnerships. We expect minority interest to increase in
future periods due to Price's preferred interest in Verizon Wireless of the
East LP, which is accounted for as a minority interest.

Provision for income taxes. The partnership is not subject to federal or
state tax on income generated from markets it owns directly or through
partnership entities. However, the partnership does own some of its markets
through corporate entities, which are required to provide for both federal and
state tax on their income. The tax provision was $193 million for the year
ended December 31, 2002, an increase of $131 million, or 211.3%, compared to
the year ended December 31, 2001. The effective tax rate was 6.9% for the year
ended December 31, 2002, compared to 4.5% for the year ended December 31, 2001.


27



The increase in the effective tax rate for 2002 was mainly attributable to an
increase in the proportion of income earned through corporate entities compared
to markets that we own directly or through partnership entities for 2002,
primarily as a result of the 2002 adoption of SFAS No. 142 which eliminated a
significant amount of amortization expense on those corporate entities. Also
contributing to the increase was a one-time tax benefit recorded in 2001 of an
allocation of interest expense to taxable entities related to the last nine
months of 2000.

2001 Compared to 2000

In 2000, we made several acquisitions and dispositions as described under
"Presentation of Financial Information" above. Set out below is a discussion of
our results in 2001 and 2000 on a historical basis and on a basis that excludes
the effect of these acquisitions and dispositions (in order to make the
comparisons more meaningful).

The following table presents our historical results for 2001, the effect
of excluding results from the acquired and disposed of entities, and our
results for 2001, adjusted for such exclusion. In the discussion below, the
percentage changes used that are excluding the effects of these acquisitions
and dispositions are derived by comparing the 2001 as adjusted results
described below and our 2000 historical results.


- --------------------------------------------------------------------------------------------------------------------------------
(in millions) Historical Excluding acquisitions & dispositions
----------------------------------------------- -------------------------------------------
2001 results
related to
2000 2001 results
acquisitions excluding
& acquisitions % change
For the years ended December 31, 2001 2000 Change % dispositions & dispositions from 2000
- --------------------------------------------------------------------------------------------------------------------------------
(unaudited)

Service revenue $ 16,011 $ 13,000 $ 3,011 23.2% $ 1,598 $ 14,413 10.9%
Equipment and other revenue $ 1,382 $ 1,222 $ 160 13.1% $ 129 $ 1,253 2.5%
Cost of service $ 2,651 $ 2,398 $ 253 10.6% $ 236 $ 2,415 0.7%
Cost of equipment $ 2,434 $ 2,023 $ 411 20.3% $ 266 $ 2,168 7.2%
Selling, general and
administrative $ 6,525 $ 5,505 $ 1,020 18.5% $ 780 $ 5,745 4.4%
Depreciation and amortization $ 3,709 $ 2,897 $ 812 28.0% $ 599 $ 3,110 7.4%


Subscribers

As of December 31, 2001, we had approximately 29.4 million controlled
subscribers, an increase of 9.7% compared to December 31, 2000. The increase
was the result of the addition of 2.6 million net new subscribers,
substantially all of which were the result of internal growth.

Operating revenue

Total operating revenue for the year ended December 31, 2001 was $17,393
million, an increase of $3,171 million, or 22.3%, compared to the year ended
December 31, 2000.

Service revenues. Service revenues for the year ended December 31, 2001
were $16,011 million, an increase of $3,011 million, or 23.2%, compared to the
year ended December 31, 2000. Excluding the acquisitions and dispositions
described above, service revenues for the year ended December 31, 2001
increased 10.9% compared to the year ended December 31, 2000. These increases
were primarily attributed to an increase in the number of average subscribers.

Average service revenue per user for the year ended December 31, 2001 was
$47.83, an increase of $0.28, or 0.6%, compared to the year ended December 31,
2000. Excluding the acquisitions and dispositions described above, average
service revenue per user for the year ended December 31, 2001 was $47.49, a
decrease of $0.06, or 0.1%, compared to the year ended December 31, 2000. This
slight decrease was due primarily to a decrease in roaming revenue as a result
of rate reductions with third-party carriers and large decreases in roaming
minutes in the fourth quarter of 2001 due to the events of September 11, 2001
and the apparent decrease in travel.

Equipment and other revenue. Equipment and other revenue for the year
ended December 31, 2001 was $1,382 million, an increase of $160 million, or
13.1%, compared to the year ended December 31, 2000. Excluding the acquisitions
and dispositions described above, equipment revenues increased 2.5% for the
year ended December 31, 2001 compared to the year ended December 31, 2000. This
increase was primarily due to increased gross subscriber additions.


28



Operating costs and expenses

Cost of service. Cost of service for the year ended December 31, 2001 was
$2,651 million, an increase of $253 million, or 10.6%, compared to the year
ended December 31, 2000. Service margins increased 2.1% to 86.4% due to the
increased service revenues. Excluding the acquisitions and dispositions
described above, cost of service increased 0.7% for the year ended December 31,
2001 compared to the year ended December 31, 2000. The increase was due
primarily to increased network operations expense offset by reduced
intercarrier roaming rates related to the aggressive migration of our
high-usage analog customers to tri-mode handsets pre-programmed to select
either our network or a preferred roaming partner's network, regardless of
whether our network in that area is analog, digital cellular or PCS.

Direct telecom charges increased due to a significant increase in minutes
of usage for the year ended December 31, 2001 as compared to the year ended
December 31, 2000. The increase was partially offset by a decrease in the rates
charged by the local exchange carriers.

Cost of equipment. Cost of equipment for the year ended December 31, 2001
was $2,434 million, an increase of $411 million, or 20.3%, compared to the year
ended December 31, 2000. Our negative margin, or subsidy, on equipment sales
increased by 10.6% to 76.1% due to increased sales of digital handsets, which
have a higher subsidy. Excluding the acquisitions and dispositions described
above, cost of equipment increased 7.2% for the year ended December 31, 2001
compared to the year ended December 31, 2000. The increase was primarily due to
an increase in gross subscriber additions as well as migrations from analog
handsets to digital for the year ended December 31, 2001 compared to the year
ended December 31, 2000.

Selling, general and administrative expenses. Selling, general and
administrative expenses for the year ended December 31, 2001 were $6,525
million, an increase of $1,020 million, or 18.5%, compared to the year ended
December 31, 2000. Excluding the acquisitions and dispositions described above,
selling, general and administrative expenses increased 4.4% for the year ended
December 31, 2001 compared to the year ended December 31, 2000. The increase
was due primarily to increased selling expenses related to the increase in
gross subscriber additions and an increase in salary and related expenses.

Depreciation and amortization. Depreciation and amortization for the year
ended December 31, 2001 was $3,709 million, an increase of $812 million, or
28.0%, compared to the year ended December 31, 2000. Excluding the acquisitions
and dispositions described above, depreciation and amortization increased 7.4%
for the year ended December 31, 2001 compared to the year ended December 31,
2000. This increase was due to our continued investment in our digital network
offset by the analog network equipment that became fully depreciated in 2001.
We expect this trend to continue.

Sales of assets, net. Sales of assets, net for the year ended December 31,
2000 included the one-time gain of approximately $848 million in conjunction
with the disposal of some Southwestern markets in connection with the formation
of Verizon Wireless.

Other Income (Expenses)

Interest expense, net. Interest expense, net, for the year ended December
31, 2001 was $642 million, an increase of $135 million, or 26.6%, compared to
the year ended December 31, 2000. The increase was due to higher average debt
outstanding related to borrowings from Verizon Communications to fund capital
expenditures and various acquisitions and the assumption of debt from Vodafone
of approximately $4 billion.

Provision for income taxes. As a general matter, the partnership is not
subject to federal or state tax on income generated from markets it owns
through partnership entities. However, the partnership owns some of its markets
through corporate entities, which are required to provide both federal and
state tax on their income. The tax provision for the year ended December 31,
2001 was $62 million, a decrease of $87 million, or 58.4%, compared to the year
ended December 31, 2000. The effective tax rates were 4.5% and 8.9% for the
year ended December 31, 2001 and for the year ended December 31, 2000,
respectively, compared to a federal statutory rate of 35.0%. The decrease in
the effective tax rate for the year ended December 31, 2001 compared to the
year ended December 31, 2000 directly relates to (1) the change in tax status
of several GTE Wireless entities from taxable to non-taxable immediately prior
to the merger of Bell Atlantic and GTE, which was accounted for as a pooling of
interests, and (2) the tax benefit of an allocation of interest expense related
to the last nine months of 2000 from the partnership to taxable entities.


29



Liquidity and Capital Resources

We have substantial cash needs, as described in more detail below.
Historically, we have funded our operations and other cash needs utilizing
internally generated funds, intercompany and external borrowings and capital
contributions. We expect to rely on a combination of internally generated,
intercompany and external funds to fund continued capital expenditures,
acquisitions, distributions and debt service needs. Sources of future
intercompany and external financing requirements may include a combination of
debt financing provided through intercompany debt facilities with Verizon
Communications, borrowings from banks or debt issued in private placements or
in the public markets. We believe that internally generated funds will be
sufficient to fund capital expenditures, distributions and interest payments on
our debt in the next several years. Internally generated funds would not be
sufficient to repay principal on our debt, including demand notes owed to
Verizon Communications (if we were required to repay that debt in the next
several years) and other short-term debt, including the $1.5 billion of
Floating Rate Notes due December 15, 2003, and would not be sufficient to honor
any exercise of Vodafone's put rights. We expect to refinance our outstanding
debt when due with new debt financings, including debt financing provided
either through intercompany borrowings, private placements, bank borrowings or
public financing, and would seek other financing to honor any exercise of the
put rights. While we believe we could obtain financing, Verizon Communications
has no commitment to provide any financing to us, and we have no commitments
from third parties. In addition to the potential cash needs described above, we
may need to secure additional financing for acquisitions of additional spectrum
licenses and wireless providers. The failure to obtain financing on
commercially reasonable terms or at all could result in the delay or
abandonment of our development and expansion plans or our inability to continue
to provide service in all or portions of some of our markets, which could harm
our ability to attract and retain subscribers.

Contractual Obligations and Commercial Commitments

The following table provides a summary of our contractual obligations and
commercial commitments as of December 31, 2002. Additional detail about these
items is included in the notes to the audited financial statements.


-----------------------------------------------------------------------
Payments Due by Year (in millions)
-----------------------------------------------------------------------
Contractual Obligations Total 2003 2004-2005 2006 -2007 Thereafter
- ---------------------------------------------------------------------------------------------------------------------------

Short-term debt (a) $ 8,570 $ 8,570 $ - $ - $ -
Long-term debt (b) 6,879 299 601 3,281 2,698
Capital lease obligations 145 49 77 2 17
Operating leases 2,694 528 898 576 692
Other long-term obligations (c) 1,878 1,852 26 - -
- ---------------------------------------------------------------------------------------------------------------------------
Total contractual cash obligations $ 20,166 $ 11,298 $ 1,602 $ 3,859 $ 3,407
- ---------------------------------------------------------------------------------------------------------------------------


- ------------
(a) Short-term debt obligations include demand notes due to Verizon
Communications.
(b) Long-term debt obligations include term notes due to Verizon
Communications.
(c) Other long-term obligations primarily includes purchase obligations under
a Lucent Technologies Inc. contract.

Debt payments in the table include principal and interest. A significant
portion of our debt described above bears interest at a variable rate and we
therefore have estimated, based on current interest rates, the amount of
interest we are committed to pay in the future. We have described the method of
calculating interest on our material debt below under "Debt Service." Actual
interest payments could differ materially due to changes in interest rates. In
addition, you should note that we expect that our capital expenditure budget
will be significantly higher than the amounts listed above under "Other
long-term obligations ". Our capital expenditure estimates are described below
under "Capital Expenditures."

Capital Expenditures

Our capital expenditures, including capital expenditures for the build-out
and upgrade of our network, including build-out related to the spectrum
licenses described above, but excluding acquisitions of other wireless service
providers, totaled approximately $4.4 billion in 2002. We expect 2003 capital
expenditures to be approximately $4.4 to $4.7 billion. We expect to incur
substantial capital expenditures after 2003 as well. We have committed to
purchase $5 billion of equipment from Lucent Technologies Inc. ("Lucent")
before January 2004 with $1.8 billion remaining to be purchased as of December
31, 2002. The $4.4 billion of capital spent for 2002 includes purchases under
the Lucent contract. In addition to these amounts, we will also require
substantial additional capital for, among other uses, acquisitions of spectrum
licenses and wireless service providers, additional system development and
network capacity expansion if wireless data services grow at a faster rate than
we anticipate.


30


Unforeseen delays, cost overruns, unanticipated expenses, regulatory changes,
engineering design changes, weather-related delays, technological changes and
other risks may also require additional funds.

Distributions

We are obligated under our partnership agreement to make certain
distributions to our owners related to taxes and additional distributions equal
to 70% of our pre-tax net income from continuing operations plus amortization
expense related to the amortization of intangible assets arising out of
transactions contemplated by the alliance agreement, less the amount of tax
distributions, assuming, in the case of non-tax distributions, we are in
compliance with certain financial covenants including a 2.5 to 1 leverage ratio
and 5 to 1 interest coverage ratio, unless our officers approve less
restrictive ratios. In addition, our owners can change our distribution policy
at any time or cause us to pay additional distributions. See "Certain
Relationships and Related Party Transactions--Partnership
Agreement--Distributions." In February 2001, we made a $691 million
distribution to our partners. We did not make subsequent scheduled
distributions in August 2001 and February 2002 to our partners because the
payments were limited by the 2.5 to 1 leverage ratio stipulated in the
partnership agreement. While we satisfied the interest coverage ratio for the
year ended December 31, 2001, our leverage ratio was 2.61 to 1 as of December
31, 2001. This exceeded the limits set forth in the partnership agreement.
Because we satisfied both ratios on June 30, 2002 and December 31, 2002, we
made the scheduled distribution to our partners in August 2002 and February
2003 of approximately $862 million and approximately $1,225 million,
respectively. Approximately $112 million of the distribution in February 2003
represented a supplemental distribution.

Vodafone Put Rights

Vodafone can exercise a right to require us to acquire up to $20 billion
worth of its partnership interest, at its then fair market value, with up to
$10 billion redeemable during July 2003 and/or July 2004 and the remainder, not
to exceed $10 billion in any one year, during July 2005, July 2006 and/or July
2007. Verizon Communications has the right to purchase a portion of this
interest instead of us, but it may exercise the right at its sole discretion.
We will need to obtain financing if we are required to repurchase those
interests. See "Certain Relationships and Related Party
Transactions--Investment Agreement." We have no commitment for such financing.

Debt Service

As of December 31, 2002, we had approximately $13.5 billion of
indebtedness and capitalized leases, including $8.2 billion of short-term debt.
Future interest payments may vary from our historical results due to changes in
outstanding debt levels, the partnership's or Verizon Communications' credit
ratings and changes in market conditions. See "--Qualitative and Quantitative
Disclosures about Market Risks."

Our principal debt obligations consist of the $1.5 billion floating rate
notes and $2.5 billion fixed rate notes and approximately $9.4 billion of debt
borrowed from Verizon Communications and its affiliates.

The floating rate notes bear interest at a rate equal to the London
Interbank Offered Rate, or LIBOR, plus 0.4% and mature on December 17, 2003.
The fixed rate notes bear interest at 5.375% and mature on December 15, 2006.

Borrowings from Verizon Communications include demand loans and term
notes. The maximum amount of demand loans outstanding during the last 12 months
was approximately $8.8 billion. Demand loan balances fluctuate based upon our
working capital and other funding requirements. At December 31, 2002, demand
loan borrowings totaled $6.6 billion. Interest on the demand loans is generally
based on a blended interest rate calculated by Verizon Communications using
fixed rates and variable rates applicable to borrowings by Verizon
Communications to fund the partnership and other entities affiliated with
Verizon Communications. Interest rates on such borrowings, with comparable
maturity dates, may be lower than rates on borrowings the partnership may enter
into with unrelated third parties primarily due to Verizon Communications'
stronger credit rating. As of December 31, 2002, the interest rate on demand
loans was 5.5%.

Term borrowings from Verizon Communications amounted to $2.8 billion at
December 31, 2002, which includes a $2.4 billion term note due in 2009 that
requires quarterly prepayments to the extent that the markets that GTE
purchased from Ameritech generate excess cash flow, as defined in the term
note. To date, no quarterly prepayment requirement has been triggered. This
term note contains limited, customary covenants and events of default. The
interest on the note is generally based on the same blended rate as for the
demand loans. Term borrowings also include a $350 million term note obtained
from Verizon Communications that bears a fixed interest rate of approximately
8.9% per year. This term note was established in connection with the
acquisition of Price's wireless assets on August 15, 2002 in order to effect a
covenant defeasance of Price's 11 3/4% Senior Subordinated Notes due 2007 and 9
1/8% Senior Secured Notes due 2006. The term note is guaranteed by Price. It
matures the earlier of February 15, 2007 or six months following the occurrence
of certain specified events.


31



We may incur significant additional indebtedness in the next several years
to help fund our cash needs.

Cash Flows Provided By Operating Activities

Our primary source of funds continues to be cash generated from
operations. The $2.1 billion increase in net cash provided by operating
activities for the year ended December 31, 2002 compared to the similar period
of 2001 was primarily due to an increase in operating income excluding
depreciation and amortization resulting from revenue growth and improvements in
working capital. The improvements in working capital were primarily driven by
decreases in accounts receivable, net and inventories, net.

Cash Flows Used In Investing Activities

Capital expenditures continue to be our primary use of cash. Our capital
expenditures were $4.4 billion for the year ended December 31, 2002, compared
to $5.0 billion for the year ended December 31, 2001 and were used primarily to
increase the capacity of our wireless network for usage demand, expand our
network footprint, to facilitate the introduction of new products and services,
enhance responsiveness to competitive challenges and increase the operating
efficiency of our wireless network. We expect total capital expenditures in
2003 to be approximately $4.4 to $4.7 billion and to have substantial capital
requirements thereafter.

We invested $774 million in cash acquisitions for the year ended December
31, 2002, including $552 million to acquire some of the wireless properties of
Dobson Communications Corporation and $222 million for other wireless
properties. For the year ended December 31, 2001, we invested $626 million in
acquisitions, which included $410 million for additional wireless spectrum
purchased from another telecommunications carrier.

Net investing activities also includes a $1,740 million refund ($1,479
million in April 2002 and $261 million in December 2002) from the FCC in
connection with our wireless auction deposit. In the year ended December 31,
2001, investing activities included the $1,625 million deposit related to the
disputed NextWave licenses from the FCC auction.

Cash Flows Provided By (Used In) Financing Activities

Net payments of $2,369 million were used to reduce our total debt during
the year ended December 31, 2002. We repaid $1,349 million of intercompany debt
and $436 million of short-term obligations, and used $584 million to redeem the
net debt assumed from Price. We redeemed the entire $550 million net debt
assumed from Price ($700 million debt less $150 million cash contributed by
Price) with the cash contributed by us and debt borrowed by one of our
subsidiaries from a wholly-owned subsidiary of Verizon Communications. The cost
of the redemption above the face amount of the debt was approximately $34
million. The $350 million term note obtained for the purpose of funding the
covenant defeasance bears interest at a fixed rate of approximately 8.9% per
year. The term note is guaranteed by Price. It will not obligate us to repay
the loan at any time prior to four and one-half years after the closing of the
Price acquisition (February 15, 2007) or six months following the occurrence of
certain specified events.

We received a refund in December 2002 from the FCC of the remaining $261
million we had deposited as a down payment on the disputed licenses for which
we were high bidder in the FCC re-auction. We used the refund to pay down
intercompany debt.

On May 31, 2002, Moody's Investor's Service ("Moody's") placed our long-term
debt ratings, and the long-term debt ratings of Verizon Communications, on
review for possible downgrade due to concerns with Verizon Communications' debt
levels and competitive issues. On December 18, 2002, Moody's lowered our long
term debt rating to A3 from A2 and lowered Verizon Communications' long-term
debt rating to A2 from A1, and changed its outlook for us and Verizon
Communications to stable from negative. Standard & Poor's and Fitch IBCA
continue to maintain a higher debt rating for us and Verizon Communications. In
February 2003, Standard & Poor's upgraded its outlook for us and Verizon
Communications to stable from negative. Any reduction in the ratings assigned
to us or Verizon Communications could increase our cost of capital and interest
expense and/or make financing less readily available to us.

Our debt to equity ratio (including partner's capital subject to
redemption) was 34% at December 31, 2002, compared to 40% at December 31, 2001.

We made distributions to our partners of $862 million in the year ended
December 31, 2002, compared to $691 million in the year ended December 31,
2001. We are required to distribute 70% of our adjusted pre-tax income to our
partners, subject to financial covenants.


32



In addition, under the terms of an investment agreement entered into among
Verizon Communications, Vodafone and us on April 3, 2000, Vodafone may require
us to purchase up to an aggregate of $20 billion of Vodafone's interest in the
Partnership, at its then fair market value, with up to $10 billion redeemable
during July 2003 and/or 2004 and the remainder, not to exceed $10 billion in
any one year, during July 2005, 2006 and/or 2007. Verizon Communications has
the right, exercisable at its sole discretion, to purchase all or a portion of
this interest instead of us. However, even if Verizon Communications exercises
this right, Vodafone has the option to require us to purchase up to $7.5
billion of this interest redeemable in July 2005, 2006 and/or 2007 with cash or
contributed debt. Accordingly, $20 billion of partners' capital has been
classified as redeemable on the accompanying condensed consolidated balance
sheets.

Financial Condition

Total assets at December 31, 2002 were $63.2 billion, an increase of $3.0
billion, or 5.0%, compared to December 31, 2001. The increase was due to a $2.3
billion increase in wireless licenses, primarily as a result of the Price
acquisition and an increase in property, plant and equipment as a result of our
network build-out program.

Total liabilities at December 31, 2002 were $21.3 billion, an increase of
$82 million, or 0.4%, compared to December 31, 2001. The increase was primarily
due to a $1.6 billion deferred tax liability resulting from the adoption of
SFAS No.142, "Goodwill and Other Intangible Assets." Under SFAS No.142,
wireless licenses are now classified as an indefinite life intangible asset and
no longer amortized. Furthermore, amounts previously classified as goodwill
were reclassified into cellular licenses as of January 1, 2001. In conjunction
with this reclassification, and in accordance with the provisions of SFAS
No.109, "Accounting for Income Taxes", we recognized a deferred tax liability
of approximately $1.6 billion related to the difference in the tax basis versus
book basis of wireless licenses. The increase was partially offset by a
reduction in borrowings during 2002, due primarily to the return by the FCC of
our original deposit on the disputed 2001 FCC auction licenses. The proceeds
from the returned deposit were used to decrease borrowings from Verizon Global
Funding, Verizon Communications' wholly owned financing affiliate.

Total partners' capital (including partner's capital subject to
redemption) was $40.3 billion at December 31, 2002, an increase of $1.7
billion, or 4.5%, compared to December 31, 2001. The increase was primarily due
to net income for the year ended December 31, 2002, offset by distributions to
our partners of $862 million.

Recent Developments

On December 19, 2002, we signed an agreement with Northcoast
Communications, L.L.C., to purchase 50 PCS licenses and related network assets,
for approximately $750 million in cash. Network investment for additional
capacity has been factored into our near-term capital program and we expect to
fund the purchase utilizing our existing intercompany loan facility with
Verizon Communications. The licenses cover large portions of the East Coast and
Midwest, including such major markets as New York, Boston, Minneapolis, MN,
Columbus, OH, Providence, RI, Rochester, NY and Hartford, CT. Total population
served by the licenses is approximately 47.2 million and includes 10 MHz in
each of the 50 U.S. licensed areas, in the D, E, and F blocks of the 1900 MHz
frequency band. The transaction is expected to close during the second quarter
of 2003.

On January 29, 2003, Verizon Wireless Inc. withdrew its registration
statement for an initial public offering of equity securities, filed with the
SEC. See "Certain Relationships and Related Transactions - Investment Agreement
- - Initial Public Offering."

Factors That May Affect Future Results

In addition to the information set forth above, the following factors, as
well as the factors listed under "Cautionary Statement Concerning
Forward-Looking Statements" may adversely affect our future results.

Legislation and Regulation

The licensing, construction, operation, sale, and interconnection
arrangements of wireless communications systems are regulated to varying
degrees by the FCC and, depending on the jurisdiction, state and local
regulatory agencies. In addition, the FCC, together with the Federal Aviation
Administration, regulates tower marking and lighting, and other government
agencies periodically consider various mandates on the wireless industry. We
are also subject to various environmental protection and health and safety laws
and regulations, including limits on radio frequency radiation from mobile
handsets and towers. Additionally, our business is increasingly subject to
efforts to adopt state consumer protection regulation and legislation. Any of


33



these agencies having jurisdiction over our business could adopt regulations or
take other actions that could increase our costs, place restrictions on our
operations and growth potential or otherwise adversely affect our business.

The FCC and an increasing number of state authorities are requiring the
wireless industry to comply with, and in some cases to fund, various
initiatives, including federal and state universal service programs, telephone
number administration, local number portability, services to the
hearing-impaired and emergency 911 networks. In addition, many states have
imposed significant taxes on providers in the wireless industry and some have
adopted or are considering adoption of regulatory requirements on customer
billing and other matters. These initiatives are imposing increasing costs on
us and other wireless carriers and may otherwise adversely affect our business.
For example, the FCC has mandated that wireless providers supply the geographic
coordinates of a subscriber's location, either by means of network-based or
handset-based technologies, to public safety dispatch agencies. This rule will
impose significant costs on us and could lead us to increase subsidies on
handsets to offset the increased costs of handset-based technologies. In
addition, local number portability rules may cause us to incur higher costs
relating to subscriber churn, acquisition or retention, as well as increased
operating expenses. See "Business--Regulatory Environment" for a more detailed
description of the regulatory environment affecting us.

