QWEST CORP, 10-Q filed on 11/4/2021
Quarterly Report
v3.21.2
Cover - shares
 9 Months Ended
Sep. 30, 2021
Nov. 04, 2021
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2021  
Document Transition Report false  
Entity File Number 001-03040  
Entity Registrant Name QWEST CORPORATION  
Entity Incorporation, State or Country Code CO  
Entity Tax Identification Number 84-0273800  
Entity Address, Address Line One 100 CenturyLink Drive,  
Entity Address, City or Town Monroe,  
Entity Address, State or Province LA  
Entity Address, Postal Zip Code 71203  
City Area Code 318  
Local Phone Number 388-9000  
Entity Information [Line Items]    
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business false  
Entity Emerging Growth false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding (in shares)   1
Entity Central Index Key 0000068622  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q3  
Amendment Flag false  
6.5% Notes Due 2056    
Entity Information [Line Items]    
Title of 12(b) Security 6.5% Notes Due 2056  
Trading Symbol(s) CTBB  
Security Exchange Name NYSE  
6.75% Notes Due 2057    
Entity Information [Line Items]    
Title of 12(b) Security 6.75% Notes Due 2057  
Trading Symbol(s) CTDD  
Security Exchange Name NYSE  
v3.21.2
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
OPERATING REVENUE        
Total operating revenue $ 1,730 $ 1,801 $ 5,246 $ 5,518
OPERATING EXPENSES        
Cost of services and products (exclusive of depreciation and amortization) 426 528 1,305 1,491
Selling, general and administrative 36 128 249 410
Operating expenses—affiliates 177 198 561 557
Depreciation and amortization 232 330 780 985
Total operating expenses 871 1,184 2,895 3,443
OPERATING INCOME 859 617 2,351 2,075
OTHER (EXPENSE) INCOME        
Interest expense (47) (69) (142) (219)
Interest expense—affiliate, net (25) (18) (87) (50)
Other expense, net (3) (18) (7) (31)
Total other expense, net (75) (105) (236) (300)
INCOME BEFORE INCOME TAX EXPENSE 784 512 2,115 1,775
Income tax expense 202 133 542 463
NET INCOME 582 379 1,573 1,312
Non-affiliate services        
OPERATING REVENUE        
Total operating revenue 1,135 1,200 3,452 3,642
Affiliate Services [Member]        
OPERATING REVENUE        
Total operating revenue $ 595 $ 601 $ 1,794 $ 1,876
v3.21.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
CURRENT ASSETS    
Cash and cash equivalents $ 2 $ 14
Accounts receivable, less allowance of $39 and $61 339 364
Advances to affiliates 368 0
Other 180 122
Total current assets 889 500
Property, plant and equipment, net of accumulated depreciation of $8,913 and $8,347 8,168 8,309
GOODWILL AND OTHER ASSETS    
Goodwill 9,360 9,360
Other intangible assets, net 215 343
Other, net 161 147
Total goodwill and other assets 9,736 9,850
TOTAL ASSETS 18,793 18,659
CURRENT LIABILITIES    
Current maturities of long-term debt 950 948
Accounts payable 239 292
Advances from affiliates 0 592
Note payable - affiliate 1,187 1,130
Accrued expenses and other liabilities    
Salaries and benefits 144 178
Income and other taxes 112 95
Other 192 186
Current portion of deferred revenue 179 183
Total current liabilities 3,003 3,604
LONG-TERM DEBT 2,156 2,386
DEFERRED CREDITS AND OTHER LIABILITIES    
Deferred income taxes, net 1,225 1,249
Affiliate obligations, net 614 637
Other 694 685
Total deferred credits and other liabilities 2,533 2,571
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDER'S EQUITY    
Common stock - one share without par value, owned by Qwest Services Corporation 10,050 10,050
Retained earnings 1,051 48
Total stockholder's equity 11,101 10,098
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 18,793 $ 18,659
v3.21.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Statement of Financial Position [Abstract]    
Accounts receivable, allowance $ 39 $ 61
PP&E, accumulated depreciation $ 8,913 $ 8,347
Common stock, share issued (in shares) 1 1
Common stock, share outstanding (in shares) 1 1
v3.21.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
OPERATING ACTIVITIES    
Net income $ 1,573 $ 1,312
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 780 985
Deferred income taxes (24) (30)
Provision for uncollectible accounts 18 45
Accrued interest on affiliate note 57 61
Net loss on early retirement of debt 8 36
Changes in current assets and liabilities:    
Accounts receivable 7 70
Accounts payable (19) (34)
Accrued income and other taxes 17 12
Other current assets and liabilities, net (113) (193)
Changes in other noncurrent assets and liabilities, net 10 45
Changes in affiliate obligations, net (23) (54)
Other, net 8 (4)
Net cash provided by operating activities 2,299 2,251
INVESTING ACTIVITIES    
Capital expenditures (557) (885)
Payments for advances to affiliates (368)  
Proceeds from collection of advances to affiliates   1,842
Proceeds from sale of property, plant and equipment and other assets 31 2
Net cash (used in) provided by investing activities (894) 959
FINANCING ACTIVITIES    
Payments of long-term debt (235) (1,860)
Dividends paid (570) (1,350)
Changes in advances from affiliates (592) 4
Net cash used in financing activities (1,397) (3,206)
Net increase in cash, cash equivalents and restricted cash 8 4
Cash, cash equivalents and restricted cash at beginning of period 15 4
Cash, cash equivalents and restricted cash at end of period 23 8
Supplemental cash flow information:    
Income taxes paid, net (557) (473)
Interest paid (net of capitalized interest of $14 and $24) (129) (232)
Sale of property, plant and equipment in exchange for receivable 56 0
Cash, cash equivalents and restricted cash:    
Cash and cash equivalents 2 6
Restricted cash - noncurrent 21 2
Total $ 23 $ 8
v3.21.2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Statement of Cash Flows [Abstract]    
Interest paid, capitalized interest $ 14 $ 24
v3.21.2
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY - USD ($)
$ in Millions
Total
COMMON STOCK
RETAINED EARNINGS
RETAINED EARNINGS
Cumulative Effect, Period of Adoption, Adjustment
Balance at beginning of period at Dec. 31, 2019   $ 10,050 $ 67 $ 3
Increase (Decrease) in Stockholder's Equity        
Net income $ 1,312   1,312  
Dividends declared and paid to Qwest Services Corporation (1,400)   (1,350)  
Other     (5)  
Balance at end of period at Sep. 30, 2020 10,077 10,050 27  
Balance at beginning of period at Jun. 30, 2020   10,050 73  
Increase (Decrease) in Stockholder's Equity        
Net income 379   379  
Dividends declared and paid to Qwest Services Corporation     (425)  
Other     0  
Balance at end of period at Sep. 30, 2020 10,077 10,050 27  
Balance at beginning of period at Dec. 31, 2020 10,098 10,050 48  
Increase (Decrease) in Stockholder's Equity        
Net income 1,573   1,573  
Dividends declared and paid to Qwest Services Corporation (570)   (570)  
Other     0  
Balance at end of period at Sep. 30, 2021 11,101 10,050 1,051  
Balance at beginning of period at Jun. 30, 2021   10,050 469  
Increase (Decrease) in Stockholder's Equity        
Net income 582   582  
Dividends declared and paid to Qwest Services Corporation     0  
Other     0  
Balance at end of period at Sep. 30, 2021 $ 11,101 $ 10,050 $ 1,051  
v3.21.2
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (parenthetical)
$ in Millions
 12 Months Ended
Dec. 31, 2019
USD ($)
RETAINED EARNINGS | Cumulative Effect, Period of Adoption, Adjustment  
Income Tax (Expense) Benefit $ (1)
v3.21.2
Background
 9 Months Ended
Sep. 30, 2021
Accounting Policies [Abstract]  
Background Background
General

