QWEST CORP, 10-Q filed on 8/1/2023
Quarterly Report
v3.23.2
Cover - shares
 6 Months Ended
Jun. 30, 2023
Aug. 01, 2023
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2023  
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 Common Stock, Shares Outstanding (in shares)   1
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 2023  
Document Fiscal Period Focus Q2  
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  
v3.23.2
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
OPERATING REVENUE        
Total operating revenue $ 1,467 $ 1,632 $ 3,008 $ 3,288
OPERATING EXPENSES        
Cost of services and products (exclusive of depreciation and amortization) 404 414 791 822
Selling, general and administrative 116 114 244 223
Operating expenses - affiliates 184 184 375 360
Depreciation and amortization 203 213 400 423
Total operating expenses 907 925 1,810 1,828
OPERATING INCOME 560 707 1,198 1,460
OTHER (EXPENSE) INCOME        
Interest expense (25) (29) (52) (56)
Other income, net 3 0 4 5
Total other expense, net (21) (46) (46) (92)
INCOME BEFORE INCOME TAX EXPENSE 539 661 1,152 1,368
Income tax expense 141 169 300 348
NET INCOME 398 492 852 1,020
Related Party | Affiliated entity        
OTHER (EXPENSE) INCOME        
Interest expense   (17)   (41)
Interest income 1   2  
Non-affiliate services        
OPERATING REVENUE        
Total operating revenue 964 1,049 1,945 2,124
Affiliate services        
OPERATING REVENUE        
Total operating revenue $ 503 $ 583 $ 1,063 $ 1,164
v3.23.2
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)
$ in Millions
Jun. 30, 2023
Dec. 31, 2022
CURRENT ASSETS    
Cash and cash equivalents $ 5 $ 8
Accounts receivable, less allowance of $35 and $36 351 309
Other 157 120
Total current assets 1,819 1,013
Property, plant and equipment, net of accumulated depreciation of $7,947 and $7,617 8,449 8,273
GOODWILL AND OTHER ASSETS    
Goodwill 9,360 9,360
Other intangible assets, net 120 138
Other, net 157 141
Total goodwill and other assets 9,637 9,639
TOTAL ASSETS 19,905 18,925
CURRENT LIABILITIES    
Current maturities of long-term debt 1 2
Accounts payable 356 213
Accrued expenses and other liabilities    
Salaries and benefits 102 127
Income and other taxes 92 89
Other 129 130
Current portion of deferred revenue 176 167
Total current liabilities 856 728
LONG-TERM DEBT 2,156 2,155
DEFERRED CREDITS AND OTHER LIABILITIES    
Deferred income taxes, net 1,265 1,282
Other 700 654
Total deferred credits and other liabilities 2,487 2,488
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDER'S EQUITY    
Common stock - one share without par value, owned by Qwest Services Corporation 10,050 10,050
Retained earnings 4,356 3,504
Total stockholder's equity 14,406 13,554
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 19,905 18,925
Related Party    
CURRENT ASSETS    
Advances to affiliates 1,306 576
DEFERRED CREDITS AND OTHER LIABILITIES    
Affiliate obligations, net $ 522 $ 552
v3.23.2
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Accounts receivable, allowance $ 35 $ 36
PP&E, accumulated depreciation $ 7,947 $ 7,617
Common stock, share issued (in shares) 1 1
Common stock, share outstanding (in shares) 1 1
v3.23.2
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
OPERATING ACTIVITIES    
Net income $ 852 $ 1,020
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 400 423
Deferred income taxes (17) (3)
Provision for uncollectible accounts 28 16
Accrued interest on affiliate note 0 28
Changes in current assets and liabilities:    
Accounts receivable (70) (12)
Accounts payable 31 (16)
Accrued income and other taxes 3 (3)
Other current assets and liabilities, net (48) (65)
Changes in other noncurrent assets and liabilities, net 33 (9)
Changes in affiliate obligations, net (30) (26)
Other, net 4 5
Net cash provided by operating activities 1,186 1,358
INVESTING ACTIVITIES    
Capital expenditures (459) (350)
Changes in advances to affiliates (730) (993)
Proceeds from sale of property, plant and equipment and other assets 2 42
Net cash used in investing activities (1,187) (1,301)
FINANCING ACTIVITIES    
Payments of long-term debt (2) 0
Changes in advances from affiliates 0 (55)
Net cash used in financing activities (2) (55)
Net (decrease) increase in cash, cash equivalents and restricted cash (3) 2
Cash, cash equivalents and restricted cash at beginning of period 10 4
Cash, cash equivalents and restricted cash at end of period 7 6
Supplemental cash flow information:    
Income taxes paid, net (302) (343)
Interest paid, including affiliate interest (net of capitalized interest of $22 and $13) (53) (56)
Cash, cash equivalents and restricted cash:    
Cash and cash equivalents 5 5
Restricted cash - noncurrent 2 1
Total $ 7 $ 6
v3.23.2
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Parenthetical) - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Statement of Cash Flows [Abstract]    
Interest paid, capitalized interest $ 22 $ 13
v3.23.2
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (UNAUDITED) - USD ($)
$ in Millions
Total
COMMON STOCK
RETAINED EARNINGS
Balance at beginning of period at Dec. 31, 2021   $ 10,050 $ 1,585
Increase (Decrease) in Stockholder's Equity      
Net income     1,020
Balance at end of period at Jun. 30, 2022 $ 12,655 10,050 2,605
Balance at beginning of period at Mar. 31, 2022   10,050 2,113
Increase (Decrease) in Stockholder's Equity      
Net income     492
Balance at end of period at Jun. 30, 2022 12,655 10,050 2,605
Balance at beginning of period at Dec. 31, 2022 13,554 10,050 3,504
Increase (Decrease) in Stockholder's Equity      
Net income     852
Balance at end of period at Jun. 30, 2023 14,406 10,050 4,356
Balance at beginning of period at Mar. 31, 2023   10,050 3,958
Increase (Decrease) in Stockholder's Equity      
Net income     398
Balance at end of period at Jun. 30, 2023 $ 14,406 $ 10,050 $ 4,356
v3.23.2
Background
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Background Background
General

We are an integrated facilities-based technology and communications company focused on providing our business and mass markets customers with a broad array of integrated communications products and services necessary to fully participate in our ever-evolving digital world. 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, 2022, 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 note 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 therein are adequate to make the information presented not misleading. We believe 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 six 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, 2022.