Legislation has been proposed in the U.S. Congress and many state and
local legislative bodies to restrict or prohibit the use of wireless phones
while driving motor vehicles. Similar laws have been enacted in other countries
and, to date, the State of New York and a small number of localities in the
U.S. have passed restrictive laws.

Litigation

In recent years, there has been a substantial amount of litigation in the
wireless industry, including patent lawsuits, personal injury lawsuits relating
to alleged health effects of wireless phones, antitrust class actions, and
class action lawsuits that challenge marketing practices and disclosures,
including practices and disclosures relating to alleged adverse health effects
of handheld wireless phones. These lawsuits seek substantial damages. The risk
of litigation may be higher for companies like us that offer services
nationally due to our increased prominence in the industry. We may incur
significant expenses in defending these lawsuits. In addition, we may be
required to pay significant awards or settlements. For a discussion of
significant litigation matters involving our company, see "Business--Legal
Proceedings."

Health Concerns

Some studies have suggested that radio frequency emissions from wireless
handsets and cell sites may be associated with various health problems,
including cancer, and may interfere with electronic medical devices, including
hearing aids and pacemakers. In addition, lawsuits have been filed against us
and other participants in the wireless industry alleging various adverse health
consequences as a result of wireless phone usage. The U.S. Food & Drug
Administration ("FDA") and the FCC have stated that the available scientific
evidence does not show that any health problems are associated with using
wireless phones, but that there is no proof that wireless phones are absolutely
safe. In May 2001, the U.S. General Accounting Office issued a report, entitled
Research and Regulatory Efforts on Mobile Phone Issues, observing that the
consensus of various major health agencies is that the research to date does
not show radio frequency energy emitted from mobile phones to have adverse
health effects but there is not yet enough information to conclude that they
pose no risk. The report offers recommendations to improve the FCC's review of
mobile phone testing, as well as the FCC's and FDA's consumer information on
health issues relating to mobile phones. Additional studies of radio frequency
emissions are ongoing. If consumers' health concerns increase, they may be
discouraged from using wireless handsets, and regulators may impose
restrictions on the location and operation of cell sites. These concerns could
have an adverse effect on the wireless communications industry and expose
wireless providers to further litigation, which, even if not successful, can be
costly to defend. Government authorities may increase regulation of wireless
handsets and cell sites as a result of these health concerns and wireless
companies may be held liable for costs or damages associated with these
concerns. The actual or perceived risk of radio frequency emissions could also
adversely affect us through a reduced subscriber growth rate, a reduction in
subscribers, reduced network usage per subscriber or reduced financing
available to the wireless communications industry.

Competition in a Rapidly Changing Industry

The wireless industry is highly competitive and rapidly changing and
characterized by substantial competition, which has led to reduced pricing and
the need to develop and introduce new services in order to retain and attract
subscribers. Competition is expected to continue, which may lead to further
pressure on pricing and increases in subscriber churn and retention costs. See
"Business-Competition."


34


Our Relationship with our Owners

Cellco Partnership is a joint venture controlled by Verizon
Communications, although many important decisions, including decisions relating
to equity issuances and significant acquisitions, require the approval of
representatives of Verizon Communications and Vodafone. Conflicts of interest
may arise between us and our owners when we are faced with decisions that could
have different implications for us and our owners, including potential
acquisitions of businesses, potential competition, the issuance or disposition
of securities, the payment of distributions by the partnership, labor relations
policies, tax, regulatory and legal matters. In certain circumstances, our
owners will be permitted to compete with us, which would increase the conflicts
of interest. Because of these conflicts, our owners may make decisions that are
adverse to us. Moreover, it is possible that the representatives will not reach
agreement regarding matters that are very important to us and could be
deadlocked. If deadlocks cannot be resolved, we will not be permitted to take
the specified action, which could, among other things, result in us losing
business opportunities and harm to our competitive position.

We have agreed with our owners that we may not, without their consent,
enter into any business other than the U.S. mobile wireless business. These
restrictions will limit our ability to grow our business through initiatives
such as expansion into international markets and acquisitions of wireless
providers that are also engaged in other businesses outside our permitted
activities. Many wireless providers that could otherwise be potential
acquisition targets are affiliated with companies that also engage in other
domestic businesses, such as wireline or long-distance services, or in
international wireless businesses. These restrictions may also preclude us from
pursuing other attractive related or unrelated business opportunities.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 143, "Accounting for Asset Retirement Obligations." This standard
requires entities to recognize the fair value of any legal obligation
associated with the retirement of long-lived assets and to capitalize that
amount as a part of the book value of the long-lived asset. That cost is then
depreciated over the remaining life of the underlying long-lived asset. We will
adopt the standard effective January 1, 2003. We do not expect the impact of
the adoption of SFAS No. 143 to have a material effect on our results of
operations or financial position.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". This standard nullifies Emerging
Issue Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)." This standard requires the
recognition of a liability for a cost associated with an exit or disposal
activity at the time the liability is incurred, rather than at the commitment
date to exit a plan as required by EITF 94-3. We will adopt this standard
effective January 1, 2003. We do not expect the impact of the adoption of SFAS
No. 146 to have a material effect on our results of operations or financial
position.

In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure," an amendment of FASB
Statement No. 123, "Accounting for Stock-Based Compensation." This standard
provides alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based compensation. In addition,
this standard amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of
the method used on reported results. Effective January 1, 2003, we will adopt
the fair value recognition provisions of SFAS No. 123, prospectively (as
permitted under SFAS No. 148) to all new stock-based employee compensation
granted, modified or settled after January 1, 2003. As we currently account for
our Value Appreciation Rights under a fair value approach, we do not expect the
impact of the adoption of the fair value recognition provisions of SFAS No. 123
to have a material effect on our results of operations or financial position.

Cautionary Statement Concerning Forward-Looking Statements

In this Management's Discussion and Analysis, and elsewhere in this annual
report and in our other public filings and statements (including oral
communications), we have made forward-looking statements. These statements are
based on our estimates and assumptions and are subject to risks and
uncertainties. Forward-looking statements include the information concerning
our possible or assumed future results of operations, capital expenditures,
anticipated cost savings and financing plans. Forward-looking statements also
include those preceded or followed by the words "may", "will", "expect",
"intend", "plan", "anticipates," "believes," "estimates", "hopes" or similar
expressions. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995.

Our actual future performance could differ materially from these
forward-looking statements, as these statements involve a number of risks and
uncertainties. Therefore, undue reliance should not be placed on these
statements. The following important


35



factors could affect future results and could cause those results to differ
materially from those expressed in the forward-looking statements:

o the duration and extent of the current economic downturn;

o materially adverse changes in economic conditions in the markets
served by us;

o an adverse change in the ratings afforded our debt securities by
nationally accredited ratings organizations;

o the effects of the substantial competition that exists in our markets,
which has been intensifying;

o our ability to obtain sufficient financing to satisfy our substantial
capital requirements, including to fund capital expenditures,
acquisitions, debt repayment and distributions to our partners;

o our ability to obtain sufficient spectrum licenses, particularly in
our most densely populated areas;

o our ability to develop future business opportunities, including
wireless data services, and to continue to adapt to the changing
conditions in the wireless industry;

o our ability to receive satisfactory service from our key vendors and
suppliers;

o our ability to generate additional subscribers, with acceptable
levels of churn, from resellers and distributors of our service;

o material changes in available technology, and technology substitution
that could impact the popularity and usage of our technology;

o our continued provision of satisfactory service to our subscribers at
an acceptable cost, in order to reduce churn;

o the impact of continued unionization efforts with respect to our
employees;

o regulatory developments, including new regulations that could increase
our cost of doing business or reduce demand for our services;

o developments in connection with existing or future litigation;

o changes in our accounting assumptions that regulatory agencies,
including the SEC, may require or that result from changes in the
accounting rules or their application, which could result in an impact
on earnings; and

o other factors described in our Registration Statement on Form S-4 (No.
333-92214) under the heading "Risk Factors".

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------------------

Our primary market risk relates to changes in interest rates, which could
impact results of operations. As of December 31, 2002, we had $10.6 billion of
aggregate floating rate debt outstanding under intercompany loan facilities,
the floating rate notes and our credit facility. The intercompany loans bear
interest at rates that vary with Verizon Communications' cost of funding;
because a portion of its debt is fixed-rate, and because its cost of funding
may be affected by events related solely to it, our interest rates may not
adjust in accordance with market rates. A change in our interest rates of 100
basis points would change our interest expense by approximately $106 million.
We currently hedge our interest rate risk for a small portion of our floating
rate debt, which was less than 1% of outstanding balances as of December 31,
2002.

We also have exposure to fluctuations in foreign exchange rates as a
result of a series of sale/leaseback transactions that obligate us to make
balloon payments in Japanese yen. As of December 31, 2002, our obligations
under these arrangements were $120 million. A change in the value of the U.S.
dollar compared to the Japanese yen of 10% would change our obligations in U.S.
dollars by approximately $6.9 million. However, we have entered into forward
exchange contracts that fully hedge the foreign exchange exposure for these
obligations, although we are subject to the risk that our counterparties to
these contracts fail to perform.

Item 8. Financial Statements and Supplementary Data
- -------------------------------------------------------------------------------

The consolidated financial statements required by this Item are set forth on
the pages indicated at Item 15.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
- -------------------------------------------------------------------------------

None.


36



PART III

Item 10. Directors and Executive Officers of the Registrant
- -------------------------------------------------------------------------------

The following table presents information regarding members of our board of
representatives, our executive officers and other significant employees.


Name Age Position
- ---- --- --------

Ivan G. Seidenberg 56 Chairman of the Board of Representatives
Sir Christopher Gent 54 Representative
Dennis F. Strigl 56 President and Chief Executive Officer, Representative
Lawrence T. Babbio, Jr. 58 Representative
Doreen A. Toben 53 Representative
Kenneth J. Hydon 58 Representative
Tomas Isaksson 48 Representative
Lowell C. McAdam 48 Executive Vice President and Chief Operating Officer
Richard J. Lynch 54 Executive Vice President and Chief Technical Officer
Andrew N. Halford 44 Vice President and Chief Financial Officer
Roger Gurnani 42 Vice President--Information Systems and Chief Information Officer
John G. Stratton 42 Vice President and Chief Marketing Officer
Marc C. Reed 44 Vice President--Human Resources
S. Mark Tuller 54 Vice President--Legal & External Affairs, General Counsel and Secretary
James J. Gerace 39 Vice President--Corporate Communications
Margaret P. Feldman 45 Vice President--Business Development


Ivan G. Seidenberg has been Chairman of the board of representatives of
Verizon Wireless since the company's launch in April 2000. He became President
and Chief Executive Officer of Verizon Communications in April 2002. From June
2000 to April 2002, he was Co-Chief Executive Officer of Verizon
Communications. Before June 2000, he was Chairman and Chief Executive Officer
of Bell Atlantic Corporation since December 1998 and was previously the Chief
Executive Officer from June 1998 and Vice Chairman, President and Chief
Operating Officer from 1997. From 1995 to 1997 he was the Chairman and Chief
Executive Officer of NYNEX Corporation. His career in the communications
industry also includes positions as Vice Chairman of NYNEX's Telecommunications
Group and President of its Worldwide Information and Cellular Services Group.
He serves on the boards of directors of Honeywell International Inc., Wyeth,
Boston Properties, Inc., CVS Corp., Viacom Inc., the Museum of Radio and
Television, the Hall of Science and Pace University.

Sir Christopher Gent has been a member of our board of representatives
since the company's launch in April 2000. He has been a member of the board of
directors of Vodafone Group Plc since August 1985 and the Chief Executive
Officer of that company since January 1997. He was the Managing Director of
Vodafone Limited, the U.K. network operator, from January 1985 to December
1996. He is Chairman of the Supervisory Board of Vodafone Holding GmbH and a
non-Executive Director of China Mobile (Hong Kong) Limited. He recently
announced his intention to resign as Chief Executive Officer of Vodafone Group
Plc in July 2003.

Dennis F. Strigl has served as President and Chief Executive Officer of
Verizon Wireless and has been a member of our board of representatives since
the company's launch in April 2000. In addition, he has served as Executive
Vice President of Verizon Communications since June 2000. He had been President
and Chief Executive Officer of Bell Atlantic Mobile and its predecessors since
1991, and was also Group President and Chief Executive Officer of Bell Atlantic
Global Wireless Group since 1997. Mr. Strigl served as President of Ameritech
Mobile Communications from 1984 to 1986, where he was instrumental in launching
the nation's first cellular communications network. He later served as
President and Chief Executive Officer of Applied Data Research Inc., and Vice
President-Operations and Chief Operating Officer for New Jersey Bell. Mr.
Strigl is a past Chairman and current member of the Executive Committee of the
Cellular Telecommunications & Internet Association, and currently serves on the
boards of directors of Anadigics, Inc., PNC Financial Services Group, Inc. and
PNC Bank.

Lawrence T. Babbio, Jr. has been a member of our board of representatives
since the company's launch in April 2000. He became President and Vice Chairman
of Verizon Communications in June 2000 upon completion of the Bell Atlantic-GTE
merger. From December 1998 until June 2000 he had been President and Chief
Operating Officer of Bell Atlantic Corporation. From 1997 until 1998, he served
as President and Chief Executive Officer of Bell Atlantic's Network Group and
Chairman of the company's Global Wireless Group, one of the largest wireless
operations worldwide, and was Vice Chairman of Bell


37



Atlantic Corporation prior to its merger with NYNEX. He serves on the boards of
directors of Hewlett Packard Company and ARAMARK Corporation.

Kenneth J. Hydon has been a member of our board of representatives since
the company's launch in April 2000. He is Vodafone's Financial Director and has
been a member of Vodafone's board of directors since 1985. He is a Fellow of
the Chartered Institute of Management Accountants, the Association of Chartered
Certified Accountants and the Association of Corporate Treasurers. He is
director of several subsidiaries of Vodafone, and promotes U.S. investor
relations. Mr. Hydon is a member of the Supervisory Board of Vodafone GmbH.

Tomas Isaksson has been a member of our board of representatives since
January 2002. He has been Chief Executive, Americas Region for Vodafone since
January 2002. From March 2000 to January 2002, Mr. Isaksson was President of
Vodafone Global Platform and Internet Services. Prior to that, he was President
and CEO of Swedish mobile operator Europolitan since November 1995. Mr.
Isaksson is a member of the Vodafone Group Executive Committee as well as Group
Operational Review Committee and a board member of Ledstiernan AB. He also is a
member of the board of directors of Grupo Iusacell, S.A. de C.V., ATX
Technologies, Inc. and Clickmarks, Inc.

Doreen A. Toben has been a member of our board of representatives since
October 2002. She has been the Executive Vice President and Chief Financial
Officer for Verizon Communications since April 2002. From 2000 to April 2002,
she was Senior Vice President and Chief Financial Officer for Verizon's Telecom
Group. From 1997 to 2000, she was Vice President and Controller for Bell
Atlantic Corporation and a member of Bell Atlantic's Executive Committee. Prior
to that, she held various financial positions at Bell Atlantic.

Lowell C. McAdam has been our Executive Vice President and Chief Operating
Officer since the company's launch in April 2000. From September 1997 to April
2000, he was President and Chief Executive Officer of PrimeCo. Prior to that he
was the Executive Vice President and Chief Operating Officer of PrimeCo since
November 1994. Mr. McAdam joined AirTouch in 1993 where he served in a number
of key positions, including Vice President-International Operations, and Lead
Technical Partner for cellular ventures in Spain, Portugal, Sweden, Italy,
Korea and Japan. From 1983 to 1993, he held various executive positions with
Pacific Bell.

Richard J. Lynch has been our Executive Vice President and Chief Technical
Officer since the company's launch in April 2000. From 1995 to 2000, he was the
Executive Vice President and Chief Technology Officer for Bell Atlantic Mobile
and Bell Atlantic NYNEX Mobile. He served as Chairman of the Wireless Data
Forum (formerly the CDPD Forum). Under his guidance, the CDPD forum was
reformed as the Wireless Data Forum embracing all wireless data technologies
and a wider variety of members. He has served as an executive board member of
the CDMA Development Group, an organization responsible for promotion,
advancement, deployment and future developments of CDMA. In addition, Mr. Lynch
is a senior member of The Institute of Electrical and Electronics Engineers,
Inc. (IEEE) and is a member of the board of directors of Sierra Wireless, Inc.

Andrew N. Halford has been our Vice President and Chief Financial Officer
since April 2002. From 1999 to 2002, he served as a Financial Director for
various Vodafone businesses, including its Northern Europe, Middle East and
Africa region encompassing nine countries serving populations of more than 300
million people. Prior to this, he held a number of business development, IT and
finance directorships in the UK electricity sector from 1992 to 1998. Mr.
Halford started his career with Price Waterhouse and worked for them from 1980
to 1992, based both in the UK and South Africa. He is a Fellow of the Institute
of Chartered Accountants in England and Wales, having qualified in 1983.

Roger Gurnani has been our Vice President--Information Systems and Chief
Information Officer since the company's launch in April 2000. From April 1997
to April 2000, he served as Vice President and Chief Information Officer at
Bell Atlantic Mobile. Prior to joining Bell Atlantic Mobile, he was Executive
Director-Broadband Systems with Bell Atlantic from October 1994 to April 1997.
Prior to that, Mr. Gurnani held a number of information technology positions at
WilTel (now WorldCom).

John G. Stratton has been our Vice President and Chief Marketing Officer
since March 2001. He served as President of our company's Northwest Area from
2000 to 2001. Previously, he was President of Bell Atlantic Mobile's
Philadelphia Region from 1999 to 2000. He also served as Vice President of
Marketing and Regional Vice President--Retail Sales and Operations for the New
York Metro market since joining Bell Atlantic Mobile in 1993. Prior to that, he
was Vice President of Merchandising for Jersey Camera.

Marc C. Reed has been our Vice President--Human Resources since the
company's launch in April 2000. He was Vice President--Human Resources for GTE
Communications Corporation, GTE's competitive local exchange carrier, from 1997
to April 2000. Prior to that, Mr. Reed was Director-Human Resources for GTE
Wireless from 1993 to 1997. He began his career with GTE in 1986 at GTE's world
headquarters.


38



S. Mark Tuller has been our Vice President--Legal and External Affairs and
General Counsel since the company's launch in April 2000 and our Secretary
since May 2000. He served as Vice President--Legal and External Affairs,
General Counsel and Secretary for Bell Atlantic Mobile and Bell Atlantic NYNEX
Mobile from 1995 to 2000. Previously, he was Vice President and General Counsel
for Bell Atlantic Mobile since 1992. He was at Bell Atlantic Network Services,
Inc. beginning in 1990. In 1986, he moved to Bell Atlantic corporate
headquarters and previously he was Vice President and General Counsel for Bell
Atlanticom Systems, Inc. Mr. Tuller is currently a member of the board of
directors of the Cellular Telecommunications & Internet Association. Mr. Tuller
began his legal career at the Federal Trade Commission where he served as
Attorney Advisor to the chairman. He later practiced antitrust and general
business litigation at Arnold & Porter.

James J. Gerace has been our Vice President--Corporate Communications
since the company's launch in April 2000. From July 1995 to April 2000, he was
Vice President--Corporate Communications at Bell Atlantic Mobile. Prior to
that, he served as Director of Public Relations for NYNEX Mobile Communications
beginning in 1991. He began his wireless communications career with NYNEX
Mobile Communications in 1986 as Manager of Employee Communications.

Margaret P. Feldman has been our Vice President--Business Development
since May 2001. From April 2000, when the company was launched, until May 2001,
she was Staff Vice President--Tax. Prior to that she served as Assistant Vice
President--State Tax Planning for GTE Corporation from October 1997 to 2000.
From 1995 to 1997, Ms. Feldman was Director of Tax Operations for Telecom
Products and Services for GTE. She began her career at Arthur Andersen & Co. in
1982, joined Contel Corporation in 1987 and GTE Mobilnet in 1991.

Item 11. Executive Compensation
- -------------------------------------------------------------------------------

The human resources committee of our board of representatives establishes
and administers the compensation and benefit plans for our chief executive
officer and each of our four most highly compensated executive officers, whom
we refer to as named executive officers. Mr. Halford became our Chief Financial
Officer as of April 1, 2002 pursuant to an international assignment agreement
with Vodafone. His salary in the summary compensation table below reflects
total salary received for fiscal year 2002. Vodafone compensates Mr. Halford
for his services, and we then reimburse Vodafone.

Prior to the contribution of assets by Verizon Communications and Vodafone
to us on April 3, 2000, each of the named executive officers was employed and
compensated by one of our predecessor companies. Since April 3, 2000, all of
our named executive officers have participated in our benefit plans. In
addition, Mr. Strigl continues to participate in selected Verizon
Communications benefit plans and Mr. Halford continues to participate in
Vodafone benefit plans.

Summary Compensation Table

As further described below, the compensation structure for the named
executive officers consists of:

o salary;
o short-term incentive paid in cash; and
o long-term incentive in the form of value appreciation rights and
stock options to purchase common stock.

Salary. Salaries listed in the summary compensation table represent the total
salary for 2000, 2001 and 2002 including:

o the salary paid to each named executive officer for the first quarter
of 2000 by the applicable predecessor company; and
o the salary paid by us to each named executive officer for the last
three quarters of 2000 and all of 2001 and 2002.


Short-term incentives. Bonuses listed in the table below represent:

o incentive amounts paid pursuant to the applicable predecessor
companies' short-term incentive plan for the first quarter of 2000;
and
o each executive's incentive amount paid pursuant to our short-term
incentive plan for the last three quarters of 2000 and all of 2001
and 2002.

Award values under our short-term incentive plan are based on the
achievement of predetermined revenue, operating cash flow and net subscriber
addition goals and quality and strategic objectives.

The short-term incentive bonus paid to Mr. Halford is based on the
achievement of predetermined objectives pursuant to the Vodafone short-term
incentive plan.

Long-term incentives. Long-term compensation listed in the table below
represents grants made to each named executive officer pursuant to our
long-term incentive plan, other than for Mr. Strigl and Mr. Halford. On an
ongoing basis, our human


39



resources committee sets the number of partnership value appreciation rights
granted to each of the named executive officers each year. All value
appreciation rights are granted with an exercise price not less than fair
market value on the date of grant.

The long term incentives granted to Mr. Strigl and Mr. Halford, are made
pursuant to the Verizon Communications long- term incentive plan and the
Vodafone Group Plc 1999 long term incentive plan, respectively.

Summary Compensation Table
Fiscal Year 2002


--------Annual Compensation---------- --------Long-Term Compensation-------
Other Annual Restricted Options/ LTIP All Other
Compensation Stock Awards Partnership Payments Compensation
Named and Principal Position Year Salary ($) Bonus ($) ($)(2) ($)(3) VARS ($) ($)(6)
- ---------------------------- ---- ---------- ------------- ------------ ------------ ----------- -------- ------------

Dennis F. Strigl 2002 $800,000 $ 1,200,000 $135,513 -- 251,000(4) -- $ 704,579
President and 2001 750,000 915,000 189,200 -- 245,300(4) -- 6,016,665
Chief Executive Officer 2000 712,500 1,212,000(1) 124,400 $3,500,000 527,060(4) -- 3,490,800

Lowell C. McAdam 2002 $524,100 $600,000 -- -- 400,000(5) -- $ 417,852
Executive Vice President
and 2001 501,600 454,000 -- -- 376,331(5) -- 560,778
Chief Operating Officer 2000 437,575 537,000(1) -- -- 197,530(5) 516,796 503,671

Richard J. Lynch 2002 $378,525 $347,000 -- -- 200,000(5) -- $ 202,534
Executive Vice President
and 2001 363,125 262,000 -- -- 190,273(5) -- 253,412
Chief Technical Officer 2000 331,000 306,000(1) -- -- 126,135(5) -- 734,445

Andrew N. Halford 2002 $497,335 $190,500 $38,636 $371,605 294,444(8) $ 407,588
Vice President and Chief
Financial Officer (7)

S. Mark Tuller 2002 $346,050 $315,000 -- -- 175,000(5) -- $ 167,952
Vice President Legal and 2001 332,000 240,000 -- -- 173,964(5) -- 204,095
External Affairs, General 2000 298,250 277,000(1) -- -- 114,576(5) -- 750,987


- ---------
(1) For fiscal year 2000, the data reflects the prorated amounts these
executive officers received under predecessor companies' short-term
incentive plan and our short-term incentive plan.
(2) Mr. Strigl's other annual compensation for 2000, 2001 and 2002 includes
incremental costs for personal use of Verizon Communications' aircraft in
the amount of $98,640, $151,525 and $83,493 respectively. Mr. Halford's
other annual compensation reflects automobile allowances of $38,636.
(3) Mr. Strigl's grant reflects the dollar value of the one-time grant of
restricted stock units based on the closing price of Verizon
Communications common stock on the grant date, September 7, 2000. These
units vest over a five-year period, subject in part to meeting specified
performance and time measures. Additional restricted stock units are
received on each dividend payment date which are determined by dividing
the dividend that would have been paid on the restricted stock units by
the closing price of Verizon Communications common stock on the dividend
declaration date. Mr. Strigl holds a total of 86,235 restricted stock
units, which had a dollar value of $3,341,599 based upon the closing price
of Verizon Communications common stock on December 31, 2002. Mr. Halford's
grant reflects the dollar value of a one-time grant of restricted stock
units based on the closing price of Vodafone common stock on December 31,
2002. These units vest over a two-year period, subject in part to meeting
specified performance measures.
(4) Reflects non-qualified stock option grants made to Mr. Strigl in 2000,
2001 and 2002 to purchase Verizon Communications common stock.
(5) Reflects partnership value appreciation rights granted under our long-term
incentive plan in 2000, 2001 and 2002.
(6) For fiscal year 2002, includes payments of retention bonuses for Messrs.
McAdam in the amount of $334,994. In addition, includes contributions by
us to qualified plans for Messrs. Strigl, McAdam, Lynch and Tuller in the
amounts of $15,400, $15,400, $15,400 and $15,400, respectively;
contributions by us to non-qualified plans for Mr. McAdam, Lynch and
Tuller in the amounts of $64,058, $36,414 and $31,943, respectively;
contributions by us to the Verizon Wireless Retirement Plan for Mr.
McAdam, Lynch and Tuller in the amounts of $3,400, $3,400 and $3,400
respectively; contributions by Verizon Communications to Mr. Strigl under
the non-qualified income deferral plan in the amount of $572,207; a
contribution by Verizon Communications to Mr. Strigl of $116,972, which is
the value of the benefit to Mr. Strigl of a company-paid split dollar life
insurance premium, determined by projecting on an actuarial basis the
benefit between payment of the premium and the termination of the policy.
As of July 2002, Verizon Communications suspended premium payments towards
these executive life insurance policies pending further evaluation of the
status of these policies. Also included are contributions by us to Messrs.
Lynch and Tuller under the executive transition and retention retirement
plan in the amounts of $147,320 and $117,209, respectively; and, for Mr.
Halford, company contributions in the form of shares of Vodafone stock
under the Vodafone profit sharing scheme with a value of $3,211, the
Vodafone Group share incentive plan with a value of $1,811, a contribution
by Vodafone to the Vodafone Group pension scheme and Vodafone group funded
unapproved retirement benefit scheme of $94,178 and $85,154, respectively;
and relocation expenses and overseas allowances of $223,234.
(7) Mr. Halford is paid in UK pounds sterling. All amounts shown are in U.S.
dollars at an exchange rate of (pound)1 = $1.6095, the reference exchange
rate for December 31, 2002. Mr. Halford's salary includes a premium of
$90,534 for his additional responsibilities in the United States.
(8) Reflects a stock option grant Mr. Halford received in 2002 under the
Vodafone Group Plc 1999 long term incentive plan.