We are an integrated communications company engaged primarily in providing a broad array of communications services to our mass markets and business customers. Our specific products and services are detailed in Note 3—Revenue Recognition of this report.

We generate the majority of our total consolidated operating revenue from services provided in the 14-state region of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. We refer to this region as our local service area.

Basis of Presentation

Our consolidated balance sheet as of December 31, 2020, which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first nine months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. Transactions with our non-consolidated affiliates (referred to herein as affiliates) have not been eliminated.

We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories. See Note 3—Revenue Recognition for additional information. These changes had no impact on total operating revenue, total operating expenses or net income for any period.

Operating lease assets are included in Other, net under goodwill and other assets on our consolidated balance sheets. Current operating lease liabilities are included in Other under accrued expenses and other liabilities on our consolidated balance sheets. Noncurrent operating lease liabilities are included in Other under deferred credits and other liabilities on our consolidated balance sheets.

Segments

Our operations are integrated into and reported as part of Lumen Technologies. Lumen's chief operating decision maker ("CODM") is our CODM but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the SEC. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we have one reportable segment.
Summary of Significant Accounting Policies

Refer to the significant accounting policies described in Note 1—Background and Summary of Significant Accounting Policies to the consolidated financial statements and accompanying notes in Part II Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020.

Recently Adopted Accounting Pronouncements

Debt

On January 1, 2021, we adopted ASU 2020-09, "Debt (Topic 470) Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762" ("ASU 2020-09"). This ASU amends and supersedes various SEC paragraphs to reflect SEC Release No. 33-10762, which includes amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees. The adoption of ASU 2020-09 did not have an impact to our consolidated financial statements.

Investments

On January 1, 2021, we adopted ASU 2020-01, "Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815)" ("ASU 2020-01"). This ASU, among other things, clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments - Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. As of September 30, 2021, we determined there was no application or discontinuation of the equity method during the reporting periods. The adoption of ASU 2020-01 did not have an impact to our consolidated financial statements.

Income Taxes

On January 1, 2021, we adopted ASU 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)" ("ASU 2019-12"). This ASU removes certain exceptions for investments, intra-period allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. The adoption of ASU 2019-12 did not have a material impact to our consolidated financial statements.

Measurement of Credit Losses on Financial Instruments

We adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13") on January 1, 2020 and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of tax effect of $1 million. Please refer to Note 4—Credit Losses on Financial Instruments for more information.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04" or "Reference Rate Reform"), designed to ease the burden of accounting for contract modifications related to the global market-wide reference rate transition period. Subject to certain criteria, ASU 2020-04 provides qualifying entities the option to apply expedients and exceptions to contract modifications and hedging accounting relationships made until December 31, 2022. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. ASU 2020-04 provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. Based on our review of our key material contracts through September 30, 2021, we do not expect ASU 2020-04 to have any material impact on the consolidated financial statements.
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets
 9 Months Ended
Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill, Customer Relationships and Other Intangible Assets Goodwill, Customer Relationships and Other Intangible Assets
Goodwill, customer relationships and other intangible assets consisted of the following:
September 30, 2021December 31, 2020
(Dollars in millions)
Goodwill$9,360 9,360 
Customer relationships, less accumulated amortization of $5,699 and $5,611
$— 88 
Other intangible assets, less accumulated amortization of $1,859 and $1,831
215 255 
Total other intangible assets, net$215 343 

Substantially all of our goodwill was derived from Lumen's acquisition of us where the purchase price exceeded the fair value of the net assets acquired.

We assess our goodwill for impairment annually as of October 31, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write-down the value of goodwill in periods in which the carrying value of equity exceeds the estimated fair value of equity, limited to the amount of goodwill. Goodwill is evaluated for impairment at the reporting unit level, and we have determined that we have one reporting unit.

As of September 30, 2021, the gross carrying amount of goodwill, customer relationships and other intangible assets was $17.1 billion. The amortization expense for intangible assets for the three months ended September 30, 2021 and 2020 totaled $22 million and $120 million, respectively. The amortization expense for intangible assets for the nine months ended September 30, 2021 and 2020 totaled $154 million and $365 million, respectively.

We estimate that total amortization expense for intangible assets for the years ending December 31, 2021 through 2025 will be as follows:
(Dollars in millions)
2021 (remaining three months)$21 
202286 
202362 
202413 
202511 
v3.21.2
Revenue Recognition
 9 Months Ended
Sep. 30, 2021
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Beginning in the first quarter of 2021, we categorize our products, services and revenue among the following categories:
•Voice and Other, which include primarily local voice services, private line and other legacy services. This category also includes Universal Service Fund ("USF") and Connect America Fund Phase II ("CAF II") support payments and other operating revenue. We receive support payments from state USF programs and from the federal CAF II program. These support payments are government subsidies designed to compensate us for providing certain broadband and telecommunications services in high-cost areas or at discounts to low-income, educational, and healthcare customers. During the nine months ended September 30, 2021 we recorded approximately $109 million of revenue from the CAF II program that will end as of December 31, 2021.