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 (Lumen Technologies and its other subsidiaries, referred to herein as affiliates) have not been eliminated.

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.

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.

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 our 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, 2022.

Recently Adopted Accounting Pronouncements

Supplier Finance Programs

On January 1, 2023, we adopted Accounting Standards Update (“ASU”) 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” (“ASU 2022-04”). These amendments require that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, program activity during the period, changes from period to period and potential magnitude of program transactions. The adoption of ASU 2022-04 did not have any impact to our consolidated financial statements.

Credit Losses

On January 1, 2023, we adopted ASU 2022-02, "Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings (“TDR”) and Vintage Disclosures” (“ASU 2022-02”). The ASU eliminates the TDR recognition and measurement guidance, enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The adoption of ASU 2022-02 did not have any impact to our consolidated financial statements.

Derivatives and Hedging

On January 1, 2023, we adopted ASU 2022-01, “Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method” ("ASU 2022-01"). The ASU expands the current single-layer method to allow multiple hedged layers of a single closed portfolio under the method. The adoption of ASU 2022-01 did not have any impact to our consolidated financial statements.

Business Combinations

On January 1, 2023, we adopted ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The adoption of ASU 2021-08 did not have any impact to our consolidated financial statements.

Government Assistance

On January 1, 2022, we adopted ASU 2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” (“ASU 2021-10”). This ASU requires business entities to disclose information about certain types of government assistance they receive. The ASU only impacts annual financial statement note disclosures. The adoption of ASU 2021-10 did not have an impact to our consolidated financial statements.

Leases

On January 1, 2022, we adopted ASU 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments” (“ASU 2021-05”). This ASU (i) amends the lease classification requirements for lessors to align them with practice under ASC Topic 840, (ii) provides criteria for lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease; and (iii) provides guidance with respect to net investments by lessors under operating leases and other related topics. The adoption of ASU 2021-05 did not have a material impact to our consolidated financial statements.
Recently Issued Accounting Pronouncements

In March 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-02, “Investments-Equity method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method” (“ASU 2023-02”). These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. ASU 2023-02 will become effective for us in the first quarter of fiscal 2024 and early adoption is permitted. As of June 30, 2023, we do not expect ASU 2023-02 will have an impact to our consolidated financial statements.

In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842): Common Control Arrangements” (“ASU 2023-01”). These amendments require all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. ASU 2023-01 will become effective for us in the first quarter of fiscal 2024 and early adoption is permitted. As of June 30, 2023, we do not expect ASU 2023-01 will have an impact to our consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2022-03”). These amendments clarify that a contractual restriction on the sales of an investment in an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. ASU 2022-03 will become effective for us in the first quarter of fiscal 2024 and early adoption is permitted. As of June 30, 2023, we do not expect ASU 2022-03 will have an impact to our consolidated financial statements.
v3.23.2
Goodwill and Other Intangible Assets
 6 Months Ended
Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets
Goodwill and other intangible assets consisted of the following:
June 30, 2023December 31, 2022
(Dollars in millions)
Goodwill$9,360 9,360 
Other intangible assets, less accumulated amortization of $1,940 and $1,924
$120 138 

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 are required to assess our goodwill for impairment annually, 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 only when our assessment determines the carrying value of equity of our reporting unit exceeds its fair value. Our annual impairment assessment date for goodwill is October 31, at which date we assess goodwill at our reporting unit. In reviewing the criteria for reporting units, we have determined that we are one reporting unit.
Second Quarter 2023 Goodwill Impairment Analysis

The sustained decline in Lumen's share price during the second quarter of 2023 was considered a triggering event requiring evaluation of goodwill impairment; as such, we estimated the fair value using only the market approach. Applying this approach, we utilized company comparisons and analyst reports within the telecommunications industry which supported a range of fair values derived from annualized revenue and EBITDA multiples between 1.5x and 4.3x and 4.6x and 10.5x, respectively. We selected a revenue multiple within and an EBITDA multiple below these comparable market multiples. For the three months ended June 30, 2023, based on our assessment performed as described above, we concluded that goodwill was not impaired.

The market approach that we used in the quarter ended June 30, 2023 incorporated estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of certain strategic initiatives. In developing the market multiples, we considered observed trends of our industry participants. Our assessment included many factors that required significant judgment. Alternative interpretations of these factors could have resulted in different conclusions.

As of June 30, 2023, the gross carrying amount of goodwill and other intangible assets was $11.4 billion. The amortization expense for finite-lived intangible assets for the three months ended June 30, 2023 and 2022 totaled $16 million and $20 million, respectively. The amortization expense for finite-lived intangible assets for the six months ended June 30, 2023 and 2022 totaled $33 million and $39 million, respectively.