40



Year 2002 Grants of Stock Options and Partnership Value Appreciation Rights

The following tables describe grants of stock options or partnership value
appreciation rights to each of our named executive officers for the year ending
December 31, 2002.

Verizon Communications Stock Options

Options to purchase Verizon Communications common stock were granted in
2002 pursuant to the Verizon Communications long-term incentive plan.


% of Total Potential Realizable Value
Number of Securities Options Granted Exercise or at Assumed Annual Rates
Underlying Options to Employees in Base Price Expiration of Stock Price Appreciation
Name Granted Fiscal Year ($/Share) Date for Option Term
- ---- -------------------- --------------- ----------- ---------- ---------------------------
5% 10%
-- ---

Dennis F. Strigl(1)... 251,000(2) 0.8% $48.67 1/23/2012 $7,682,684 $19,469,429


- ---------
(1) No partnership value appreciation rights have been granted to Mr. Strigl.
(2) One-third of the options are exercisable on January 24, 2003; two-thirds
are exercisable on January 24, 2004; and the balance is exercisable on
January 24, 2005.


The potential realizable value is calculated based on the term of the
option. It is calculated assuming that the fair market value of the common
stock of Verizon Communications on the date of the grant appreciates at
projected annual rates compounded annually for the entire term of the option
and that the option is exercised and sold on the last day of its term for the
appreciated stock price. These numbers are calculated based on the requirements
of the SEC and do not reflect our estimate of future stock price growth.

Verizon Communications' options generally vest as to one-third of the
aggregate number of shares each year, commencing one year after the date of
grant. These options include a reload feature, which provides that, if an
optionee exercises a stock option by delivering previously owned shares that
are sufficient to pay the exercise price plus applicable tax withholdings, he
or she will receive an additional stock option grant. The number of shares
represented by that option will be equal to the number of previously owned
shares surrendered in this transaction. This replacement stock option will be
granted with an exercise price equal to the fair market value of the underlying
stock on the date of grant and will become exercisable six months from the date
of the grant.

Partnership Value Appreciation Rights

Partnership value appreciation rights were granted in 2002 pursuant to our
long-term incentive plan.


% of Total Potential Realizable Value
Number of Securities VARs Granted Exercise or at Assumed Annual Rates
Underlying VARs to Employees in Base Price Expiration of Stock Price Appreciation
Name Granted Fiscal Year ($/VAR) Date for VAR Term
- ---- -------------------- --------------- ----------- ---------- ---------------------------
5% 10%
-- ---


Lowell C. McAdam(1)..... 400,000 0.74% $8.7400 7/23/2012 $2,198,616 $5,571,724
Richard J. Lynch(1)..... 200,000 0.37% 8.7400 7/23/2012 1,099,308 2,785,862
S. Mark Tuller(1)....... 175,000 0.32% 8.7400 7/23/2012 961,894 2,437,629


- ---------
(1) On July 23, 2002, Messrs. McAdam, Lynch and Tuller received grants under
our long-term incentive plan. These grants vest at the same time in full
on July 23, 2005.


The potential realizable value is calculated based on the term of the
partnership value appreciation right. It is calculated using the fair market
value of the value appreciation right on the date of grant, which represents
the value of the firm as of December 31, 2002 and appreciates at projected
annual rates compounded annually for the entire term of the value appreciation
right and that the right is exercised and sold on the last day of its term for
the appreciated stock price. These numbers are calculated based on the
requirements of the SEC and do not reflect our estimate of future stock price
growth.


41



Vodafone Group Plc Stock Options

Options to purchase Vodafone common stock were granted in 2002 pursuant to
the Vodafone Group Plc 1999 Incentive Plan.


% of Total Potential Realizable Value
Number of Securities Options Granted Exercise or at Assumed Annual Rates
Underlying Options to Employees in Base Price Expiration of Stock Price Appreciation
Name Granted Fiscal Year ($/Share) Date for Option Term
- ---- -------------------- --------------- ----------- ---------- ---------------------------
5% 10%
-- ---

Andrew N. Halford(1) .... 294,444 0.48% 1.4486 07/01/2012 268,243 679,781


- ---------
(1) On July 1, 2002, Mr. Halford received a grant under Vodafone's long-term
stock incentive plan.


The potential realizable value is calculated based on the term of the
option. It is calculated assuming that the fair market value of Vodafone common
stock on the date of grant appreciates at projected annual rates compounded
annually for the entire term of the option and that the option is exercised and
sold on the last day of its term for the appreciated stock price. These numbers
are calculated based on the requirements of the SEC and do not reflect our
estimate of future stock price growth.

Aggregate Exercise in Year 2002 and Year-End Values of Options and Value
Appreciation Rights

The following table provides information for the named executive officers
regarding exercises of Verizon Communications options, partnership value
appreciation rights and Vodafone options in 2002. Additionally, the table
provides the value of unexercised options and value appreciation rights which
have been based on the fair market value of the shares of common stock of
Verizon Communications and Vodafone and on the value of the partnership
appreciation rights on December 31, 2002, less the applicable exercise price.


Shares Number of Unexercised Value of Unexercised
Acquired Options/VARs In-The-Money Options/
on Exercise Value Realized as of 12/31/02 (#) VARs as of 12/31/02 ($)
--------------------- -----------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --- --- ----------- ------------- ----------- -------------

Dennis F. Strigl(1)....................... -- -- 448,891 856,896 13,956 --
Lowell C. McAdam(2)....................... -- -- -- 973,861 -- --
Andrew N. Halford(3)...................... -- -- 125,500 513,744 -- 110,197
Richard J. Lynch(2)....................... -- -- -- 516,408 -- --
S. Mark Tuller(2)......................... -- -- -- 463,540 -- --


- ---------
(1) Represents Verizon Communications options.
(2) Represents Verizon Wireless partnership value appreciation rights granted
pursuant to our long-term incentive plan.
(3) Represents Vodafone options.


Retirement and Other Plans

Verizon Communications Income Deferral Plan

Mr. Strigl participates in the Verizon Communications income deferral
plan. This plan is a nonqualified, unfunded, supplemental retirement and
deferred compensation plan under which an individual account is maintained for
each participant. The plan allows the participants to defer voluntarily a
portion of their compensation and also provides retirement and other benefits
through credits to the participant's account under the plan. The plan allows
the participants to defer voluntarily the receipt of up to 100% of their
eligible compensation, and also provides retirement and other benefits to
certain executives through credits made by Verizon Communications to the
participant's account under the plan. Eligible compensation consists of:

o a participant's base salary in excess of the Internal Revenue Code
limit on compensation for qualified retirement plans, which was
$200,000 in 2002;
o all of the participant's annual incentive award under the Verizon
Communications short-term incentive plan; plus
o retention awards or other bonuses which the plan administrator
determines are eligible for deferral.

If a participant elects to defer income, Verizon Communications provides a
matching contribution equal to the rate of match under the qualified savings
plan for management employees. In most cases, that rate is 100% of the first 4%
of eligible


42



compensation deferred and 50% of the next 2% of eligible compensation deferred.
In addition, for the first 20 years of participation in the plan for certain
participants, Verizon Communications automatically makes retirement
contributions to a participant's account equal to 32% of the base salary, in
excess of $200,000, and short-term incentive award components of the
participant's eligible compensation. Thereafter, Verizon Communications makes
retirement contributions equal to 7% of such eligible compensation.

Verizon Communications maintains an individual account for each
participant in the income deferral plan. For 2002, Verizon Communications'
matching and retirement contributions to Mr. Strigl's account were $572,207,
with an aggregate account balance of $2,909,493.

Vodafone Americas Asia Inc. Deferred Compensation Plan

Mr. McAdam participated in the Vodafone Americas Asia Inc. deferred
compensation plan. This plan is a nonqualified, supplemental retirement and
deferred compensation plan. The plan allowed Mr. McAdam to defer all or a part
of his base salary and specified other incentive compensation and made him
eligible to receive a matching contribution up to 6% of his base salary and
specified other incentive compensation in excess of the Internal Revenue Code
limit on compensation for qualified retirement plans. Mr. McAdam no longer
participates in this plan. However, he continues to receive interest on his
account balance at a rate equal to the October valuation of the 10-year
Treasury note plus 2%.

Verizon Wireless Executive Savings Plan

Messrs. McAdam, Lynch and Tuller participate in the Verizon Wireless
executive savings plan (formerly, the Bell Atlantic Mobile Executive Savings
Plan). The plan allows participants to defer voluntarily a portion of their
compensation. Participants are allowed to defer:

o all or a portion of a participant's base salary in excess of the
Internal Revenue Code limit on compensation for qualified retirement
plans, which was $200,000 in 2002; plus
o all or a portion of the participant's annual incentive award under
the Verizon Wireless short-term incentive plan.

If a participant defers base salary through the plan, we provide a matching
contribution generally equal to 100% of the first 6% of the participant's
compensation contributed under the plan. This plan is a nonqualified, unfunded,
supplemental retirement and deferred compensation plan. Amounts deferred in the
plan are invested in a fixed-income fund or a phantom partnership equity fund
at the discretion of the participant, who is entitled to switch between funds
on a daily basis.

The portion of Messrs. McAdam's, Lynch's and Tuller's accounts
attributable to us as of December 31, 2002 was $64,058, $36,414 and $31,943,
respectively.

Bell Atlantic NYNEX Mobile Executive Transition and Retention Retirement Plan

Messrs. Lynch and Tuller participate in the Bell Atlantic NYNEX Mobile
executive transition and retention retirement plan. This plan is a
non-qualified, unfunded supplemental retirement plan under which an individual
account is maintained for each participant. Participants' accounts are fully
vested at all times. Annually, an amount equal to 23% and 20%, respectively, of
base salary and actual bonus under the Verizon Wireless short-term incentive
plan is credited to the accounts of Messrs. Lynch and Tuller. Amounts are
payable upon separation from service with us or any affiliated company,
including amounts representing a full year of service even if the separation is
effected before the end of that year. As of December 31, 2002, Messrs. Lynch's
and Tuller's account balances were $1,032,780 and $808,062, respectively.

Verizon Enterprises Management Pension Plan

Mr. Lynch participated in the Verizon Enterprises management pension plan.
This is a non-contributory, tax-qualified pension plan that provides for
distribution of benefits in a lump sum or an annuity, at the participant's
election. Mr. Lynch's active participation in the plan ended on June 30, 1995.
His accrued benefit of $2,827.72, expressed as a single life annuity payable at
age 65, reflects service and pay history while employed by Bell Atlantic prior
to July 1, 1995.


43



Bell Atlantic Executive Management Retirement Income Plan

Mr. Lynch participated in the Bell Atlantic executive management
retirement income plan. This is a non-contributory, nonqualified excess pension
plan that provides for distribution of benefits in a lump sum or an annuity, at
the participant's election. Mr. Lynch's active participation in the plan ended
on June 30, 1995. His accrued benefit of $3,235.73, expressed as a single life
annuity payable immediately, reflects service and pay history while employed at
Bell Atlantic prior to July 1, 1995.

Verizon Wireless Retirement Plan

Messrs. McAdam, Lynch and Tuller participate in the Verizon Wireless
retirement plan. Verizon Wireless provides a transitional contribution of 2% of
eligible pay up to the Internal Revenue Code limit on compensation for
qualified retirement plans, which was $200,000 in 2002, for all eligible
employees who were actively employed as of January 1, 2001 and who are not
continuing to participate in a pension plan sponsored by GTE or its successor.
The transitional benefit is provided annually. The first contribution was made
during the first quarter of 2002 for the 2001 plan year. The transitional
contribution is expected to continue until, but not after, the 2004 plan year.
The portion of Messrs. McAdam's, Lynch's and Tuller's accounts contributed by
us as of December 31, 2002 was $3,400, $3,400 and $3,400, respectively.

Vodafone Group Pension Schemes

Mr. Halford participates in the Vodafone Group pension scheme. This is a
defined benefit scheme restricted by the UK Inland Revenue earnings limits. Mr.
Halford also participates in the Vodafone Group funded unapproved retirement
benefit scheme which is a defined contribution scheme allowing contributions in
excess of the UK Inland Revenue cap. The amounts contributed in 2002 by
Vodafone to the Vodafone Group pension scheme and Vodafone Group funded
unapproved retirement benefit scheme are $85,154 and $94,178, respectively.

The following table shows the total estimated annual pension benefits
payable to Mr. Halford under the Vodafone Group pension scheme upon retirement
at age 60, the normal retirement age at Vodafone Group Plc. The "pensionable
remuneration" covered by this plan is presently capped by the UK Inland Revenue
at an annual maximum of $157,000. For purposes of this table, "pensionable
remuneration" means base salary only. The amounts set forth below are not
subject to any deduction for Social Security or any other offset.

Years of Service
----------------
Pensionable Remuneration ($) 15 20 25 or more
- ---------------------------- -- -- ----------
125,000 $62,500 $83,333 $83,333
150,000 $75,000 $100,000 $100,000
157,000 or more $78,222 $104,296 $104,296

At December 31, 2002, the number of creditable years of service and
pensionable remuneration for Mr. Halford was 4 years and $157,000,
respectively. As of December 31, 2002, the accrued actuarial value of his
benefit is $199,708.

2000 Verizon Wireless Long Term Incentive Plan

Messrs. McAdam, Lynch and Tuller participate in the 2000 Verizon Wireless
long-term incentive plan, pursuant to which they have been granted partnership
value appreciation rights. The plan also provides for the following awards:
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code, nonqualified stock options, deferred stock, dividend equivalents,
performance awards, restricted stock awards, stock appreciation rights and
other stock-based awards. While stock options and stock awards have been
authorized under the plan, the issuance of such securities is not currently
contemplated by our partnership agreement and accordingly would require further
authorization by our partners before issuance.

The following individuals are eligible to receive awards under our plan,
including value appreciation rights:

o our officers or officers of an affiliated company;
o other of our employees or employees of an affiliated company;
o individuals whose services are leased or seconded to us or to an
affiliated company; and
o consultants who perform bona fide services for us or for an
affiliated company.

Unless the plan committee determines otherwise, the exercise price of each
value appreciation right may generally not be less than the fair market value
on the date of grant. Except as otherwise provided by the plan committee or
otherwise provided in the plan, a value appreciation right will become fully
exercisable on the third anniversary of the date of grant and will expire on


44



the tenth anniversary of the date of grant, subject to earlier expiration as
provided in the plan. In the sole discretion of the plan committee, in the
event of our initial public offering or an initial public offering of any
affiliated company which serves as a public offering vehicle representing our
business, value appreciation rights outstanding on the effective date of the
public offering may be converted into stock options to purchase the publicly
traded common stock of us, or if different, the public offering vehicle. If
value appreciation rights are converted, then, unless the plan committee
specifies otherwise, such converted stock options will become exercisable
according to the terms specified by the plan committee.

The plan committee may provide in each participant's grant document the
effect that a change in control of our company (as defined in the plan) will
have on his or her grant. Our board of representatives may generally amend or
terminate the plan at any time. The plan will terminate on the tenth
anniversary of its effective date, unless our board of representatives
terminates the plan earlier or extends it with approval of the stockholders.

Vodafone Group Plc 1999 Incentive Plan

Mr. Halford currently participates in the Vodafone Group Plc 1999
long-term incentive plan under which he received an option grant in 2002. The
plan is administered at the discretion of the Vodafone Group Plc remuneration
committee. Option grants are normally made within six weeks following the
announcement of Vodafone's results on the London Stock Exchange for any
financial period. Options granted under the plan are subject to performance
conditions that are aimed to link the exercise of options to improvements in
the financial performance of Vodafone. Subject to any performance conditions,
options granted under the Vodafone Group Plc 1999 stock incentive plan are
normally exercisable between three and ten years after their grant.

Mr. Halford also received a restricted stock award under the plan.
Eligible employees are granted an award of Vodafone ordinary shares which are
transferred, together with any dividends on such shares, to the employee on a
specified date if he or she remains employed by Vodafone through that date and
Vodafone satisfies predetermined performance targets. Upon a change in control
of Vodafone, the trustees of the plan will take whatever action they consider
appropriate, including exercising their discretion to transfer any ordinary
shares underlying an award. In 2002, Mr. Halford received an award of 203,870
shares at $371,605, which represents the fair market value on December 31,
2002.

Vodafone Group Profit Sharing Scheme

Mr. Halford participated in the Vodafone Group profit sharing scheme until
March 31, 2002. Under this plan, eligible employees can contribute up to 5% of
their salary each month, up to a maximum of $1,070 per month, to enable
trustees of the plan to purchase shares of Vodafone stock on their behalf, with
an equivalent number of shares being purchased for the employee by Vodafone. As
of December 31, 2002, Mr. Halford has contributed $3,211 of base salary to the
plan and the value of the shares contributed by Vodafone is $3,211. The
Vodafone Group profit sharing scheme was terminated on March 31, 2002 and
replaced by the Vodafone Group share incentive plan on April 1, 2002 under
which eligible employees may contribute up to a maximum of $201 per month but
otherwise operates in a similar way to the profit sharing scheme.

Employment Arrangements

Dennis F. Strigl. Under the terms of Mr. Strigl's employment agreement
with us, he has received a base salary of at least $750,000 (and, effective
January 1, 2002, at least $800,000). In addition, the agreement provides Mr.
Strigl with:

o an opportunity to earn a performance-based cash bonus in accordance
with our short-term incentive plan;
o an opportunity to earn equity awards under Verizon Communications
long-term incentive plan;
o a retention bonus, paid in July 2001, since Mr. Strigl remained in
our continuous employ through June 30, 2001 equal to the sum of 100%
of his 2001 base salary, 50% of his 2001 short-term incentive
opportunity and 100% of his 2001 long-term incentive opportunity;
o a one-time grant of an option to purchase 400,000 shares of Verizon
Communications common stock;
o a one-time grant of 80,000 restricted stock units with respect to
shares of Verizon Communications common stock, of which one-third of
the units will vest over a five-year period from the grant date,
one-third of the units will vest based on the growth of the annual
revenues of Verizon Communications and one-third of the units will
vest based on the growth of the earnings per share of Verizon
Communications common stock; and
o other customary benefits and perquisites.

Mr. Strigl's employment agreement has a three-year term effective July 1,
2000, but beginning on July 1, 2001 and on each day thereafter, the remaining
term will be two years except as expressly modified by the parties in writing.
Under the agreement, Mr. Strigl will be entitled to the following payments and
benefits if we terminate his employment without cause or if he terminates such
employment for good reason, which includes the occurrence of a change in
control as defined in the employment agreement:


45



o a lump-sum cash payment equal to Mr. Strigl's base salary, 50% of his
maximum short-term bonus opportunity and 100% of his long-term bonus
opportunity for the remaining term of employment, reduced by any
amounts payable under any severance plan or other arrangement that we
or our subsidiaries, affiliates or portfolio companies sponsor;
o immediate vesting of any unvested stock options, exercisable up to
the earlier of the fifth anniversary of the termination of employment
or the expiration of the options;
o outplacement services; and
o continued benefits under a split-dollar life insurance program. As of
July 2002, Verizon Communications suspended premium payments towards
these executive life insurance policies pending further evaluation of
the status of these policies.

If we experience a change in control and Mr. Strigl terminates his
employment for good reason, as defined in his agreement, and receives the
payments described above, he will also receive a gross-up payment to offset
fully the effect of any excise tax imposed by Section 4999 of the Internal
Revenue Code on any excess parachute payment.

Under the agreement, Mr. Strigl agrees that during employment and for six
months following termination of employment, he will not engage in business
activities relating to products or services similar to those which were or will
be sold to paying customers and for which he then has responsibility to plan,
develop, manage, market or oversee or had any such responsibility within his
most recent 24 months of employment with us, except any such business activity
whose geographic marketing area does not overlap with that of us or our
subsidiaries, affiliates or portfolio companies. Further, during employment and
for one year following termination of employment, Mr. Strigl will not interfere
with our business relations, including for example by soliciting employees,
customers, agents, representatives or suppliers.

Lowell C. McAdam, Richard J. Lynch and S. Mark Tuller. In April of 2000,
we entered into employment agreements with Messrs. McAdam, Lynch and Tuller
with base salaries of $480,000, $350,000 and $320,000, respectively. In
addition, the agreements provide each of these individuals with the opportunity
to earn an annual cash bonus in accordance with the terms of the partnership's
short-term incentive plan and to receive stock-based awards under the
partnership's long-term incentive plan.

In addition, Mr. McAdam is entitled to receive the following amounts under
his previous employment agreement with Vodafone and his current retention
agreement:

o $620,000 payable upon the termination of the employment agreement;
o $310,000, paid in April 2002; and
o $500,000, paid in October 2001 under his retention agreement.

Each employment agreement has a three-year term effective April 3, 2000,
but the term is automatically extended on a monthly basis except as expressly
modified by the parties in writing. Under the agreements, each of Messrs.
McAdam, Lynch and Tuller will be entitled to liquidated damages if we terminate
their employment without cause or if the executive terminates such employment
for good reason, as defined in the agreements, equal to:

o 150% of their annualized base salary and short-term incentive target
amount payable in 18 monthly installments;
o continued participation in our health and dental insurance plans for
18 months following termination; and
o pro-rata vesting of any unvested long-term incentive awards.

Further, if employment is terminated because it is not renewed, the
executive will be entitled to liquidated damages equal to:

o 100% of their annualized base salary and short-term incentive target
amount payable in 12 monthly installments;
o continued participation in our health and dental insurance plans for
12 months following termination; and
o vesting of any unvested long-term incentive award in accordance with
the terms of the governing plan documents.

Under the agreements, the executives each agree that during employment and
one year following termination of employment, he will not engage in business
activities in the wireless communications industry within or adjacent to the
partnership's geographic footprint relating to products or services similar to
those of the partnership, including any products or services we or an
affiliated company planned to offer. Further, during employment and the two
years following termination of employment they agree not to interfere with our
business relations, including for example by soliciting employees, customers,
agents, representatives, suppliers or vendors under contract.

The Human Resources Committee of the Board of Representatives has approved
successor employment agreements for Messrs. McAdam, Lynch and Tuller, effective
April 3, 2003, following the termination of existing employment agreements.

Andrew N. Halford. Mr. Halford is employed by the Vodafone Group and was
seconded to us for a period of two years beginning on April 1, 2002. Under the
terms of his international assignment agreement with Vodafone, Mr. Halford
received an annual base salary of $497,335, which includes a premium of $90,534
for his additional responsibility in the United States, and was eligible for an
annual bonus of $190,500. Mr. Halford was also entitled to specified
perquisites, including an automobile allowance of $38,636. Mr. Halford is paid
in UK pounds sterling. All amounts above are in U.S. dollars at an exchange
rate of (pound)1=$1.6095, the reference exchange rate for December 31, 2002.
The arrangement requires each party to provide six months' notice in order to
terminate the agreement.


46



Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------------------------------------------------------------------------------

The following table sets forth information regarding beneficial ownership
of our partnership interests held by:

o each of our named executive officers;

o each member of our board of representatives;

o each holder of more than 5% of our outstanding partnership interests;
and

o all current representatives and executive officers as a group.

To our knowledge, except as indicated in the footnotes to this table and
pursuant to applicable community property laws, the persons named in the table
have sole voting and investment power regarding all partnership interests.

%
Partnership
Name and Address of Beneficial Owner Interest
- ------------------------------------ ------------
Verizon Communications Inc. (1)
1095 Ave of the Americas
New York, NY.............................................................55.0%
Vodafone Group Plc (2)
The Courtyard
2-4 London Road
Newbury Berkshire
RG14 1JX England.........................................................45.0%
Ivan G. Seidenberg......................................................... --
Sir Christopher Gent....................................................... --
Lawrence T. Babbio, Jr..................................................... --
Doreen A. Toben............................................................ --
Kenneth J. Hydon........................................................... --
Tomas Isaksson............................................................. --
Dennis F. Strigl........................................................... --
Lowell C. McAdam........................................................... --
Richard J. Lynch........................................................... --
Andrew N. Halford.......................................................... --
S. Mark Tuller............................................................. --
All officers and representatives as a group (11 persons)................... --

- --------------
(1) Includes partnership interests held of record by the following subsidiaries
of Verizon Communications: Bell Atlantic Cellular Holdings, L.P., NYNEX PCS
Inc., PCSCO Partnership, GTE Wireless Incorporated, GTE Consumer Services
Incorporated and GTE Wireless of Ohio Incorporated.