•Fiber Infrastructure Services, which include high speed, fiber-based and lower speed DSL-based broadband services, and optical network services;
•IP and Data Services, which consist primarily of Ethernet services; and

•Affiliate Services, which are communications services that we also provide to external customers. In addition, we provide to our affiliates application development and support services, network support and technical services.

Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following tables provide our total revenue by product and service category as well as the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards:

Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Voice and Other $522 (83)439 567 (87)480 
Fiber Infrastructure495 (30)465 505 (30)475 
IP and Data Services 118 — 118 128 — 128 
Affiliate Services595 (9)586 601 (1)600 
Total revenue$1,730 (122)1,608 1,801 (118)1,683 
____________________________________________________________________
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.

Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Voice and Other$1,595 (251)1,344 1,726 (263)1,463 
Fiber Infrastructure1,500 (90)1,410 1,527 (94)1,433 
IP and Data Services357 — 357 389 — 389 
Affiliate Services1,794 (18)1,776 1,876 (3)1,873 
Total revenue$5,246 (359)4,887 5,518 (360)5,158 
____________________________________________________________________
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.

Operating Lease Revenue

Qwest leases various data transmission capacity, office facilities, switching facilities and other network sites to third parties under operating leases. Lease and sublease revenue are included in operating revenue in our consolidated statements of operations.

For the three months ended September 30, 2021 and 2020, our gross rental income was $82 million and $77 million, which represents approximately 5% and 4%, respectively, of our operating revenue for the three months ended September 30, 2021 and 2020. For both the nine months ended September 30, 2021 and 2020, our gross rental income was $239 million and $234 million, which represents approximately 5% and 4%, respectively, of our operating revenue for the nine months ended September 30, 2021 and 2020.
Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities as of September 30, 2021 and December 31, 2020:
September 30, 2021December 31, 2020
 (Dollars in millions)
Customer receivables (1)
$333 346 
Contract assets11 13 
Contract liabilities321 300 
______________________________________________________________________
(1)Reflects gross customer receivables, including gross affiliate receivables, of $365 million and $396 million, net of allowance for doubtful accounts of $32 million and $50 million, at September 30, 2021 and December 31, 2020, respectively.

Contract liabilities consist of consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ranges from one to five years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheets. During the three and nine months ended September 30, 2021, we recognized $12 million and $187 million, respectively, of revenue that was included in contract liabilities as of January 1, 2021. During the three and nine months ended September 30, 2020, we recognized $13 million and $210 million, respectively, of revenue that was included in contract liabilities as of January 1, 2020.

Performance Obligations

As of September 30, 2021, our estimated revenue expected to be recognized in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied is approximately $188 million. We expect to recognize approximately 91% of this revenue through 2023, with the balance recognized thereafter.

These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed), and (ii) contracts that are classified as leasing arrangements that are not subject to ASC 606.
Contract Costs

The following tables provide changes in our contract acquisition costs and fulfillment costs:
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
 (Dollars in millions)
Beginning of period balance$68 49 81 59 
Costs incurred12 7 12 6 
Amortization(14)(9)(15)(8)
End of period balance$66 47 78 57 

Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
 (Dollars in millions)
Beginning of period balance$73 54 86 64 
Costs incurred36 19 39 18 
Amortization(43)(26)(47)(25)
End of period balance$66 47 78 57 

Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of communications services to customers, including labor and materials consumed for these activities.

Deferred acquisition and fulfillment costs are amortized based on the transfer of services on a straight-line basis over the average customer life of 30 months for mass markets customers and average contract life of 29 months for business customers. Amortized fulfillment costs are included in cost of services and products and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statements of operations. The amount of these deferred costs that are anticipated to be amortized in the next 12 months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond the next 12 months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on an annual basis.
v3.21.2
Credit Losses on Financial Instruments
 9 Months Ended
Sep. 30, 2021
Credit Loss [Abstract]  
Credit Losses on Financial Instruments Credit Losses on Financial InstrumentsIn accordance with ASC 326, "Financial Instruments - Credit Losses," we aggregate financial assets with similar risk characteristics to align our expected credit losses with the credit quality or deterioration over the life of such assets. We monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change each reporting period. Financial assets that do not share risk characteristics with other financial assets are evaluated separately. Our financial assets measured at amortized cost primarily consist of accounts receivable.
We use a loss rate method to estimate our allowance for credit losses. Our determination of the current expected credit loss rate begins with our use of historical loss experience as a percentage of accounts receivable. We measure our historical loss period based on the average days to recognize accounts receivable as credit losses. When asset specific characteristics and current conditions change from those in the historical period, due to changes in our credit and collections strategy, certain classes of aged balances, or credit loss and recovery policies, we perform a qualitative and quantitative assessment to adjust our historical loss rate. We use regression analysis to develop an expected loss rate using historical experience and economic data over a forecast period. We measure our forecast period based on the average days to collect payment on billed accounts receivable. To determine our current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable.

In conjunction with an internal reorganization and changes to how we manage our customers, we pooled certain assets with similar credit risk characteristics based on the nature of our customers, their industry, policies used to grant credit terms and their historical and expected credit loss patterns. Additionally, we reassessed our historical loss period for the portfolio reorganization.

If there is a deterioration of a customer's financial condition or if future default rates in general differ from currently anticipated default rates (including changes caused by COVID-19), we may need to adjust the allowance for credit losses, which would affect earnings in the period that adjustments are made.

The assessment of the correlation between historical observed default rates, current conditions and forecasted economic conditions requires judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding the allowance for credit losses. The amount of credit loss is sensitive to changes in circumstances and forecasted economic conditions. Our historical credit loss experience, current conditions and forecast of economic conditions may also not be representative of the customers' actual default experience in the future.