We estimate that amortization expense for intangible assets for the years ending December 31, 2023 through 2027 will be as follows:
(Dollars in millions)
2023 (remaining six months)$32 
202432 
202516 
202610 
20277 
v3.23.2
Revenue Recognition
 6 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
We categorize our revenue derived from our operations serving our mass markets customers, primarily within the first three categories listed below, and our revenue derived from our operations servicing our business customers, primarily in the 'Harvest', 'Nurture' and 'Grow' categories listed below:
•Other Broadband, under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure;

•Voice and Other, under which we derive revenues from (i) providing local and long-distance voice services, professional services, and other ancillary services, (ii) federal broadband and state support programs, and (iii) equipment, IT solutions and other services;

•Fiber Broadband, under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure;

•Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing ("TDM") voice, private line and other legacy services;

•Nurture, which includes our more mature offerings, including primarily ethernet;

•Grow, which includes products and services marketed to our business customers that we anticipate will grow, including dark fiber and wavelengths 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 and network support.
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 June 30, 2023Three Months Ended June 30, 2022
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)
Other Broadband$283 (24)259 326 (27)299 
Voice and Other150 (4)146 174 (4)170 
Fiber Broadband122 (3)119 114 (3)111 
Harvest276 (36)240 288 (41)247 
Nurture94 (2)92 107 (2)105 
Grow39 — 39 40 (3)37 
Affiliate Services503 (11)492 583 (12)571 
Total revenue$1,467 (80)1,387 1,632 (92)1,540 

Six Months Ended June 30, 2023Six Months Ended June 30, 2022
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)
Other Broadband$576 (49)527 660 (55)605 
Voice and Other306 (8)298 368 (20)348 
Fiber Broadband243 (6)237 224 (6)218 
Harvest543 (73)470 575 (82)493 
Nurture199 (4)195 219 (4)215 
Grow78 — 78 78 (6)72 
Affiliate Services1,063 (22)1,041 1,164 (23)1,141 
Total revenue$3,008 (162)2,846 3,288 (196)3,092 
____________________________________________________________
(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 income are included in operating revenue in our consolidated statements of operations.

For the three months ended June 30, 2023 and 2022, our gross rental income was $78 million and $88 million, respectively, which represents approximately 5% of our operating revenue for both periods. For the six months ended June 30, 2023 and 2022, our gross rental income was $158 million and $176 million, respectively, which represents approximately 5% our operating revenue for both periods.
Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities as of June 30, 2023 and December 31, 2022:
June 30, 2023December 31, 2022
 (Dollars in millions)
Customer receivables (1)
$295 297 
Contract assets8 9 
Contract liabilities290 343 
______________________________________________________________________
(1)Reflects gross customer receivables, including gross affiliate receivables, of $322 million and $324 million, net of allowance for credit losses of $27 million at both June 30, 2023 and December 31, 2022, 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 typically 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 six months ended June 30, 2023, we recognized $10 million and $149 million, respectively, of revenue that was included in contract liabilities of $343 million as of January 1, 2023. During the three and six months ended June 30, 2022, we recognized $14 million and $164 million, respectively, of revenue that was included in contract liabilities of $317 million as of January 1, 2022.

Performance Obligations

As of June 30, 2023, we expect to recognize approximately $1.8 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of June 30, 2023, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2023, 2024 and thereafter was $492 million, $641 million and $644 million, respectively.

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 June 30, 2023Three Months Ended June 30, 2022
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning Balance$58 $46 63 $47 
Cost Incurred13 9 12 10 
Amortization(12)(10)(13)(10)
Ending Balances59 $45 62 47 

Six Months Ended June 30, 2023Six Months Ended June 30, 2022
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning Balance$61 $46 64 $47 
Cost incurred22 19 25 19 
Amortization(24)(20)(27)(19)
Ending Balances59 45 62 47 

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 contract life of 36 months for mass markets customers and average contract life of 33 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 a quarterly basis.
v3.23.2
Credit Losses on Financial Instruments
 6 Months Ended
Jun. 30, 2023
Credit Loss [Abstract]  
Credit Losses on Financial Instruments Credit Losses on Financial Instruments
To assess our expected credit losses on financial instruments, we aggregate financial assets with similar risk characteristics to monitor their credit quality or deterioration over the life of such assets. We periodically monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change. We separately evaluate financial assets that do not share risk characteristics with other financial assets. 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 review 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.
If there is an unexpected deterioration of a customer's financial condition or an unexpected change in economic conditions, including macroeconomic events, we assess the need to adjust the allowance for credit losses. Any such resulting adjustments 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 our 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, and we may use methodologies that differ from those used by other companies.

The following table presents the activity of our allowance for credit losses by accounts receivable portfolio for the six months ended June 30, 2023:
BusinessMass MarketsTotal
(Dollars in millions)
As of December 31, 2022$20 16 36 
Provision for expected losses9 19 28 
Write-offs charged against the allowance(8)(21)(29)
Ending balance at June 30, 2023$21 14 35 
v3.23.2
Long-Term Debt and Note Payable - Affiliate
 6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
Long-Term Debt and Note Payable - Affiliate Long-Term Debt and Note Payable - Affiliate
The following chart reflects the consolidated long-term debt of Qwest Corporation and its subsidiaries, including finance lease and other obligations, unamortized premiums, net, and unamortized debt issuance costs:
Interest Rates (1)
Maturities (1)
June 30, 2023December 31, 2022
   (Dollars in millions)
Senior notes
6.500% - 7.750%
2025 - 2057$1,986 1,986 
Term loan (2)
SOFR + 2.50%
2027215 215 
Finance lease and other obligationsVariousVarious4 3 
Unamortized premiums, net  4 5 
Unamortized debt issuance costs(52)(52)
Total long-term debt  $2,157 2,157 
Less current maturities(1)(2)
Long-term debt, excluding current maturities$2,156 2,155 
_______________________________________________________________________________
(1)As of June 30, 2023.
(2)Qwest Corporation's Term Loan had interest rates of 7.717% and 6.640% as of June 30, 2023 and December 31, 2022, respectively.
Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt as of June 30, 2023 (excluding unamortized premiums, net, and unamortized debt issuance costs) maturing during the following years:
(Dollars in millions)
2023 (remaining six months)$— 
20241 
2025250 
20261 
2027215 
2028 and thereafter1,738 
Total long-term debt$2,205 