(2) Includes partnership interests held of record by the following subsidiaries
of Vodafone: PCS Nucleus, L.P., JV Partnerco, LLC and AirTouch Paging.

Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------------------------------

The following descriptions are summaries of the material terms of
agreements to which we or certain related persons are a party. They may not
contain all of the information that is important to you. To understand these
agreements fully, you should carefully read each of the agreements, copies of
which have been filed as exhibits with the Securities and Exchange Commission.

U.S. Wireless Alliance Agreement

General

On September 21, 1999, Bell Atlantic, now known as Verizon Communications,
and Vodafone entered into a U.S. wireless alliance agreement to create a
wireless business composed of both companies' U.S. wireless assets. For this
purpose, Verizon Communications and Vodafone agreed to amend and restate the
existing partnership agreement of Cellco Partnership, which had previously been
owned solely by Verizon Communications and through which Verizon Communications
operated its Bell Atlantic Mobile wireless business. Pursuant to the agreement,
Vodafone and Verizon Communications transferred specific U.S. wireless assets
and liabilities to us in exchange for partnership interests. The assets were
conveyed in two stages. The first stage occurred in April 2000 and related to
the transfer of specific wireless assets and liabilities of Vodafone and
Verizon Communications' interest in PrimeCo and other assets to us. The second
stage occurred in July 2000 and related to the transfer of specific wireless
assets and liabilities that were acquired by Verizon Communications through
Bell Atlantic's merger with GTE Corporation. After these contributions, Verizon
Communications has an aggregate partnership interest equal to 55%, and Vodafone
has an aggregate partnership interest equal to 45%.


47


Indemnification

The agreement, as amended, provides for customary indemnification of us by
Verizon Communications and Vodafone. Specifically, subject to limitations
including caps, deductibles and time limitations, it provides that Verizon
Communications will indemnify us for any losses that may result from, arise out
of or relate to:

o any breach of the representations, warranties or covenants contained
in the alliance agreement, other than those related to tax matters;

o any claim, litigation or proceeding arising out of events or a cause
of action which existed prior to April 3, 2000, in the case of claims
relating to the Cellco assets, or prior to July 10, 2000, in the case
of claims relating to the assets transferred to us by Verizon
Communications, with the exception of PrimeCo assets and except to the
extent the claims arise out of transactions contemplated by the
alliance agreement;

o liabilities that were not assumed by us relating to Cellco assets as
of April 3, 2000; and

o liabilities that were not assumed by us relating to the assets
conveyed to the partnership by Verizon Communications as of July 10,
2000.

Similarly, subject to similar limitations, Vodafone will indemnify us for
any losses that may result from, arise out of or relate to:

o any breach of the representations, warranties or covenants contained
in the alliance agreement, other than those related to tax matters;

o any claim, litigation or proceeding arising out of events or a cause
of action which existed prior to April 3, 2000, in the case of claims
relating to all assets transferred to us by Vodafone in the first
stage closing, or prior to July 10, 2000, in the case of claims
relating to the assets transferred to us by Vodafone in the second
stage closing, with the exception of PrimeCo assets and except to the
extent the claims arise out of transactions contemplated by the
alliance agreement;

o liabilities that were not assumed by us relating to the assets
conveyed to us by Vodafone as of April 3, 2000; and

o liabilities that were not assumed by us relating to the assets
conveyed to us by Vodafone as of July 10, 2000.

The agreement also includes a tax indemnity by each partner to us with
respect to any pre-closing income tax liability, although we are generally
liable for pre-closing tax liabilities not involving income taxes.

The agreement provides that we have to indemnify Verizon Communications
and Vodafone for losses that may result from the liabilities that we have
assumed or from events that occur after the applicable closing dates with
respect to transferred assets.

In connection with the alliance agreement, Verizon Communications,
PrimeCo, GTE Wireless and Vodafone were required to dispose of various assets
to eliminate overlapping networks. Our partners retained the cash proceeds of
these dispositions. We agreed to sign an indemnity agreement in the form
contemplated by the alliance agreement in connection with any disposition or
acquisition made by Verizon Communications, including GTE Wireless, or Vodafone
as a result of that requirement. Under these indemnity agreements, we are
required to indemnify the seller for any losses it may incur as a result of
indemnification it is required to provide in connection with those
dispositions, unless the facts or circumstances triggering the losses were of
the type that would be covered by the indemnity provided to us in the alliance
agreement. In addition, those entities agreed to indemnify us for any losses
arising out of assets purchased to the extent they receive reimbursement for
those losses under indemnity rights in the purchase agreement.


48



Settlement Strategy Agreement

Vodafone and Verizon Communications have entered into a settlement
strategy agreement which sets out the principal terms upon which Vodafone and
Verizon Communications intend to minimize the possibility of potential
litigation and to pursue a settlement of any claims made or litigation
commenced in connection with the alliance agreement. Pursuant to the agreement,
we have full authority to obtain consents with respect to claimed rights of
consent, rights of first refusal, put rights, default or similar claims made by
a third party with respect to the assets conveyed pursuant to the alliance
agreement. The parties contemplate that the resolution of third party rights
with respect to a conveyed asset may result in a payment to the right holder, a
sale by a party of the conveyed asset to the right holder and/or a purchase by
a party of an additional ownership interest in the conveyed asset. All
resulting liabilities and costs incurred after April 3, 2000 have been assumed
by us.

Partnership Agreement

Partnership Governance

Our company is governed by a board of representatives that is comprised of
four Verizon Communications representatives and three Vodafone representatives,
so long as Verizon Communications and Vodafone each owns at least 20% of the
partnership. Other than as described below, a majority of our board of
representatives can make all decisions.

The partnership agreement provides that the following matters require
approval by at least two representatives of each of Verizon Communications and
Vodafone so long as Vodafone and its included affiliates, as defined under
"--Restrictions on Transfer", owns at least 20% of the partnership:

o our engagement in any line of business or activity other than the
business described below under "--Business of the Partnership" or any
other business that is necessary, appropriate or incidental thereto;

o our voluntary dissolution or liquidation or similar actions, or any
action contrary to the preservation and maintenance of our existence,
rights, franchises and privileges as a Delaware general partnership;

o any acquisition or disposition or series of related acquisitions or
dispositions of assets, net of liabilities, of the partnership, which
in the aggregate have a fair market value in excess of 20% of the fair
market value of all of our net assets on a consolidated basis;

o transactions, other than transactions under some existing agreements,
between us and a partner or an affiliate of the partner having a value
in excess of amounts that range between $10.0 million and $25.0
million, depending on the type of transaction, or having a term in
excess of five years;

o the issuance by us of any partnership interests, or the admission of
any partners to the partnership, other than issuances of partnership
interests to, or the admission as a partner of members of the Verizon
group, members of the Vodafone group or their respective permitted
transferees in accordance with the provisions of the alliance
agreement, the investment agreement or the partnership agreement;

o mergers, consolidations or similar transactions other than
acquisitions by us that do not involve the issuance of partnership
interests as consideration and for which approval would not otherwise
be needed by any other provision;

o the redemption or repurchase by us of any partnership interests unless
expressly permitted by the alliance agreement, the investment
agreement or the partnership agreement;

o any amendment or modification to the partnership agreement, except for
any amendment or modification to the current distribution policy after
it expires;

o any capital contributions to us by any partner other than their
initial capital contribution; and

o the selection, or any decision to remove, our independent auditors if
they are also the principal independent auditor for Verizon
Communications.

As a result of provisions summarized above, Vodafone has veto power over these
significant actions.


49



In addition, Vodafone has the right to appoint one of our significant
officers so long as it holds at least 20% of our partnership interests. Mr.
Halford, our Vice President and Chief Financial Officer, was selected by
Vodafone.

Distributions

The partnership agreement requires that we make certain distributions to
our partners related to taxes. We are also required, subject to compliance with
financial tests, including a 2.5 to 1 leverage ratio and 5 to 1 interest
coverage ratio (unless less restrictive ratios are selected by officers of our
company), to pay additional distributions to our partners in an amount equal to
70% of our pre-tax net income from continuing operations plus amortization
expense related to the amortization of intangible assets arising out of
transactions contemplated by the alliance agreement, to the extent this amount
exceeds the tax distribution. We made distributions of $691 million in February
2001, $862 million in August 2002 and $1,225 million in February 2003.
Approximately $112 million of the distribution in February 2003 represented a
supplemental distribution. We did not make scheduled distributions in August
2001 and February 2002 because the payments were limited by the 2.5 to 1
leverage ratio stipulated in the partnership agreement.

This distribution policy applies until the earlier to occur of (1) April
3, 2005 and (2) the date when Vodafone and its included affiliates cease to
own, directly or indirectly, at least 20% of all outstanding partnership
interests.

After the current distribution policy expires, we must continue tax
distributions, and a new distribution policy is expected to be set that may
provide for additional distributions above tax distributions. In making a
decision on a new distribution policy, relevant factors, including our
financial performance and capital requirements will be taken into account.

As an exception to the general allocation and distribution provisions in
the partnership agreement, the partnership agreement provides that if we
dispose of an asset with a built-in gain for tax purposes contributed at the
first stage closing in April 2000 or that was contributed to the partnership in
the second stage closing in July 2000, in accordance with applicable tax rules
the taxable gain recognized on the disposition of such asset to the extent of
the remaining original built-in gain in existence at the time of disposition
will be specially allocated to the contributing partner. The partnership
agreement also provides for a special distribution, and a special allocation of
income, to the contributing partner in respect of such built-in gain.

Business of the Partnership

Unless otherwise approved by Verizon Communications and Vodafone, the
partnership agreement limits our business to the acquisition, ownership,
operation and maintenance, with the goal of maximizing long-term value, of a
wireless communications network that provides a full range of wireless voice
and data services, including wireless Internet access and long-distance resale,
throughout the U.S. to the extent that these services are commercially economic
or are competitively necessary, as well as any business necessary, appropriate
or incidental to that business.

Non-competition

The partnership agreement provides that no partner or affiliate of a
partner may engage in the provision of mobile telecommunications services,
whether directly or as a reseller, in the U.S., but excluding Puerto Rico and
its other possessions and territories, including mobile third generation
services delivered over any wireless spectrum, other than through the
partnership. These prohibitions generally do not restrict partners or their
affiliates from the following:

o fixed wireless local loop or wireless telecommunications businesses
engaged in by a partner or its affiliates as an adjunct to its
wireline service offering, fixed wireless high speed data services,
fixed wireless video services and satellite communications services;

o any wireless business opportunity that is rejected by our board of
representatives so long as each of the representatives designated by
that partner voted in favor of the partnership's pursuit of that
business; provided that once that partner begins to pursue that
business opportunity, the other partners may also do so;

o any wireless activity engaged in by an entity in which a partner owns
less than 40% of the total equity and with respect to which such
partner does not have more than protective rights;

o any investment in any entity to the extent that it does not exceed 10%
of the equity of that entity except as a result of equity repurchases
or recapitalizations;


50



o any wireless business acquired by Verizon Communications or Vodafone,
or their respective affiliates, as part of a larger business
combination where the wireless business does not represent more than
40% of the total value of the acquired business;

o any significant corporate transaction to which either Verizon
Communications or Vodafone is a party and which results in a
significant change in control of Verizon Communications or Vodafone;

o a partner from owning or acquiring specified assets identified in the
alliance agreement; or

o a partner or any of its affiliates from selling the partnership's
mobile telecommunications services (1) as an agent of the partnership
or (2) on a "bundled" basis with wireline services, so long as the
partner provides the partnership with the opportunity to purchase
wireline services from the partner.

The partnership agreement provides that the non-competition provisions
terminate upon the earliest of (1) the date the partnership interest held by
Verizon Communications and its affiliates decreases to less than 40%, (2) the
date the partnership interest held by Vodafone and its included affiliates
decreases to less than 20% and (3) July 10, 2005, subject to repeated one-year
extensions so long as Vodafone and its included affiliates hold at least 25% of
our outstanding partnership interests.

Other than the non-compete provisions described above, the partnership
agreement does not limit the businesses or activities of any partner even if
those businesses or activities are competitive with us. The agreement further
states that if a partner or its affiliates, officers, directors or employees
acquire knowledge of a corporate opportunity that may be an opportunity for
both us and that partner, it will not have any obligation to transmit the
opportunity to us and will have no liability for choosing to pursue the
opportunity itself.

Restrictions on Transfer

A partner generally does not have the right, directly or indirectly, to
transfer any of the partnership interest held by that partner, other than the
following permitted transfers:

o Transfers in accordance with the alliance agreement and the
investment agreement.

o A partner does have the right, without the consent of the other
partners, to transfer ownership of all or any part of its partnership
interest to a wholly-owned subsidiary of the partner and to make
transfers of 10% or more of its partnership interest, or up to three
transfers totalling up to 10%, to any of its affiliates if 50% of the
common equity and voting power in the affiliate is owned by the
partner. Wholly-owned subsidiaries and these other affiliates who
receive less than 10% of the partnership interests are referred to as
"included affiliates." Verizon Communications, its subsidiaries and
its affiliates that receive partnership interests in accordance with
this paragraph are referred to as the Verizon Group, and Vodafone, its
subsidiaries and affiliates who similarly receive partnership
interests are referred to as the Vodafone group.

o Any partner may generally transfer a 10% or greater partnership
interest to any single person, subject to rights of first refusal held
by each other partner, that, together with its wholly-owned
subsidiaries, owns more than 20% of our partnership interests. Sales
by Verizon Communications and its affiliates are not subject to this
right of first refusal. However, so long as Vodafone holds at least
30% of our total outstanding partnership interests, then Vodafone will
have an option, at a price that would include a 2% premium, to
purchase any partnership interest which Verizon Communications intends
to transfer if, as a result of the transfer, a third party would
succeed to Verizon Communication's representative designation rights
or Verizon Communications or the transferee becomes unable to report
their earnings and results of operations with those of the partnership
on a consolidated basis.

Notwithstanding these exceptions, the partners may not sell partnership
interests to specified major competitors of Verizon Communications or Vodafone.

A transferee of an amount of partnership interests equal to at least 25%
of our partnership interests from Vodafone and its wholly-owned subsidiaries is
entitled, if so designated by Vodafone, to the rights of Vodafone contained in
the partnership agreement and all references to Vodafone would then refer
instead to the transferee. Any transferee of an amount of partnership interests
equal to at least 20% of our partnership interests from Verizon Communications
and its wholly-owned subsidiaries is entitled, if so designated by Verizon
Communications, to the rights of Verizon Communications contained in the
partnership agreement and all references to Verizon Communications would then
refer instead to the transferee. Any transferee described in this paragraph is
known as an "exit transferee," and any transfer to an exit transferee is
subject to rights of first refusal as described above.


51



The partnership agreement provides that defined instances of a "change in
ownership" of a partner will be deemed to be a proposed transfer of the
partnership interest to which some of the provisions relating to transfers of
partnership interests will apply. Neither Verizon Communications' nor
Vodafone's right to select representatives, or Vodafone's approval rights over
significant decisions will be transferred to the new holder in the event of a
change of control unless the holder is an exit transferee. A spin-off or
split-off of an entity holding interests in us by Verizon Communications or
Vodafone or their affiliates will not be considered a change in ownership if
the partnership interests held by the entity constitute not more than 75% of
the fair market value of the entity's assets.

Investment Agreement

On April 3, 2000, we, Verizon Communications and Vodafone entered into an
investment agreement.

Vodafone's Put Right

Phase I option

The agreement permits Vodafone to require our company to repurchase from
it and its included affiliates partnership interests at a price equal to their
market value in July 2003 and/or July 2004. The aggregate amount that we are
required to purchase upon exercise of this right may not exceed $10 billion.

Phase II option

The agreement permits Vodafone to require our company to repurchase from
it and its included affiliates partnership interests at a price equal to their
market value in July 2005, July 2006 and/or July 2007 in exchange for the
consideration described below. The aggregate amount that we are required to
purchase upon exercise of this right may not exceed $20 billion less the amount
paid in connection with any exercises of the right described in the prior
paragraph. In addition, no single exercise of the right may be for an amount in
excess of $10 billion.

Market value will be determined on the date when the notice of exercise is
sent. In determining the market value of Vodafone's interests, we will use an
amount agreed to by Verizon Communications and Vodafone or, if they cannot
agree, the amount determined by arbitrators. If there has been an initial
public offering, the market value will be determined by reference to the
trading price of common stock of our managing general partner. The percentage
of Vodafone's interest in the partnership to be sold, in connection with an
exercise, shall be reduced to reflect accretion in the market value between the
date of the notice and the date of settlement at a rate equal to LIBOR plus
1.0% for the first 30 days and LIBOR plus 2.0% thereafter less any
distributions declared by Verizon Wireless and paid to Vodafone with respect to
the interest being sold subsequent to the notice. In the event Vodafone seeks
to exercise the option for an amount greater than its total ownership, we are
required to pay it the value of all of its interests plus for the period
between the date of notice and the date of settlement an amount equal to LIBOR
plus 1.0% for the first 30 days and LIBOR plus 2.0% thereafter less any
distribution declared by Verizon Wireless and paid to Vodafone with respect to
the interest being sold subsequent to the notice.

Verizon Communications' obligations

Under the agreement, Verizon Communications has the right to obligate
itself or its designee, rather than us, to purchase some or all of the
interests covered by the options described above. However, even if Verizon
Communications exercises this right, Vodafone has the option to require us to
purchase up to $7.5 billion of interests in connection with the phase II option
in the form of assumed debt or other consideration, as described below under
"--Consideration to be paid upon exercise of the option." In addition, Verizon
Communications is obligated to purchase interests that we fail to repurchase,
but its liability for all these failures cannot exceed $5 billion for the phase
I option or $10 billion for the phase II option less amounts paid in respect of
the phase I option.

Consideration to be paid upon exercise of the option

Verizon Communications will have the right to deliver to Vodafone cash or,
at Verizon Communications' option, shares of Verizon Communications common
stock. Verizon Communications will be required to grant registration rights to
Vodafone with respect to any of these shares of common stock.


52



We will be required to pay cash. However, in connection with up to $7.5
billion of interests to be purchased pursuant to the phase II option, Vodafone
may require us to assume debt of Vodafone or its designee, or incur debt and
distribute the proceeds to Vodafone or its designee. The debt:

o shall be provided by a third-party lender;

o shall mature 10 years after the date of exercise of the option and not
require any amortization of principal for at least eight years;

o shall be redeemable at the partnership's option after eight years;

o except as stated below, shall be nonrecourse to any existing or future
partners of the partnership; and

o may be guaranteed, at Vodafone's sole option, by Vodafone or its
designee.

We will not be permitted to make any prepayments, voluntarily take any
action that would result in acceleration of the debt or waive any rights or
provide any guarantee or similar credit enhancement for a period of eight years
if the result would be to cause the debt to be allocated under Internal Revenue
Code Section 752 to persons other than persons from which the assumed debt was
assumed.

In lieu of requiring us to assume debt, Vodafone may elect to receive such
amount pursuant to an alternative structure that would be more tax-efficient
for it and would not have a material adverse effect on us. Vodafone will be
required to reimburse Verizon Communications for any resulting postponement in
the realization of tax benefits.

We and Verizon Communications are also required to cooperate to change the
above-described structure if an alternative structure would have more favorable
tax consequences for Vodafone so long as we and Verizon Communications would
not be adversely affected or would be indemnified for any losses caused by the
change.

Initial Public Offering

The agreement prohibits any direct or indirect public offering of
ownership interests in the partnership except issuances of stock by a newly
created general partner as described below or in the form of a tracking stock
or other shares of stock issued by Verizon Communications or Vodafone.

Verizon Communications has the right at any time to monetize all or part
of its investment in us by causing an initial public offering of our equity,
and Vodafone has a similar right beginning in April 2003. The initial public
offering would occur through the creation of a general partner that would issue
the equity and transfer the proceeds to the selling holder in exchange for
partnership interests. The initiating party is required to propose a structure
that preserves our partnership status for tax purposes, does not make us or the
public offering vehicle a registered investment company and does not modify in
any material respect the allocation of governance or economic rights in us. The
agreement provides that holders of partnership interests must be permitted to
exchange their interests for shares of common stock of the initial public
offering vehicle. We had previously announced our intention to undertake an
initial public offering of indirect ownership interests in the partnership,
subject to market and other conditions. The offering would have been
effectuated by Verizon Wireless Inc., a newly formed company that would have
contributed the proceeds of its initial public offering of common stock to us
in exchange for a partnership interest and becoming our managing general
partner. Verizon Wireless Inc. filed a Form S-1 registration statement for the
offering with the Securities and Exchange Commission on August 24, 2000 and an
amendment to the registration statement on November 28, 2001. Verizon Wireless
Inc. withdrew the registration statement on January 29, 2003, stating that the
company currently had no significant funding needs that would require it to
consummate the offering.

Registration Rights

Any new general partner formed as described above must grant registration
rights to Verizon Communications and Vodafone requiring it to register shares
of its common stock issued to them in exchange for partnership interests. It
will be required to use best efforts to register under the Securities Act any
of those shares of common stock for sale in accordance with the intended method
of disposition, subject to customary deferral rights. Each holder will have an
unlimited number of demand registration rights, but no demand may be made
unless the shares to be registered have a market value on the demand date of at
least $200 million. In addition, the holders will have the right to include
their shares in other registrations of equity securities other than on Form S-4
or S-8, subject to customary cutback provisions, although Verizon
Communications and Vodafone are cut back only after all other holders,
including holders exercising their own demand rights, are cut back.

In addition, the agreement provides that the partnership is required to
pay all registration expenses, including all filing fees and other fees and
expenses, other than underwriting discounts and commissions and the fees of
counsel, accountants or other persons retained by the holders. The agreement
also contains customary indemnification and contribution provisions.


53



Verizon Communications Intellectual Property Arrangements

Patents

Subsidiaries of Verizon Communications own various patents related to the
provision of wireless services. Under a license agreement, the subsidiaries
have granted us a perpetual, irrevocable, non-exclusive and non-transferable
license to use some of these patents and related know-how in connection with
the manufacture, sale and import of wireless telecommunications goods and
services in the U.S., its territories and possessions. We also have the right
to sublicense this property to resellers, vendors, agents, distributors,
exclusive dealers and similar persons. We are not required to pay any royalties
for use of these patents.

Pursuant to the alliance agreement, Verizon Communications will license or
transfer to us its rights to GTE Wireless patents regarding the provision of
wireless services used exclusively by GTE Wireless previously in its business
in the U.S.

Trademarks and Domain Names

Verizon Communications has licensed trademarks, service marks, trade names
and domain names to us. We are not required to pay any royalties or fees for
use of these trademarks, service marks, trade names and domain names. Most
notably, Verizon Communications owns the "Verizon" and "Verizon Wireless" brand
names and some service offering names. The license agreements grant
non-exclusive, non-transferable licenses to use the trademarks, service marks,
trade name and domain names in connection with the marketing, advertising, sale
and provision of wireless communications goods and services in the U.S., its
territories and possessions. We also have the right to sublicense this
intellectual property to resellers, vendors, agents, distributors, exclusive
dealers and similar persons. The licenses include quality control standards
governing our use of the intellectual property.

The license to use the "Verizon" and "Verizon Wireless" brand names will
expire 2 1/2 years after the first day an alternate brand is adopted or Verizon
Communications ceases to own any interest in the partnership. Verizon
Communications may also terminate upon breach or insolvency or upon our failure
to perform any material obligations under the license. In addition, pursuant to
the alliance agreement between Verizon Communications and Vodafone, we are
required to change our brand name and discontinue the use of any trademarks
owned by Verizon Communications at any time if we are directed to do so by
Verizon Communications.

The license to use some service offering marks will terminate on the date
that Verizon Communications ceases to own any interest in the partnership. This
license may also be terminated upon 30 days written notice in the event of the
partnership's breach or insolvency.

Pursuant to the alliance agreement, Verizon Communications will license or
transfer to us its rights to various GTE Wireless trademarks, service marks,
trade names and other intellectual property regarding the provision of wireless
services.

Vodafone Intellectual Property Arrangements

Patents

Vodafone Americas, Inc., formerly AirTouch, has assigned various patents
regarding the provision of wireless services outright to us or another
subsidiary of Verizon Communications. We have granted back to AirTouch a
royalty free, perpetual, non-exclusive worldwide license to the patents, with
the right to sublicense them to third parties. We have agreed that we will not
license or otherwise transfer the patents to Verizon Communications, including
its other affiliates and subsidiaries, without AirTouch's prior written
permission.

Software License Agreement

Vodafone Americas, Inc., formerly AirTouch, has also irrevocably assigned
and transferred to us some of its software and related rights. We have granted
back to AirTouch a perpetual worldwide, irrevocable, royalty-free,
non-exclusive transferable license to sell, use, copy and otherwise fully
exploit the software.