The following table presents the activity of our allowance for credit losses by accounts receivable portfolio for the nine months ended September 30, 2021:
BusinessMass MarketsTotal
(Dollars in millions)
Beginning balance at January 1, 2021 (1)
$25 36 61 
Provision for expected losses6 12 18 
Write-offs charged against the allowance(15)(35)(50)
Recoveries collected2 8 10 
Ending balance at September 30, 2021$18 21 39 
(1)    Due to an internal reorganization of our reporting categories on January 1, 2021, our accounts receivable portfolios were changed to align with changes to how we manage our customers. Allowance for credit losses previously included in the Consumer and Business portfolio of $32 million and $4 million, respectively, were reclassified to the Mass Markets allowance for credit losses on January 1, 2021, as a result of this change.

For the nine months ended September 30, 2021, we decreased our allowance for credit losses for our business and mass markets accounts receivable portfolios primarily due to higher year to date write-off activity with the easing of prior delays due to COVID-19 related restrictions in 2020.
v3.21.2
Long-Term Debt and Note Payable - Affiliate
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Long-Term Debt and Note Payable - Affiliate Long-Term Debt and Note Payable - Affiliate
The following chart reflects (i) the consolidated long-term debt of Qwest Corporation and its subsidiaries, including finance lease and other obligations, unamortized premiums, net, unamortized debt issuance costs and (ii) note payable - affiliate:
Interest Rates (1)
Maturities (1)
September 30, 2021December 31, 2020
   (Dollars in millions)
Senior notes
6.500% - 7.750%
2021 - 2057$2,935 3,170 
Term loan (2) (3)
LIBOR + 2.00%
2027215 215 
Finance lease and other obligationsVariousVarious3 6 
Unamortized premiums, net  6 5 
Unamortized debt issuance costs(53)(62)
Total long-term debt  3,106 3,334 
Less current maturities  (950)(948)
Long-term debt, excluding current maturities  $2,156 2,386 
Note payable - affiliate4.809%2022$1,187 1,130 
_______________________________________________________________________________
(1)As of September 30, 2021.
(2)Qwest Corporation's Term Loan had interest rates of 2.090% and 2.150% as of September 30, 2021 and December 31, 2020, respectively.
(3)See Note 1— Background for our considerations of the impact of Reference Rate Reform on our debt subject to rate reference changes from LIBOR.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt as of September 30, 2021 (excluding unamortized premiums, net and unamortized debt issuance costs and note payable-affiliate) maturing during the following years:
(Dollars in millions)
2021 (remaining three months)$951 
20221 
2023— 
2024— 
2025250 
2026 and thereafter1,951 
Total long-term debt$3,153 

Redemption of Senior Notes

On February 16, 2021, we fully redeemed all $235 million aggregate principal amount of our outstanding 7.000% Senior Notes due 2056. The redemption of the Senior Notes resulted in a loss of $8 million for the nine months ended September 30, 2021.
Note Payable - Affiliate

Qwest Corporation is currently indebted to an affiliate of our ultimate parent company, Lumen Technologies, Inc., under a revolving promissory note that provides Qwest Corporation with a funding commitment of up to $965 million in aggregate principal amount (the "Intercompany Note"). The outstanding principal balance owed by Qwest Corporation under the Intercompany Note and the accrued interest thereon is due and payable on demand, but if no demand is made, then on June 30, 2022. Interest is accrued on the outstanding principal balance during the respective interest period using a weighted average per annum interest rate on the consolidated outstanding debt of Lumen Technologies, Inc. and its subsidiaries. As of September 30, 2021 and December 31, 2020, the Intercompany Note is reflected on our consolidated balance sheets as a current liability under "Note payable - affiliate". In accordance with the terms of the Intercompany Note, interest shall be assessed on June 30th and December 31st (an "Interest Period"). Any assessed interest for an Interest Period that remains unpaid on the last day of the subsequent Interest Period is capitalized to the outstanding principal balance on such date. Due to the amount of the unpaid interest capitalized since inception of the Intercompany Note, the outstanding principal balance at September 30, 2021 is approximately $1.2 billion. Additionally, as of September 30, 2021, $14 million of accrued interest is reflected in other current liabilities on our consolidated balance sheet.

Compliance

As of September 30, 2021, we believe we were in compliance with the financial covenants contained in our material debt agreements in all material respects.

Other

For additional information on our long-term debt and credit facilities, see Note 6—Long-Term Debt and Note Payable - Affiliate to our consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2020.
v3.21.2
Fair Value Disclosure
 9 Months Ended
Sep. 30, 2021
Fair Value Disclosures [Abstract]  
Fair Value Disclosure Fair Value Disclosure
Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, advances to and from affiliates, accounts payable, note payable-affiliate and long-term debt, excluding finance lease and other obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, advances to and from affiliates, accounts payable and note payable-affiliate approximate their fair values.

The three input levels in the hierarchy of fair value measurements are defined by the Fair Value Measurement and Disclosure framework generally as follows:
Input LevelDescription of Input
Level 1Observable inputs such as quoted market prices in active markets.
Level 2Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3Unobservable inputs in which little or no market data exists.

The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding finance lease and other obligations, as well as the input level used to determine the fair values indicated below:
  September 30, 2021December 31, 2020
 Input
Level		Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
  (Dollars in millions)
Liabilities—Long-term debt (excluding finance lease and other obligations)2$3,103 3,291 3,328 3,532 
v3.21.2
Commitments, Contingencies and Other Items
 9 Months Ended
Sep. 30, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments, Contingencies and Other Items Commitments, Contingencies and Other Items
We are subject to various claims, legal proceedings and other contingent liabilities, including the matters described below, which individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. As a matter of course, we are prepared to both litigate these matters to judgment as needed, as well as to evaluate and consider reasonable settlement opportunities.

Irrespective of its merits, litigation may be both lengthy and disruptive to our operations and could cause significant expenditure and diversion of management attention. We review our litigation accrual liabilities on a quarterly basis, but in accordance with applicable accounting guidelines only establish accrual liabilities when losses are deemed probable and reasonably estimable and only revise previously-established accrual liabilities when warranted by changes in circumstances, in each case based on then-available information. As such, as of any given date we could have exposure to losses under proceedings as to which no liability has been accrued or as to which the accrued liability is inadequate. Amounts accrued for our litigation and non-income tax contingencies at September 30, 2021 aggregated to approximately $19 million and are included in “Other” current liabilities and “Other Liabilities” in our consolidated balance sheet as of such date. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows.