Note Payable - Affiliate

On June 30, 2022, Qwest Corporation entered into an amended and restated revolving promissory note ("Note Payable - Affiliate") with an affiliate of our ultimate parent company, Lumen Technologies, Inc. ("Lender"), that replaces the previous revolving promissory agreement that was scheduled to mature on June 30, 2022 ("Prior Note Payable - Affiliate"). The Note Payable - Affiliate, as amended, provides Qwest Corporation with a funding commitment of up to $2.0 billion. Any outstanding principal balance owed by Qwest Corporation under the Note Payable - Affiliate and the accrued interest thereon is due and payable on demand, but if no demand is made, then on the maturity date. The Note Payable - Affiliate has an initial maturity date of June 30, 2027, but will automatically renew for an unlimited number of successive twelve-month periods unless the Lender provides notice of its intent not to renew at least 30 days prior to the initial maturity date or each subsequent maturity date.

In accordance with the terms of the amended Note Payable - Affiliate, interest is assessed every six months ending on June 30th and December 31st (an "Interest Period") and is payable within 30 days of the end of the respective Interest Period. 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.

On September 30, 2022, Qwest Corporation repaid the outstanding principal and interest on the Note Payable - Affiliate of approximately $1.2 billion and $43 million, respectively. As of June 30, 2023, there was no outstanding principal or accrued interest under the Note Payable - Affiliate.

Compliance

As of June 30, 2023, we believe we were in compliance with the financial covenants contained in our material debt agreements in all material respects.
v3.23.2
Fair Value Disclosure
 6 Months Ended
Jun. 30, 2023
Fair Value Disclosures [Abstract]  
Fair Value Disclosure Fair Value of Financial Instruments
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.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs using the below-described fair value hierarchy.
We determined the fair values of our long-term debt, including the current portion, based on quoted market prices where available or, if not available, based on inputs other than quoted market prices in active markets that are either directly or indirectly observable such as discounted future cash flows using current market interest rates.

The three input levels in the hierarchy of fair value measurements are defined by the FASB 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 financial liabilities as of June 30, 2023 and December 31, 2022, as well as the input level used to determine the fair values indicated below:
  June 30, 2023December 31, 2022
 Input
Level		Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
  (Dollars in millions)
Liabilities—Long-term debt (excluding finance lease and other obligations)2$2,153 1,431 2,154 1,691 
v3.23.2
Affiliate Transactions
 6 Months Ended
Jun. 30, 2023
Related Party Transactions [Abstract]  
Affiliate Transactions Affiliate Transactions
We provide incumbent local exchange carrier telecommunications services to our affiliates that we also provide to external customers. These services are priced at regulated rates, where applicable, or otherwise at rates we believe are consistent with non-regulated market-based rates charged to external customers.

We also provide to our affiliates shared services in the form of application development and support services, as well as network support and technical services, and administrative and corporate support. In this regard, we function as a service company to other Lumen affiliates, and correspondingly recognize affiliate revenue based on the costs for the services that we provide to those affiliates.

Whenever possible, costs for shared services are incurred directly by our affiliates for the services they use. When these shared costs are not directly incurred, they are allocated among all affiliates based upon what we determine to be the most reasonable method, first using cost causative measures, or, if no cost causative measure is available, using a general allocator. From time to time, we may adjust the basis for allocating the costs of a shared service among affiliates. As applicable any such changes in allocation methodologies are applied prospectively.

For the three months ended June 30, 2023 and 2022, direct affiliate revenue was $367 million and $427 million and allocated affiliate revenue was $136 million and $156 million, respectively. For the six months ended June 30, 2023 and 2022, direct affiliate revenue was $794 million and $854 million and allocated affiliate revenue was $269 million and $310 million, respectively.
We also purchase services from our affiliates including telecommunication services, insurance, flight services and other support services such as legal, regulatory, finance administration and executive support. Our affiliates charge us for these services using the allocation methodology described above.
v3.23.2
Commitments, Contingencies and Other Items
 6 Months Ended
Jun. 30, 2023
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.
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. Subject to these limitations, at June 30, 2023 we had accrued $17 million in the aggregate for our litigation and non-income tax contingencies, which is included in “Other” current liabilities and “Other Liabilities” on our consolidated balance sheet as of such date. We cannot at this time estimate the reasonably possible loss or range of loss in excess of this $17 million accrual due to the inherent uncertainties and speculative nature of contested proceedings. 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 named 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, regulatory hearings 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 or commercial disputes.

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 within the next twelve months 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. In addition, in the past we acquired companies that installed lead-sheathed cables several decades ago. Under applicable environmental laws, we could be responsible for environmental liabilities arising from the historical operations of our predecessors.
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 in this Note do not reflect all of our contingencies. For additional information on our contingencies, see Note 14—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, 2022. 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.
v3.23.2
Dividends
 6 Months Ended
Jun. 30, 2023
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 six months ended June 30, 2023 and June 30, 2022, we declared and paid no dividends to QSC. Dividends paid, when applicable, are reflected on our consolidated statements of cash flows as financing activities.
v3.23.2
Other Financial Information
 6 Months Ended
Jun. 30, 2023
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 current assets on our consolidated balance sheets:

June 30, 2023December 31, 2022
(Dollars in millions)
Prepaid expenses$59 46
Contract acquisition costs36 38
Contract fulfillment costs29 30
Other33 6
Total other current assets$157 120
Other Current Liabilities