Tower Arrangements

We generally lease or pay a monthly fee for, rather than own or control,
the tower space on which our antennas are located. Prior to the formation of
the partnership, Bell Atlantic Mobile, GTE Wireless and Vodafone each entered
into separate


54



transactions with different tower management companies to sell or lease on a
long-term basis the majority of their communications towers and related assets.
In connection with each of these transactions, Bell Atlantic Mobile, GTE
Wireless and Vodafone either entered into global leases for, or reserved antenna
space on, each of the towers in exchange for a monthly rental or site
maintenance payment. The tower companies are also required to build and manage
future towers on which our antennas will be located. In two of the agreements,
the tower company entered into a joint venture with one of our partners. Each of
the tower monetization transactions with those joint ventures is summarized
below:

Bell Atlantic Mobile

In March 1999, Bell Atlantic Mobile formed a joint venture with Crown
Castle to own and operate approximately 1,500 towers, representing
substantially all the towers then owned by Bell Atlantic Mobile. The joint
venture is controlled and managed by Crown Castle, which owns a controlling
interest of 58%, while a subsidiary of Verizon Communications owns a minority
interest of 42%. Under the agreement, the joint venture was entitled to build
and own the first 500 towers built for Bell Atlantic Mobile's wireless network
after the date of the agreement; however, the parties agreed to end their
obligations related to such towers in 2002. The joint venture leases antenna
space on the towers to us at monthly rates ranging from $1,585 to $2,325 per
tower, with annual increases of 3% or the percentage increase in the consumer
price index, whichever is greater.

GTE Wireless

In January 2000, GTE Wireless formed a joint venture with Crown Castle to
own and operate approximately 2,300 towers, representing substantially all the
towers then owned by GTE Wireless not including the towers purchased as part of
the Ameritech properties acquisition. The joint venture is controlled and
managed by Crown Castle, which owns a controlling interest of 80.1%, while a
subsidiary of Verizon Communications owns a minority interest of 19.9%. Under
the agreement, the joint venture was entitled to build and own the first 500
towers built for GTE Wireless' network after the date of the agreement;
however, the parties agreed to end their obligations related to such towers in
2002. The joint venture leases antenna space on the towers to us at the monthly
rate of $1,400 per tower, with annual increases of 4%. At the same time, GTE
Wireless and Crown Castle also signed a letter agreement giving GTE Wireless
the right to contribute up to 600 towers acquired as part of the acquisition of
the Ameritech properties on substantially the same terms and conditions
described above which transaction closed in August 2000.

Vodafone

In August 1999, AirTouch Cellular signed a definitive agreement with
American Tower Corporation for the sublease of all unused space on
approximately 2,100 of its communications towers, in exchange for approximately
$800 million plus a five-year warrant to purchase three million American Tower
shares at $22 per share. In February 2000, AirTouch Cellular also signed a
definitive agreement with SpectraSite Holdings, Inc. for the sublease of unused
space on approximately 430 of its towers in exchange for $155 million. As of
December 31, 2002, approximately 2,200 towers have been subleased, at the
monthly rate of $2,000 per tower. Management believes that the remaining towers
will not be subleased. The tower sublease agreements require monthly
maintenance fees for the existing physical space used by our cellular
equipment. Vodafone also entered into exclusive three-year build-to-suit
agreements with American Tower and SpectraSite to produce new towers in
strategic locations. The build-to-suit agreements were assumed by us upon the
closing of the AirTouch Properties acquisition; however the parties agreed to
terminate the build-to-suit agreement with SpectraSite in 2002. The
build-to-suit agreement with American Tower expired in January, 2003.

Upon the formation of the partnership, Verizon Communications and Vodafone
agreed that proceeds from tower monetization transactions entered into prior to
April 3, 2000 are excluded from the assets of the partnership. The partners
further agreed that they could cause us to enter into further tower
monetization transactions with respect to towers contributed to us by such
partners, excluding any towers previously used by PrimeCo. The proceeds from
these transactions were to be excluded from the assets of the partnership if
the transaction was entered into by April 3, 2001 and is consummated by April
3, 2003, although we would be liable for the financial obligations incurred in
those transactions. No such additional tower monetization transactions were
entered into.

Financing Arrangements

In connection with the alliance agreement, Verizon Communications and
Vodafone contributed to us approximately $9.5 billion of debt, including $5.5
billion of intercompany obligations incurred by Verizon Communications
subsidiaries and $4 billion from Vodafone.

Existing intercompany loans and any additional intercompany loans that may
be made to us to fund future debt financing requirements will be provided by
Verizon Communications or its affiliates at interest rates and other terms that
will be no less


55



favorable than the interest rates and other terms that we would be able to
obtain from third parties, including the public markets, without the benefit of
a guaranty by Verizon Communications or any of its affiliates. As of December
31, 2002, the partnership had approximately $9.4 billion of outstanding
indebtedness borrowed from affiliates of Verizon Communications at a weighted
average interest rate of 5.6%. This includes a $350 million term note from an
affiliate of Verizon Communications that bears a fixed interest rate of
approximately 8.9% per year. This term note was made in connection with our
acquisition of the wireless assets of Price Communications Wireless on August
15, 2002. It is guaranteed by Price Communications Wireless and matures on the
earlier of February 15, 2007 or six months following the occurrence of certain
specified events. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources--Debt
Service."

We had agreements with an entity owned by Verizon Communications and
Vodafone that operated overlapping properties in Chicago, Houston and Richmond
that we were required to dispose of pursuant to FCC regulations and which has
since been sold. Pursuant to the agreements, we provided transition services
and products and employee services and licensed trademarks and copyrighted
materials. As of December 31, 2002, the entity has incurred charges and has an
outstanding balance due of approximately $202 million, including interest.

Other Services Provided to Verizon Communications

Since our formation, we have provided tax services to Verizon
Communications related to resolving tax disputes and controversies relating to
periods prior to our formation. For the year ended December 31, 2001 we have
charged Verizon Communications a total of $0.6 million for these services. Tax
services provided to Verizon Communications were immaterial for the twelve
months ended December 31, 2002.

For the years ended December 31, 2000, 2001 and 2002, in the normal course
of business, we recorded revenues related to transactions with Verizon
Communications affiliated companies of $51 million, $39 million and $20
million, respectively.

Other Services Provided by Verizon Communications

Direct Telecommunication and Data Processing

We incurred direct telecommunication and data processing charges of $272
million, $201 million and $281 million for the years ended December 31, 2000,
2001 and 2002, respectively, for services provided by subsidiaries and
affiliates of Verizon Communications including, but not limited to the
following services: telephone, network interconnection, switching and directory
assistance.

General Services

We have agreements with Verizon Communication subsidiaries and affiliates,
primarily relating to former GTE entities, for the provision of general
management and administrative services, including but not limited to payroll,
accounts payable, legal management, tax, accounting, procurement, inventory
management, real estate and information technology services. We incurred total
charges of approximately $142 million, $31 million and $30 million for the
years ended December 31, 2000, 2001 and 2002, respectively for general
management and administrative services. Our need for these services has
decreased as a result of the combination of the businesses that form Verizon
Wireless, as many of these services were provided to GTE Wireless entities,
which had less of a management infrastructure than we currently have.

Billing Services

We incurred charges of approximately $49 million for the year ended
December 31, 2000, respectively, for bill preparation and printing services
provided by a subsidiary of Verizon Communications. Effective January 2001, an
independent third party provided all bill preparation and printing services for
us.

Roaming and Clearinghouse Services

We incurred charges of approximately $24 million and $62 million for the
years ended December 31, 2000 and 2001, respectively, for roaming settlement,
fraud detection and call clearinghouse services provided by GTE
Telecommunications Services Incorporated, a subsidiary of Verizon
Communications. In February 2002, that subsidiary was sold to an unrelated
third-party.

We have entered into a roaming agreement with a subsidiary of Verizon
Communications to permit our subscribers to use its network in Puerto Rico,
where we do not have a license to provide services, and to permit its
subscribers to roam on our


56



network. Under the agreement, we paid $1.5 million, $0.9 million and $1.4
million for the years ended December 31, 2000, 2001, and 2002, and received $1
million, $2.6 million and $1.4 million for the years ended 2000, 2001 and 2002,
respectively.

Leases

We incurred charges of approximately $2 million, $3 million and $2 million
for the years ended December 31, 2000, 2001 and 2002, respectively, for leases
for company vehicles and buildings from subsidiaries of Verizon Communications.

Sales and Distribution Services

We incurred charges of $8 million, $5 million and $18 million for the
years ended December 31, 2000, 2001 and 2002, respectively, for commissions and
other sales expenses related to the sale and distribution of our products and
services by subsidiaries and affiliates of Verizon Communications.

Lockbox Services

We currently purchase lockbox services from Verizon Communications at
market rates. For the years ended December 31, 2000, 2001 and 2002, in the
normal course of business, we made lockbox payments of $5 million, $5 million
and $11 million, respectively.

Insurance

We currently purchase property and casualty insurance from affiliates of
Verizon Communications at market rates. For the years ended December 31, 2000,
2001 and 2002, in the normal course of business, we paid $4 million, $8 million
and $17 million, respectively.

Warranty Repairs

We incurred charges of approximately $1 million and $2 million for the
years ended December 31, 2001 and 2002, respectively, for warranty repairs on
cellular handsets provided by Verizon Logistics, a subsidiary of Verizon
Communications.

Other Agreements

In April 2002, Cellco Partnership sold all of its rights in eight A-block
10 MHz Wireless Communications Service licenses to an affiliate of Verizon
Communications for a purchase price of $5 million.


Item 14. Controls and Procedures
- -------------------------------------------------------------------------------

(a) Evaluation of disclosure controls and procedures. We first became
subject to reporting requirements under the Securities Exchange Act of 1934 in
October 2002, when our registration statement on Form S-4 was declared
effective. We implemented disclosure controls and procedures (as defined below)
beginning at such time.

Our chief executive officer and chief financial officer have evaluated the
effectiveness of the registrant's disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of
1934), as of a date within 90 days of the filing date of this annual report
(the "Evaluation Date"). They have concluded that as of the Evaluation Date,
the registrant's disclosure controls and procedures were adequate and effective
to ensure that material information relating to the registrant and its
consolidated subsidiaries would be made known to them by others within those
entities, particularly during the period in which this annual report was being
prepared.

(b) Changes in internal controls. There were no significant changes in the
registrant's internal controls or in other factors that could significantly
affect these controls subsequent to the Evaluation Date, nor were there any
significant deficiencies or material weaknesses in these controls requiring
corrective actions.


57



PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- -------------------------------------------------------------------------------

(a) Documents filed as part of this report:
Page
----
(1) Report of Independent Auditors 61

Financial Statements covered by Report of Independent Auditors:
Consolidated Statements of Operations and Comprehensive Income 62
Consolidated Balance Sheets 63
Consolidated Statements of Cash Flows 64
Consolidated Statements of Changes in Partners' Capital 65
Notes to Consolidated Financial Statements 66

(2) Financial Statement Schedule

Report of Independent Auditors 87
Schedule II - Valuation and Qualifying Accounts 88

(3) Exhibits


Exhibit Number
- --------------

3.3 Cellco Partnership Amended and Restated Partnership Agreement dated as
of April 3, 2000 (incorporated by reference to Verizon Wireless Inc.
Form S-1 (No.333-44394))

3.3.1 Amendment and Joinder to Cellco Partnership Amended and Restated
Partnership Agreement dated as of July 10, 2000 (incorporated by
reference to Cellco's Form S-4 (No. 333-92214))

4.1 Indenture dated as of December 17, 2001 among Cellco Partnership and
Verizon Wireless Capital LLC as Issuers and First Union National Bank as
Trustee (incorporated by reference to Cellco's Form S-4 (No. 333-92214))

4.2 Form of global certificate representing the Floating Rate Notes due 2003
(incorporated by reference to Cellco's Form S-4 (No. 333-92214))

4.3 Form of global certificate representing the 5.375%Notes due 2006
(incorporated by reference to Cellco's Form S-4 (No. 333-92214))

10.1 U.S. Wireless Alliance Agreement dated September 21, 1999 (incorporated
by reference to Bell Atlantic Corporation Form 10-Q for quarter ended
September 30, 1999)

10.2 Amendment to U.S. Wireless Alliance Agreement dated as of April 3,2000
(incorporated by reference to Verizon Wireless Inc. Form S-1
(No.333-44394))

10.3 Investment Agreement dated as of April 3, 2000 among Vodafone AirTouch
Plc, Bell Atlantic Corporation and Cellco Partnership (incorporated by
reference to Verizon Wireless Inc. Form S-1 (No.333-44394))

10.4 Settlement Strategy Agreement dated as of September 21, 1999 by and
between Vodafone AirTouch Plc and Bell Atlantic Corporation
(incorporated by reference to Verizon Wireless Inc. Form S-1
(No.333-44394))

10.5 Amendment to Settlement Strategy Agreement dated as of April 3, 2000
(incorporated by reference to Verizon Wireless Inc. Form S-1
(No.333-44394))

10.6 Form of Indemnity Agreement related to dispositions of conflicted
systems (incorporated by reference to Verizon Wireless Inc. Form S-1
(No.333-44394))

10.7 Secondment Agreement among Vodafone AirTouch Plc, Bell Atlantic
Corporation and Cellco Partnership (incorporated by reference to Verizon
Wireless Inc. Form S-1 (No.333-44394))

10.8 Bell Atlantic Stock Option Program (incorporated by reference to
Amendment No.1 to Verizon Wireless Inc. Form S-1 (No.333-44394))

10.9 Software Assignment and License Agreement dated as of April 3, 2000
between AirTouch Communications, Inc. and Cellco Partnership
(incorporated by reference to Amendment No.1 to Verizon Wireless Inc.
Form S-1 (No.333-44394))

10.10 Intellectual Property Assignment dated as of April 3, 2000 between
AirTouch Communications, Inc. and Cellco Partnership (incorporated by
reference to Amendment No.1 to Verizon Wireless Inc. Form S-1
(No.333-44394))


58



10.11 Patent License Agreement dated as of April 3, 2000 between AirTouch
Communications, Inc. and Cellco Partnership (incorporated by reference
to Amendment No.1 to Verizon Wireless Inc. Form S-1 (No.333-44394))

10.12 Transition Services Agreement dated as of April 3, 2000 between Vodafone
AirTouch Plc and Cellco Partnership (incorporated by reference to
Verizon Wireless Inc. Form S-1 (No.333-44394))

10.13 Patent License Agreement dated as of April 3, 2000 between Bell Atlantic
Cellular Holdings, L.P. and NYNEX PCS Inc. (collectively, "Licensors"),
and Cellco Partnership (incorporated by reference to Amendment No.1 to
Verizon Wireless Inc. Form S-1 (No.333-44394)).

10.14 Trademark and Domain License Agreement dated as of April 3, 2000 between
Licensors and Cellco Partnership (incorporated by reference to Amendment
No.1 to Verizon Wireless Inc. Form S-1 (No.333-44394))

10.15 Trademark and Domain License Agreement dated as of April 3, 2000 between
Licensors and Cellco Partnership (incorporated by reference to Amendment
No.1 to Verizon Wireless Inc. Form S-1 (No.333-44394))

10.16 Trademark and Domain License Agreement dated as of April 3, 2000 between
Licensors and Cellco Partnership (incorporated by reference to Amendment
No.1 to Verizon Wireless Inc. Form S-1 (No.333-44394))

10.17 Trademark and Domain Name License Agreement dated as of April 3, 2000
between AirTouch Communications, Inc. and Cellco Partnership
(incorporated by reference to Amendment No.1 to Verizon Wireless Inc.
Form S-1 (No.333-44394))

10.18 Verizon Wireless Executive Savings Plan, as amended and restated,
effective January 1, 2001 (incorporated by reference to Amendment No.1
to Verizon Wireless Inc. Form S-1 (No.333-44394))

10.19 [Reserved]

10.20 Bell Atlantic NYNEX Mobile Executive Transition and Retention Retirement
Plan, as amended and restated, effective May 19, 2000 (incorporated by
reference to Amendment No.1 to Verizon Wireless Inc. Form S-1
(No.333-44394))

10.21 Vodafone Americas Asia Inc. Deferred Compensation Plan (formerly
AirTouch Communications Deferred Compensation Plan), as amended and
restated, effective as of June 1, 1998 (incorporated by reference to
Amendment No.1 to Verizon Wireless Inc. Form S-1 (No.333-44394))

10.22 Employment contract dated November 2, 2000 between Dennis Strigl and
Verizon Wireless Inc. (incorporated by reference to Verizon
Communications Inc. Exhibit 10f to Form 10-Q for the period ended
September 30, 2000 (No. 001-08606))

10.23 International assignment agreement effective as of April 1, 2002 between
Andrew Halford and Vodafone Group Services Ltd.

10.24 Employment agreement effective as of April 3, 2000 between Lowell McAdam
and Cellco Partnership (incorporated by reference to Amendment No.1 to
Verizon Wireless Inc. Form S-1 (No.333-44394))

10.25 Employment agreement effective as of April 3, 2000 between Richard Lynch
and Cellco Partnership (incorporated by reference to Amendment No.1 to
Verizon Wireless Inc. Form S-1 (No.333-44394))

10.26 Employment agreement effective as of April 3, 2000 between S. Mark
Tuller and Cellco Partnership (incorporated by reference to Amendment
No.1 to Verizon Wireless Inc. Form S-1 (No.333-44394))

10.27 [Reserved]

10.28 [Reserved]

10.29 Transaction Agreement dated as of December 18, 2001 among Price
Communications Corporation, Price Communications Cellular Inc., Price
Communications Cellular Holdings, Inc., Price Communications Wireless,
Inc., Cellco Partnership and Verizon Wireless of the East LP (Filed as
Exhibit 10.1 to Price Communications Corporation 's Current Report on
Form 8-K dated as of December 18, 2001 and incorporated by reference
herein)

10.30 Vodafone Group Pension Scheme Second Definitive Deed and Rules dated May
28, 1999 (incorporated by reference to Amendment No.1 to Verizon
Wireless Inc. Form S-1 (No.333-44394))

10.31 [Reserved]

10.32 Vodafone Group Profit Sharing Scheme Trust Deed dated September 29, 1992
(incorporated by reference to Amendment No.1 to Verizon Wireless Inc.
Form S-1 (No.333-44394))

10.33 Vodafone Group Profit Sharing Scheme Supplemental Deed to the Trust Deed
dated March 27, 1998 (incorporated by reference to Amendment No.1 to
Verizon Wireless Inc. Form S-1 (No.333-44394))

10.34 Rules of the Vodafone Group 1998 Executive Share Option Scheme (July
1998,Final Version) (incorporated by reference to Amendment No.1 to
Verizon Wireless Inc. Form S-1 (No.333-44394))


59



10.35 The Rules of the Vodafone Group Plc Share Option Scheme, as approved on
September 14, 1988 and amended from time to time (incorporated by
reference to Amendment No.1 to Verizon Wireless Inc. Form S-1
(No.333-44394))

10.36 Definitive Agreement between Cellco Partnership and Lucent Technologies
Inc. dated March 16, 2001 (1)

10.37 2000 Verizon Wireless Long-Term Incentive Plan as amended and restated
effective July 10, 2000 (incorporated by reference to Amendment No.1 to
Verizon Wireless Inc. Form S-1 (No.333-44394))

10.38 [Reserved]

10.39 Amendment No.1 to the Transaction Agreement (previously filed as an
exhibit to Verizon Wireless of the East LP 's Registration Statement on
Form S-4 filed on May 31, 2002 (No.333- 82408 and 333-82408-01) and
incorporated by reference herein).

10.40 Letter Agreement dated July 16, 2002 among Price Communications
Corporation, Price Communications Cellular Inc., Price Communications
Cellular Holdings, Inc., Price Communications Wireless, Inc., Cellco
Partnership and Verizon Wireless of the East LP, amending the
Transaction Agreement (previously filed as an exhibit to Verizon
Wireless of the East LP 's Quarterly Report on Form 10-Q filed on August
14, 2002 and incorporated by reference herein).

10.41 Letter Agreement dated August 9, 2002 among Price Communications
Corporation, Price Communications Cellular Inc., Price Communications
Cellular Holdings, Inc., Price Communications Wireless, Inc., Verizon
Communications Inc., Verizon Wireless Inc., Cellco Partnership and
Verizon Wireless of the East LP and Verizon Communications Inc.,
amending the Transaction Agreement (previously filed as an exhibit to
Verizon Wireless of the East LP's Quarterly Report on Form 10-Q filed on
August 14,2002 and incorporated by reference herein).

10.42 Letter Agreement dated August 15, 2002 among Price Communications
Corporation, Price Communications Cellular Inc., Price Communications
Cellular Holdings, Inc., Price Communications Wireless, Inc., Cellco
Partnership and Verizon Wireless of the East LP, amending the
Transaction Agreement (previously filed as an exhibit to Verizon
Wireless of the East LP 's Current Report on Form 8-K filed August
26,2002 and incorporated by reference herein)

10.43 Promissory Note dated August 15, 2002 made by Verizon Wireless of the
East LP and payable to Verizon Investments Inc. in the principal amount
of $350 million (previously filed as an exhibit to Verizon Wireless of
the East LP's Current Report on Form 8-K filed August 26, 2002 and
incorporated by reference herein)

10.44 Verizon Communications Inc. Verizon Income Deferral Plan, effective
January 1, 2002 (incorporated by reference to Verizon Communications
Inc. Form 10-Q for the period ended June 30, 2002 (No. 001-08606))

10.45 Vodafone Group Plc 1999 Long Term Stock Incentive Plan (incorporated by
reference to Vodafone Group Plc Annual Report on Form 20-F for the
financial year ended March 31, 2001 (No. 001-10086))

10.46 Bell Atlantic Executive Management Retirement Income Plan (restated as
of January 1, 1996)

10.47 Verizon Wireless Retirement Plan, as amended and restated, effective
January 1, 2001

10.48 Verizon Enterprises Management Pension Plan, as amended and restated,
effective January 1, 2002

10.49 Verizon Communications Inc. Long-Term Incentive Plan (incorporated by
reference to Verizon Communications Inc. 2001 Proxy Statement filed
March 12, 2001 (No. 001-08606))

12 Computation of Ratio of Earnings to Fixed Charges

21 Subsidiaries of the Company

24 Powers of Attorney

99.1 Section 906 Certification of the Chief Executive Officer

99.2 Section 906 Certification of the Chief Financial Officer
- --------------------

(1) Confidential materials appearing in this document have been omitted
and filed separately with the Securities and Exchange Commission in
accordance with the Securities Act of 1933, as amended, and Rule 406
promulgated thereunder. Omitted information has been replaced with
asterisks.


(b) Current Reports on Form 8-K filed during the quarter ended December 31,
2002:

On November 20, 2002, we filed a Form 8-K under Item 9 providing the
certifications of the CEO and CFO pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.


60



INDEPENDENT AUDITORS' REPORT


To the Board of Representatives and Partners of
Cellco Partnership d/b/a Verizon Wireless

We have audited the accompanying consolidated balance sheets of Cellco
Partnership d/b/a Verizon Wireless (the "Partnership") as of December 31, 2002
and 2001, and the related consolidated statements of operations and
comprehensive income, partners' capital, and cash flows for each of the three
years in the period ended December 31, 2002. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Partnership as
of December 31, 2002 and 2001, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2002 in
conformity with accounting principles generally accepted in the United States
of America.

As discussed in Note 3 to the consolidated financial statements, in 2002 the
Partnership adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets." As discussed in Note 9 to the
consolidated financial statements, in 2001 the Partnership adopted Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities."