Principal Proceedings

Billing Practices Suits

In June 2017, a former employee of a Lumen Technologies subsidiary filed an employment lawsuit against Lumen Technologies (at the time known as CenturyLink, Inc.) claiming that she was wrongfully terminated for alleging that Lumen charged some of its retail customers for products and services they did not authorize. Thereafter, based in part on the allegations made by the former employee, several legal proceedings were filed, including consumer class actions in federal and state courts, a series of securities investor class actions in federal courts, and several shareholder derivative actions in federal and Louisiana state courts. The derivative cases were brought on behalf of CenturyLink, Inc. against certain current and former officers and directors of the Company and seek damages for alleged breaches of fiduciary duties.

The consumer class actions, the securities investor class actions, and the federal derivative actions were transferred to the U.S. District Court for the District of Minnesota for coordinated and consolidated pretrial proceedings as In Re: CenturyLink Sales Practices and Securities Litigation. Lumen Technologies has settled the consumer and securities investor class actions, those settlements are final. The derivative actions remain pending.

Lumen has engaged in discussions regarding related claims with a number of state attorneys general, and has entered into agreements settling certain of the consumer practices claims asserted by state attorneys general. While Lumen Technologies does not agree with allegations raised in these matters, it has been willing to consider reasonable settlements where appropriate.

Other Proceedings, Disputes and Contingencies

From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, administrative hearings of state public utility commissions relating primarily to our rates or services, actions relating to employee claims, various tax issues, environmental law issues, grievance hearings before labor regulatory agencies and miscellaneous third-party tort actions.
We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, many of which are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial during the fourth quarter of 2021 or during 2022 if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers. As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities.

We are subject to various federal, state and local environmental protection and health and safety laws. From time to time, we are subject to judicial and administrative proceedings brought by various governmental authorities under these laws. Several such proceedings are currently pending, but none is reasonably expected to exceed $300,000 in fines and penalties.

The outcome of these other proceedings described under this heading is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on us.

The matters listed above in this Note do not reflect all of our contingencies. For additional information on our contingencies, see Note 16—Commitments, Contingencies and Other Items to the financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2020. The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing above in this Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us.
v3.21.2
Dividends
 9 Months Ended
Sep. 30, 2021
Dividends [Abstract]  
Dividends Dividends
From time to time we may declare and pay dividends to our direct parent company, QSC, sometimes in excess of our earnings to the extent permitted by applicable law. Our debt covenants do not currently limit the amount of dividends we can pay to QSC.

During the nine months ended September 30, 2021 and 2020, we declared and paid dividends to QSC of $570 million and $1.4 billion, respectively. Dividends paid are reflected on our consolidated statements of cash flows as financing activities.
v3.21.2
Other Financial Information
 9 Months Ended
Sep. 30, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Other Financial Information Other Financial Information
Other Current Assets

The following table presents details of other currents assets in our consolidated balance sheets:

September 30, 2021December 31, 2020
(Dollars in millions)
Prepaid expenses$45 40
Contract acquisition costs44 47
Contract fulfillment costs30 28
Receivable for sale of land56 — 
Other5 7
Total other current assets$180 122
Other Noncurrent Liabilities

The following table presents details of other noncurrent liabilities in our consolidated balance sheets:

September 30, 2021December 31, 2020
(Dollars in millions)
Unrecognized tax benefits$459 448
Deferred revenue110 108
Noncurrent operating lease liability64 76
Other61 53
Total other noncurrent liabilities$694 685
v3.21.2
Labor Union Contracts
 9 Months Ended
Sep. 30, 2021
Risks and Uncertainties [Abstract]  
Labor Union Contracts Labor Union Contracts
    
As of September 30, 2021, approximately 43% of our employees were represented by the Communication Workers of America ("CWA") or the International Brotherhood of Electrical Workers ("IBEW"). There are no collective bargaining agreements that are scheduled to expire over the twelve month period ending September 30, 2022. We believe relations with our employees continue to be generally good.
v3.21.2
Background (Policies)
 9 Months Ended
Sep. 30, 2021
Accounting Policies [Abstract]  
Basis of presentation
Basis of Presentation

Our consolidated balance sheet as of December 31, 2020, which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first nine months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. Transactions with our non-consolidated affiliates (referred to herein as affiliates) have not been eliminated.
Reclassification We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories.
Segments SegmentsOur operations are integrated into and reported as part of Lumen Technologies. Lumen's chief operating decision maker ("CODM") is our CODM but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the SEC. Consequently, we do not provide our discrete financial information to the CODM on a regular basis.
Recently adopted and issued accounting pronouncements
Recently Adopted Accounting Pronouncements

Debt

On January 1, 2021, we adopted ASU 2020-09, "Debt (Topic 470) Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762" ("ASU 2020-09"). This ASU amends and supersedes various SEC paragraphs to reflect SEC Release No. 33-10762, which includes amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees. The adoption of ASU 2020-09 did not have an impact to our consolidated financial statements.

Investments

On January 1, 2021, we adopted ASU 2020-01, "Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815)" ("ASU 2020-01"). This ASU, among other things, clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments - Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. As of September 30, 2021, we determined there was no application or discontinuation of the equity method during the reporting periods. The adoption of ASU 2020-01 did not have an impact to our consolidated financial statements.

Income Taxes

On January 1, 2021, we adopted ASU 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)" ("ASU 2019-12"). This ASU removes certain exceptions for investments, intra-period allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. The adoption of ASU 2019-12 did not have a material impact to our consolidated financial statements.

