Analysis of Debt
Total Debt (Carrying Amount)
Verizon Communications Inc., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
An examination of the reported debt figures reveals fluctuations in both short-term and long-term obligations over the five-year period. Overall, total debt remained relatively stable for the first three years, followed by a decrease in year four and an increase in year five.
- Short-Term Debt
- Debt maturing within one year demonstrates a consistent upward trend from 2021 to 2023, increasing from US$7.443 billion to US$12.973 billion. This represents a significant rise in near-term obligations. In 2024, this figure increased substantially to US$22.633 billion before decreasing to US$18.618 billion in 2025. The increase in 2024, followed by a decrease in 2025, suggests potential strategic shifts in debt management, such as refinancing or accelerated repayments.
- Long-Term Debt
- Long-term debt, excluding amounts due within one year, generally decreased from 2021 to 2024, moving from US$143.425 billion to US$121.381 billion. This indicates a reduction in longer-dated liabilities. However, in 2025, long-term debt increased to US$139.532 billion, potentially due to new debt issuance or reclassification of short-term debt.
- Total Debt
- Total short-term and long-term debt remained relatively consistent between 2021 and 2023, fluctuating around US$150 billion. A decrease was observed in 2024, with total debt falling to US$144.014 billion. Subsequently, total debt increased in 2025, reaching US$158.150 billion. This final year increase is attributable to the combined effect of decreased short-term debt in 2025 and increased long-term debt.
The observed patterns suggest a dynamic debt management strategy. The substantial increase in short-term debt in 2024, followed by a reduction, warrants further investigation. The increase in total debt in 2025, despite a decrease in short-term obligations, indicates a shift towards longer-term financing or a change in the company’s capital structure.
Total Debt (Fair Value)
| Dec 31, 2025 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Short-term and long-term debt, excluding finance leases | 154,304) |
| Finance lease obligations | 2,511) |
| Total short-term and long-term debt, including finance leases (fair value) | 156,815) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.99 |
Based on: 10-K (reporting date: 2025-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt: 7.81%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 7.75% | 29,192) | 2,262) | |
| 7.88% | 39,769) | 3,134) | |
| 8.95% | 60,471) | 5,412) | |
| 4.87% | 1,373) | 67) | |
| 4.87% | 647) | 32) | |
| 6.80% | 38) | 3) | |
| 7.88% | 56) | 4) | |
| 8.38% | 317) | 27) | |
| 8.75% | 297) | 26) | |
| 6.09% | 18,247) | 1,111) | |
| 4.87% | 8,857) | 431) | |
| 5.00% | 2,511) | 126) | |
| Total | 161,775) | 12,634) | |
| 7.81% | |||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × 12,634 ÷ 161,775 = 7.81%
Interest Costs Incurred
Verizon Communications Inc., interest costs incurred
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Interest expense exhibited a notable upward trend over the five-year period. While initially fluctuating, interest costs experienced significant increases in the later years of the observed timeframe. A closer examination of the components reveals differing patterns between interest expense, capitalized interest costs, and interest costs specifically related to debt balances.
- Overall Interest Expense
- Overall interest expense increased from US$3,485 million in 2021 to US$5,524 million in 2023, representing a substantial rise. This growth continued, albeit at a slower pace, reaching US$6,649 million in 2024 and US$6,694 million in 2025. The most significant increase occurred between 2022 and 2023.
- Capitalized Interest Costs
- Capitalized interest costs followed a different trajectory. Beginning at US$1,841 million in 2021, these costs increased to US$2,030 million in 2022 before declining steadily. By 2025, capitalized interest costs had decreased to US$740 million, indicating a reduction in projects where interest could be added to the asset's cost. This decline contrasts with the overall increase in interest expense.
- Interest Costs on Debt
- Interest costs directly attributable to debt balances and net amortization of debt discount mirrored the trend of overall interest expense, though with slightly higher values. These costs rose from US$5,326 million in 2021 to US$7,342 million in 2023, then to US$7,612 million in 2024, and finally settling at US$7,434 million in 2025. The relatively stable level between 2024 and 2025 suggests a potential stabilization of debt-related interest costs, despite the overall high level.
The divergence between the increasing overall interest expense and the decreasing capitalized interest costs suggests a shift in how funds are being utilized. A greater proportion of interest is being expensed immediately rather than being added to the cost of assets under construction. The increase in interest costs on debt balances indicates either increased borrowing, higher interest rates on existing or new debt, or a combination of both. The slight decrease in interest costs on debt balances in 2025 may indicate debt repayment or refinancing at more favorable rates.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= 29,366 ÷ 6,694 = 4.39
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs on debt balances and net amortization of debt discount
= 29,366 ÷ 7,434 = 3.95
The interest coverage ratios demonstrate a declining trend from 2021 through 2023, followed by a period of relative stabilization. Both the standard interest coverage ratio and the adjusted interest coverage ratio experienced decreases during the analyzed period, though the adjusted ratio consistently reports lower values.
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio, excluding capitalized interest, decreased from 9.44 in 2021 to 8.82 in 2022, representing a reduction of approximately 6.6%. A more substantial decline occurred between 2022 and 2023, falling to 4.08. This represents a decrease of over 54% from the 2022 value. The ratio experienced a slight recovery in 2024, increasing to 4.46, and remained relatively stable at 4.39 in 2025.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted interest coverage ratio, which includes the effect of capitalized interest, followed a similar pattern of decline. It decreased from 6.18 in 2021 to 5.65 in 2022, a decrease of approximately 8.6%. The most significant decrease was observed between 2022 and 2023, dropping to 3.07. This represents a nearly 46% decrease from the 2022 value. The ratio showed improvement in 2024, rising to 3.89, and continued to 3.95 in 2025, though it did not return to levels observed in earlier years.
The difference between the two ratios consistently widened from 2021 to 2023, indicating an increasing impact from capitalized interest on the company’s ability to cover its interest expense. The stabilization of both ratios in 2024 and 2025 suggests a potential leveling off of the factors contributing to the earlier declines, but coverage remains substantially lower than in 2021 and 2022.