/s/ Deloitte & Touche LLP
New York, New York
January 28, 2003
(March 4, 2003 as to Note 16)


61



CELLCO PARTNERSHIP
(d/b/a Verizon Wireless)
Consolidated Statements of Operations and
Comprehensive Income
(in Millions)


FOR THE YEARS ENDED DECEMBER 31, 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------

OPERATING REVENUE
Service revenue $ 17,747 $ 16,011 $ 13,000
Equipment and other 1,513 1,382 1,222
- ---------------------------------------------------------------------------------------------------------------------------
Total operating revenue 19,260 17,393 14,222
- ---------------------------------------------------------------------------------------------------------------------------

OPERATING COSTS AND EXPENSES
Cost of service (excluding depreciation and
amortization related to network assets included below) 2,788 2,651 2,398
Cost of equipment 2,669 2,434 2,023
Selling, general and administrative 7,029 6,525 5,505
Depreciation and amortization 3,293 3,709 2,897
Sales of assets, net (7) 9 (859)
- ---------------------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 15,772 15,328 11,964
- ---------------------------------------------------------------------------------------------------------------------------
Operating income 3,488 2,065 2,258
OTHER INCOME (EXPENSES)
Interest expense, net (602) (642) (507)
Minority interests (127) (60) (136)
Equity in income of unconsolidated entities 14 6 57
Other, net 4 (3) 5
- ---------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes and cumulative effect of a change
in accounting principle 2,777 1,366 1,677
Provision for income taxes (193) (62) (149)
- ---------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of a change in accounting principle 2,584 1,304 1,528
Cumulative effect of a change in accounting principle - (4) -
- ---------------------------------------------------------------------------------------------------------------------------
NET INCOME 2,584 1,300 1,528
- ---------------------------------------------------------------------------------------------------------------------------

OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized loss on derivative financial instruments - (2) -
Minimum pension liability adjustments (3) - -
- ---------------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 2,581 $ 1,298 $ 1,528
===========================================================================================================================


See Notes to Consolidated Financial Statements


62


CELLCO PARTNERSHIP
(d/b/a Verizon Wireless)
Consolidated Balance Sheets
(in Millions)


AS OF DECEMBER 31, 2002 2001
- -------------------------------------------------------------------------------------------------------

ASSETS
Current assets
Cash $ 124 $ 198
Accounts receivable, net of allowances of $257 and $288 1,679 1,858
Unbilled revenue 369 335
Other receivables, net 309 243
Inventories, net 331 615
Prepaid expenses and other current assets 404 428
- -------------------------------------------------------------------------------------------------------
Total current assets 3,216 3,677

Property, plant and equipment, net 17,688 15,966
Wireless licenses, net 40,014 37,741
Other intangibles, net 1,594 2,073
Investments in unconsolidated entities 225 222
Deferred charges and other assets, net 449 471
- -------------------------------------------------------------------------------------------------------
Total assets $ 63,186 $ 60,150
=======================================================================================================

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Short-term obligations, including current maturities $ 1,576 $ 458
Due to affiliates, net 6,580 8,359
Accounts payable and accrued liabilities 2,618 2,584
Advance billings 536 475
Other current liabilities 139 90
- -------------------------------------------------------------------------------------------------------
Total current liabilities 11,449 11,966

Long-term debt 2,569 4,099
Due to affiliates 2,781 2,431
Deferred tax liabilities, net 4,165 2,424
Other non-current liabilities 358 320
- -------------------------------------------------------------------------------------------------------
Total liabilities 21,322 21,240

Minority interests in consolidated entities 1,575 365
Partner's capital subject to redemption 20,000 20,000

Commitments and contingencies (see Note 15)

Partners' capital
Capital 20,294 18,547
Accumulated other comprehensive loss (5) (2)
- -------------------------------------------------------------------------------------------------------
Total partners' capital 20,289 18,545
- -------------------------------------------------------------------------------------------------------
Total liabilities and partners' capital $ 63,186 $ 60,150
=======================================================================================================


See Notes to Consolidated Financial Statements


63



CELLCO PARTNERSHIP
(d/b/a Verizon Wireless)
Consolidated Statements of Cash Flows
(in Millions)


FOR THE YEARS ENDED DECEMBER 31, 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,584 $ 1,300 $ 1,528
Add: Cumulative effect of a change in accounting principle - 4 -
- ------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of a change in accounting principle 2,584 1,304 1,528
Adjustments to reconcile income before cumulative effect of a change in
accounting principle to net cash provided by operating activities:
Depreciation and amortization 3,293 3,709 2,897
Provision for losses on accounts receivable, net of recoveries 442 649 470
Provision (benefit) for deferred income taxes 59 (49) (61)
Equity in income of unconsolidated entities (14) (6) (57)
Minority interests 127 60 136
Net (gain) loss on disposal of property, plant and equipment (4) 9 11
Net gain on sale of other assets (3) - (850)
Mark-to-market adjustment - financial instruments - 4 -
Changes in certain assets and liabilities (net of the effects of
purchased and disposed businesses):
Receivables and unbilled revenue, net (369) (978) (791)
Inventories, net 285 (19) (251)
Prepaid expenses and other current assets 39 (207) 1
Deferred charges and other assets (50) (23) 71
Accounts payable and accrued liabilities 36 (61) 173
Other current liabilities 83 86 38
Other operating activities, net 61 3 (39)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 6,569 4,481 3,276
- ------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (4,354) (5,006) (4,908)
Proceeds from sale of property, plant and equipment 11 - 21
Acquisitions of businesses and licenses, net of cash acquired (774) (626) (1,620)
Wireless licenses refund (payment) 1,740 (1,691) (131)
Investments in and contributions to unconsolidated entities - - (46)
Distributions from unconsolidated entities 11 9 65
Purchase of minority interests - - (209)
Proceeds from sale of other assets 5 3 1,298
- ------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (3,361) (7,311) (5,530)
- ------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net (payments to) proceeds from affiliates (1,349) 3,773 2,022
Net change in short-term obligations (436) (34) (33)
Issuance of long-term debt - 4,592 784
Repayments of long-term debt, net (584) (4,679) (43)
Issuance of notes receivable - affiliate - - (68)
Distribution to partners (862) (691) (223)
Contributions from minority investors 6 1 86
Distribution to minority investors (57) (21) (235)
Other financing activities, net - - (3)
- ------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (3,282) 2,941 2,287
- ------------------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash (74) 111 33
Cash, beginning of year 198 87 54
- ------------------------------------------------------------------------------------------------------------------------
Cash, end of year $ 124 $ 198 $ 87
========================================================================================================================


See Notes to Consolidated Financial Statements


64



CELLCO PARTNERSHIP
(d/b/a Verizon Wireless)
Consolidated Statements of Partners' Capital
(in Millions)


- ------------------------------------------------------------------------------------------------------

Partners' capital at January 1, 2000 $ 7,340

Net income 1,528
Partnership interests issued in connection with Vodafone acquisition 8,000
Distribution to partners, net (393)
- ------------------------------------------------------------------------------------------------------
Partners' capital at December 31, 2000 16,475

Net income 1,300
Contributions from partners, net 772
Accumulated other comprehensive loss (2)
- ------------------------------------------------------------------------------------------------------
Partners' capital at December 31, 2001 18,545

Net income 2,584
Distribution to partners, net (837)
Accumulated other comprehensive loss (3)
- ------------------------------------------------------------------------------------------------------
Partners' capital at December 31, 2002 $ 20,289
======================================================================================================


See Notes to Consolidated Financial Statements


65



CELLCO PARTNERSHIP
(d/b/a Verizon Wireless)
Notes to Consolidated Financial Statements

1. Formation of Verizon Wireless and Description of the Business
- -------------------------------------------------------------------------------

Formation of Verizon Wireless

Cellco Partnership (the "Partnership"), formerly doing business as Bell
Atlantic Mobile ("BAM"), was a general partnership formed by Bell Atlantic
Corporation ("Bell Atlantic") and the former NYNEX Corporation ("NYNEX"), which
began conducting business operations on July 1, 1995. On August 14, 1997, Bell
Atlantic and NYNEX merged into one company, Bell Atlantic. Subsequent to the
merger, Bell Atlantic held an indirect aggregate ownership interest of 100% in
the Partnership.

On April 3, 2000, Bell Atlantic and Vodafone Group Plc ("Vodafone") consummated
their previously announced agreement to combine their U.S. wireless operations.
In accordance with the terms of the U.S. Wireless Alliance Agreement (the
"Alliance Agreement") dated September 21, 1999 between the two companies,
Vodafone contributed its U.S. wireless operations (the "AirTouch Properties"),
its 50% ownership interest in PrimeCo Personal Communications L.P. ("PrimeCo")
and approximately $4 billion of debt to the Partnership, in exchange for a
65.1% interest in the Partnership. Bell Atlantic also contributed its 50%
ownership interest in PrimeCo, and retained a 34.9% interest in the
Partnership. Bell Atlantic maintained control of the Partnership. As of April
3, 2000, the Partnership began conducting business as Verizon Wireless.

On June 30, 2000, Bell Atlantic and GTE Corporation ("GTE Corp.") completed a
merger of equals under a definitive merger agreement entered into on July 27,
1998 (the "Merger"). On June 30, 2000, the newly merged entity changed its name
to Verizon Communications Inc. ("Verizon Communications"). Under the Alliance
Agreement, Verizon Communications contributed certain GTE Corp. wireless net
assets and operations ("GTE Wireless" or "GTEW") increasing its partnership
interest to 55% and decreasing Vodafone's partnership interest to 45%.

The Merger qualified as a tax-free reorganization and has been accounted for as
a pooling-of-interests business combination. Under this method of accounting,
the Partnership and GTEW are treated as if they had always been combined for
accounting and financial reporting purposes in a manner similar to a
pooling-of-interests and therefore all prior period consolidated financial
statements of the Partnership have been restated to reflect these operations
(see Note 4). The Partnership began consolidating the financial statements of
PrimeCo on April 3, 2000. All previous periods have been restated to include
the historical results of PrimeCo on the equity method.

Description of the Business

Under the Verizon Wireless brand name, the Partnership is the nation's leading
provider of wireless communications in terms of number of subscribers, network
coverage, revenues and operating income. The Partnership provides wireless
voice and data services and related equipment to consumers and business
customers in its markets. The Partnership has the largest wireless network in
the United Stated covering 49 of the 50 largest metropolitan areas throughout
the United States.


2. Summary of Significant Accounting Policies
- -------------------------------------------------------------------------------

Consolidated Financial Statements and Basis of Presentation

The consolidated financial statements of the Partnership include the accounts
of its majority-owned subsidiaries and the partnerships in which the
Partnership exercises control. Investments in businesses and partnerships in
which the Partnership does not have control, but has the ability to exercise
significant influence over operating and financial policies, are accounted for
under the equity method of accounting (see Note 6). All significant
intercompany balances and transactions between these entities have been
eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting


66


period. Actual results could differ from those estimates. Estimates are used
for, but not limited to, the accounting for: allowance for uncollectible
accounts receivable, unbilled revenue, fair values of financial instruments,
depreciation and amortization, useful life and impairment of assets, accrued
expenses, inventory reserves, equity in income (loss) of unconsolidated
entities, employee benefits, income taxes, contingencies and allocation of
purchase prices in connection with business combinations. Estimates and
assumptions are periodically reviewed and the effects of any material revisions
are reflected in the consolidated financial statements in the period that they
are determined to be necessary.

Revenue Recognition

The Partnership earns revenue by providing access to the network (access
revenue) and for usage of the network (airtime/usage revenue), which includes
roaming and long distance revenue. In general, access revenue is billed one
month in advance and is recognized when earned; the unearned portion is
classified in advance billings. Airtime/usage revenue, roaming revenue and long
distance revenue are recognized when service is rendered and included in
unbilled revenue until billed. Customer activation fees, along with the related
costs up to but not exceeding the activation fees, are deferred and amortized
over the customer relationship period. Equipment sales revenue associated with
the sale of wireless handsets and accessories is recognized when the products
are delivered to and accepted by the customer, as this is considered to be a
separate earnings process from the sale of wireless services. The Partnership's
revenue recognition policies are in accordance with the Securities and Exchange
Commission's ("SEC") Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements."

Selling, General and Administrative Expenses

In 2002, the Partnership classified all site rentals, including tower rentals,
and network related salaries as cost of service. The Partnership has
reclassified approximately $480 million and $361 million from selling, general
and administrative expense to cost of service for the years ended December 31,
2001 and 2000, respectively.

The Partnership expenses advertising costs as incurred. Total advertising
expense amounted to $829 million, $719 million and $772 million for the years
ended December 31, 2002, 2001, and 2000, respectively.

Inventory

Inventory consists primarily of wireless equipment held for sale. Equipment
held for sale is carried at the lower of cost (determined using a first-in,
first-out method) or market.

Capitalized Software

Capitalized software consists primarily of direct costs incurred for
professional services provided by third parties and compensation costs of
employees which relate to software developed for internal use either during the
application stage or for upgrades and enhancements that increase functionality.
Costs are capitalized and are being amortized on a straight-line basis over
their estimated useful lives of three to five years. Costs incurred in the
preliminary project stage of development and maintenance are expensed as
incurred.

Capitalized software of $305 million and $291 million and related accumulated
amortization of $152 million and $135 million as of December 31, 2002 and 2001,
respectively, have been included in deferred charges and other assets, net in
the consolidated balance sheets.

Property, Plant and Equipment

Property, plant and equipment primarily represents costs incurred to construct
and enhance Mobile Telephone Switching Offices and cell sites. The cost of
property, plant and equipment is depreciated over its estimated useful life
using the straight-line method of accounting. Leasehold improvements are
amortized over the shorter of their estimated useful lives or the term of the
related lease. Major improvements to existing plant and equipment are
capitalized. Routine maintenance and repairs that do not extend the life of the
plant and equipment are charged to expense as incurred.

Upon the sale or retirement of property, plant and equipment, the cost and
related accumulated depreciation or amortization is eliminated from the
accounts and any related gain or loss is reflected in the statement of
operations and comprehensive income.

Interest expense and network engineering costs incurred during the construction
phase of the Partnership's network and real estate properties under development
are capitalized as part of property, plant and equipment and recorded as
construction in progress until the projects are completed and placed into
service.


67


Valuation of Assets

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. When
such events occur, the undiscounted expected future cash flows are compared to
the carrying amount of the asset. If the comparison indicates that there is an
impairment, the amount of the impairment is typically calculated using
discounted expected future cash flows. The discount rate applied to these cash
flows is based on the Partnership's weighted average cost of capital (see Note
3 "Wireless Licenses and Other Intangibles, Net").

Financial Instruments

The Partnership uses various financial instruments, including foreign
exchange-forward contracts and interest rate swap agreements, to manage risk to
the Partnership by generating cash flows that offset the cash flows of certain
transactions in foreign currencies or underlying financial instruments in
relation to their amount and timing. The Partnership's derivative financial
instruments are for purposes other than trading (see Note 9).

Income Taxes

The Partnership is not a taxable entity for federal income tax purposes. Any
federal taxable income or loss is included in the respective partners'
consolidated federal return. Certain states, however, impose taxes at the
partnership level and such taxes are the responsibility of the Partnership and
are included in the Partnership's tax provision. The consolidated financial
statements also include provisions for federal and state income taxes, prepared
on a stand-alone basis, for all corporate entities within the Partnership.
Deferred income taxes are recorded using enacted tax law and rates for the
years in which the taxes are expected to be paid or refunds received. Deferred
income taxes are provided for items when there is a temporary difference in
recording such items for financial reporting and income tax reporting.

Through June 30, 2000, GTEW's financial results included a tax provision, as
its assets were ultimately owned by corporate entities. In connection with the
contribution of GTEW's net assets to the Partnership, Verizon Communications
assumed certain income tax liabilities that existed as of June 30, 2000.

Employee Benefit Plans

Pension and postretirement health care, dental and life insurance benefits
earned during the year, as well as interest on projected benefit obligations,
are accrued currently. Prior service costs and credits resulting from changes
in plan benefits are amortized over the average remaining service period of the
employees expected to receive benefits.

Concentrations

To the extent the Partnership's customer receivables become delinquent,
collection activities commence. No single customer is large enough to present a
significant financial risk to the Partnership. The Partnership maintains an
allowance for losses based on the expected collectibility of accounts
receivable.

The Partnership relies on local and long-distance telephone companies, some of
whom are related parties (see Note 14), and other companies to provide certain
communication services. Although management believes alternative
telecommunications facilities could be found in a timely manner, any disruption
of these services could potentially have an adverse impact on operating
results.

Although the Partnership attempts to maintain multiple vendors for each
required product, its network assets, which are important components of its
operations, are currently acquired from only a few sources. If the suppliers
are unable to meet the Partnership's needs as it builds out its network
infrastructure and sells service and equipment, delays and increased costs in
the expansion of the Partnership's network infrastructure or losses of
potential customers could result, which would adversely affect operating
results.

Comprehensive Income

Comprehensive income consists of net income and other gains and losses
affecting partners' investment that, under generally accepted accounting
principles, are excluded from net income. Other comprehensive income is
comprised of net unrealized gains (losses) on derivative financial instruments
and adjustments to the minimum pension liability (see Notes 9 and 10).


68


Segments

The Partnership has one reportable business segment and operates domestically
only. The Partnership's products and services are materially comprised of
wireless telecommunications services.

Reclassifications

Certain reclassifications have been made to the 2001 and 2000 consolidated
financial statements to conform to the current year presentation.

Recently Issued Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations." This standard requires entities to recognize the
fair value of any legal obligation associated with the retirement of long-lived
assets and to capitalize that amount as a part of the book value of the
long-lived asset. That cost is then depreciated over the remaining life of the
underlying long-lived asset. The Partnership will adopt the standard effective
January 1, 2003. The Partnership does not expect the impact of the adoption of
SFAS No. 143 to have a material effect on the Partnership's results of
operations or financial position.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This standard re-addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. It concludes
that a single accounting model be used for long-lived assets to be disposed of
by sale and broadens the presentation of discontinued operations to include
more disposal transactions. The Partnership adopted the standard effective
January 1, 2002. The adoption of SFAS No. 144 had no material effect on the
Partnership's results of operations or financial position.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". This standard nullifies Emerging Issue Task
Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." This standard requires the recognition of
a liability for a cost associated with an exit or disposal activity at the time
the liability is incurred, rather than at the commitment date to exit a plan as
required by EITF 94-3. The Partnership will adopt this standard effective
January 1, 2003. The Partnership does not expect the impact of the adoption of
SFAS No. 146 to have a material effect on the Partnership's results of
operations or financial position.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," an amendment of FASB Statement No.
123, "Accounting for Stock-Based Compensation." This standard provides
alternative methods of transition for a voluntary change to the fair value
based method of accounting for stock-based compensation. In addition, this
standard amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of
the method used on reported results. Effective January 1, 2003, the Partnership
will adopt the fair value recognition provisions of SFAS No. 123, prospectively
(as permitted under SFAS No. 148) to all new stock-based employee compensation
granted, modified or settled after January 1, 2003. As the Partnership
currently accounts for its Value Appreciation Rights ("VARs") under a fair
value approach (see Note 11), it does not expect the impact of the adoption of
the fair value recognition provisions of SFAS No. 123 to have a material effect
on the Partnership's results of operations or financial position.


3. Wireless Licenses and Other Intangibles, Net
- -------------------------------------------------------------------------------

The Partnership has adopted the provisions of SFAS No. 142, "Goodwill and Other
Intangible Assets," as of January 1, 2002. In conjunction with this adoption,
the Partnership has reassessed the useful lives of previously recognized
intangible assets. The Partnership's principal intangible assets are licenses,
including licenses associated with equity method investments, which provide the
Partnership with the exclusive right to utilize certain radio frequency
spectrum to provide wireless communication services. While licenses are issued
for only a fixed time, generally 10 years, such licenses are subject to renewal
by the Federal Communications Commission ("FCC"). Renewals of licenses have
occurred routinely and at nominal cost. Moreover, the Partnership has
determined that there are currently no legal, regulatory, contractual,
competitive, economic or other factors that limit the useful life of the
Partnership's wireless licenses. As a result, the wireless licenses have been
treated as an indefinite life intangible asset under the provisions of SFAS No.
142 and have not been amortized but rather were tested for impairment. The
Partnership will reevaluate the useful life determination for wireless licenses
at least annually to determine whether events and circumstances continue to
support an indefinite useful life.


69


Previous business combinations have been for the purpose of acquiring existing
licenses and related infrastructure to enable the Partnership to build out its
existing nationwide network. The primary asset acquired in such combinations
has been wireless licenses. In the allocation of the purchase price of these
previous acquisitions, amounts classified as goodwill have related
predominately to the expected synergies of placing the acquired licenses in the
Partnership's national footprint. Further, in purchase accounting, the values
assigned to both wireless licenses and goodwill were principally determined
based on an allocation of the excess of the purchase price over the acquired
net assets. The Partnership believes that the nature of its wireless licenses
and related goodwill are fundamentally indistinguishable.

In light of these considerations, on January 1, 2002 amounts previously
classified as goodwill, approximately $7,958 million for the year ended
December 31, 2001, were reclassified into wireless licenses. Also, assembled
workforce, previously included in other intangible assets, is no longer
recognized separately from wireless licenses. Amounts for fiscal year 2001 have
been reclassified to conform to the presentation adopted on January 1, 2002. In
conjunction with this reclassification, and in accordance with the provisions
of SFAS No. 109, "Accounting for Income Taxes," the Partnership recognized a
deferred tax liability of approximately $1,627 million related to the
difference in the tax basis versus book basis of the wireless licenses. This
reclassification, including the related impact on deferred taxes, had no impact
on the results of operations of the Partnership. This reclassification and the
methodology used to test wireless licenses for impairment under SFAS No. 142,
as described in the next paragraph, have been reviewed with the staff of the
SEC.

When testing the carrying value of the wireless licenses for impairment, the
Partnership determined the fair value of the aggregated wireless licenses by
subtracting from enterprise discounted cash flows (net of debt) the fair value
of all of the other net tangible and intangible assets of the Partnership. If
the fair value of the aggregated wireless licenses as determined above had been
less than the aggregated carrying amount of the licenses, an impairment would
have been recognized. Upon the adoption of SFAS No. 142 and during 2002, tests
for impairment were performed with no impairment recognized. Future tests for
impairment will be performed at least annually and more often if events or
circumstances warrant.

Other intangibles, net, which primarily represent acquired customer lists, have
a finite useful life of 4-8 years.

The following table presents the adjusted net income that would have been
recognized if the amortization expense associated with wireless licenses,
including licenses associated with equity method investments, had been excluded
in each period shown.


For the Years Ended December 31,
(Dollars in Millions) 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------

Reported net income $ 2,584 $ 1,300 $ 1,528
Add: Wireless license amortization, net of tax - 1,032 825
---------------------------------------------
Adjusted net income $ 2,584 $ 2,332 $ 2,353
=============================================


The changes in the carrying amount of wireless licenses are as follows:


Wireless Licenses
Associated with
Wireless Equity Method
(Dollars in Millions) Licenses, Net (a) Investments (b) Total
- --------------------------------------------------------------------------------------------------------------

Balance, net, as of December 31, 2001 $ 37,741 $ 168 $ 37,909
Wireless licenses acquired 2,349 - 2,349
Aggregate impairment losses recognized - - -
Wireless licenses refund (1,740) - (1,740)
Deferred tax liability reclassification 1,627 - 1,627
Other 37 - 37
---------------------------------------------
Balance as of December 31, 2002 $ 40,014 $ 168 $ 40,182
=============================================


---------
(a) Interest costs of $21 and $25 were capitalized in wireless licenses
during the years ended December 31, 2002 and 2001, respectively.
(b) Included in investments in unconsolidated entities.


70



Other intangibles, net consist of the following:

December 31,
(Dollars in Millions) 2002 2001
- --------------------------------------------------------------------------------
Customer lists (4-7 yrs.) $ 3,424 $ 3,349
Other (8 yrs.) 1 5
-------------------------
3,425 3,354
Less: accumulated amortization (a) 1,831 1,281
-------------------------
Other intangibles, net $ 1,594 $ 2,073
=========================

---------
(a) Based solely on the amortized intangible assets existing at December
31, 2002, the estimated amortization expense for the five succeeding
fiscal years is as follows:
For the year ended 12/31/03 $ 520
For the year ended 12/31/04 $ 468
For the year ended 12/31/05 $ 462
For the year ended 12/31/06 $ 131
For the year ended 12/31/07 $ 11


4. Business Combinations and Other Transactions
- -------------------------------------------------------------------------------

The following table presents information about the Partnership's acquisitions
for the years ended December 31, 2002, 2001 and 2000:


Net
Acquisition Purchase Wireless Other Tangible
(Dollars in Millions) Date Price (a) Licenses Intangibles Assets
- ------------------------------------------------------------------------------------------------------------------------------

2002
- ----
Price Communications Wireless, Inc. (b) Aug 2002 $ 1,702 $ 1,610 $ 52 $ 40
Dobson Communications Corporation (b) Feb 2002 $ 552 $ 505 $ 19 $ 28
Various various $ 249 $ 234 $ 4 $ 11

2001
- ----
Various various $ 835 $ 794 $ 11 $ 30

2000
- ----
Vodafone and PrimeCo Apr 2000 $ 33,910 $ 28,018 $ 2,825 $ 3,067
ALLTEL Communications Apr/Jun 2000 $ 2,441 $ 1,814 $ 178 $ 449
Various various $ 901 $ 141 $ 6 $ 754


---------
(a) Purchase price includes cash, assumption of debt, as well as the fair
value of assets exchanged, as applicable.
(b) The allocation of the purchase price is preliminary. However, the
Partnership does not believe that future adjustments to the purchase
price allocation will have a material effect on the Partnership's
financial position or results of operations.


All of the acquisitions of businesses included herein were accounted for under
the purchase method of accounting with results of operations included in the
consolidated statements of operations from the date of acquisition. Excluding
Vodafone, PrimeCo and ALLTEL Communications, had the acquisitions of businesses
been consummated on January 1 of the year preceding the year of acquisition,
the results of these acquired operations would not have had a significant
impact on the Partnership's consolidated results of operations.

Price Communications Wireless, Inc.

On August 15, 2002, the Partnership acquired substantially all of the operating
assets of Price Communications Wireless, Inc. ("Price"), a subsidiary of Price
Communications Corp., pursuant to an agreement dated as of December 18, 2001,
as amended. The transaction was valued at $1,702 million, including $550
million ($700 million debt less $150 million cash contributed by Price) in net
debt assumed and redeemed. On December 17, 2001 a new limited partnership,
Verizon Wireless of the East LP, was formed for the purpose of acquiring the
assets to be contributed by Price and subsidiaries of the Partnership. The
Partnership contributed certain of its assets to the new limited partnership in
exchange for a managing general partner interest and a limited partner
interest. In exchange for its contributed assets, Price received a preferred
limited partnership interest in


71


Verizon Wireless of the East LP that is exchangeable under certain
circumstances into equity of Verizon Wireless (if an initial public offering of
such equity occurs) or into common stock of Verizon Communications on the
fourth anniversary of the asset contribution if a qualifying initial public
offering of Verizon Wireless equity has not occurred prior to such anniversary.
Pursuant to the limited partnership agreement, the profits of Verizon Wireless
of the East LP are allocated on a preferred basis to Price's capital account
quarterly in an amount up to, but not exceeding, 2.915% per annum (based on the
weighted daily average balance of Price's capital account). Price's initial
capital account balance for its preferred interest was $1,113 million, which is
included in minority interests in consolidated entities in the December 31,
2002 consolidated balance sheet. Verizon Wireless of the East LP is controlled
and fully consolidated by the Partnership.

Dobson Communications Corporation

In February 2002, the Partnership acquired certain Dobson Communications
Corporation wireless operations in California, Georgia, Ohio, Tennessee, and
Arizona for approximately $552 million.

Vodafone and PrimeCo

On April 3, 2000, Bell Atlantic and Vodafone consummated their previously
announced agreement to combine their U.S. wireless operations in a transaction
valued at $33,910 million. In accordance with the terms of the Alliance
Agreement dated September 21, 1999 between the two companies, Vodafone
contributed its AirTouch properties, its 50% ownership interest in PrimeCo and
approximately $4 billion of debt to the Partnership, in exchange for a 65.1%
interest in the Partnership, and Bell Atlantic retained a 34.9% interest. Bell
Atlantic maintained control of the Partnership. Upon completion of the Merger
(see Note 1) and the contribution of GTEW to the Partnership, effective June
30, 2000, Bell Atlantic increased its partnership interest to 55% and
Vodafone's partnership interest decreased to 45%. Under the terms of the
Alliance Agreement between Bell Atlantic and Vodafone, Vodafone may require the
Partnership to purchase parts of Vodafone's interest in the Partnership at
specific periods in time (see Note 15).