Measurement of Credit Losses on Financial Instruments

We adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13") on January 1, 2020 and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of tax effect of $1 million. Please refer to Note 4—Credit Losses on Financial Instruments for more information.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04" or "Reference Rate Reform"), designed to ease the burden of accounting for contract modifications related to the global market-wide reference rate transition period. Subject to certain criteria, ASU 2020-04 provides qualifying entities the option to apply expedients and exceptions to contract modifications and hedging accounting relationships made until December 31, 2022. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. ASU 2020-04 provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. Based on our review of our key material contracts through September 30, 2021, we do not expect ASU 2020-04 to have any material impact on the consolidated financial statements.
Goodwill and intangible assets, goodwill We assess our goodwill for impairment annually as of October 31, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write-down the value of goodwill in periods in which the carrying value of equity exceeds the estimated fair value of equity, limited to the amount of goodwill. Goodwill is evaluated for impairment at the reporting unit level, and we have determined that we have one reporting unit.
Operating lease income
Operating Lease Revenue

Qwest leases various data transmission capacity, office facilities, switching facilities and other network sites to third parties under operating leases. Lease and sublease revenue are included in operating revenue in our consolidated statements of operations.
Credit losses on financial instruments In accordance with ASC 326, "Financial Instruments - Credit Losses," we aggregate financial assets with similar risk characteristics to align our expected credit losses with the credit quality or deterioration over the life of such assets. We monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change each reporting period. Financial assets that do not share risk characteristics with other financial assets are evaluated separately. Our financial assets measured at amortized cost primarily consist of accounts receivable.If there is a deterioration of a customer's financial condition or if future default rates in general differ from currently anticipated default rates (including changes caused by COVID-19), we may need to adjust the allowance for credit losses, which would affect earnings in the period that adjustments are made.
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets (Tables)
 9 Months Ended
Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Intangible Assets and Goodwill
Goodwill, customer relationships and other intangible assets consisted of the following:
September 30, 2021December 31, 2020
(Dollars in millions)
Goodwill$9,360 9,360 
Customer relationships, less accumulated amortization of $5,699 and $5,611
$— 88 
Other intangible assets, less accumulated amortization of $1,859 and $1,831
215 255 
Total other intangible assets, net$215 343 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense We estimate that total amortization expense for intangible assets for the years ending December 31, 2021 through 2025 will be as follows:
(Dollars in millions)
2021 (remaining three months)$21 
202286 
202362 
202413 
202511 
v3.21.2
Revenue Recognition (Tables)
 9 Months Ended
Sep. 30, 2021
Revenue from Contract with Customer [Abstract]  
Schedule of Revenue
The following tables provide our total revenue by product and service category as well as the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards:

Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Voice and Other $522 (83)439 567 (87)480 
Fiber Infrastructure495 (30)465 505 (30)475 
IP and Data Services 118 — 118 128 — 128 
Affiliate Services595 (9)586 601 (1)600 
Total revenue$1,730 (122)1,608 1,801 (118)1,683 
____________________________________________________________________
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.

Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Voice and Other$1,595 (251)1,344 1,726 (263)1,463 
Fiber Infrastructure1,500 (90)1,410 1,527 (94)1,433 
IP and Data Services357 — 357 389 — 389 
Affiliate Services1,794 (18)1,776 1,876 (3)1,873 
Total revenue$5,246 (359)4,887 5,518 (360)5,158 
____________________________________________________________________
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.
Contract with customer, asset and liability
The following table provides balances of customer receivables, contract assets and contract liabilities as of September 30, 2021 and December 31, 2020:
September 30, 2021December 31, 2020
 (Dollars in millions)
Customer receivables (1)
$333 346 
Contract assets11 13 
Contract liabilities321 300 
______________________________________________________________________
(1)Reflects gross customer receivables, including gross affiliate receivables, of $365 million and $396 million, net of allowance for doubtful accounts of $32 million and $50 million, at September 30, 2021 and December 31, 2020, respectively.
Capitalized contract cost
The following tables provide changes in our contract acquisition costs and fulfillment costs:
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
 (Dollars in millions)
Beginning of period balance$68 49 81 59 
Costs incurred12 7 12 6 
Amortization(14)(9)(15)(8)
End of period balance$66 47 78 57 

Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
 (Dollars in millions)
Beginning of period balance$73 54 86 64 
Costs incurred36 19 39 18 
Amortization(43)(26)(47)(25)
End of period balance$66 47 78 57 
v3.21.2
Credit Losses on Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2021
Credit Loss [Abstract]  
Financing Receivable, Allowance for Credit Loss The following table presents the activity of our allowance for credit losses by accounts receivable portfolio for the nine months ended September 30, 2021:
BusinessMass MarketsTotal
(Dollars in millions)
Beginning balance at January 1, 2021 (1)
$25 36 61 
Provision for expected losses6 12 18 
Write-offs charged against the allowance(15)(35)(50)
Recoveries collected2 8 10 
Ending balance at September 30, 2021$18 21 39 
(1)    Due to an internal reorganization of our reporting categories on January 1, 2021, our accounts receivable portfolios were changed to align with changes to how we manage our customers. Allowance for credit losses previously included in the Consumer and Business portfolio of $32 million and $4 million, respectively, were reclassified to the Mass Markets allowance for credit losses on January 1, 2021, as a result of this change.
v3.21.2
Long-Term Debt and Note Payable - Affiliate (Tables)
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Schedule of long-term debt
The following chart reflects (i) the consolidated long-term debt of Qwest Corporation and its subsidiaries, including finance lease and other obligations, unamortized premiums, net, unamortized debt issuance costs and (ii) note payable - affiliate:
Interest Rates (1)
Maturities (1)
September 30, 2021December 31, 2020
   (Dollars in millions)
Senior notes
6.500% - 7.750%
2021 - 2057$2,935 3,170 
Term loan (2) (3)
LIBOR + 2.00%
2027215 215 
Finance lease and other obligationsVariousVarious3 6 
Unamortized premiums, net  6 5 
Unamortized debt issuance costs(53)(62)
Total long-term debt  3,106 3,334 
Less current maturities  (950)(948)
Long-term debt, excluding current maturities  $2,156 2,386 
Note payable - affiliate4.809%2022$1,187 1,130 
_______________________________________________________________________________
(1)As of September 30, 2021.
(2)Qwest Corporation's Term Loan had interest rates of 2.090% and 2.150% as of September 30, 2021 and December 31, 2020, respectively.
(3)See Note 1— Background for our considerations of the impact of Reference Rate Reform on our debt subject to rate reference changes from LIBOR.
Schedule of maturities of long-term debt
Set forth below is the aggregate principal amount of our long-term debt as of September 30, 2021 (excluding unamortized premiums, net and unamortized debt issuance costs and note payable-affiliate) maturing during the following years:
(Dollars in millions)
2021 (remaining three months)$951 
20221 
2023— 
2024— 
2025250 
2026 and thereafter1,951 
Total long-term debt$3,153 
v3.21.2
Fair Value Disclosure (Tables)
 9 Months Ended
Sep. 30, 2021
Fair Value Disclosures [Abstract]  
Schedule of carrying amounts and estimated fair values of long-term debt, excluding capital lease obligations, and input level to determine fair values
The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding finance lease and other obligations, as well as the input level used to determine the fair values indicated below:
  September 30, 2021December 31, 2020
 Input
Level		Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
  (Dollars in millions)
Liabilities—Long-term debt (excluding finance lease and other obligations)2$3,103 3,291 3,328 3,532 
v3.21.2
Other Financial Information (Tables)
 9 Months Ended
Sep. 30, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Schedule of components other current assets
The following table presents details of other currents assets in our consolidated balance sheets:

September 30, 2021December 31, 2020
(Dollars in millions)
Prepaid expenses$45 40
Contract acquisition costs44 47
Contract fulfillment costs30 28
Receivable for sale of land56 — 
Other5 7
Total other current assets$180 122
Other Noncurrent Liabilities
The following table presents details of other noncurrent liabilities in our consolidated balance sheets:

September 30, 2021December 31, 2020
(Dollars in millions)
Unrecognized tax benefits$459 448
Deferred revenue110 108
Noncurrent operating lease liability64 76
Other61 53
Total other noncurrent liabilities$694 685
v3.21.2
Accounting Policies - General (Details)
Sep. 30, 2021
state
Accounting Policies [Abstract]  
Number of states in which entity operates 14
v3.21.2
Accounting Policies- Segments (Details)
 9 Months Ended
Sep. 30, 2021
segment
Accounting Policies [Abstract]  
Number of reportable segments 1
v3.21.2
Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Jun. 30, 2021
Dec. 31, 2020
Sep. 30, 2020
Jun. 30, 2020
Dec. 31, 2019
Accounting Policies [Abstract]            
Cumulative effect of new accounting principle in period of adoption, net of tax $ 11,101   $ 10,098 $ 10,077    
RETAINED EARNINGS            
Accounting Policies [Abstract]            
Cumulative effect of new accounting principle in period of adoption, net of tax $ 1,051 $ 469 $ 48 $ 27 $ 73 $ 67
Cumulative Effect Of New Accounting Principle In Period Of Adoption, Tax           1
Cumulative Effect, Period of Adoption, Adjustment | RETAINED EARNINGS            
Accounting Policies [Abstract]            
Cumulative effect of new accounting principle in period of adoption, net of tax           $ 3
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]    
Goodwill $ 9,360 $ 9,360
Finite-lived intangible assets, net 215 343
Customer relationships    
Finite-Lived Intangible Assets [Line Items]    
Finite-lived intangible assets, net 0 88
Accumulated amortization 5,699 5,611
Other Intangible Assets    
Finite-Lived Intangible Assets [Line Items]    
Finite-lived intangible assets, net 215 255
Accumulated amortization $ 1,859 $ 1,831
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
USD ($)
Sep. 30, 2020
USD ($)
Sep. 30, 2021
USD ($)
reporting_unit
Sep. 30, 2020
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]        
Number of reporting units | reporting_unit     1  
Intangible assets, gross (including goodwill) $ 17,100   $ 17,100  
Amortization of intangible assets $ 22 $ 120 $ 154 $ 365
v3.21.2
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Future Amortization Expense (Details)
$ in Millions
Sep. 30, 2021
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
2021 (remaining three months) $ 21
2022 86
2023 62
2024 13
2025 $ 11
v3.21.2
Revenue Recognition - Additional Information - Overview (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Disaggregation of Revenue [Line Items]        
Total operating revenues $ 1,730 $ 1,801 $ 5,246 $ 5,518
Voice and Other - CAF Phase II [Member]        
Disaggregation of Revenue [Line Items]        
Total operating revenues     $ 109  
v3.21.2
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Disaggregation of Revenue [Line Items]        
Total Revenue $ 1,730 $ 1,801 $ 5,246 $ 5,518
Adjustments for non-ASC 606 revenue (122) (118) (359) (360)
Total Revenue from Contracts with Customers 1,608 1,683 4,887 5,158
Voice and Other [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 522 567 1,595 1,726
Adjustments for non-ASC 606 revenue (83) (87) (251) (263)
Total Revenue from Contracts with Customers 439 480 1,344 1,463
Fiber Infrastructure [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 495 505 1,500 1,527
Adjustments for non-ASC 606 revenue (30) (30) (90) (94)
Total Revenue from Contracts with Customers 465 475 1,410 1,433
IP & Data Services [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 118 128 357 389
Adjustments for non-ASC 606 revenue 0 0 0 0
Total Revenue from Contracts with Customers 118 128 357 389
Affiliate Services [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 595 601 1,794 1,876
Adjustments for non-ASC 606 revenue (9) (1) (18) (3)
Total Revenue from Contracts with Customers $ 586 $ 600 $ 1,776 $ 1,873
v3.21.2
Revenue Recognition - Operating Lease Revenue (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]        
Lease income $ 82 $ 77 $ 239 $ 234
Percent of operating revenue 5.00% 4.00% 5.00% 4.00%
v3.21.2
Revenue Recognition - Customer Receivables and Contract Balances (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Revenue from Contract with Customer [Abstract]    
Customer receivables $ 333 $ 346
Contract assets 11 13
Contract liabilities 321 300
Accounts receivable, gross 365 396
Allowance for doubtful accounts $ 32 $ 50
v3.21.2
Revenue Recognition - Additional Information - Customer Receivables and Contract Balances (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Customer Receivables and Contract Balances [Line Items]        
Revenue recognized from prior year contract liability $ 12 $ 13 $ 187 $ 210
Minimum        
Customer Receivables and Contract Balances [Line Items]        
Contract term     1 year  
Maximum        
Customer Receivables and Contract Balances [Line Items]        
Contract term     5 years  
v3.21.2
Revenue Recognition - Additional Information, Performance Obligation (Details)
$ in Millions
Sep. 30, 2021
USD ($)
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 188
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, percentage 91.00%
Expected timing of satisfaction, period 2 years 3 months
v3.21.2
Revenue Recognition - Contract Costs (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Acquisition Costs        
Capitalized Contract Cost        
Beginning of period balance $ 68 $ 81 $ 73 $ 86
Costs incurred 12 12 36 39
Amortization (14) (15) (43) (47)
End of period balance 66 78 66 78
Fulfillment Costs        
Capitalized Contract Cost        
Beginning of period balance 49 59 54 64