The following table presents details of other current liabilities on our consolidated balance sheets:

June 30, 2023December 31, 2022
(Dollars in millions)
Affiliate obligations$57 57 
Operating lease liabilities23 21 
Other49 52 
Total other current liabilities$129 130 

Other Noncurrent Liabilities

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

June 30, 2023December 31, 2022
(Dollars in millions)
Unrecognized tax benefits$442 427
Operating lease liabilities57 58
Other201 169
Total other noncurrent liabilities$700 654
v3.23.2
Labor Union Contracts
 6 Months Ended
Jun. 30, 2023
Risks and Uncertainties [Abstract]  
Labor Union Contracts Labor Union Contracts
    
As of June 30, 2023, approximately 42% of our employees were represented by the Communications Workers of America ("CWA") or the International Brotherhood of Electrical Workers ("IBEW"). None of our represented employees are subject to collective bargaining agreements that are scheduled to expire within the twelve-month period ending June 30, 2024. We believe relations with our employees continue to be generally good.
v3.23.2
Background (Policies)
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation

Our consolidated balance sheet as of December 31, 2022, 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 note 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 therein are adequate to make the information presented not misleading. We believe 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 six 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, 2022.

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 (Lumen Technologies and its other subsidiaries, referred to herein as affiliates) have not been eliminated.
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 our CODM on a regular basis.
Recently Adopted and Issued Accounting Pronouncements
Recently Adopted Accounting Pronouncements

Supplier Finance Programs

On January 1, 2023, we adopted Accounting Standards Update (“ASU”) 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” (“ASU 2022-04”). These amendments require that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, program activity during the period, changes from period to period and potential magnitude of program transactions. The adoption of ASU 2022-04 did not have any impact to our consolidated financial statements.

Credit Losses

On January 1, 2023, we adopted ASU 2022-02, "Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings (“TDR”) and Vintage Disclosures” (“ASU 2022-02”). The ASU eliminates the TDR recognition and measurement guidance, enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The adoption of ASU 2022-02 did not have any impact to our consolidated financial statements.

Derivatives and Hedging

On January 1, 2023, we adopted ASU 2022-01, “Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method” ("ASU 2022-01"). The ASU expands the current single-layer method to allow multiple hedged layers of a single closed portfolio under the method. The adoption of ASU 2022-01 did not have any impact to our consolidated financial statements.

Business Combinations

On January 1, 2023, we adopted ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The adoption of ASU 2021-08 did not have any impact to our consolidated financial statements.

Government Assistance

On January 1, 2022, we adopted ASU 2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” (“ASU 2021-10”). This ASU requires business entities to disclose information about certain types of government assistance they receive. The ASU only impacts annual financial statement note disclosures. The adoption of ASU 2021-10 did not have an impact to our consolidated financial statements.

Leases

On January 1, 2022, we adopted ASU 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments” (“ASU 2021-05”). This ASU (i) amends the lease classification requirements for lessors to align them with practice under ASC Topic 840, (ii) provides criteria for lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease; and (iii) provides guidance with respect to net investments by lessors under operating leases and other related topics. The adoption of ASU 2021-05 did not have a material impact to our consolidated financial statements.
Recently Issued Accounting Pronouncements

In March 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-02, “Investments-Equity method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method” (“ASU 2023-02”). These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. ASU 2023-02 will become effective for us in the first quarter of fiscal 2024 and early adoption is permitted. As of June 30, 2023, we do not expect ASU 2023-02 will have an impact to our consolidated financial statements.

In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842): Common Control Arrangements” (“ASU 2023-01”). These amendments require all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. ASU 2023-01 will become effective for us in the first quarter of fiscal 2024 and early adoption is permitted. As of June 30, 2023, we do not expect ASU 2023-01 will have an impact to our consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2022-03”). These amendments clarify that a contractual restriction on the sales of an investment in an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. ASU 2022-03 will become effective for us in the first quarter of fiscal 2024 and early adoption is permitted. As of June 30, 2023, we do not expect ASU 2022-03 will have an impact to our consolidated financial statements.
Goodwill We are required to assess our goodwill for impairment annually, 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 only when our assessment determines the carrying value of equity of our reporting unit exceeds its fair value. Our annual impairment assessment date for goodwill is October 31, at which date we assess goodwill at our reporting unit.
Operating Lease Revenue
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 income are included in operating revenue in our consolidated statements of operations.
Credit Losses on Financial Instruments To assess our expected credit losses on financial instruments, we aggregate financial assets with similar risk characteristics to monitor their credit quality or deterioration over the life of such assets. We periodically monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change. We separately evaluate financial assets that do not share risk characteristics with other financial assets. Our financial assets measured at amortized cost primarily consist of accounts receivable.If there is an unexpected deterioration of a customer's financial condition or an unexpected change in economic conditions, including macroeconomic events, we assess the need to adjust the allowance for credit losses. Any such resulting adjustments would affect earnings in the period that adjustments are made.
v3.23.2
Goodwill and Other Intangible Assets (Tables)
 6 Months Ended
Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Intangible Assets and Goodwill
Goodwill and other intangible assets consisted of the following:
June 30, 2023December 31, 2022
(Dollars in millions)
Goodwill$9,360 9,360 
Other intangible assets, less accumulated amortization of $1,940 and $1,924
$120 138 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense We estimate that amortization expense for intangible assets for the years ending December 31, 2023 through 2027 will be as follows:
(Dollars in millions)
2023 (remaining six months)$32 
202432 
202516 
202610 
20277 
v3.23.2
Revenue Recognition (Tables)
 6 Months Ended
Jun. 30, 2023
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 June 30, 2023Three Months Ended June 30, 2022
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)
Other Broadband$283 (24)259 326 (27)299 
Voice and Other150 (4)146 174 (4)170 
Fiber Broadband122 (3)119 114 (3)111 
Harvest276 (36)240 288 (41)247 
Nurture94 (2)92 107 (2)105 
Grow39 — 39 40 (3)37 
Affiliate Services503 (11)492 583 (12)571 
Total revenue$1,467 (80)1,387 1,632 (92)1,540 