ALLTEL Overlap Transaction

Based on regulations of the FCC governing wireless communications and the U.S.
Department of Justice consent order dated December 6, 1999, certain properties
of the Partnership, AirTouch and GTEW were required to be divested in order to
eliminate overlapping operations. To effect these divestitures, some properties
were exchanged via swaps with other wireless carriers. Accordingly, on January
31, 2000, the Partnership and GTEW, separately, signed agreements with ALLTEL
Communications ("ALLTEL") to exchange wireless interests in two stages ("Stage
I" and "Stage II"). On April 1, 2000, the Partnership executed the Stage I
transaction whereby it exchanged its interest in the southwest part of the
United States (also known as "Southwestco Wireless") for ALLTEL's interest in
eight markets. The Partnership recorded a gain on the sale of Southwestco
Wireless of approximately $848 million, which was included in sales of assets,
net in the consolidated statements of operations and comprehensive income. On
June 29, 2000, GTEW executed the Stage II transaction whereby it obtained 17 of
ALLTEL's wholly owned markets and eight of its majority owned markets in
exchange for GTEW's interest in certain markets. No gain or loss was recorded
by the Partnership in the Stage II transaction as the markets to be divested
were transferred from GTEW to GTE Corp. before the transaction was executed.
The results of operations of the divested GTEW properties were included in the
Partnership's consolidated results of operations through June 29, 2000. The
total consideration paid for this overlap transaction was approximately $2,441
million. The allocation of the purchase price was finalized in 2001.

The following selected unaudited pro forma information is being provided to
present a summary of the combined results of the Partnership as if the AirTouch
Properties and ALLTEL acquisitions had occurred as of January 1, 2000, giving
effect to purchase accounting adjustments. The unaudited pro forma data is for
informational purposes only and may not necessarily reflect the results of
operations of the Partnership had the acquired business operated as part of the
Partnership for the year ended December 31, 2000, nor is the unaudited pro
forma data indicative of the results of future consolidated operations.

For the Year Ended
December 31, 2000
(Dollars in Millions) Pro Forma
- -------------------------------------------------------------------------
(unaudited)

Total operating revenues $ 15,392
Net income $ 749


72



GTE Wireless

As described in Note 1, all prior period consolidated financial statements
presented have been restated to include the consolidated results of operations,
financial position and cash flows of GTEW as though it had always been a part
of the Partnership.

The operating revenues and net income previously reported by the separate
entities and the combined amounts in the accompanying consolidated statements
of operations were as follows:

For the Six Months Ended
(Dollars in Millions) June 30, 2000
- ------------------------------------------------------------------------------
(unaudited)

Operating Revenues:
Cellco $ 4,057
GTEW 2,115
Conforming Adjustments (73)
------------
Combined $ 6,099
============

Net Income:
Cellco $ 976
GTEW 92
Conforming Adjustments 1
------------
Combined $ 1,069
============

The significant conforming adjustments related to:

o Elimination of inter-company transactions
o Conforming accounting policies to expense customer acquisition costs
as incurred.

Various Acquisitions

In addition to the business combinations and dispositions outlined above,
during the years ended December 31, 2002, 2001 and 2000, the Partnership
purchased various individually immaterial partnership interests and wireless
licenses. Had all these purchases been consummated on January 1 of the year
preceding the year of acquisition, the results of these aggregated operations
would not have had a significant impact on the Partnership's consolidated
results of operations.

Tower Transactions

In accordance with the Alliance Agreement, any tower financing transactions
accounted for by Verizon Communications as a financing were not contributed to
the Partnership. The tower financings associated with BAM and GTEW resulted in
the Partnership's continuing involvement in joint ventures ("JVs") with Crown
Castle International Corporation ("Crown"), which were established through the
contribution of communications towers in exchange for cash and equity interests
in the JVs. The JVs are controlled and managed by Crown. The JVs were entitled
to build and own the first 500 towers built for BAM's network and the first 500
towers built for GTEW's network after the date of each agreement; however, the
parties agreed to end their obligations related to such towers in 2002. The
Partnership leases back a portion of the towers pursuant to lease agreements.
The Partnership paid $85 million, $76 million and $58 million to Crown related
to payments under operating leases for the years ended December 31, 2002, 2001
and 2000, respectively.

Prior to the acquisition of the AirTouch Properties, Vodafone entered into
agreements ("Sublease Agreements") to sublease all of its unused space on its
communications towers to American Tower Corporation ("ATC") and SpectraSite
Holdings, Inc. ("SpectraSite") in exchange for $955 million. Vodafone also
entered into exclusive three-year build-to-suit agreements with ATC and
SpectraSite to produce new communications towers in strategic locations. The
build-to-suit agreements were assumed by the Partnership upon the closing of
the AirTouch Properties acquisition. Several of these transactions closed in
phases throughout 2001. The parties agreed to terminate the build-to-suit
agreement with SpectraSite in 2002. The build-to-suit agreement with ATC
expired in January 2003. As of December 31, 2002, approximately 2,200 towers
have been subleased, at the monthly rate of approximately two thousand dollars
per tower. In accordance with the Alliance Agreement, all proceeds from the
subleases were retained by or remitted to Vodafone. The Sublease Agreements
require monthly maintenance fees for the existing physical space used by the
Partnership's wireless equipment. The terms of the Sublease Agreements differ
for leased communication towers versus those owned by the Partnership and range
from 20 to 99 years. The Partnership paid $53


73


million, $41 million and $26 million to ATC and SpectraSite pursuant to the
Sublease Agreements for the years ended December 31, 2002, 2001 and 2000,
respectively.

5. Supplementary Financial Information
- -------------------------------------------------------------------------------

Supplementary Balance Sheet Information


December 31,
(Dollars in Millions) 2002 2001
- ----------------------------------------------------------------------------------------

Property, Plant and Equipment, Net:
Land and improvements $ 94 $ 68
Buildings (5-40 yrs.) 3,768 3,048
Wireless plant equipment (4-15 yrs.) 21,719 19,465
Rental equipment (1-3 yrs.) 162 196
Furniture, fixtures and equipment (2-7 yrs.) 2,703 2,599
Leasehold improvements (5 yrs.) 798 737
----------------------------
29,244 26,113
Less: accumulated depreciation 11,556 10,147
----------------------------
Property, plant and equipment, net (a)(b) $ 17,688 $ 15,966
============================


---------
(a) Construction-in-progress included in certain of the classifications
shown in property, plant and equipment, principally wireless plant
equipment, amounted to $837 and $1,065 at December 31, 2002 and 2001,
respectively.
(b) Interest costs of $56 and $84 and network engineering costs of $203
and $211 were capitalized during the years ended December 31, 2002
and 2001, respectively.


December 31,
(Dollars in Millions) 2002 2001
- ----------------------------------------------------------------------------------------

Accounts Payable and Accrued Liabilities:
Accounts payable $ 1,816 $ 1,939
Accrued liabilities 802 645
----------------------------
Accounts payable and accrued liabilities $ 2,618 $ 2,584
============================


Supplementary Statements of Operations Information


For the Years Ended December 31,
(Dollars in Millions) 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------

Depreciation and Amortization:
Depreciation of property, plant and equipment, net $ 2,673 $ 1,939 $ 1,400
Amortization of wireless licenses, net - 1,086 868
Amortization of other intangibles, net 551 634 562
Amortization of deferred charges and other assets, net 69 50 67
--------------------------------------------------
Total depreciation and amortization $ 3,293 $ 3,709 $ 2,897
==================================================

Interest Expense, Net:
Interest expense $ (703) $ (764) $ (674)
Interest income 24 13 86
Capitalized interest 77 109 81
--------------------------------------------------
Interest expense, net $ (602) $ (642) $ (507)
==================================================



74



Supplementary Cash Flows Information


For the Years Ended December 31,
(Dollars in Millions) 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------

Net (refunds received) cash paid for income taxes $ (46) $ 160 $ 266
Interest paid, net of amounts capitalized $ 618 $ 634 $ 536

Supplemental investing and financing non-cash transactions:
Net assets transferred to affiliate $ - $ (25) $ (170)
Net assets transferred from affiliate $ 26 $ - $ -
Equity contribution and conversion of affiliate payable $ - $ 1,488 $ -

Business combinations and other acquisitions:
Cash paid $ 774 $ 626 $ 1,620
Debt and net liabilities assumed, less cash 616 209 7,555
Partnership interest exchanged - - 28,251
Minority interest (preferred return) issued 1,113 - -
--------------------------------------------------
Fair value of assets acquired $ 2,503 $ 835 $ 37,426
==================================================



6. Investments in Unconsolidated Entities
- -------------------------------------------------------------------------------

The Partnership owns non-controlling interests in the following unconsolidated
entities, which are accounted for using the equity method of accounting. The
assets, liabilities and the results of operations of the unconsolidated
entities, in the aggregate, are immaterial to the Partnership's consolidated
financial position and results of operations.


Partnership's
Ownership Interest
December 31,
2002 2001
- ----------------------------------------------------------------------------------------------

Investee
- --------
Bristol Bay Cellular Partnership 50.00% 50.00%
Railfone - Amtrak Venture (a) 50.00%
Iowa RSA No. 2 Limited Partnership 49.50% 49.50%
Badlands Cellular of North Dakota Limited Partnership 49.00% 49.00%
San Isabel Cellular of Colorado Limited Partnership 49.00% 49.00%
Northstar Paging/Holding LTD 48.45% 48.45%
Iowa 8 - Monona Limited Partnership 44.92% 44.92%
GTE Mobilnet of Indiana RSA #6 Limited Partnership 43.75% 43.75%
New York RSA 2 Cellular Partnership 42.86% 42.86%
St. Lawrence Seaway RSA Cellular Partnership 40.00% 40.00%
Illinois Valley Cellular RSA 2-I Partnership 40.00% 40.00%
Illinois Valley Cellular RSA 2-III Partnership 40.00% 40.00%
Indiana RSA #1 Limited Partnership 40.00% 40.00%
Mohave Cellular Limited Partnership 33.33% 33.33%
GTE Mobilnet of Texas RSA #17 Limited Partnership 31.92% 31.92%
California RSA No. 3 Limited Partnership 27.72% 27.72%
Cal-One Cellular Limited Partnership 22.48% 22.48%
Missouri RSA 9B1 Limited Partnership 14.70% 14.70%
Missouri RSA 9B1 Tower Holdings LLC 14.70% 14.70%
Jacksonville MSA Limited Partnership 14.24% 14.24%
RSA 7 Limited Partnership 14.14% 14.14%
RSA 1 Limited Partnership 9.14% 9.14%
Virginia RSA 2 Limited Partnership 4.99% 4.99%
Wisconsin RSA #8 Limited Partnership 2.00% 2.00%
Virginia 10 RSA Limited Partnership 1.00% 1.00%
New Mexico RSA 6-II Partnership - (b)


---------
(a) In June 2002, the Partnership purchased the remaining 50% interest
for an immaterial amount and started consolidating the operating
results of the entity.
(b) This investment was sold in 2001. The Partnership received proceeds
of $3 million and recognized a gain of $2 million.


75


The Partnership utilizes the equity method of accounting for certain
partnerships where it owns less than 20% as it maintains the ability to
exercise significant influence over operating and financial policies.

7. Debt
- -------------------------------------------------------------------------------


December 31,
(Dollars in Millions) 2002 2001
- --------------------------------------------------------------------------------------

Short-term debt consists of the following:
Floating rate notes $ 1,500 $ -
Credit facility and term loan 24 410
Capital lease obligations 45 38
Other 7 10
---------------------------
1,576 458
---------------------------

Long-term debt consists of the following:
Fixed rate notes, net of discount 2,490 2,488
Floating rate notes - 1,500
Capital lease obligations (see Note 13) 77 106
Other 2 5
---------------------------
2,569 4,099
---------------------------
Total debt $ 4,145 $ 4,557
===========================


Credit Facility and Term Loan

At December 31, 2002, borrowings under the credit facility amounted to $24
million. The credit facility matures on April 2, 2003 and bears interest (at
the Partnership's option) at a rate equal to i) LIBOR plus 0.32%, ii) the prime
rate or iii) a competitive bid option (1.7% at December 31, 2002). The $386
million term loan, included in 2001, was repaid on July 1, 2002. Facility fees
are 0.06% of the total commitment calculated and payable monthly. The credit
facility contains customary events of default and customary covenants,
including a requirement to maintain a certain leverage ratio. The Partnership
was in compliance with all covenants at December 31, 2002.

Fixed and Floating Rate Notes

On December 17, 2001, the Partnership and Verizon Wireless Capital LLC, a
wholly owned subsidiary of the Partnership, co-issued a private placement of $4
billion in unsecured and unsubordinated notes (the "notes"). Verizon Wireless
Capital LLC, a Delaware limited liability company, was formed for the sole
purpose of facilitating the offering of the notes and additional debt
securities of the Partnership. Other than acting as co-issuer of the
Partnership indebtedness, Verizon Wireless Capital LLC has no material assets,
operations or revenues. The Partnership is joint and severally liable with
Verizon Wireless Capital LLC for the notes. The notes include $1.5 billion of
floating rate notes maturing in December 2003 and $2.5 billion, net of a $12
million discount, of fixed rate notes maturing in December 2006. The discount
is amortized using the effective interest method. These notes are non-recourse
against any existing or future partners of the Partnership. Interest on the
floating rate notes is payable quarterly in arrears at a rate equal to LIBOR
plus 0.4% (2.21% at December 31, 2002). The fixed rate notes bear interest at a
rate of 5.375% due semi-annually on each June 15 and December 15. Net
capitalized debt issuance costs, included in deferred charges and other assets,
net in the 2002 and 2001 consolidated balance sheets, amounted to $9 million
and $13 million, respectively, and are amortized in the consolidated statements
of operations and comprehensive income using the straight-line method.

The Partnership may not redeem the floating rate notes at any time prior to
maturity; however, the fixed rate notes can be redeemed at any time at a
purchase price equal to 100% of the principal amount plus the following: i)
accrued interest, ii) unpaid interest on the principal amount being redeemed to
the redemption date, and iii) an additional premium. The notes contain
customary events of default and customary non-financial covenants. The
Partnership was in compliance with all covenants at December 31, 2002.

After deducting the initial discount relating to the fixed rate notes, the net
cash proceeds from the private placement amounted to $3,988 million. These
proceeds were used to reduce outstanding amounts of the Partnership's credit
facility.


76


On July 10, 2002, the Partnership filed a registration statement on Form S-4 to
exchange the privately placed notes for a new issue of notes with identical
terms registered under the Securities Act of 1933. The registration statement
was declared effective and the exchange offer was commenced on October 11,
2002. The exchange offer expired and closed on November 12, 2002.

8. Due from/to Affiliates
- -------------------------------------------------------------------------------


December 31,
(Dollars in Millions) 2002 2001
- -------------------------------------------------------------------------------------------

Short-term portion consists of the following:
Receivable from affiliates $ (63) $ (23)
Demand notes due to affiliate 6,643 8,382
--------------------------------
6,580 8,359

Long-term portion consists of the following:
Term notes payable to affiliates 2,781 2,431
--------------------------------
Total due to affiliates $ 9,361 $ 10,790
================================


Receivable from Affiliates

The Partnership has agreements with certain Verizon Communications'
subsidiaries and affiliates for the provision of services in the normal course
of business, including but not limited to direct and office telecommunications
and general and administrative services.

Demand Notes Due to Affiliate

The Partnership has an agreement with Verizon Communications' wholly-owned
financing affiliate, Verizon Global Funding ("VGF") under which it could
borrow, regularly on an uncommitted basis, up to an agreed upon amount for
working capital and other general partnership purposes. Amounts payable to VGF
are offset on a daily basis by cash available in the Partnership's cash
accounts. At December 31, 2002, the maximum amount available from VGF was $17.8
billion. Under the terms of the agreement, all demand notes are payable to VGF
on demand.

In 2002, the Partnership received refunds of approximately $1,740 million from
the FCC pertaining to the disputed wireless spectrum licenses (see Note 15).
The refunds were used to reduce the debt payable to VGF.

Demand note borrowings from VGF will fluctuate based upon the Partnership's
working capital and other funding requirements. Interest on the demand note
borrowings is generally based on a blended interest rate calculated by VGF
using fixed rates and variable rates applicable to borrowings by VGF to fund
the partnership and other entities affiliated with Verizon Communications. For
the years ended December 31, 2002 and 2001, the average interest rate for all
demand note borrowings from VGF was 5.1% and 5.4%, respectively.

Term Notes Payable to Affiliates

At December 31, 2002, approximately $2,431 million of term note borrowings from
Verizon Communications' subsidiaries and affiliates are due in 2009. The
Partnership must make quarterly prepayments to the extent that its former
Ameritech markets generate excess cash flow, as defined in the term notes.
Management does not anticipate such excess cash flow within fiscal 2003; hence
the entire amount is classified as long term. Interest on the term note
borrowings ranged from 4.26% to 5.57% and 4.61% to 5.96% in 2002 and 2001,
respectively. The term notes contain limited, customary non-financial covenants
and events of default. The Partnership was in compliance with all covenants and
restrictions at December 31, 2002.

In conjunction with the acquisition of the operating assets of Price (see Note
4), in August 2002, Verizon Wireless of the East LP, a subsidiary of the
Partnership, obtained a $350 million term note from Verizon Investments Inc., a
wholly-owned subsidiary of Verizon Communications. The funds were used to
partially fund the redemption of the debt assumed from Price. The term note
bears interest at a fixed rate of approximately 8.9% per year. Interest is
payable quarterly in arrears. The term note is non-recourse to the partners of
Verizon Wireless of the East LP and is guaranteed by Price. It matures four and
one-half years after the closing of the Price acquisition (February 15, 2007)
or six months following the occurrence of certain specified events.


77



9. Financial Instruments
- -------------------------------------------------------------------------------

Fair Value

The carrying amounts and fair values of the Partnership's financial instruments
as of December 31 consist of the following:


December 31,
2002 2001
----------------------------- -----------------------------
Carrying Fair Carrying Fair
(Dollars in Millions) Value Value Value Value
- --------------------------------------------------------------------------------------------------------------------

Credit facility and term loans $ 24 $ 24 $ 410 $ 410
Fixed rate notes $ 2,490 $ 2,626 $ 2,488 $ 2,488
Floating rate notes $ 1,500 $ 1,500 $ 1,500 $ 1,500
Foreign exchange-forward contracts $ 35 $ 35 $ 48 $ 48
Partner's capital subject to redemption $ 20,000 $ 20,000 $ 20,000 $ 20,000


The Partnership's trade receivables and payables, and debt maturing within one
year are short term in nature. Accordingly, these instruments' carrying value
approximates fair value. The fair values of foreign exchange-forward contracts
are determined using quoted market prices. The fair value of the credit
facility and term loans is considered to be equivalent to the carrying value as
the interest rates are based upon variable rates. A discounted future cash
flows method is used to determine the fair value of the fixed and floating rate
notes.

Interest Rate Swaps

The Partnership uses interest rate swap contracts to manage market risk and
reduce its exposure to fluctuations in interest rates on its variable rate
debt. Interest rate swaps allow the Partnership to raise funds at floating
rates and effectively swap them into fixed rates that are lower than those
available to it if fixed rate borrowings were made directly. These swaps do not
involve an exchange of the underlying principal amount. The Partnership's use
of interest rate swaps is limited; an insignificant portion of its variable
rate debt portfolio is hedged. The Partnership maintained two interest rate
swap agreements, one expired in 2000 and the other in August 2001, with an
aggregate notional amount of $40 million. The effect of these agreements was to
limit the interest rate exposure to 5.73% on $10 million and 5.76% on $30
million of the revolving credit facility.

Periodic payments and receipts under the interest rate swaps were recorded as
part of interest expense. The related amount payable to, or receivable from,
the counterparty was included in accrued interest payable or other current
assets in the consolidated balance sheets. The fair value of the interest rate
swaps was not recognized in the consolidated statements of operations as they
were accounted for as hedges. If the interest rate swaps ceased to qualify as a
hedge, any subsequent gains and losses would have been recognized in the
statement of operations.

The Partnership was subject to credit risk in the event of nonperformance by
the counterparty to the interest rate swap agreements.

Derivatives

The Partnership maintains foreign exchange-forward contracts to hedge foreign
currency transactions; specifically Japanese Yen denominated capital lease
obligations. As a result of the Partnership's acquisition of Vodafone's 50%
ownership interest in PrimeCo (see Note 1), the Partnership had approximately
$120 million and $156 million of foreign exchange contracts outstanding
relating to foreign currency denominated capital lease obligations at December
31, 2002 and 2001, respectively. The contracts are designated as cash flow
hedges and currently expire at various dates through April 2005. The foreign
exchange-forward contracts generally require the Partnership to exchange U.S.
dollars for Yen at maturity of the Japanese Yen denominated obligations, at
rates agreed to at inception of the contracts.

The Partnership could be at risk for any currency related fluctuations if the
counterparties do not contractually comply. Should the counterparties not
comply, the ultimate impact, if any, will be a function of the difference in
the cost of acquiring Yen at the time of delivery versus the contractually
agreed upon price.

Effective January 1, 2001, the Partnership adopted SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities" and its correcting
amendments under SFAS No. 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities." SFAS 133 requires that all derivatives be
measured at fair value and recognized as either assets or liabilities in the
consolidated balance sheets. Changes in the fair values of derivative
instruments not used as hedges will be recognized in earnings


78


immediately. Changes in the fair values of derivative instruments used
effectively as hedges of changes in cash flows will be recognized in other
comprehensive income/(loss) and will be recognized in the consolidated
statements of operations when the hedged item affects earnings. The ineffective
portion of a derivative's change in fair value will be immediately recognized
in earnings. The initial impact of adoption on the Partnership's consolidated
financial statements was recorded as a cumulative transition adjustment. A
charge of $4 million was recorded to earnings as a cumulative effect of a
change in accounting principle for derivatives not designated as hedges and a
cumulative charge of $2 million was recorded to other comprehensive
income/(loss) for derivatives designated as cash flow-type hedges in our
consolidated financial statements. The recognition of assets and liabilities in
the consolidated balance sheets was immaterial.

The ongoing effect of adoption on the Partnership's consolidated financial
statements will be determined each quarter by several factors, including the
specific hedging instruments in place and their relationships to hedged items,
as well as market conditions at the end of each period. The impact for the year
ended December 31, 2002 was an immaterial gain for derivatives not designated
as hedges, however; for the year ended December 31, 2001 the impact was a $4
million loss. These are included in other, net in the 2002 and 2001
consolidated statements of operations, respectively. The impact to other
comprehensive income/(loss) for derivatives designated as cash flow-type hedges
for the years ended December 31, 2002 and 2001 was immaterial.


10. Employee Benefits
- -------------------------------------------------------------------------------

Pension and Postretirement Benefits

The Partnership provides pension benefits to certain eligible employees hired
before January 1, 2001 or to certain employees who were participants in a
defined benefit pension plan formerly sponsored by legacy companies under the
"Verizon Wireless Retirement Plan" and the "Retiree Medical, Dental and Life
Plan," which consists of the former Upstate Cellular Network Pension Plan and
AirTouch Pension Plan. These plans include a qualified pension plan, a
nonqualified pension plan and a postretirement benefit plan. In accordance with
the Alliance Agreement, all AirTouch pension plan assets and liabilities were
transferred to the Partnership on January 1, 2001. The beginning balance of
each plan's assets and obligations were determined under the purchase method of
accounting.