Costs incurred 7 6 19 18
Amortization (9) (8) (26) (25)
End of period balance $ 47 $ 57 $ 47 $ 57
v3.21.2
Revenue Recognition - Additional Information - Contract Costs (Details) - Weighted Average
 9 Months Ended
Sep. 30, 2021
Mass Markets Customers, Average Contract Life  
Contract Costs [Line Items]  
Length of customer life 30 months
Business Customer, Average Contract Life  
Contract Costs [Line Items]  
Length of customer life 29 months
v3.21.2
Credit Losses on Financial Instruments (Details)
$ in Millions
 9 Months Ended
Sep. 30, 2021
USD ($)
Financing Receivable, Allowance for Credit Loss [Roll Forward]  
Beginning balance $ 61
Provision for expected losses 18
Write-offs charged against the allowance (50)
Recoveries collected 10
Ending balance 39
Consumer Reclassed to Mass Market  
Financing Receivable, Allowance for Credit Loss [Roll Forward]  
Beginning balance 32
Business Reclassed to Mass Markets  
Financing Receivable, Allowance for Credit Loss [Roll Forward]  
Beginning balance 4
Mass Market Portfolio  
Financing Receivable, Allowance for Credit Loss [Roll Forward]  
Beginning balance 36
Provision for expected losses 12
Write-offs charged against the allowance (35)
Recoveries collected 8
Ending balance 21
Business Portfolio  
Financing Receivable, Allowance for Credit Loss [Roll Forward]  
Beginning balance 25
Provision for expected losses 6
Write-offs charged against the allowance (15)
Recoveries collected 2
Ending balance $ 18
v3.21.2
Long-Term Debt and Note Payable - Affiliate - Schedule of Long Term Debt (Details) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2021
Dec. 31, 2020
Long-term debt    
Long-term debt, gross $ 3,153  
Unamortized premiums, net 6 $ 5
Unamortized debt issuance costs (53) (62)
Less current maturities (950) (948)
Long-term debt, excluding current maturities 2,156 2,386
Note payable - affiliate 1,187 1,130
Long-term Debt and Lease Obligation, Including Current Maturities, Total 3,106 3,334
Senior notes    
Long-term debt    
Long-term debt, gross $ 2,935 3,170
Senior notes | Minimum    
Long-term debt    
Stated interest rate 6.50%  
Senior notes | Maximum    
Long-term debt    
Stated interest rate 7.75%  
Term loan    
Long-term debt    
Long-term debt, gross $ 215 $ 215
Weighted average interest rate 2.09% 2.15%
Term loan | London Interbank Offered Rate (LIBOR)    
Long-term debt    
Basis spread on variable rate 2.00%  
Finance lease and other obligations    
Long-term debt    
Long-term debt, gross $ 3 $ 6
Note payable - affiliate | Affiliated entity    
Long-term debt    
Note payable - affiliate $ 1,187 $ 1,130
Weighted average interest rate 4.809%  
v3.21.2
Long-Term Debt and Note Payable - Affiliate - Schedule of Debt Maturity (Details)
$ in Millions
Sep. 30, 2021
USD ($)
Debt Disclosure [Abstract]  
2021 (remaining three months) $ 951
2022 1
2023 0
2024 0
2025 250
2026 and thereafter 1,951
Total long-term debt $ 3,153
v3.21.2
Long-Term Debt and Note Payable - Affiliate - Additional Information (Details) - USD ($)
 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Feb. 16, 2021
Dec. 31, 2020
Sep. 30, 2017
Long-term debt          
Net loss on early retirement of debt $ 8,000,000 $ 36,000,000      
Note payable - affiliate 1,187,000,000     $ 1,130,000,000  
Senior notes          
Long-term debt          
Net loss on early retirement of debt 8,000,000        
Note payable - affiliate | Affiliated entity          
Long-term debt          
Note payable - affiliate 1,187,000,000     $ 1,130,000,000  
Note payable - affiliate | Affiliated entity | Qwest Corporation          
Long-term debt          
Note payable - affiliate funding commitment         $ 965,000,000
Note payable - affiliate 1,200,000,000        
Accrued interest on note payable - affiliate $ 14,000,000        
7.000% Notes Due 2056 | Senior notes          
Long-term debt          
Repurchased face amount     $ 235,000,000    
Stated interest rate     7.00%    
v3.21.2
Fair Value Disclosure (Details) - Fair value measurements, nonrecurring - Fair value inputs, Level 2 - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Carrying Amount    
Liabilities    
Liabilities—Long-term debt (excluding finance lease and other obligations) $ 3,103 $ 3,328
Fair Value    
Liabilities    
Liabilities—Long-term debt (excluding finance lease and other obligations) $ 3,291 $ 3,532
v3.21.2
Commitments, Contingencies and Other Items (Details)
 3 Months Ended
Sep. 30, 2021
USD ($)
patent
Loss Contingencies [Line Items]  
Estimate of possible loss $ 19,000,000
Loss Contingency, Patents Allegedly Infringed, Number | patent 1
Unfavorable Regulatory Action  
Loss Contingencies [Line Items]  
Estimate of possible loss $ 300,000
v3.21.2
Dividends (Details) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Dividends [Abstract]    
Dividends declared and paid to Qwest Services Corporation $ 570 $ 1,400
v3.21.2
Other Financial Information- Other Current Assets (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Prepaid Expense and Other Assets, Current [Abstract]    
Prepaid expenses $ 45 $ 40
Contract acquisition costs 44 47
Contract fulfillment costs 30 28
Receivable for sale of land 56 0
Other 5 7
Total other current assets $ 180 $ 122
v3.21.2
Other Financial Information - Other Non-current Liabilities (Details) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Deferred Credits and Other Liabilities [Abstract]    
Unrecognized tax benefits $ 459 $ 448
Deferred revenue 110 108
Noncurrent operating lease liability 64 76
Other 61 53
Total other noncurrent liabilities $ 694 $ 685
v3.21.2
Labor Union Contracts (Details)
 9 Months Ended
Sep. 30, 2021
Union employees concentration risk | Employees covered under collective bargaining agreements  
Labor Union Contracts  
Concentration risk percentage 43.00%
v3.21.2
Label Element Value
Accounting Standards Update [Extensible Enumeration] us-gaap_AccountingStandardsUpdateExtensibleList Accounting Standards Update 2016-13 [Member]