Six Months Ended June 30, 2023Six Months Ended June 30, 2022
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)
Other Broadband$576 (49)527 660 (55)605 
Voice and Other306 (8)298 368 (20)348 
Fiber Broadband243 (6)237 224 (6)218 
Harvest543 (73)470 575 (82)493 
Nurture199 (4)195 219 (4)215 
Grow78 — 78 78 (6)72 
Affiliate Services1,063 (22)1,041 1,164 (23)1,141 
Total revenue$3,008 (162)2,846 3,288 (196)3,092 
____________________________________________________________
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.
Schedule of Customer Receivables and Contract Balances
The following table provides balances of customer receivables, contract assets and contract liabilities as of June 30, 2023 and December 31, 2022:
June 30, 2023December 31, 2022
 (Dollars in millions)
Customer receivables (1)
$295 297 
Contract assets8 9 
Contract liabilities290 343 
______________________________________________________________________
(1)Reflects gross customer receivables, including gross affiliate receivables, of $322 million and $324 million, net of allowance for credit losses of $27 million at both June 30, 2023 and December 31, 2022, respectively.
Schedule of Contract Costs
The following tables provide changes in our contract acquisition costs and fulfillment costs:

Three Months Ended June 30, 2023Three Months Ended June 30, 2022
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning Balance$58 $46 63 $47 
Cost Incurred13 9 12 10 
Amortization(12)(10)(13)(10)
Ending Balances59 $45 62 47 

Six Months Ended June 30, 2023Six Months Ended June 30, 2022
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning Balance$61 $46 64 $47 
Cost incurred22 19 25 19 
Amortization(24)(20)(27)(19)
Ending Balances59 45 62 47 
v3.23.2
Credit Losses on Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2023
Credit Loss [Abstract]  
Schedule of Allowance for Credit Loss The following table presents the activity of our allowance for credit losses by accounts receivable portfolio for the six months ended June 30, 2023:
BusinessMass MarketsTotal
(Dollars in millions)
As of December 31, 2022$20 16 36 
Provision for expected losses9 19 28 
Write-offs charged against the allowance(8)(21)(29)
Ending balance at June 30, 2023$21 14 35 
v3.23.2
Long-Term Debt and Note Payable - Affiliate (Tables)
 6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
Schedule of Long-Term Debt
The following chart reflects the consolidated long-term debt of Qwest Corporation and its subsidiaries, including finance lease and other obligations, unamortized premiums, net, and unamortized debt issuance costs:
Interest Rates (1)
Maturities (1)
June 30, 2023December 31, 2022
   (Dollars in millions)
Senior notes
6.500% - 7.750%
2025 - 2057$1,986 1,986 
Term loan (2)
SOFR + 2.50%
2027215 215 
Finance lease and other obligationsVariousVarious4 3 
Unamortized premiums, net  4 5 
Unamortized debt issuance costs(52)(52)
Total long-term debt  $2,157 2,157 
Less current maturities(1)(2)
Long-term debt, excluding current maturities$2,156 2,155 
_______________________________________________________________________________
(1)As of June 30, 2023.
(2)Qwest Corporation's Term Loan had interest rates of 7.717% and 6.640% as of June 30, 2023 and December 31, 2022, respectively.
Schedule of Maturities of Long-Term Debt
Set forth below is the aggregate principal amount of our long-term debt as of June 30, 2023 (excluding unamortized premiums, net, and unamortized debt issuance costs) maturing during the following years:
(Dollars in millions)
2023 (remaining six months)$— 
20241 
2025250 
20261 
2027215 
2028 and thereafter1,738 
Total long-term debt$2,205 
v3.23.2
Fair Value Disclosure (Tables)
 6 Months Ended
Jun. 30, 2023
Fair Value Disclosures [Abstract]  
Schedule of Carrying Amounts and Estimated Fair Values
The following table presents the carrying amounts and estimated fair values of our financial liabilities as of June 30, 2023 and December 31, 2022, as well as the input level used to determine the fair values indicated below:
  June 30, 2023December 31, 2022
 Input
Level		Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
  (Dollars in millions)
Liabilities—Long-term debt (excluding finance lease and other obligations)2$2,153 1,431 2,154 1,691 
v3.23.2
Other Financial Information (Tables)
 6 Months Ended
Jun. 30, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Schedule of Other Current Assets
The following table presents details of other current assets on our consolidated balance sheets:

June 30, 2023December 31, 2022
(Dollars in millions)
Prepaid expenses$59 46
Contract acquisition costs36 38
Contract fulfillment costs29 30
Other33 6
Total other current assets$157 120
Schedule of Other Current Liabilities
The following table presents details of other current liabilities on our consolidated balance sheets:

June 30, 2023December 31, 2022
(Dollars in millions)
Affiliate obligations$57 57 
Operating lease liabilities23 21 
Other49 52 
Total other current liabilities$129 130 
Schedule of Other Noncurrent Liabilities
The following table presents details of other noncurrent liabilities on our consolidated balance sheets:

June 30, 2023December 31, 2022
(Dollars in millions)
Unrecognized tax benefits$442 427
Operating lease liabilities57 58
Other201 169
Total other noncurrent liabilities$700 654
v3.23.2
Accounting Policies - General (Details)
Jun. 30, 2023
state
Accounting Policies [Abstract]  
Number of states in which entity operates 14
v3.23.2
Accounting Policies- Segments (Details)
 6 Months Ended
Jun. 30, 2023
segment
Accounting Policies [Abstract]  
Number of reportable segments 1
v3.23.2
Goodwill and Other Intangible Assets - Schedule of Goodwill (Details) - USD ($)
$ in Millions
Jun. 30, 2023
Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]    
Goodwill $ 9,360 $ 9,360
Other Intangible Assets    
Finite-Lived Intangible Assets [Line Items]    
Other intangible assets, less accumulated amortization 120 138
Accumulated amortization $ 1,940 $ 1,924
v3.23.2
Goodwill and Other Intangible Assets - Additional Information (Details)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2023
USD ($)
Jun. 30, 2022
USD ($)
Jun. 30, 2023
USD ($)
reporting_unit
Jun. 30, 2022
USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Number of reporting units | reporting_unit     1  
Intangible assets, gross (including goodwill) $ 11,400   $ 11,400  
Amortization expense $ 16 $ 20 $ 33 $ 39
Minimum | Revenue Multiple        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Market multiple (ratio) 1.5   1.5  
Minimum | EBITDA Multiple        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Market multiple (ratio) 4.6   4.6  
Maximum | Revenue Multiple        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Market multiple (ratio) 4.3   4.3  
Maximum | EBITDA Multiple        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Market multiple (ratio) 10.5   10.5  
v3.23.2
Goodwill and Other Intangible Assets - Schedule of Future Amortization Expense (Details)
$ in Millions
Jun. 30, 2023
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
2023 (remaining six months) $ 32
2024 32
2025 16
2026 10
2027 $ 7
v3.23.2
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Disaggregation of Revenue [Line Items]        
Total Revenue $ 1,467 $ 1,632 $ 3,008 $ 3,288
Adjustments for non-ASC 606 revenue (80) (92) (162) (196)
Total Revenue from Contracts with Customers 1,387 1,540 2,846 3,092
Other Broadband        
Disaggregation of Revenue [Line Items]        
Total Revenue 283 326 576 660
Adjustments for non-ASC 606 revenue (24) (27) (49) (55)
Total Revenue from Contracts with Customers 259 299 527 605
Voice and Other        
Disaggregation of Revenue [Line Items]        
Total Revenue 150 174 306 368
Adjustments for non-ASC 606 revenue (4) (4) (8) (20)
Total Revenue from Contracts with Customers 146 170 298 348
Fiber Broadband        
Disaggregation of Revenue [Line Items]        
Total Revenue 122 114 243 224
Adjustments for non-ASC 606 revenue (3) (3) (6) (6)
Total Revenue from Contracts with Customers 119 111 237 218
Harvest        
Disaggregation of Revenue [Line Items]        
Total Revenue 276 288 543 575
Adjustments for non-ASC 606 revenue (36) (41) (73) (82)
Total Revenue from Contracts with Customers 240 247 470 493
Nurture        
Disaggregation of Revenue [Line Items]        
Total Revenue 94 107 199 219
Adjustments for non-ASC 606 revenue (2) (2) (4) (4)
Total Revenue from Contracts with Customers 92 105 195 215
Grow        
Disaggregation of Revenue [Line Items]        
Total Revenue 39 40 78 78
Adjustments for non-ASC 606 revenue 0 (3) 0 (6)
Total Revenue from Contracts with Customers 39 37 78 72
Affiliate Services        
Disaggregation of Revenue [Line Items]        
Total Revenue 503 583 1,063 1,164
Adjustments for non-ASC 606 revenue (11) (12) (22) (23)
Total Revenue from Contracts with Customers $ 492 $ 571 $ 1,041 $ 1,141
v3.23.2
Revenue Recognition - Operating Lease Revenue (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Revenue from Contract with Customer [Abstract]        
Lease income $ 78 $ 88 $ 158 $ 176
Percent of operating revenue 5.00% 5.00% 5.00% 5.00%
v3.23.2
Revenue Recognition - Customer Receivables and Contract Balances (Details) - USD ($)
$ in Millions
Jun. 30, 2023
Jan. 01, 2023
Dec. 31, 2022
Jan. 01, 2022
Revenue from Contract with Customer [Abstract]        
Customer receivables $ 295   $ 297  
Contract assets 8   9  
Contract liabilities 290 $ 343 343 $ 317
Gross affiliate receivables 322   324  
Allowance for credit losses $ 27   $ 27  
v3.23.2
Revenue Recognition - Additional Information, Contract Costs (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Jan. 01, 2023
Dec. 31, 2022
Jan. 01, 2022
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]              
Revenue recognized from prior year contract liability $ 10 $ 14 $ 149 $ 164      
Contract liabilities $ 290   $ 290   $ 343 $ 343 $ 317
Minimum              
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]              
Contract term     1 year        
Maximum              
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]              
Contract term     5 years        
Weighted Average | Mass Markets Customers, Average Contract Life              
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]              
Length of customer life     36 months        
Weighted Average | Business Customer, Average Contract Life              
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]              
Length of customer life     33 months        
v3.23.2
Revenue Recognition - Additional Information, Performance Obligation (Details)
$ in Millions
Jun. 30, 2023
USD ($)
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 1,800
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation 1,800
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 492
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Expected timing of satisfaction, period 6 months