The following information summarizes activity in the pension and postretirement
benefit plans:


(Dollars in Millions) Pension Benefits Postretirement Benefits
-------------------------- -------------------------
For the Years Ended December 31, 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------

Benefit Cost
Service cost $ 18.8 $ 19.5 $ 0.4 $ 0.4
Interest cost 6.8 5.2 1.6 1.7
Expected return on plan assets (10.1) (12.0) - -
Amortization of actuarial (gain) loss, net 4.0 - - -
Recognized curtailments gain - (5.0) - -
-------------------------------------------------------
Net periodic benefit cost $ 19.5 $ 7.7 $ 2.0 $ 2.1
=======================================================



79



(Dollars in Millions) Pension Benefits Postretirement Benefits
---------------------------- ----------------------------
For the Years Ended December 31, 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------------

Benefit Obligation
Benefit obligation at January 1 $ 92.3 $ 75.2 $ 25.1 $ 22.3
Service cost 18.8 19.5 0.4 0.4
Interest cost 6.8 5.2 1.6 1.7
Actuarial loss, net 2.8 11.7 4.1 1.5
Benefits paid (12.6) (14.3) (0.9) (0.8)
Plan amendments 0.8 - - -
Curtailments - (5.0) - -
------------------------------------------------------------
Benefit obligation at December 31 $ 108.9 $ 92.3 $ 30.3 $ 25.1
------------------------------------------------------------

Change in Plan Assets
Fair value of plan assets at January 1 $ 123.5 $ 143.9 $ - $ -
Actual return on plan assets (11.5) (7.2) - -
Employer contributions 1.4 1.1 - -
Benefits paid (12.6) (14.3) - -
------------------------------------------------------------
Fair value of plan assets at December 31 $ 100.8 $ 123.5 $ - $ -
------------------------------------------------------------

Funded Status
Funded status at December 31 $ (8.2) $ 31.2 $ (30.3) $ (25.1)
Unrecognized net actuarial loss 51.4 30.9 5.6 1.4
Unrecognized prior service (benefit) cost 0.8 - - -
------------------------------------------------------------
Net amount recognized at December 31 $ 44.0 $ 62.1 $ (24.7) $ (23.7)
------------------------------------------------------------

Amounts recognized in the December 31
Consolidated Balance Sheet consist of:
Prepaid pension costs $ 47.7 $ 66.4 $ - $ -
Accrued benefit liability (7.4) (4.3) (24.7) (23.7)
Accumulated other comprehensive loss 3.7 - - -
------------------------------------------------------------
Net amount recognized $ 44.0 $ 62.1 $ (24.7) $ (23.7)
============================================================


The actuarial assumptions used are based on market interest rates, past
experience, and management's best estimate of future economic conditions. The
expected rate of return on plan assets has been changed from 9.25% in 2002 to
8.50% in 2003. The weighted average assumptions used in determining expense and
benefit obligations are as follows:

As of December 31,
2002 2001
- -------------------------------------------------------------------------------

Discount rate 6.75% 7.25%
Expected return on plan assets 9.25% 9.25%
Rate of compensation increase 5.50% 5.50%

For the postretirement health care benefit plan, the Partnership assumed a 8.0%
weighted average annual health care cost trend rate for 2002, gradually
declining to 5.0% in 2005 and beyond. Assumed health care trend rates have a
significant effect on the amounts reported for the postretirement benefits. A
one-percentage point change in the Partnership's healthcare cost trend rate
would have the following effects:


One-Percentage Point
(Dollars in Millions) Increase Decrease
- ----------------------------------------------------------------------------------------

Effect on total of service and interest cost components $ 0.2 $ (0.2)
Effect on postretirement benefit obligation $ 2 $ (2)



GTEW Benefit Plans

Upon completion of the Merger, the assets and obligations for benefits
pertaining to GTE Corp.'s pension and postretirement plans remained with
Verizon Communications. The plans include former employees of GTEW; therefore,
the Partnership reimburses Verizon Communications for GTEW's share of the cost
of these plans. Prior to January 2001, the allocation was based on GTEW's
contribution to the GTE Corp. plans, representing an allocation of the GTE
Corp.'s plans' assets and


80



liabilities, based on the number and characteristics of GTEW's employees in
relation to total GTE Corp. employees. The Partnership recognized pension
expense of $2 million and other postretirement benefit expense of $4 million
for the year ended December 31, 2000.

Beginning in 2001, the Partnership and Verizon Communications established a new
billing agreement for the costs of providing pension and other postretirement
benefits to former GTE Wireless employees for the period commencing January 1,
2001 and ending December 31, 2004. The allocation is based on the proportion of
GTEW active salary and number of employees at the Partnership to the total
Verizon Communications active salary and number of employees for Non-Network
Services pension and postretirement plans, respectively, plus an additional $2
million per year to cover the cost of the pension benefit improvement. The
Partnership recognized pension and postretirement benefit expense of $13
million and $11 million for the years ended December 31, 2002 and 2001,
respectively, for former GTEW employees.

Employee Savings and Profit Sharing Retirement Plans

The Partnership maintains the Verizon Wireless Savings and Retirement Plan (the
"VZW Plan") for the benefit of its employees. During 2000, the Partnership
maintained the Bell Atlantic Mobile Savings and Profit Sharing Retirement Plan
(the "BAM Plan"). The BAM Plan was amended and restated effective January 1,
2001 and is now the VZW Plan. The BAM Plan and the VZW Plan provide that
employees may make contributions and that the Partnership may make matching
contributions as well as profit sharing contributions.

Prior to 2001, employees of BAM were eligible to participate in the BAM Plan
upon the first of the month following completion of 12 months of employment.
Effective January 1, 2001, employees of the Partnership are eligible to
participate as soon as practicable following their commencement of employment.

Beginning in 2002, under the employee savings component of the VZW Plan,
employees may contribute, subject to IRS limitations, up to a total of 25% of
eligible compensation, on a before-tax or after-tax basis, or as a combination
of before-tax and after-tax contributions, under Section 401(k) of the Internal
Revenue Code of 1986, as amended. In 2001, employees were able to contribute up
to a total of 16% of eligible compensation. The Partnership matches 100% of the
first 6% of an employee's contributions (75% in the case of former GTE
employees who continue to participate in the GTE pension plan). The Partnership
recognized approximately $71 million and $70 million of expense related to
matching contributions for the years ended December 31, 2002 and 2001,
respectively.

Prior to 2001, the Partnership made two types of matching contributions: fixed
and variable. The fixed match was made at the rate of 50% of an employee's
contributions up to 6% of eligible compensation. The variable match was
determined at the sole discretion of the Human Resources Committee of the Board
of Representatives (the "HRC"). The HRC declared a variable matching
contribution of 50% in the year ended December 31, 2000. The Partnership
recognized approximately $18 million of expense related to fixed and variable
matching contributions for the year 2000.

Beginning in 2001, under the profit sharing component of the VZW Plan the
Partnership may elect, at the sole discretion of the HRC, to contribute an
additional amount to the accounts of employees who have completed at least 12
months of service by December 1, 2001 in the form of a profit sharing
contribution. The HRC declared profit sharing contributions of 3%, 2% and 3% of
employees' eligible compensation for 2002, 2001 and 2000, respectively. The
Partnership recognized approximately $47 million, $35 million and $11 million
of expense related to profit sharing contributions for 2002, 2001 and 2000,
respectively.

11. Long-Term Incentive Plan
- -------------------------------------------------------------------------------

The 2000 Verizon Wireless Long-Term Incentive Plan (formerly known as the Bell
Atlantic Mobile 1995 Long-Term Incentive Plan) (the "Plan") provides
compensation opportunities to eligible employees and other participating
affiliates of the Partnership. The Plan provides rewards that are tied to the
long-term performance of the Partnership. Under the former Plan, Contingent
Value Appreciation Rights ("CVARs") were granted to eligible employees since
1995. A CVAR was a right to receive cash payment, upon exercise, equal to the
appreciation in the fair market value of CVARs from the date granted to the
exercise date. On November 1, 2000, all CVARs outstanding were converted to
VARs pursuant to the Plan. The outstanding CVARs were converted utilizing a
conversion ratio representing the relationship of the fair value of a BAM CVAR
to the fair value of a Verizon Wireless VAR.

VARs reflect the change in the value of the Partnership, similar to stock
options. Once VARs become vested, employees can exercise their VARs and receive
a payment that is equal to the difference between the VAR price on the date of
grant and the VAR price on the date of exercise, less applicable taxes. VARs
are fully exercisable three years from the date of grant with a


81


maximum term of 10 years. All VARs are granted at a price equal to the
estimated fair value of the Partnership at the date of the grant. The
Partnership employs standard valuation techniques to arrive at the fair value
of the VARs. These standard valuation techniques include both the income
approach and the market approach. The income approach uses future net cash
flows discounted at market rates of return to arrive at an indication of fair
value. The market approach compares the financial condition and operating
performance of the enterprise being appraised with that of publicly traded
enterprises in the same or similar lines of business thought to be subject to
corresponding business and economic risks, and environmental and political
factors to arrive at an indication of fair value. The aggregate number of VARs
that may be issued under the Plan is 343,300,000.

The Partnership accounts for VARs issued to employees as provided in Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" and
related interpretations and follows the disclosure only provisions of SFAS No.
123. Effective January 1, 2003, the Partnership will adopt the fair value
recognition provisions of SFAS No. 123, prospectively as permitted under SFAS
No. 148 (see Note 2). Accordingly, the Partnership will continuously record a
charge or benefit in the consolidated statements of operations and
comprehensive income each reporting period based on the change in fair value of
the award during the period.

Compensation expense resulting from the Plan was $20 million, $4 million and
$70 million for the years ended December 31, 2002, 2001 and 2000, respectively.

Awards outstanding at December 31, 2002, 2001 and 2000 under the Plan are
summarized as follows:


Weighted
Average
Exercise
Price Vested
CVARs* VARs* of VARs* VARs*
- --------------------------------------------------------------------------------------------------------------

Outstanding, January 1, 2000 2,709,300
Granted 593,701 25,353,843 $ 30.00
Exercised (1,402,350) (2,064,491) 13.05
Cancelled (31,115) (145,263) 30.00
Conversion of CVARs (1,869,536) 4,741,143 18.54
------------------------------
Outstanding, December 31, 2000 - 27,885,232 29.31 2,218,305
------------------------------
Granted - 54,600,530 17.33
Exercised - (105,312) 12.91
Cancelled - (2,728,248) 27.76
------------------------------
Outstanding, December 31, 2001 - 79,652,202 21.17 1,129,602
------------------------------
Granted - 53,980,943 9.10
Exercised - (63,101) 11.46
Cancelled - (6,652,385) 17.87
------------------------------
Outstanding, December 31, 2002 - 126,917,659 $ 16.22 1,403,298
==============================


- ---------
* The weighted average exercise price is presented in actual dollars; VARs
and CVARs are presented in actual units.

The following table summarizes the status of the Partnership's VARs as of
December 31, 2002:


VARs Outstanding VARs Vested
-------------------------------------------------- ----------------------------
Weighted
Average
Remaining Weighted Weighted
Range of Contractual Average Average
Exercise Prices VARs Life (Years) Exercise Price VARs Exercise Price
- ----------------------------------------------------------------------------------------------------------------

$8.74 - $14.79 51,216,239 9.51 $ 8.77 611,872 $ 11.09
$14.80 - $22.19 49,977,100 8.78 16.75 636,621 17.05
$22.20 - $30.00 25,724,320 7.53 30.00 154,805 30.00
------------- -----------
Total 126,917,659 $ 16.22 1,403,298 $ 15.88
============= ===========


During 2000, the Partnership recorded a charge to operating expenses of
approximately $38 million in selling, general and administrative expenses
related to the vesting of certain CVARs in accordance with the Plan, in
connection with the closing of the AirTouch Properties acquisition. The vesting
was triggered by a change of control provision as defined in the Plan.


82


12. Income Taxes
- -------------------------------------------------------------------------------

The provision for income taxes consists of the following:


For the Years Ended December 31,
(Dollars in Millions) 2002 2001 2000
- --------------------------------------------------------------------------------------

Current:
Federal $ 108 $ 83 $ 158
State and local 26 28 52
---------------------------------------------
134 111 210
---------------------------------------------
Deferred:
Federal 47 (38) (38)
State and local 12 (11) (23)
---------------------------------------------
59 (49) (61)
---------------------------------------------
Provision for income taxes $ 193 $ 62 $ 149
=============================================


A reconciliation of the income tax provision computed at the statutory tax rate
to the Partnership's effective tax rate is as follows:


For the Years Ended December 31,
(Dollars in Millions) 2002 2001 2000
- -------------------------------------------------------------------------------------------------------------------

Income tax provision at the statutory rate $ 972 $ 478 $ 587
State income taxes, net of U.S. federal benefit 30 16 19
Amortization of goodwill - 36 45
Partnership income not subject to federal or state income taxes (810) (468) (500)
Other, net 1 - (2)
-----------------------------------------
Provision for income tax $ 193 $ 62 $ 149
=========================================


Deferred taxes arise because of differences in the book and tax bases of
certain assets and liabilities. The significant components of the Partnership's
deferred tax assets and (liabilities) are as follows:

December 31,
(Dollars in Millions) 2002 2001
- --------------------------------------------------------------------------------
Total deferred tax assets $ 222 $ 240
-------------------------------

Deferred tax liabilities:
Property, plant and equipment $ (400) $ (260)
Intangible assets (3,772) (2,189)
Other (108) (108)
-------------------------------
Total deferred tax liabilities $ (4,280) $ (2,557)
-------------------------------

Net deferred tax asset-current $ 107 $ 107
Net deferred tax liability-non-current $ (4,165) $ (2,424)

Net operating loss carryovers of $128 million expire at various dates
principally from December 31, 2017 through December 31, 2020.

13. Leases
- -------------------------------------------------------------------------------

Operating Leases

The Partnership entered into operating leases for facilities and equipment used
in its operations. Lease contracts include renewal options that include rent
expense adjustments based on the Consumer Price Index as well as annual and
end-of-lease term adjustments. For the years ended December 31, 2002, 2001 and
2000, the Partnership recognized rent expense related to payments under these
operating leases of $406 million, $338 million and $218 million, respectively,
in cost of service and $241


83


million, $220 million and $158 million, respectively, in selling, general and
administrative expense in the accompanying consolidated statements of
operations and comprehensive income.

Capital Leases

The Partnership has certain sales/leasebacks for network equipment which are
accounted for as financings, whereby a sale was not recorded and a capital
lease obligation was recorded for the proceeds received. The related
depreciation of assets recorded under capital leases is included in
depreciation and amortization in the accompanying consolidated statements of
operations and comprehensive income.

Future minimum payments under these and other capital lease obligations, a
portion of which are payable in Japanese Yen, less imputed interest, and the
aggregate future minimum rental commitments under noncancellable operating
leases, excluding renewal options for the periods are as follows:


Operating Capital
(Dollars in Millions) Leases Leases
- ---------------------------------------------------------------------------------------

Years
- -----
2003 $ 528 $ 49
2004 477 68
2005 421 9
2006 336 1
2007 240 1
2008 and thereafter 692 17
---------------------------
Total minimum payments $ 2,694 145
============
Less: imputed interest 23
------------
Obligations under capital leases 122
Less: current capital lease obligations 45
------------
Long-term capital lease obligations at December 31, 2002 $ 77
============


14. Other Transactions with Affiliates
- -------------------------------------------------------------------------------

In addition to transactions with affiliates in Notes 8 and 10, other
significant transactions with affiliates are summarized as follows:


For the Years Ended December 31,
(Dollars in Millions) 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------

Statement of Operations:
Revenue related to transactions with affiliated companies $ 20 $ 39 $ 51
Direct and office telecommunication charges $ 281 $ 265 $ 340
Certain general and administrative expenses (a) $ 81 $ 49 $ 160
Secondment agreement expenses (b) $ - $ - $ 657
Interest expense, net $ 499 $ 504 $ 562

Balance Sheet:
Amounts capitalized for construction of cell sites and other system property $ - $ - $ 4


- ---------
(a) In addition to recurring allocations, during 2000, the Partnership
received an allocation of direct costs of approximately $46 in selling,
general and administrative expenses from Verizon Communications. The
charge related to severance costs and incentive stay agreements with
employees of GTEW that were incurred in connection with the Merger. In
2001, the affiliate general and administrative expenses were the result of
direct billings. Prior to 2001, expenses were allocated based on the
percentage of time spent on wireless-related activities. The percentage
used was determined by annual time studies. The Partnership believes these
allocations were reasonable.

(b) On April 3, 2000, Vodafone, Verizon Communications and the Partnership
entered into an employee secondment agreement pursuant to which Vodafone
agreed to loan approximately 14,000 of its employees to the Partnership
until December 31, 2000. During the period, the loaned employees continued
to be paid by Vodafone and performed services exclusively for the
Partnership, which reimbursed Vodafone for their salaries, benefits and
any relocation expenses. The Partnership reimbursed Vodafone $657 in 2000.
All loaned employees became employees of the Partnership on January 1,
2001.


84


Under the terms of the partnership agreement between Verizon Communications and
Vodafone, the Partnership is required to make annual distributions to its
partners to pay taxes. Additionally, the Partnership is required, subject to
compliance with specified financial tests, to pay distributions to the partners
based upon a calculation specified in the partnership agreement.

Based on the financial tests performed, a $1,113 million distribution will be
made to the partners in February 2003 for the period July through December
2002. Concurrent with this payment, the Partnership will make a supplemental
distribution in 2003 of $112 million to the partners with respect to the period
from April 2000 to June 2002. In August 2002, an $862 million distribution was
made to the partners for the period January through June 30, 2002. In February
2001, a $691 million distribution was made to the partners for the period July
through December 31, 2000. There have been no distributions made in respect of
the 2001 calendar year due to the result of the financial tests mentioned
above.

In December 2002, a 57.13% partnership interest in Pennsylvania RSA6 (B1),
valued at approximately $24 million, was contributed to the Partnership from
Verizon Communications. In December 2001, approximately $25 million of proceeds
related to the sale of an asset associated with an overlap property were
received directly by Verizon Communications. In connection with the sale of
overlapping properties by Verizon Communications in 2001 and 2000, non-cash
proceeds of approximately $1.5 billion were generated and were fully utilized
for the purchase of certain properties. In accordance with the U.S. Wireless
Alliance Agreement with Vodafone, in the first quarter of 2001, the Partnership
recorded an equity contribution from Verizon Communications, relieving the
affiliate payable (see Note 5).

Upon finalization of the disposition of certain overlap wireless properties,
the Partnership may be required to make additional distributions or may receive
additional contributions from Verizon Communications or Vodafone to reflect the
proportionate ownership of the two partners in accordance with the Alliance
Agreement. Management is unable to estimate the impact this may have on the
financial position of the Partnership as negotiations between Verizon
Communications and Vodafone regarding the finalization of the disposition of
the overlap wireless properties is not complete.

15. Commitments and Contingencies
- -------------------------------------------------------------------------------

Under the terms of the investment agreement entered into among the Partnership,
Verizon Communications and Vodafone on April 3, 2000, Vodafone may require the
Partnership to purchase up to an aggregate of $20 billion of Vodafone's
interest in the Partnership, at its then fair market value, with up to $10
billion redeemable in July 2003 and/or 2004 and the remainder in July 2005,
2006 and/or 2007. Verizon Communications has the right, exercisable at its sole
discretion, to purchase all or a portion of this interest instead of the
Partnership. However, even if Verizon Communications exercises this right,
Vodafone has the option to require the Partnership to purchase up to $7.5
billion of this interest redeemable in July 2005, 2006 and/or 2007 with cash or
contributed debt. Accordingly, $20 billion of partners' capital has been
classified as redeemable on the accompanying consolidated balance sheets.

The Alliance Agreement contains a provision, subject to specified limitations,
that requires Vodafone and Verizon Communications to indemnify the Partnership
for certain contingencies, excluding PrimeCo contingencies, arising prior to
the formation of Verizon Wireless.

The Partnership is subject to several lawsuits and other claims including class
actions, product liability, patent infringement, antitrust, partnership
disputes, and claims involving the Partnership's relations with resellers and
agents. The Partnership is also defending lawsuits filed against the
Partnership and other participants in the wireless industry alleging various
adverse effects as a result of wireless phone usage. Various consumer class
action lawsuits allege that the Partnership breached contracts with consumers,
violated certain state consumer protection laws and other statutes and
defrauded customers through concealed or misleading billing practices. These
matters may involve indemnification obligations by third parties and/or
affiliated parties covering all or part of any potential damage awards against
the Partnership and/or insurance coverage. Attorney Generals in a number of
states also are investigating certain sales, marketing and advertising
practices.

All of the above matters are subject to many uncertainties, and outcomes are
not predictable with assurance. Consequently, the ultimate liability with
respect to these matters at December 31, 2002 cannot be ascertained. The
potential effect, if any, on the consolidated financial condition and results
of operations of the Partnership, in the period in which these matters are
resolved, may be material.

In addition to the aforementioned matters, the Partnership is subject to
various other legal actions and claims in the normal course of business. While
the Partnership's legal counsel cannot give assurance as to the outcome of each
of these other matters, in management's opinion, based on the advice of such
legal counsel, the ultimate liability with respect to any of these actions, or
all of them combined, will not materially affect the combined financial
position or operating results of the Partnership.


85


On March 19, 2001, the Partnership awarded a three-year, approximately $5
billion supply contract to telecommunications equipment maker Lucent
Technologies Inc. ("Lucent"). The contract makes Lucent the largest supplier of
high-speed, high-capacity wireless infrastructure to the Partnership. As of
December 2002, the remaining commitment was approximately $1.8 billion.

FCC Auction

In December 2000, the FCC began an auction of Personal Communications Service
("PCS") licenses that had been awarded in previous license grants but had been
cancelled by the FCC and reclaimed from those bidders. The Partnership was the
winning bidder for 113 of the 422 licenses offered. The Partnership agreed to
pay a total bid price of approximately $8.8 billion upon receipt of the
licenses and paid $1.8 billion as a deposit. There were no legal challenges to
the Partnership's qualifications to acquire these licenses. The Partnership was
awarded 33 of the 113 licenses in August 2001 and paid approximately $82
million for them. However, the remaining licenses for which the Partnership was
the high bidder have been the subject of litigation by the original licensees,
NextWave Personal Communications Inc. and NextWave Power Partners, Inc.
(collectively "NextWave"). In June 2001 a federal appeals court ruled that the
FCC's cancellation of NextWave's licenses violated the federal bankruptcy law.
The FCC appealed that decision to the United States Supreme Court. Oral
argument on the appeal was heard in October 2002, and the decision remained
pending at December 31, 2002. On January 27, 2003, the Supreme Court opinion
affirmed the lower court decision ordering the FCC to return the auction
spectrum to NextWave.

In January 2002, the Partnership and most other bidders filed a petition with
the FCC to refund their deposits on the ground that the FCC could not timely
deliver the licenses to them. In March 2002, the FCC ordered a refund of 85% of
the deposits but determined that it would retain the balance pending the
outcome of the Supreme Court case. In November 2002, however, the FCC decided
to refund the remaining balance for those bidders that wanted to dismiss their
applications and to thereupon relieve those bidders of their obligations. In
December 2002, the Partnership dismissed its applications and received back in
full its remaining deposit of $261 million.

Proposed Acquisitions

On December 19, 2002, the Partnership signed an agreement with Northcoast
Communications LLC, to purchase 50 PCS licenses and related network assets, for
approximately $750 million in cash. The licenses cover large portions of the
East Coast and Midwest and the total population served by the licenses is
approximately 47 million. The transaction is expected to close during the
second quarter of 2003.


16. Subsequent Events
- -------------------------------------------------------------------------------

On January 29, 2003, the Partnership withdrew its registration statement for an
initial public offering of equity securities, filed with the SEC.

In February 2003, the Partnership purchased a 66% general partnership interest
in Virginia 10 RSA Limited Partnership ("Virginia 10") for approximately $37
million from Shenandoah Mobile Company, a wholly-owned direct subsidiary of
Shenandoah Telecommunications Company, bringing its total interest in Virginia
10 to 67%.

On March 4, 2003, Verizon Communications purchased a minority interest in one
of its subsidiaries that is a partner in the Partnership for approximately $98
million. Pursuant to a preexisting agreement, the Partnership reimbursed
Verizon Communications for this amount.


86



INDEPENDENT AUDITORS' REPORT



To the Board of Representatives and Partners of
Cellco Partnership d/b/a Verizon Wireless

We have audited the consolidated financial statements of Cellco
Partnership d/b/a Verizon Wireless (the "Partnership") as of December 31, 2002
and 2001, and for each of the three years in the period ended December 31,
2002, and have issued our report thereon dated January 28, 2003 (March 4, 2003
as to Note 16), (which report expresses an unqualified opinion and includes an
explanatory paragraph relating to the Partnership's change in method of
accounting for goodwill and other intangible assets to conform to Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets" in fiscal 2002, and the Company's change in method of accounting for
derivative instruments and hedging activities to conform to SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities", in fiscal
2001); such financial statements and report are included elsewhere in this Form
10-K. Our audits also included the consolidated financial statement schedule of
the Company, listed in Item 15. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.



/s/ Deloitte & Touche LLP
New York, New York
January 28, 2003


87



Schedule II - Valuation and Qualifying Accounts
Cellco Partnership (d/b/a Verizon Wireless)



Balance at Additions Write-offs, Balance at
beginning charged to net of end of the
(in millions) of the year operations recoveries year
- ----------------------------------------------------------------------------------------------------------------

Accounts Receivable Allowances:
2002 $ 324 $ 442 $ (448) $ 282
2001 $ 198 $ 649 $ (523) $ 324
2000 $ 84 $ 470 $ (356) $ 198

Inventory Allowances:
2002 $ 13 $ 68 $ (65) $ 16
2001 $ 21 $ 124 $ (132) $ 13
2000 $ 13 $ 82 $ (74) $ 21




88



Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Cellco Partnership

Date March 27, 2003 By /s/ Andrew N. Halford
-------------- ----------------------------
Andrew N. Halford
Vice President and Chief
Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


Principal Executive Officer:

/s/ Dennis F. Strigl President and March 27, 2003
- -------------------------------------- Chief Executive Officer
Dennis F. Strigl


Principal Financial and Accounting
Officer:

/s/ Andrew N. Halford Vice President and March 27, 2003
- -------------------------------------- Chief Financial Officer
Andrew N. Halford



89



Signatures - Continued



* Chairman of the Board of Representatives March 27, 2003
- --------------------------------------
(Ivan G. Seidenberg)

* Representative March 27, 2003
- --------------------------------------
(Sir Christopher Gent)

* Representative March 27, 2003
- --------------------------------------
(Lawrence T. Babbio, Jr.)

* Representative March 27, 2003
- --------------------------------------
(Doreen A. Toben)

* Representative March 27, 2003
- --------------------------------------
(Kenneth J. Hydon)

* Representative March 27, 2003
- --------------------------------------
(Tomas Isaksson)



*By: /s/ Dennis F. Strigl
----------------------------------
(Dennis F. Strigl)
Co-Attorney-in-Fact


*By: /s/ Andrew N. Halford
----------------------------------
(Andrew N. Halford)
Co-Attorney-in-Fact


90



I, Dennis F. Strigl, certify that:

1. I have reviewed this annual report on Form 10-K of Cellco Partnership;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.


Date: March 27, 2003



/s/ Dennis F. Strigl
- --------------------------------------

Dennis F. Strigl
President and Chief Executive Officer


91



I, Andrew N. Halford, certify that:

1. I have reviewed this annual report on Form 10-K of Cellco Partnership;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.


Date: March 27, 2003



/s/ Andrew N. Halford
- ------------------------------------------

Andrew N. Halford
Vice President and Chief Financial Officer


92