Remaining performance obligation $ 492
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 641
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Expected timing of satisfaction, period 1 year
Remaining performance obligation $ 641
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 644
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Expected timing of satisfaction, period 3 years
Remaining performance obligation $ 644
v3.23.2
Revenue Recognition - Contract Costs (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Acquisition Costs        
Capitalized Contract Cost [Line Items]        
Beginning Balance $ 58 $ 63 $ 61 $ 64
Cost Incurred 13 12 22 25
Amortization (12) (13) (24) (27)
Ending Balances 59 62 59 62
Fulfillment Costs        
Capitalized Contract Cost [Line Items]        
Beginning Balance 46 47 46 47
Cost Incurred 9 10 19 19
Amortization (10) (10) (20) (19)
Ending Balances $ 45 $ 47 $ 45 $ 47
v3.23.2
Credit Losses on Financial Instruments (Details)
$ in Millions
 6 Months Ended
Jun. 30, 2023
USD ($)
Financing Receivable, Allowance for Credit Loss  
Beginning balance $ 36
Provision for expected losses 28
Write-offs charged against the allowance (29)
Ending balance 35
Business  
Financing Receivable, Allowance for Credit Loss  
Beginning balance 20
Provision for expected losses 9
Write-offs charged against the allowance (8)
Ending balance 21
Mass Markets  
Financing Receivable, Allowance for Credit Loss  
Beginning balance 16
Provision for expected losses 19
Write-offs charged against the allowance (21)
Ending balance $ 14
v3.23.2
Long-Term Debt and Note Payable - Affiliate - Schedule of Long Term Debt (Details) - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Long-term debt    
Unamortized premiums, net $ 4 $ 5
Unamortized debt issuance costs (52) (52)
Total long-term debt 2,157 2,157
Less current maturities (1) (2)
Long-term debt, excluding current maturities 2,156 2,155
Senior notes    
Long-term debt    
Long-term debt, gross $ 1,986 1,986
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 7.717% 6.64%
Term loan | SOFR    
Long-term debt    
Basis spread on variable rate 2.50%  
Finance lease and other obligations    
Long-term debt    
Long-term debt, gross $ 4 $ 3
v3.23.2
Long-Term Debt and Note Payable - Affiliate - Schedule of Debt Maturity (Details)
$ in Millions
Jun. 30, 2023
USD ($)
Debt Disclosure [Abstract]  
2023 (remaining six months) $ 0
2024 1
2025 250
2026 1
2027 215
2028 and thereafter 1,738
Total long-term debt $ 2,205
v3.23.2
Long-Term Debt and Note Payable - Affiliate - Additional Information (Details) - Note payable - affiliate - Affiliated entity - Qwest Corporation - USD ($)
$ in Millions
 6 Months Ended
Sep. 30, 2022
Jun. 30, 2023
Long-term debt    
Note Payable - Affiliate, funding commitment (up to)   $ 2,000
Note Payable - Affiliate, term subject to automatic renewal   12 months
Note Payable - Affiliate, period to provide notice of intent not to renew   30 days
Note Payable - Affiliate, period to pay interest from end of Interest Period   30 days
Note Payable - Affiliate, outstanding principal repaid $ 1,200  
Note Payable - Affiliate, interest repaid $ 43  
Note Payable - Affiliate, outstanding   $ 0
v3.23.2
Fair Value Disclosure (Details) - Fair value measurements, nonrecurring - Fair value inputs, Level 2 - USD ($)
$ in Millions
Jun. 30, 2023
Dec. 31, 2022
Carrying Amount    
Fair Value Disclosure    
Liabilities—Long-term debt (excluding finance lease and other obligations) $ 2,153 $ 2,154
Fair Value    
Fair Value Disclosure    
Liabilities—Long-term debt (excluding finance lease and other obligations) $ 1,431 $ 1,691
v3.23.2
Affiliate Transactions (Details) - Affiliated entity - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Direct revenue        
Related Party Transaction [Line Items]        
Revenue from affiliate $ 367 $ 427 $ 794 $ 854
Allocated revenue        
Related Party Transaction [Line Items]        
Revenue from affiliate $ 136 $ 156 $ 269 $ 310
v3.23.2
Commitments, Contingencies and Other Items (Details)
 6 Months Ended
Jun. 30, 2023
USD ($)
patent
Loss Contingencies [Line Items]  
Estimate of possible loss $ 17,000,000
Number of patent infringement lawsuits expected to go to trial within the next twelve months | patent 1
Unfavorable Regulatory Action  
Loss Contingencies [Line Items]  
Estimate of possible loss $ 300,000
v3.23.2
Dividends (Details) - USD ($)
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Dividends [Abstract]    
Dividends declared and paid to Qwest Services Corporation $ 0 $ 0
v3.23.2
Other Financial Information- Other Current Assets (Details) - USD ($)
$ in Millions
Jun. 30, 2023
Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]    
Prepaid expenses $ 59 $ 46
Contract acquisition costs 36 38
Contract fulfillment costs 29 30
Other 33 6
Total other current assets $ 157 $ 120
v3.23.2
Other Financial Information - Other Current Liabilities (Details) - USD ($)
$ in Millions
Jun. 30, 2023
Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]    
Affiliate obligations $ 57 $ 57
Operating lease liabilities 23 21
Other 49 52
Total other current liabilities $ 129 $ 130
v3.23.2
Other Financial Information - Other Noncurrent Liabilities (Details) - USD ($)
$ in Millions
Jun. 30, 2023
Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]    
Unrecognized tax benefits $ 442 $ 427
Operating lease liabilities 57 58
Other 201 169
Total other noncurrent liabilities $ 700 $ 654
v3.23.2
Labor Union Contracts (Details) - Union employees concentration risk
 6 Months Ended
Jun. 30, 2023
Employees covered under collective bargaining agreements  
Labor Union Contracts  
Concentration risk percentage 42.00%
Workforce Subject to Collective-Bargaining Arrangements Expiring within One Year  
Labor Union Contracts  
Concentration risk percentage 0.00%